Department of Justice Compensates Victims of Bernard Madoff Fraud Scheme With Funds Recovered Through Asset Forfeiture

Payments Are the Single Largest Distribution of Forfeited Funds in the History of the Department of Justice’s Victim Compensation Program

The Department of Justice today announced that on Nov. 9, the Madoff Victim Fund (MVF) began its initial distribution of $772.5 million in funds forfeited to the U.S. Government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme. These funds will be sent to 24,631 victims across the globe. This distribution represents the first in a series of payments that will eventually return over $4 billion to victims as compensation for losses they suffered from the collapse of the BLMIS. The MVF has received over 65,000 petitions from victims in 136 countries.

These payments mark the single largest distribution of forfeited funds in the history of the Department’s victim compensation program.

Deputy Attorney General Rod J. Rosenstein, Acting U.S. Attorney Joon H. Kim for the Southern District of New York and Assistant Director in Charge William F. Sweeney Jr., of the FBI’s New York Field Division made the announcement.

“Thanks to civil asset forfeiture, the Department of Justice is announcing today the record-setting distribution of restitution to victims of Bernard Madoff’s notorious investment fraud scheme,” said Deputy Attorney General Rosenstein. “We have recovered billions of dollars from third parties – not Mr. Madoff – and are now returning that money to tens of thousands of victims. This is the largest restoration of forfeited property in history.”

“Bernie Madoff committed one of history’s largest and most devastating frauds,” said Acting U.S. Attorney Kim. “This Office not only prosecuted Madoff himself and others who helped perpetrate his fraud, but has remained committed to recovering money for his victims. To date, this Office has recovered more than $9 billion for the innocent victims of Madoff’s fraud, and today’s distribution of $770 million, the single largest distribution of forfeited funds in the Department’s history is part of our ongoing commitment to not only prosecute criminals but also find relief for victims.”

“No amount of money in the world could ever reverse the catastrophic effects Madoff’s historic Ponzi scheme had on individuals and businesses alike,” Assistant Director in Charge Sweeney. “But now, nearly a decade after this crime was exposed, it is our hope that victims will finally be able to see the light at the end of a long, dark tunnel.”

For decades, Bernard L. Madoff used his position as Chairman of BLMIS, the investment advisory business he founded in 1960, to steal billions from his clients. On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family and select members of his inner circle. On June 29, 2009, U.S. District Judge Denny Chin sentenced Madoff to 150 years in prison for running the largest fraudulent scheme in history. Judge Chin ordered Madoff to forfeit $170.799 billion as part of Madoff’s sentence.

Of the approximately $4.05 billion that will be made available to victims, approximately $2.2 billion was collected as part of the historic civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower. An additional $1.7 billion was collected as part of a Deferred Prosecution Agreement with JPMorgan Chase Bank N.A. and civilly forfeited in a parallel action. The remaining funds were collected through a civil forfeiture action against investor Carl Shapiro and his family, and from civil and criminal forfeiture actions against Bernard L. Madoff, Peter B. Madoff and their co-conspirators.

The MVF’s payouts would not have been possible without the extraordinary efforts of the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section, the U.S. Attorney’s Office for the Southern District of New York, and the FBI in the prosecution of these crimes and the recovery of assets supporting the forfeiture in this case. The MVF is overseen by Richard Breeden, former Chairman of the U.S. Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings.

More information about MVF and its compensation to victims of BLMIS is available on the MVF website at www.madoffvictimfund.com, such as eligibility criteria, process updates, and frequently asked questions. Further questions may be directed to the MVF at 866-624-3670 or info@madoffvictimfund.com (link sends e-mail).

Former Director Of Fixed Income And Head Of Portfolio Strategy At The New York State Common Retirement Fund Pleads Guilty In “Pay-For-Play” Bribery Scheme

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that NAVNOOR KANG, the former Director of Fixed Income and Head of Portfolio Strategy at the New York State Common Retirement Fund (“NYSCRF”), pled guilty today before U.S. District Judge J. Paul Oetken for participating in a massive “pay-for-play” bribery scheme involving the NYSCRF, the nation’s third largest public pension fund.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As an investment professional with New York State Common Retirement Fund, Navnoor Kang owed a duty to the public employees whose pension money he oversaw. But in this case of public corruption meets securities fraud, Kang sold himself and his duty to safeguard public retirement money for luxury vacations, jewelry, cash and even drugs. He has now admitted to his crimes and is a convicted felon. ”

According to allegations contained in the Indictment charging KANG and statements made during his plea proceeding:

The NYSCRF

The NYSCRF is a pension fund administered for the benefit of public employees of the State of New York. From January 2014 through February 2016, KANG served as Director of Fixed Income and Head of Portfolio Strategy for the NYSCRF. In that capacity, KANG was responsible for investing more than $53 billion in fixed-income securities and was entrusted with discretion to manage those investments on behalf of the NYSCRF. KANG owed a fiduciary duty to the NYSCRF and its members and beneficiaries, and was required to make investment decisions in their best interests and free of any conflict of interest. New York State law and NYSCRF policies prohibited KANG and other NYSCRF employees from receiving any bribes, gifts, benefits, or consideration of any kind.

The Scheme to Steer NYSCRF Fixed-Income Business in Exchange for Secret Bribes

From 2014 through 2016, KANG and others participated in a scheme to defraud the NYSCRF and its members and beneficiaries, and to deprive the NYSCRF of its intangible right to KANG’s honest services. The scheme involved, among other things, an agreement among KANG, Deborah Kelley, a managing director of institutional fixed income sales at New York-based broker-dealer (“Broker-Dealer-1”), Gregg Shonhorn, a vice president of fixed income sales at a New York-based broker-dealer (“Broker-Dealer-2”), and others to pay KANG bribes – in the form of entertainment, travel, lavish meals, prostitutes, nightclub bottle service, narcotics, tickets to sports games and other events, luxury gifts, and cash payments for strippers and KANG’s personal expenses – in exchange for fixed-income business from the NYSCRF. Such bribes – which totaled more than $100,000 – were strictly forbidden by the NYSCRF, and were paid secretly and without any disclosure to the NYSCRF and its members and beneficiaries concerning the conflicts of interest inherent therein.

In exchange for the bribes paid by Kelley, Schonhorn, and others, KANG used his position as Director of Fixed Income and Head of Portfolio Strategy at the NYSCRF to promote the interests of Kelley, Schonhorn, and their respective brokerage firms. KANG, in exchange for the bribes he received, agreed to steer fixed-income business to Broker-Dealer-1 and Broker-Dealer-2. In fact, KANG steered more than $3 billion in fixed-income business to Broker-Dealer-1 and Broker-Dealer-2, from which Kelley, Schonhorn, and their respective employers earned millions of dollars in commissions from the NYSCRF. In so doing, KANG, with the knowledge and approval of Kelley and Schonhorn, breached his fiduciary duty to make investment decisions in the best interest of the NYSCRF and its members and beneficiaries, and free of conflict, and deprived the NYSCRF of its intangible right to KANG’s honest services.

As the bribes paid by Schonhorn to KANG increased, so too did Broker-Dealer-2’s fixed-income business with the NYSCRF. The value of the NYSCRF’s domestic bond transactions with Broker-Dealer-2 skyrocketed from zero in the fiscal year ending March 31, 2013, to approximately $1.5 million in the fiscal year ending March 31, 2014, to approximately $858 million in the fiscal year ending March 31, 2015, and to approximately $2.378 billion in the fiscal year ending March 31, 2016. Broker-Dealer-2 became the third largest broker-dealer with which the NYSRCF executed domestic bond transactions for the fiscal year ending March 31, 2016, having not even been on the approved list in the fiscal year ending March 31, 2013. As the NYSCRF’s third largest broker-dealer in this asset class, Broker-Dealer-2 brokered approximately eight percent of the total value of the NYSCRF’s domestic bond transactions – a figure greater than that of all but two of the major international banks and brokerage houses on the list. Similarly, the value of NYSCRF’s domestic bond transactions with Broker-Dealer-1 increased from zero in the fiscal year ending March 1, 2014, to approximately $156 million in the fiscal year ending March 1, 2015, and to approximately $179 million in the fiscal year ending March 1, 2016.

KANG’s trades resulted in the payment of millions of dollars in commissions to Broker-Dealer-1 and Broker-Dealer-2, of which Kelley and Schonhorn personally earned approximately 35 to 40 percent.

The Obstruction of Justice

In late 2015, the Securities and Exchange Commission (“SEC”) opened an investigation into the entertainment and benefits that Kelley had provided KANG, and the SEC subpoenaed both KANG and Kelley for their testimony. In advance of their testimony, KANG and Kelley agreed to align their stories and testify falsely before the SEC in order to conceal their scheme. In late 2015 and early 2016, KANG and Kelley each falsely testified under oath before the SEC about expenses Kelley had paid for KANG. Moreover, after a federal grand jury investigation was opened, KANG instructed Schonhorn to testify falsely before the grand jury, and KANG admitted that he had hidden relevant evidence.

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KANG, 37, of Glendale, California, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison, and one count of conspiracy to commit honest services wire fraud, which carries a maximum sentence of 20 years in prison. KANG is scheduled to be sentenced on February 23, 2018, by Judge Oetken.

Kelley and Schonhorn have each pled guilty for participating in the scheme. Kelley was sentenced by Judge Oetken to three years of probation.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation and noted that the investigation is continuing. He also thanked the SEC, which filed civil charges against Kang, Kelley, and Schonhorn in a separate civil action, and the Office of Inspector General for the Office of the New York State Comptroller.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Edward A. Imperatore and Joshua A. Naftalis are in charge of the prosecution.

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Members of International Bank Fraud Ring Sentenced to Prison for Role in Scheme

TUCSON, Ariz. – Four members of an international fraud syndicate have been sentenced to federal prison for conspiracy to commit bank fraud and aggravated identity theft in connection with their scheme to manufacture and use fraudulent credit cards using the personally identifiable information of US-based individuals.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Elizabeth A. Strange for the District of Arizona, and Special Agent in Charge Scott Brown of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Phoenix Field Office made the announcement.

“Our office is dedicated to combatting transnational fraud and identity theft,” said Acting U.S. Attorney Strange. “The scope of the fraud scheme in this case was staggering, and we commend our law enforcement partners for apprehending the perpetrators and bringing them to justice.”

“This appalling international scheme illustrates the lengths to which fraudsters will go to game the system for financial gain,” said HSI Special Agent Brown. “We will continue to work tirelessly with our law enforcement partners to hold shameless, brazen fraudsters accountable for their crimes.”

According to admissions made in connection with their guilty pleas, the defendants participated in a conspiracy that bought stolen personally identifiable information, credit card account information, and other financial information over the Internet from individuals located in Ukraine, Tajikistan, and Russia, among other countries. The stolen personally identifiable information and stolen credit card account information were then used to unlawfully manufacture fraudulent credit cards.

Participants in the fraud scheme traveled on multiple occasions from Mexico into the United States and used the fraudulent credit cards to purchase gift cards and high end merchandise, such as iPhones, laptop computers, and designer clothing, from retailers throughout Arizona and elsewhere in the United States. After purchasing merchandise and gift cards, the co-conspirators transported the unlawfully purchased merchandise and gift cards to Mexico for future sale and profit for scheme participants. The defendants admitted in their guilty pleas that they collectively possessed at least 5,684 fraudulent credit cards resulting in the loss of hundreds of thousands of dollars.

The defendants each pleaded guilty to conspiracy to commit bank fraud and aggravated identity theft. Today, Rey Martinez-Lopez, 33, of Hermosillo, Sonora, Mexico, was sentenced to four years and six months in prison, to be followed by five years of supervised release by U.S. District Judge Rosemary Marquez of the District of Arizona.

Judge Marquez sentenced the other three defendants to the following prison terms:

• On Sept. 29, Anwar Barragan Flores, 39, of Hermosillo, Sonora, Mexico, was sentenced to seven years in prison, to be followed by five years of supervised release.
• On Sept. 12, Jorge Williams-Araiza, 38, of Hermosillo, Sonora, Mexico, was sentenced to three years and two months in prison, to be followed by five years of supervised release.
• On Aug. 23, Javier Ramirez-Villegas, 36, of Hermosillo, Sonora, Mexico, was sentenced to four years in prison to be followed by five years of supervised release.
• The defendants’ restitution will be determined by the Court at a later hearing, which has not been scheduled yet.

The investigation in this case was conducted by HSI Nogales. The prosecution was handled by Assistant U.S. Attorney Matthew G. Eltringham, Organized Crime and Drug Enforcement Task Force, District of Arizona, Tucson and Trial Attorney Rebecca A. Staton of the Criminal Division’s Organized Crime and Gang Section.

CASE NUMBER: CR-0184-TUC JGZ (LAB)

RELEASE NUMBER: 2017-110_Martinez_Lopez_etal

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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/

Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ (link is external) for the latest news.

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Former FAA Aviation Safety Inspector and Owners of Miami Aviation Repair Company Charged in Bribery Scheme

A former FAA Aviation Safety Inspector and the co-owner of a South Florida aviation repair company, AVCOM Avionics and Instruments Inc., were charged with various offenses in connection with bribery scheme during 2010-2013. To date, the other co-owner of AVCOM Avionics and Instruments Inc. has also been convicted and sentenced in connection with the ongoing investigation.

Benjamin G. Greenberg, Acting United States Attorney for the Southern District of Florida, Marlies T. Gonzalez, Regional Special Agent in Charge, U.S. Department of Transportation, Office of Inspector General (DOT-OIG), and Robert F. Lasky, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.

Patricia Suarez, a/k/a “Patricia Bailly,” a/k/a “Patricia Del Castillo,” 49, of Coral Gables, was charged by indictment with one count of conspiracy to commit bribery, in violation of Title 18, United States Code, Sections 371 and 201(b)(1)(C) and (b)(2)(C), and fifteen counts of bribery, in violation of Title 18, United States Code, Section 201(b)(1)(C). If convicted, Patricia Suarez faces a maximum statutory sentence of five years’ imprisonment for the conspiracy count and fifteen years’ imprisonment each for the bribery counts, as well as a fine up to $250,000 or triple the bribery proceeds.

Manuel R. Fernandez, 40, of Miami, was charged by indictment with one count of conspiracy to commit bribery, in violation of Title 18, United States Code, Sections 371 and 201(b)(1)(C) and (b)(2)(C); fifteen counts of bribery, in violation of Title 18, United States Code, Section 201(b)(2)(C); one count of providing false statements to a federal agency, in violation Title 18, United States Code, Section 1001(a)(2); two counts of wire fraud, in violation Title 18, United States Code, Section 1343; and two counts of aggravated identity theft, in violation Title 18, United States Code, Section 1028A. If convicted, Fernandez faces a maximum statutory sentence of five years’ imprisonment for the conspiracy count, fifteen years’ imprisonment each for the bribery counts, five years’ imprisonment for the false statements count, twenty years’ imprisonment for each wire fraud count, and a two-year consecutive mandatory minimum sentence for the aggravated identity theft counts, as well as a fine up to $250,000 or triple the bribery proceeds.

Rolando Suarez, 56, of Coral Gables, pled guilty to conspiracy to commit bribery, in violation of Title 18, United States Code, Sections 371 and 201(b)(1)(C). Rolando Suarez was sentenced to 24 months’ imprisonment and a $20,000 fine. Rolando Suarez also agreed to pay approximately $711,940 in joint and several restitution in relation to the bribery scheme.

Acting U.S. Attorney Benjamin G. Greenberg stated, “The Suarez’s, through their company, paid tens of thousands of dollars in bribes to Fernandez, an FAA Aviation Inspector, for the sake of minimizing the cost of doing business, gaining inside information on its competitors, and maximizing profits. This indictment represents our joint efforts to ensure that businesses compete on a level playing field, without improper outside influences or the payment or receipt of bribes.”

“This investigation of alleged bribery demonstrates that those entrusted with ensuring the safety our aviation system are held to the highest standards of integrity in the roles for which they are employed,” said Marlies T. Gonzalez, Regional Special Agent-In-Charge, U.S. Department of Transportation Office of Inspector General (DOT OIG). “The Department of Transportation has made safety and accountability a top priority. Working with our law enforcement and prosecutorial partners, we will continue our vigorous efforts to prevent, detect and prosecute fraud schemes that compromise the safety of the traveling public.”

“When those entrusted with aviation system safety put self-interest and personal enrichment ahead of their obligation, they breach the public’s trust,” said Robert F. Lasky, Special Agent in Charge, FBI Miami. “We encourage anyone who may have information about corruption to come forward and report it. This information is vital to our work. The South Florida community can be assured that public corruption will remain a top priority for the FBI.”

According to the indictment, from 2010 through June 28, 2013, Fernandez served as a FAA Aviation Safety Inspector with the FAA South Florida Flight Standards District Office (“FSDO”). Patricia Suarez and Rolando Suarez were the co-owners, officers, and directors of AVCOM, a Miami aviation repair company, which was subject to the jurisdiction and official responsibility of the FAA South FSDO.

Patricia Suarez and Rolando Suarez corruptly provided thousands of dollars in cash, income, credit cards, vacation cruises, airline tickets, and other things of value to Fernandez, in exchange for Fernandez violating his lawful and official duties as an FAA Aviation Safety Inspector. In violation of his lawful and official duties, Fernandez provided AVCOM with improperly obtained aviation repair manuals, which saved AVCOM vast sums of money. Fernandez assisted AVCOM in altering and erasing language, warnings, and advisories from the manuals that indicated confidential, proprietary, copyrighted, and trade secret material. Fernandez also provided AVCOM with notice and warnings as to FAA inspections and investigations regarding AVCOM and its competitors, disclosed to AVCOM sensitive and confidential information regarding AVCOM’s competitors, and concealed and failed to report AVCOM legal, regulatory, and policy violations to the FAA.

In addition to cash payments, in order to funnel additional money to Fernandez, Patricia Suarez and Rolando Suarez submitted documents to AVCOM’s payroll provider establishing Fernandez’s relative as a no-show employee. In turn, Fernandez’s relative promptly provided these AVCOM funds directly to him. Patricia Suarez and Rolando Suarez also issued various company checks made out directly to Fernandez.

According to the indictment, Fernandez also provided materially false statements to the FAA and DOT in order to hide his AVCOM activities. Additionally, Fernandez electronically submitted fraudulent sick leave requests to the FAA, including utilizing a forged and fictitious doctor’s note.

Mr. Greenberg commended the investigative efforts of the DOT-OIG and the FBI Miami Area Corruption Task Force in this matter. This case is being prosecuted by Assistant U.S. Attorney Sean T. McLaughlin.

An indictment merely contains allegations and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

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Sherwood Woman Sentenced to 45 Months in Prison for Wire Fraud, Money Laundering, and Tax Fraud

LITTLE ROCK—Cody Hiland, United States Attorney for the Eastern District of Arkansas, and Tracey D. Montaño, Internal Revenue Service (IRS) Special Agent in Charge, announced today that United States District Judge Kristine G. Baker sentenced Lynn Alisa Espejo, 53, of Sherwood, to 45 months in federal prison for her role in a scheme in which she stole more than $600,000 from her employers.

On February 8, 2017, after a seven-day trial, a federal jury found Espejo guilty on 4 counts of filing false tax returns, 15 counts of wire fraud, and 6 counts of money laundering. On Friday, Judge Baker, in addition to the prison time, imposed three years of supervised release and $2,500 in special assessment penalties. Restitution in this type of case is mandatory, and Judge Baker announced that she will determine the amount of restitution Espejo must pay the IRS and issue an order at a later time.

“Today’s sentence reflects the seriousness of Ms. Espejo’s crimes,” Hiland said. “She stole hundreds of thousands of dollars from people who trusted her, and then repeatedly lied about it. These financial and tax-related crimes hurt not just the actual victims Ms. Espejo stole from, but also all citizens who are honest and pay their taxes as they should.”

From 2007-2010, Espejo served as office manager for Practice Management Services, Inc. (PMSI) and Blanford Medical Services, Inc. (BMSI), corporations that administered business expenses for doctors in Little Rock. Espejo was responsible for managing PMSI’s general financial ledger. During her employment, Espejo stole approximately $611,099 by wire transfer from PMSI and BMSI to her personal bank accounts. Espejo misrepresented these transactions in the accounting software Quickbooks and concealed the wire transfers from the doctors and their accountant. Espejo used stolen money for personal expenses such as making payments toward a vehicle, a pool, and construction expenses on a new house.

In addition to the money stolen by wire transfer, Espejo obtained a PMSI debit card and used it for personal purchases from Wal-Mart, including grocery items such as snow crab, bacon, and popcorn balls, video gaming devices, school supplies, and a trampoline.

During this same time period, Espejo filed false tax returns with the IRS in which she failed to report the stolen money as income on her tax returns. These returns resulted in a tax loss of approximately $207,941 for tax years 2007 through 2010.

“Ms. Espejo’s employers entrusted her to ethically and responsibly manage their business’ financial affairs, but instead she decided to divert funds for her personal benefit,” Montaño said. “IRS Criminal Investigation Special Agents are experts in unraveling complex tax fraud and money laundering schemes utilizing our forensic accounting skills. These specialized skills coupled with our partnership with the U.S. Attorney’s Office are key to the identification, investigation, and prosecution of these types of white collar crimes.”

This case was investigated by the IRS Criminal Investigation. Assistant United States Attorneys Stephanie Mazzanti and Jamie Dempsey prosecuted the case for the United States.

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Two Brothers From Yorktown Heights Plead Guilty In Connection With Heist Of Over $1 Million Worth Of Computers Bound For Public High School Students

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ANTON SALJANIN and GJON SALJANIN plead guilty this week before U.S. Magistrate Judge Lisa Margaret Smith to charges associated with participating in a scheme to steal, transport, and sell a shipment of approximately 1,200 computers, valued at over $1 million, that were bound for two public high schools in New Jersey. All four defendants charged in the scheme have pled guilty. ANTON SALJANIN and GJON SALJANIN are scheduled to be sentenced by U.S. District Judge Kenneth M. Karas in February 2018.

According to the Complaint and Superseding Indictment filed in White Plains federal court, as well as materials submitted in connection with the plea proceedings:

On or about January 15, 2014, ANTON SALJANIN, a driver for a shipping company, drove a truck from Yorktown Heights, New York, to a technology company located in Massachusetts to pick up a shipment of approximately 1,200 computers. ANTON SALJANIN brought his brother, GJON SALJANIN, with him. The computers were being shipped to two public high schools located in New Jersey, and were valued at over $1 million.

The next morning, ANTON SALJANIN reported to the Yorktown Police Department that the truck had been stolen from a parking lot located in Yorktown Heights. Later that day, ANTON SALJANIN reported to Yorktown Police that he had been driving around looking for the truck when he happened to spot it from the highway in a parking lot in Danbury, Connecticut. The truck would not have been visible in the Danbury parking lot to a driver passing by on the highway. Furthermore, historical cell site data for ANTON SALJANIN’s cellphone contradicts his claims about the route he took to look for the truck.

Yorktown Police detectives examined the truck and found that a window had been broken. The detectives found broken glass on the scene in the Danbury parking lot but found no broken glass on the scene in the Yorktown Heights parking lot, suggesting that the window had been broken at the Danbury parking lot rather than at the Yorktown Heights parking lot.

During interviews with the Yorktown Police, ANTON SALJANIN and GJON SALJANIN both falsely claimed that on the night of January 15, 2014, they drove directly from a convenience store outside of Yorktown Heights to the Yorktown Heights parking lot. Security camera footage from various locations in Yorktown Heights shows that a truck matching the description of the truck driven by the SALJANIN brothers departed from their claimed route, and instead traveled in the direction of the residence of Ujka Vulaj, a long-time friend of ANTON SALJANIN. The video surveillance footage also shows that the duration of the detour corresponds to the approximate length of time it would have taken to drive to Vulaj’s residence, unload the computers from the truck, and return to the route to the Yorktown Heights parking lot.

From in or about January 2014 through at least in or about April 2014, Vulaj sold the stolen computers, some with the help of a co-worker, Carlos Caceres. They sold the computers, which had a retail value of approximately $1,000, for far below the market price. Vulaj and Caceres charged approximately $500 to $800 in cash for each computer, and handed over each computer in plain brown cardboard packaging.

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ANTON SALJANIN, 45, of Yorktown Heights, New York, pled guilty on October 18, 2017, to one count of conspiracy to commit theft from an interstate shipment, interstate transportation of stolen property, and receipt, possession, and sale of stolen property, which carries a maximum sentence of five years in prison; and one count of theft from an interstate shipment, which carries a maximum sentence of ten years in prison. He is scheduled to be sentenced on February 6, 2018.

GJON SALJANIN, 42, of Yorktown Heights, New York, pled guilty on October 16, 2017, to one count of conspiracy to commit theft from an interstate shipment, interstate transportation of stolen property, and receipt, possession, and sale of stolen property, which carries a maximum sentence of five years in prison. He is scheduled to be sentenced on February 2, 2018.

The SALJANINs’ co-defendants have been convicted and sentenced. Vulaj, 56, of Yorktown Heights, New York, pled guilty on June 17, 2016, to one count of conspiracy to commit theft from an interstate shipment, interstate transportation of stolen property, and receipt, possession, and sale of stolen property, and was sentenced by Judge Karas on May 12, 2017, to 12 months and one day in prison and two years of supervised released (including 6 months of home confinement). Judge Karas also ordered Vulaj to forfeit $889,424.15 in ill-gotten gains and to pay $889,424.15 in restitution.

Caceres, 39, of the Bronx, New York, pled guilty on July 21, 2016, to one count of conspiracy to commit receipt, possession, and sale of stolen property, and was sentenced by Judge Karas on January 6, 2017, to 27 months in prison and three years of supervised released. Judge Karas also ordered Caceres to forfeit $331,188 in ill-gotten gains and to pay $331,188 in restitution.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation, the Yorktown Police Department, the Westchester County Police Department, and the New York City Police Department. He also thanked the Bronx County District Attorney’s Office for its assistance.

This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Won S. Shin, Benjamin Allee, and Scott Hartman are in charge of the prosecution.

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Eleven Men Charged In $1 Million Cross-Country Scheme To Defraud National Cellular Provider

NEWARK, N.J. – Eleven men in New York, Connecticut, North Carolina and Florida were charged today for their roles in a scheme that used stolen identities to order smartphones and other electronic goods and then paid drivers with a parcel delivery company to divert those goods to members of the conspiracy, Acting U.S. Attorney William E. Fitzpatrick announced.

Eight defendants were arrested this morning. Arrantes Garrincha Green, a/k/a “Don Gucci,” a/k/a “Gucci,” 39, of Margate, Florida, and Helton Arando Mallette, 27, of Miami, Florida, will appear this afternoon before U.S. Magistrate Judge Edwin G. Torres in Miami federal court. Omar Kimani Forsythe, a/k/a “Biggs,” 26, and Elvis Anthony Prehay, 43, both of Tamarac, Florida, will appear before Judge Torres tomorrow.

Sheldon Andre Wellington, a/k/a “Shellinz,” 35, of Rockville Center, New York, and Kindley Michel, 36, of Spring Valley, New York, will appear this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court.

Troy Linton Cooper, 35, of East Hartford, Connecticut, will appear this afternoon before U.S. Magistrate Judge Robert Richardson in Hartford federal court. Dashawn Brown, 25, of Raleigh, North Carolina, will appear this afternoon before U.S. Magistrate Judge James E. Gates in Raleigh federal court.

Andre Donovan Duffas, 27, of Plantation, Florida, Jermaine Wilson, a/k/a “Budds,” 32, of Nanuet, New York, and Oneil Gentles, a/k/a “Daffy,” 40, of Bronx, New York, remain at large.

All 11 defendants are charged by indictment with one count of wire fraud conspiracy and one count of conspiracy to transport stolen goods in interstate commerce. Green is also charged with one count of aggravated identity theft.

According to the indictment:

From June 2015 through June 2017, the defendants and others, led by Green, allegedly conspired to steal electronic equipment, including new smartphones, from a national cellular service provider.

Members of the conspiracy used stolen personal identifiers and debit and credit card information to place orders with the victim company. Many of the orders were allegedly made using two cellular phones associated with Green.

Afterwards, members of the conspiracy, including Green, Duffas, Mallette, Prehay, Wellington, and Wilson, transmitted anticipated delivery dates and locations of the fraudulently-ordered products to other conspirators who were employed as drivers with a major parcel delivery company. These drivers, including Brown, Cooper and Michel, were paid to divert the products mid-delivery to other members of the conspiracy, including Duffas, Forsythe, Gentles, Mallette, Prehay, Wellington, and Wilson.

Proceeds generated through the scheme were shared by wire transfer or depositing the funds in designated bank accounts.

The scheme compromised the identities of hundreds of residents in multiple municipalities across multiple states, including Upper Saddle River, New Jersey, and caused losses in excess of $1 million to the victim company.

The count of conspiracy to commit wire fraud carries a maximum potential penalty of 20 years in prison. The count of conspiracy to commit interstate transportation of stolen property carries a maximum potential penalty of five years in prison. Both counts carry a potential fine of $250,000, or twice the gross gain or loss from the offense. The aggravated identity theft count carries a mandatory sentence of two years in prison, which must be served in addition to any sentence imposed.

Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to the charges. He also thanked the Upper Saddle River Police Department, the Bergen County Prosecutor’s Office, the NYPD, the Westchester County District Attorney’s Office, the West Hartford Police Department and the Connecticut State’s Attorney’s Office, Hartford Judicial District, for their assistance.

The government is represented by Assistant U.S. Attorney Sammi Malek of the U.S. Attorney’s Office General Crimes Unit in Newark.

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Prince George’s County Liquor Board Official Pleads Guilty to Conspiracy, Bribery, and Obstruction of Justice

Greenbelt, Maryland – On October 17, 2017, Prince George’s County Liquor Board official David Dae Sok Son, age 41, of Bowie, Maryland, pleaded guilty to an Information charging him with conspiracy, bribery, and obstruction of justice, in a scheme involving alcoholic beverage licenses in Prince George’s County, Maryland.

The guilty plea was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Special Agent in Charge Thomas Jankowski of the Internal Revenue Service – Criminal Investigation, Washington, D.C. Field Office; and Chief Henry Stawinski III of the Prince George’s County Police Department.

Son was a Commissioner on the Prince George’s County Board of License Commissioners (“Liquor Board”) from 2005 through 2014. During the 2015 Maryland legislative session, Son served as a liaison for the Prince George’s County Senate delegation. He returned to the Liquor Board later in 2015, as its Director.

As described in the affidavit filed in support of the criminal complaint and in the plea agreement, Son solicited and facilitated bribes, from lobbyists and business owners, including co-conspirators Young Jung Paig and Shin Ja Lee. The bribe recipients were elected state officials, including then-County Councilman William Alberto Campos-Escobar (a/k/a “Will Campos”) and then-Delegate Michael Vaughn.

For example, during a meeting on April 4, 2014, Son informed an FBI Confidential Human Source (“CHS”) that Campos needed $10,000 to pay an expense related to Campos’s campaign for Maryland State Delegate. Son told the CHS that Son had spoken with Campos about the CHS giving cash to Campos in exchange for Campos arranging for another grant to be awarded to a non-profit organization selected by the CHS.

On or about April 9, 2014, Son met the CHS at a coffee shop in Lanham, Maryland. Son told the CHS that Son had told Campos to “hook [the CHS] up” with the developer of a new business in the County, so that the developer would retain the CHS’s business services. Son explained to the CHS that the business owed Campos, because Campos obtained a tax benefit for the business. Son and the CHS then walked to the coffee shop’s parking lot, where the CHS’s vehicle was located. The CHS then retrieved $3,000 in U.S. currency from the CHS’s vehicle.

On or about April 9, 2014, Son gave Campos the $3,000 in U.S. currency that Son had received from the CHS. Later on April 9, 2014, Campos sent a text message to the CHS that stated, “I owe you big time my man.”

Beginning in 2015, Son solicited and facilitated bribe payments from lobbyists and business owners who were interested in the “Sunday Sales Bill,” which established up to 100 Sunday liquor sales permits in Prince George’s County. The bribes were intended to influence public officials in the performance of their official duties. For example, in 2015, Son had asked Campos to assist in passing the Sunday Sales bill by talking to one of his colleagues about the bill; both subsequently voted in favor of the bill. On April 22, 2015, after the passage of the bill, Son arranged a lunch between Campos, Paig, and Lee. A lobbyist and attorney, Matthew Gorman, also attended. During the lunch, Son told Campos to meet Paig in the men’s bathroom, saying that Paig was “… going to hook you up.” In the men’s bathroom, Paig handed Campos an envelope containing a total of $4,000 cash, which constituted a bribe from Son, Paig, Lee, and Gorman. In addition, on October 19, 2015, Son received a $4,000 bribe payment from a lobbyist for his assistance in ensuring that the lobbyist’s clients received Sunday Sales licenses.

Lee and Paig subsequently talked to Son about getting beneficial legislation introduced related to the Sunday Sales bill and indicated that they would be willing to pay $50,000 to make that happen. Son spoke with Delegate Vaughn, who agreed to introduce legislation. On November 10, 2015, Son arranged for Paig and Lee to meet with Vaughn so they could make a “down payment.” After the meeting, law enforcement observed Paig and Vaughn get into Vaughn’s car, while Lee and Son waited in the parking lot. Shortly after Paig got out of the car, Vaughn drove directly to a bank in the same shopping center. Bank surveillance video shows Vaughn pulling a stack of cash out of his right pocket and handing it to the teller, and then doing the same from his left pocket. Bank records show that Vaughn deposited a total of $4,000.

On December 17, 2016, after Son had been questioned by the FBI, he hand-wrote a letter to another subject of the FBI’s investigation informing the subject that Son had been “taken” by the “Feds” and was “wired” when he last visited the subject. In the letter, Son also listed names of individuals who had “flipped,” or cooperated with the FBI. Son further described devices used by the FBI for body wires and told the subject that the subject should assume meetings with Son were being recorded. Son also laid out means by which the subject and Son could communicate secretly.

If convicted, Son faces a maximum sentence of five years in prison for the conspiracy, ten years in prison for bribery, and 20 years in prison for obstruction of justice. U.S. District Court Judge Paula Xinis has scheduled sentencing for January 22, 2018 at 10 a.m. in U.S. District Court in Greenbelt.

Acting United States Attorney Stephen M. Schenning commended the FBI, IRS-CI, and Prince George’s County Police Department for their work in the investigation. Mr. Schenning thanked Assistant U.S. Attorneys Thomas P. Windom, Menaka Kalaskar, Arun G. Rao, and James A. Crowell IV, who prosecuted the case.

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Four People Charged In Mortgage Fraud Conspiracy

NEWARK, N.J. – A real estate investor, a builder, a mortgage loan officer, and a real estate settlement attorney were arrested today and charged with using “straw buyers” to fraudulently obtain mortgage loans from a bank, Acting U.S. Attorney William E. Fitzpatrick announced.

Victor Santos, a/k/a “Vitor Santos,” 57, of Wachtung, New Jersey; Arsenio Santos, a/k/a “Gaspar Santos,” 50, of Warren, New Jersey; Fausto Simoes, 64, of Millington, New Jersey; and, Raquel Casalinho, 37, of Union, New Jersey, are charged by complaint with one count each of conspiracy to commit bank fraud. They are expected to appear at 2 p.m. today before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court.

According to the complaint:

From September 2007 through November 2008, Victor Santos, a real estate investor; Arsenio Santos, a builder and Victor’s cousin; Casalinho, a junior home mortgage consultant at the victim bank and Victor’s niece; and Simoes, a real estate settlement attorney, and others allegedly conspired to fraudulently obtain mortgage loans with a total value of more than $5 million.

Victor Santos, Arsenio Santos, and their conspirators allegedly recruited straw buyers to purchase properties in Newark and obtained their identifying information, including Social Security cards and drivers’ licenses. A “straw buyer” was an individual who purchased a property for another in order to conceal the identity of the actual purchaser, usually in exchange for a fee.

In exchange for the use of the straw buyers’ identity and credit history, Victor Santos, Arsenio Santos, and others allegedly agreed to pay each of the straw buyers a fee of approximately $5,000, provide the straw buyer’s down payment and cash required for closing, secure tenants to lease the purchased property and make the mortgage payments on each of the fraudulently obtained mortgages. These secret agreements were not disclosed to the bank.

In accordance with Victor Santos’ instructions, the straw buyers’ information was provided to Casalinho and was used to prepare fraudulent mortgage loan applications that contained a variety of false statements, including the identity of the actual buyer. For the two representative schemes highlighted in the complaint, Casalinho, Victor Santos, Arsenio Santos, and their conspirators prepared and submitted mortgage applications containing false information to the bank and obtained loans totaling more than $900,000. The conspirators allegedly arranged transactions for the Newark properties whereby the straw buyers would nominally purchase the properties for far more than the sellers had agreed to sell them, and the conspirators kept the difference between the contract price and the amounts the sellers received.

Simoes was the closing attorney on approximately 10 of the fraudulent transactions and signed and certified as true the final settlement statements. These statements falsely stated that the cash required for closing for each transaction came from the straw buyer. In fact, Victor Santos and his conspirators provided those funds to Simoes and the funds were deposited into Simoes’ attorney trust account. For certain transactions, a shell company – whose bank account was controlled by Victor Santos and a conspirator and to which funds from fraudulently obtained mortgage loans were disbursed – was the source of the cashier’s checks given to Simoes to fund the buyer’s cash required at closing. For other transactions, down payments came from an account owned and controlled by Arsenio Santos and Victor Santos, the proceeds of the mortgage loan itself after funding or closing, or from the proceeds of a previously obtained fraudulent loan.

The conspiracy to commit bank fraud carries a maximum potential penalty of 30 years in prison, a fine of $1 million or twice the gross gain to the defendants or twice the gross loss to others whichever is greater.

Acting U.S. Attorney Fitzpatrick credited special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Steven Perez, and special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher of the Newark office, with the investigation leading to today’s charges.

The government is represented by Special Assistant U.S. Attorneys Kevin DiGregory and Charlie Divine and Senior Litigation Counsel Andrew Leven of the U.S. Attorney’s Office’s Economic Crimes Unit in Newark.

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

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