Financial Fraud: China Zhongwang Holdings Limited Indicted For A Complex Financial Fraud Scheme

China Zhongwang Holdings Limited Indicted For A Complex Financial Fraud Scheme

Federal Indictment Alleges Scheme to Avoid Payment of $1.8 Billion in Anti-Dumping Duties on Chinese Aluminum Imported as ‘Pallets’

Chinese Billionaire also Accused of Defrauding Investors by Inflating Value of Publicly Traded Company Through Sham Sales of Aluminum Stockpiled in U.S.

LOS ANGELES – A federal grand jury indictment unsealed late Tuesday alleges a complex financial fraud scheme in which a Chinese company exported to the United States huge amounts of aluminum – disguised as “pallets” to avoid customs duties of up to 400 percent – and “sold” the purported pallets to related entities to fraudulently inflate the company’s revenues and deceive investors around the world.

The 53-page indictment alleges that China Zhongwang Holdings Limited, Asia’s largest aluminum extrusion company; Zhongtian Liu, the company’s former president and chairman; and several individual and corporate co-defendants lied to U.S. Customs and Border Protection to avoid paying the United States $1.8 billion in anti-dumping and countervailing duties (AD/CVD) that were imposed in 2011 on certain types of extruded aluminum imported into the United States from China.

The aluminum sold to United States-based companies controlled by Liu were simply aluminum extrusions that were spot-welded together to make them appear to be functional pallets, which would be finished goods not subject to the duties, according to the indictment. In reality, there were no customers for the 2.2 million pallets imported by the Liu-controlled companies between 2011 and 2014, and no pallets were ever sold.

The aluminum was imported through the Ports of Los Angeles and Long Beach and then stockpiled at four large warehouses in Southern California, all of which were purchased at Liu’s direction.

Liu and his co-defendants orchestrated the bogus sales of aluminum to Liu-controlled companies in Southern California to falsely inflate the value of China Zhongwang, according to the indictment. Liu is a major shareholder of China Zhongwang, which has been listed on the Stock Exchange of Hong Kong since a 2009 initial public offering that raised $1.26 billion.

After the AD/CVD duties were put in place in 2011, the company’s annual reports created a false narrative that there was a robust demand for the aluminum pallets in the United States, according to the indictment. The defendants allegedly inflated China Zhongwang’s sales volume and its volume of exports to the United States by engaging in transactions with entities controlled by Liu, and then falsely claimed in China Zhongwang’s annual reports that the aluminum was being sold to independent third parties, when it was actually being stockpiled by Liu-controlled entities in Southern California. Because there was no such demand for the pallets, the indictment alleges that “defendants Liu and China Zhongwang would direct that aluminum melting facilities be built and acquired to be used to reconfigure the aluminum imported as pallets into a form with commercial value.”

The indictment also alleges a massive money laundering scheme that was used by the defendants to funnel hundreds of millions of dollars through shell companies to the U.S.-based aluminum companies controlled by Liu. The funds were then transferred to China Zhongwang and the other shell companies as payments for the aluminum.

“This indictment outlines the unscrupulous and anti-competitive practices of a corrupt businessman who defrauded the United States out of $1.8 billion in tariffs due on Chinese imports,” said United States Attorney Nick Hanna. “Moreover, the bogus sales of hundreds of millions of dollars of aluminum artificially inflated the value of a publicly traded company, putting at risk investors around the world. The rampant criminality described in this case also posed a threat to American industry, livelihoods and investments.”

“The charges filed against these defendants are extremely serious,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “Organized assistance and subsidies by foreign nations such as China have a detrimental effect on U.S. production and employment. Of greater concern, our national security is jeopardized when domestic industry loses its ability to develop and supply products for U.S. defense and critical infrastructure applications, forcing us to become dependent on unreliable imports from other countries. HSI will continue to work closely with our law enforcement partners in the U.S. and overseas to aggressively target threats to our national interest.”

The defendants named in the 24-count indictment returned under seal on May 7 are:

  • Zhongtian Liu, 55, a billionaire Chinese citizen, who for a time maintained a residence in Tustin, and who is the former president and former chairman of the board of China Zhongwang;
  • China Zhongwang Holdings Limited, the publicly traded aluminum company based in Liaoyang City that was the largest aluminum extrusion manufacturer in Asia and the second-largest in the world;
  • Zhaohua Chen, 60, a Chinese national and close friend of Liu, who allegedly was a key player in the scheme;
  • Xiang Chun Shao, also known as Johnson Shao, 58, most recently of Irvine, who managed a collection of Southern California businesses that pretended to be independent third parties importing the Chinese aluminum;
  • The Ontario-based Perfectus Aluminium Inc., which was controlled by Liu and managed by Shao;
  • Perfectus Aluminum Acquisitions, LLC, a subsidiary of Perfectus Aluminium formed in late 2014 to take over a string of companies that had received aluminum pallets shipped to the U.S. after the duties were imposed on Chinese aluminum in 2011; and
  • Four LLCs controlled by Liu that were established to purchase warehouses in Riverside, Ontario, Irvine and Fontana where the aluminum pallets were stockpiled.

At this time, none of the individual defendants named in the indictment – Liu, Chen or Shao – are believed to be in the United States.

In a separate case filed late Tuesday, an associate of Liu, Po-Chi Eric Shen, 41, of Los Angeles, was charged with failing to report to the Internal Revenue Service more than $9 million in taxable income he received in 2015. Shen has agreed to plead guilty and cooperate with the government’s ongoing investigation in this matter.

“Tariffs are a tax on imports. Importers are expected to check the tariffs and other taxes and duties due on the goods they bring in, calculate what they owe, and pay it,” stated IRS Criminal Investigation Special Agent in Charge Ryan L. Korner. “Today’s announcement reinforces our commitment to every American taxpayer to identify and prosecute those who evade taxes, including by devising illegal schemes to dodge tariffs and create an unfair trade advantage for profit.”

In September 2017, the United States Attorney’s Office filed civil forfeiture actions against the four Southern California warehouses used by Perfectus to store the pallets. In February 2018, the government filed a fifth civil forfeiture complaint against “approximately 279,808 Aluminum Structures in the Shape of Pallets,” about half of which were seized in early 2017 at the Ports of Los Angeles and Long Beach, and the other half were seized from three other warehouses Perfectus was using to store the pallets. Those civil asset forfeiture cases have been stayed pending the completion of the criminal prosecution, in which the government is seeking the criminal forfeiture of the warehouses and seized aluminum.

The indictment announced today charges all of the defendants with conspiracy, nine counts of wire fraud and seven counts of passing false and fraudulent papers through a customhouse. All of the defendants, except the warehouse entities, also face seven counts of international promotional money laundering. If they were to be convicted, the individual defendants would face a statutory maximum penalty of five years in federal prison for the conspiracy charge and up to 20 years for each of the remaining 23 counts. If the companies were to be convicted, they would face substantial monetary penalties.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

This matter is being investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and IRS Criminal Investigation.

The criminal cases are being prosecuted by Assistant United States Attorneys Eddie A. Jauregui, Poonam G. Kumar and Julian L. André of the Major Frauds Section. The asset forfeiture cases are being handled by Assistant United States Attorney Steven R. Welk, Chief of the Asset Forfeiture Section.

Environment: Thomas S. Fritzel Found Guilty On Charges Of Disposing Of Asbestos In Violation Of The Clean Air Act

Thomas S. Fritzel Found Guilty On Charges Of Disposing Of Asbestos In Violation Of The Clean Air Act

Jury Verdict: Lawrence Developer Violated Asbestos Disposal Laws

TOPEKA, KAN. – A jury today found a Lawrence developer guilty on charges of disposing of asbestos in violation of the Clean Air Act.

Thomas S. Fritzel, 53, Lawrence, Kan., was convicted on the following counts:

    • Failing to notify authorities before removing asbestos (count two).
    • Failing to keep asbestos wet during demolition to prevent air contamination (count three).
    • Failing to dispose of asbestos in leak-tight containers (count four).

During trial, the government presented evidence that Fritzel violated federal laws for handling asbestos during demolition and renovations at the Alvamar Country Club in Lawrence. The government presented evidence to show that Fritzel knew that the roof of the country club contained 75 percent chrysotile asbestos. The previous owners, who sold the club to Fritzel in January 2016, had decided not to replace the roof because of the cost of abating the asbestos.

On October 19, 2016, the Kansas Department of Health and Environment told Fritzel to get a licensed asbestos contractor to remove asbestos from the site and dispose of it properly. On Oct. 25, 2016, KDHE inspected the site and determined asbestos debris had been removed and hauled to Hamm Landfill in Perry, Kan., which is not approved for asbestos disposal.

Sentencing will be set for a later date. He faces a penalty of up to two years in federal prison and a fine up to $250,000 on count two and up to five years and a fine up to $250,000 on counts three and four. First Assistant U.S. Attorney Duston Slinkard commended the Environmental Protection Agency – Criminal Investigation Division and Assistant U.S. Attorney Richard Hathaway for their work on the case.

Financial Fraud: KENNETH CHARITY Pleaded Guilty To Conspiring To Defraud First NBC Bank

Kenneth Charity Pleaded Guilty To Conspiring To Defraud First Nbc Bank

New Orleans Business Owner Pleads Guilty to Conspiracy to Defraud First NBC Bank

NEW ORLEANS – The United States Attorney’s Office announced that KENNETH CHARITY (“CHARITY”), age 54, a resident of New Orleans, Louisiana, pleaded guilty today to conspiring to defraud First NBC Bank, the New Orleans-based bank that failed in April 2017.

According to the Bill of Information, from in or around February 2007 through April 2017, CHARITY had a banking relationship with First NBC Bank, individually and through certain entities. During that time, Bank President A acted as the loan officer for CHARITY and the loan officer to certain of CHARITY’s entities (“the Entities”). By the time First NBC Bank failed, the balances on the loans issued to CHARITY and the entities totaled more than $18 million. CHARITY, Bank President A, and others knowingly conspired to defraud First NBC Bank. According to the Bill of Information, the purpose of the conspiracy was for CHARITY, Bank President A, and others to unjustly enrich themselves, disguise the true financial status of CHARITY and the Entities, conceal the accurate performance, and misrepresented the purpose of the loans made to KENNETH CHARITY and the Entities.

KENNETH CHARITY, Bank President A, and others provided First NBC Bank with materially false and fraudulent documents and financial statements, which, among other things, overstated the value of KENNETH CHARITY’s assets, understated his liabilities, and omitted material information. These false statements disguised his and the Entities’ true financial condition.

The Bill of Information also alleges that it was part of the conspiracy for Bank President A and others to disguise CHARITY and the Entities’ true financial condition by, among other things, issuing new loans to CHARITY and the Entities, which would pay older loans that CHARITY was unable to repay. The new loans would then appear to be current and performing, while the old loans appeared to have been paid. In reality, CHARITY had insufficient income and cash flow to support his debt at First NBC Bank. Bank President A was well-aware that CHARITY was unable to repay his loans, yet Bank President A continued to falsely represent in bank records that CHARITY and his Entities were profitable.

Additionally, the Bill of Information alleges CHARITY, Bank President A, and others, carried out the conspiracy by repeatedly lying in bank loan documents about the purpose of loans that Bank President A approved for CHARITY and the Entities. Specifically, Bank President A approved loans for CHARITY and his Entities that appeared to be for legitimate business purposes. In reality, CHARITY spent loan proceeds on personal expenses. Bank President A was aware that CHARITY did not spend the loan proceeds consistently with the purposes stated on the loan documents. For example, from in or around August 2014 through in or around December 2016, Bank President A caused three loans to be disbursed to one of CHARITY’s entities for the purpose, in part, of enclosing a patio at a beignet shop located at 620 Decatur Street. CHARITY never built the patio. The loan proceeds were used instead to pay CHARITY’s overdrafts, which included personal expenses, and to make loan payments.

CHARITY could face up to 30 years’ imprisonment, a fine of not more than $1 million, or twice the gross gain to him or the gross loss of any victims, 5 years of supervised release, and a special assessment of $100.

Judge Lance M. Africk set CHARITY’s sentencing hearing for October 23, 2019 at 2 pm.

This case is being investigated by the Federal Bureau of Investigation; the Federal Deposit Insurance Corporation, Office of Inspector General; and the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Office of Inspector General. Assistant U.S. Attorneys Sharan E. Lieberman, Matthew R. Payne, Nicholas D. Moses, and J. Ryan McLaren are in charge of the prosecution.

Cyber Crime: Shan Shi Was Convicted Of One Count Of Conspiracy To Commit Theft Of Trade Secrets

Shan Shi Was Convicted Of One Count Of Conspiracy To Commit Theft Of Trade Secrets

Texas Man Convicted of Conspiracy to Commit Theft of Trade Secrets

A Texas man was convicted today by a federal jury in Washington D.C. of conspiracy to commit theft of trade secrets.

Following a nine-day trial, Shan Shi, 54, of Houston, Texas, was convicted of one count of conspiracy to commit theft of trade secrets. Shi was originally indicted in June 2017 for conspiracy to commit theft of trade secrets, and a superseding indictment containing one count of conspiracy to commit economic espionage and one count of conspiracy to commit money laundering charges issued in April 2018. Shi was acquitted on the other charges.

“Shan Shi and his coconspirators went to great lengths to cash in on the Chinese government’s desire to obtain syntactic foam technology,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “As this case demonstrates, the Department of Justice is and will remain on the front lines of defending U.S. companies against the theft of their trade secrets.”

“The jury’s verdict makes clear that Shan Shi conspired to steal trade secrets by poaching employees from a U.S. company and enticing them to bring technical data to his company,” said Assistant Attorney General for National Security John C. Demers. “He did this against the backdrop of China’s strategic plan to close the gap between China and United States in buoyancy technology and with the benefit of millions of dollars of funding from China. Like our many other prosecutions implicating China’s economic aggression, this case exemplifies both the threat to American companies and our commitment to confront it.”

“We take very seriously the theft of intellectual property that was developed in the United States through long years of research, development, and innovation,” said U.S. Attorney Jessie K. Liu for the District of Columbia. “Shi chose to steal the secrets of a U.S. company rather than do the hard work necessary to succeed honestly in the free market. He is now being held accountable for that choice.”

“Shan Shi attempted to obtain sophisticated U.S. technology with both military and civilian uses for the ultimate benefit of China,” said Assistant Director John Brown of the FBI’s Counterintelligence Division. “It is no secret that China is determined to achieve superiority in virtually all high-tech areas, and the FBI is equally determined to stop individuals who commit illegal acts to help China achieve its goals. The stakes are high both for U.S. national security and for American companies who invest so much money and time on research and development.”

“FBI Houston’s elite counterintelligence investigators worked for years to dismantle Mr. Shi’s prolific network and bring him to justice,” said Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office. “Our highly trained agents and intelligence analysts work every day to protect American businesses from unscrupulous foreign adversaries. We are pleased by today’s verdict, and we will continue to aggressively protect America’s economic security and intellectual property from those who would do us harm.”

Evidence introduced at trial established that Shi conspired with others to steal trade secrets from a Houston-based company, Trelleborg Offshore, relating to syntactic foam, a strong, lightweight material with commercial and military uses that is essential for deep-sea oil and gas drilling. In public statements of its national priorities, China has made clear its desire to develop this technology. Shi sought to obtain information about syntactic foam for the benefit of CBM-Future New Material Science and Technology Co. Ltd. (CBMF), a Chinese company based in Taizhou, and for the ultimate benefit of the People’s Republic of China. Four of Shi’s codefendants—some of whom worked at Trelleborg—had pleaded guilty to conspiring to steal trade secrets, and two testified as cooperating witnesses at trial. From 2014 to 2017, CBMF sent Shi’s company in Houston approximately $3.1 million from China in order to promote Shi’s activity in the United States.

Sentencing has been set for Oct. 25, 2019.

The FBI’s Houston Field Office conducted the investigation. Senior Counsel Joss Nichols of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Jeffrey Pearlman and Luke Jones for the District of Columbia are prosecuting the case.

Financial Fraud: JASON And YALE SCHIFF Is Charged With Multiple Counts Of Bank Fraud

Jason And Yale Schiff Is Charged With Multiple Counts Of Bank Fraud

Federal Probe into Bank Fraud in North Suburbs Adds Two New Defendants

CHICAGO — A federal investigation that previously led to bank fraud and identity theft charges against a north suburban businessman has resulted in indictments against two additional defendants, including the businessman’s brother.

JASON SCHIFF, 40, of Lincolnwood, is charged with three counts of bank fraud, according to a superseding indictment returned July 24, 2019, in U.S. District Court in Chicago. The superseding indictment also charges Jason Schiff’s brother, YALE SCHIFF, 44, of Riverwoods, with 12 counts of bank fraud and two counts of aggravated identity theft. Yale Schiff was initially charged in the case last month. The Schiffs pleaded not guilty today during arraignments before U.S. Magistrate Judge Young B. Kim in Chicago.

A separate indictment returned July 17, 2019, charges Yale Schiff’s business associate, DAVID IZSAK, 44, of Chicago, with eleven counts of bank fraud and one count of aggravated identity theft. During the investigation, federal authorities seized Izsak’s 57-foot Carver 570 Voyager yacht known as the “Flying Lady.” The indictment seeks forfeiture of the yacht, as well as a personal money judgment against Izsak of approximately $4 million. Izsak pleaded not guilty at his arraignment earlier this month.

The indictments were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and Craig Goldberg, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The government is represented by Assistant U.S. Attorney Sheri H. Mecklenburg.

According to the charges against the Schiffs, Yale Schiff made false statements in loan applications to obtain millions of dollars in mortgage loans secured by a variety of properties. The charges allege that Yale Schiff filed with the Cook County Recorder of Deeds fraudulent letters from financial institutions claiming that loans on the properties were paid in full and that the mortgages were released, when, in fact, the loans were not paid in full and the mortgages had not been released. Yale Schiff then kept the financing paid by the banks, as well as proceeds from the eventual sales of the properties, without paying the mortgages, the indictment states. The fraud allegedly committed by Jason Schiff arose out of bank loans for vehicles and a loan secured by real estate purchased from Yale Schiff.

The charges against Izsak accuse him of fraudulently obtaining loans secured by real estate and vehicles. Izsak allegedly submitted or caused to be submitted to the Cook County Recorder of Deeds fake letters purporting to be from the lender, purporting to congratulate Izsak for paying his loan in full and releasing the lien. In reality, the letters were not from the lender, the loans were not paid in full, and the liens were not released, the indictment states.

Izsak and Yale Schiff are each accused of fraudulently obtaining loans by using names, Social Security numbers and dates of birth that did not belong to them. Izsak also used a stolen identity to obtain a credit card, while Yale Schiff used fake and stolen identities to fraudulently obtain a charge card at Nordstrom department store and loans for a Jeep Grand Cherokee and a Lexus RX350, the indictment states.

The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. Each bank fraud count is punishable by a maximum sentence of 30 years in prison, while each count of aggravated identity theft carries a mandatory sentence of two years. If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.

Financial Fraud: Complaint Against Digital Currency Exchange BTC-e And Alexander Vinnik

Complaint Against Digital Currency Exchange Btc E And Alexander Vinnik

United States Files $100 Million Civil Complaint Against Digital Currency Exchange BTC-e And Chief Owner-Operator Alexander Vinnik

Complaint seeks to enforce federal penalties for alleged violations of Bank Secrecy Act

SAN FRANCISCO– The Department of Justice filed a civil complaint in federal court against digital currency exchange BTC-e, also known as Canton Business Corporation, and one of its chief owners and operators Alexander Vinnik, announced United States Attorney David L. Anderson and U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) Director Kenneth A. Blanco. The complaint seeks to enforce monetary penalties FinCEN assessed against BTC-e and Vinnik for alleged violations of the Bank Secrecy Act (BSA), 31 U.S.C. §§ 5311-14 and 5316-32.

BTC-e is a digital currency exchange organized as a corporation under the laws of Cyprus and/or the Seychelles Islands. BTC-e operated in Bulgaria, the Seychelles Islands, and other jurisdictions, including the Northern District of California, and allowed its users to buy and sell bitcoin and other digital currencies anonymously through its web domain, btc-e.com. Vinnik, a Russian national, occupied a senior leadership position within BTC-e, controlled multiple BTC-e administrative accounts used to process BTC-e’s transactions, and participated in the direction and supervision of BTC-e’s operations and finances. The civil complaint alleges that Vinnik operated several BTC-e accounts, including some tied to thefts from other virtual currency exchanges such as Mt. Gox. Vinnik is currently incarcerated in Greece and is the subject of an extradition request to the Northern District of California in connection with criminal charges filed in this district.

On July 26, 2017, FinCEN assessed monetary penalties against BTC-e and Vinnik for violations of the BSA. FinCEN assessed $12 million in penalties against Vinnick and $88,596,314 in penalties against BTC-e for BTC-e’s alleged willful violations of the BSA. The civil complaint seeks to enforce the monetary penalties issued by FinCEN.

According to the complaint, FinCEN assessed penalties based, in part, on the following conduct:

Failure to Register as an MSB: BTC-e did not register with FinCEN as a Money Services Business (MSB). The BSA defines an MSB and requires, among other things, MSBs to register with FinCEN within 180 days of beginning operations. In this case, FinCen assessed penalties, in part, because the agency concluded BTC-e was an MSB and failed to register with the agency.

Failure to Establish Anti-Money Laundering Programs and Procedures: Under the BSA, an MSB must develop, implement, and maintain an effective anti-money laundering (AML) program that is reasonably designed to prevent the MSB from being used to facilitate money laundering and the financing of terrorist activities. FinCEN’s fines were based, in part, on BTC-e’s failure to have reasonable AML policies or procedures in place to prevent criminal activity on the digital currency exchange.

Failure to File Suspicious Activity Reports: Under the BSA, an MSB must file a suspicious activity report (SAR) if it becomes aware of transactions that the MSB “knows, suspects, or has reason to suspect” are suspicious where those transactions involve the MSB and aggregate to at least $2,000 in value. FinCEN’s penalties were assessed, in part, because BTC-e did not file SARs and instead received proceeds from ransomware schemes, transferred funds to and from known dark net marketplaces, and deposited funds stolen from other digital currency exchanges into BTC-e accounts that Vinnik controlled.

This case is being handled by Assistant United States Attorney Kirstin Ault and U.S. Department of Justice Trial Attorney John Siemietkowski with assistance from Tina Louie.

Visa Fraud: WEIYUN HUANG Charged With One Count Of Conspiracy To Commit Visa Fraud

Weiyun Huang Charged With One Count Of Conspiracy To Commit Visa Fraud

Federal Grand Jury in Chicago Indicts Chinese Businesswoman on Charges of Visa Fraud

CHICAGO — A Chinese businesswoman has been indicted in Chicago on federal fraud charges for allegedly providing false verifications of employment for Chinese nationals seeking to stay in the United States on F-1 or H-1B visas.

WEIYUN HUANG, also known as “Kelly Huang,” 30, of Beijing, China, is charged with one count of conspiracy to commit visa fraud and five counts of visa fraud, according to an indictment returned Thursday in U.S. District Court in Chicago. Huang has been in federal custody since March after her arrest in the Northern District of California. Arraignment in federal court in Chicago has not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI; and James M. Gibbons, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Chicago. The government is represented by Assistant U.S. Attorney Shoba Pillay.

An F-1 visa permitted a foreign national to study in the United States at a university or other academic institution. An F-1 visa-holder could extend the visa by participating in a program that required the student to obtain temporary employment in their area of study. An H-1B visa permitted U.S.-based employers to temporarily employ foreign nationals in specialty occupations. Foreign nationals with an H-1B visa were permitted to stay in the U.S. for three years, with the possibility of extending their stay to six years.

According to the indictment, Huang founded two companies – FINDREAM LLC and SINOCONTECH LLC – for the purported purpose of employing foreign nationals in the United States. Huang advertised Findream as a “startup company in technology services and consulting,” with clients in China and the U.S. Huang used a China-based website, “Chinese Looking for Job,” and a China-based WeChat platform, “Job Hunters of North America,” to advertise Findream and Sinocontech to F-1 visa-holders in the U.S. seeking employment and H-1B visas.

In reality, the companies did not deliver any technology or consulting services nor did they employ any of the individuals who responded to the advertisements, the indictment states. In exchange for a fee, Huang and the companies provided written proof of employment to their customers, knowing that the companies did not actually employ them, the charges allege. Huang, Findream and Sinocontech also provided false offer letters and verification of employment letters as purported evidence of employment, knowing the forms were bogus, the indictment states.

The fraud scheme allowed at least approximately 2,685 customers to list Findream or Sinocontech as their employer in order to stay in the U.S. on the visas, according to the indictment. Huang and her two companies received at least approximately $2 million from customers for whom they agreed to falsely certify employment, the indictment states.

Findream, which was incorporated in California, and Sinocontech, which was incorporated in Delaware, are also charged in the indictment. Findream is charged with one count of conspiracy to commit visa fraud and four counts of visa fraud, while Sinocontech is charged with one count of conspiracy to commit visa fraud and one count of visa fraud.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. Each count of visa fraud is punishable by up to ten years in prison, while the conspiracy count carries a maximum sentence of five years.

Health Care Fraud: Dinesh Goyal Pleaded Guilty To One Count Of Conspiracy To Commit An Offense Against The United States

Dinesh Goyal Pleaded Guilty To One Count Of Conspiracy To Commit An Offense Against The United States

Owensboro Man Pleads Guilty to Health Care Fraud Conspiracy

LEXINGTON, Ky. – Today, an Owensboro man admitted in federal court that he participated in a conspiracy to defraud health insurance programs of more than $1.3 million.

Dinesh Goyal, 60, pleaded guilty to one count of conspiracy to commit an offense against the United States, before United States District Judge Joseph Hood. Goyal owned a toxicology laboratory in Owensboro, Kentucky called Tristate Medical Laboratory (“Tristate”). His co-conspirators, Mason Routt and Sam Ford, owned or were affiliated with a Nicholasville, Kentucky toxicology lab known as C.A.L. Laboratory Services (“CAL”). Among other things, CAL provided urine drug testing services for physician clients. Beginning in late 2015, health care organizations who administer the Kentucky Medicaid program placed payment restrictions on CAL’s claims seeking reimbursement for urine drug tests, due to concerns about the legitimacy of those claims. In October 2016, Goyal, Routt, and Ford agreed that urine drug tests referred to and performed by CAL would be billed to the health insurance programs using Tristate’s billing information, falsely representing that the tests were performed by Tristate. In this way, CAL evaded the payment restrictions placed upon it by the insurers, and received reimbursements to which it was not entitled. In exchange for the use of his lab’s billing information, Goyal agreed to receive 40% of these fraudulent reimbursements. In the plea agreement filed today, Goyal admitted that these fraudulent claims caused Humana Caresource, Aetna Coventry Cares, and Anthem Blue Cross & Blue Shield Medicaid to suffer a combined loss of $1,378,449.

Goyal was charged by way of information in the Eastern District of Kentucky, waiving his right to indictment by a federal grand jury. Sam Ford, one of his co-conspirators, pled guilty to the same offense in March 2019 and is scheduled to be sentenced on August 12, 2019. Mason Routt, the owner of CAL and the other co-conspirator, passed away unexpectedly in August 2017.

In addition to his guilty plea, Goyal entered into a separate settlement agreement resolving his civil liability under the federal False Claims Act for the same misconduct. Pursuant to the False Claims Act settlement agreement, Goyal is obligated to sell personal and commercial property and remit 75% of the net sale proceeds to the United States, in addition to certain cash payment obligations. Goyal also agreed to be excluded from the Medicare and Kentucky Medicaid programs for a period of 10 years, meaning that he cannot own or work for any company that submits claims to those federal health insurance program.

Robert M. Duncan, Jr., United States Attorney for the Eastern District of Kentucky; James Robert Brown, Jr., Special Agent in Charge, Federal Bureau of Investigation, Louisville Field Office; and Derrick L. Jackson, Special Agent in Charge, Department of Health and Human Services, Office of Inspector General (HHS-OIG), Atlanta Field Office, jointly announced the guilty plea.

The investigation was conducted by the FBI and HHS-OIG. The U.S. Attorney’s Office for the Eastern District of Kentucky was represented by Assistant U.S. Attorney Paul McCaffrey in the criminal case, and by Assistant U.S. Attorney Christine Corndorf in the parallel civil case.

Goyal is scheduled to be sentenced on October 15, 2019, in federal court in Lexington. He faces up to 5 years in prison and a maximum fine of $250,000, or twice the amount of loss caused by his crime, whichever is greater. However, any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the applicable federal statutes.

Financial Fraud: James A. Young Charging With Two Counts Of Wire Fraud And Three Counts Of Failure To File Tax Returns

James A. Young Charging With Two Counts Of Wire Fraud And Three Counts Of Failure To File Tax Returns

Former Financial Planner Indicted For Investment Fraud Scheme And Failure To File Tax Returns

PENSACOLA, FLORIDA – Former financial planner James A. Young III, 49, of Milton, Florida, was arraigned today in the U.S. District Court in Pensacola after a federal grand jury returned an indictment charging him with two counts of wire fraud and three counts of failure to file tax returns over a three-year period. The indictment was announced today by Lawrence Keefe, United States Attorney for the Northern District of Florida.

The indictment alleges that between 2010 and 2014, while working as a financial planner, Young solicited his clients and others to invest money in false “side investments” in real estate and natural resource rights. The indictment also alleges that Young presented false documents to potential investors and falsely told them he was also personally invested to convince them to invest.

The indictment further alleges that Young then pocketed the money, which totaled over $500,000, and used it for his own personal use. Further, in some instances, Young is alleged to have used money obtained from investors to pay back other investors, fraudulently representing the funds were returns or interest on their investments in order to keep the scheme going. Young also allegedly failed to file his federal tax returns for 2012, 2013, and 2014.

The maximum penalty for wire fraud is twenty years’ imprisonment. The maximum penalty for failure to file tax returns is one year imprisonment. The trial is scheduled for September 3, 2019, at 9:00 a.m. at the United States Courthouse in Pensacola.

Assistant United States Attorney Alicia H. Forbes is prosecuting the case following an investigation by the Emerald Coast Financial Crimes Task Force consisting of the Internal Revenue Service-Criminal Investigation and the Okaloosa County Sheriff’s Office. This case is part of the Department of Justice’s Elder Justice Initiative, which combats elder abuse and financial fraud targeted at seniors and is a key priority of the Department of Justice and the United States Attorney’s Office for the Northern District of Florida.

An indictment is merely an allegation by a grand jury that a defendant has committed a violation of federal criminal law and is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the government’s burden to prove guilt beyond a reasonable doubt at trial.

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 U.S. Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html

Financial Fraud: Todd Ficeto Found Guilty Of One Count Of Conspiracy To Commit Securities Fraud And Wire Fraud

Todd Ficeto Found Guilty Of One Count Of Conspiracy To Commit Securities Fraud And Wire Fraud

Ex-Beverly Hills Stockbroker Convicted of Securities Fraud in $200 Million Portfolio-Pumping Stock Manipulation Scheme

LOS ANGELES – A former Beverly Hills stockbroker who worked with fugitive hedge fund manager Florian Homm was found guilty by a jury late this afternoon of 18 federal criminal charges for participating in a stock manipulation scheme designed to pump up the reported profits of hedge funds that fraudulently caused investors approximately $200 million in losses.

Todd Ficeto, 52, of Marion, Ohio, was found guilty after a 17-day jury trial. The jury found Ficeto guilty of one count of conspiracy to commit securities fraud and wire fraud, seven counts of securities fraud, two counts of investment adviser fraud, one count of money laundering conspiracy, five counts of unlawful money transactions, one count of obstruction of justice, and one count of making false statements.

Ficeto was the president of a Beverly Hills-based broker-dealer, Hunter World Markets, which he co-owned with Florian Wilhelm Jürgen Homm, who was first indicted in March 2013 on charges of securities fraud and wire fraud after he was arrested in Italy. Homm later fled to Germany and is a fugitive from justice. Homm was the founder and chief investment officer of Absolute Capital Management Holdings (ACMH), a Cayman Islands-based investment advisor that operated from Palma de Majorca in Spain and managed eight hedge funds (the Absolute Funds).

Between September 2004 and September 2007, Homm directed the Absolute Funds to buy billions of shares of thinly traded, United States-based “penny stocks” through Hunter World Markets that Ficeto located and brought to Homm through investment banking deals. Ficeto then facilitated the manipulative stock purchases and caused millions of shares of the same penny stocks to be given to Homm, Hunter World Markets, and CIC Global Capital, which was controlled by co-defendants Colin Heatherington, of Port Alberni, British Columbia, Canada; and Craig Heatherington, of Queensland, Australia.

Ficeto, Homm, and other co-conspirators fraudulently manipulated the penny stocks to inflate and artificially prop up their prices to exaggerate the purported profitability of the Absolute Capital hedge funds. As a result, the co-conspirators were able to sell their own shares of the penny stocks at the inflated prices to the hedge funds. The stock price inflation also served to fraudulently overstate the performance of the hedge funds which, in turn, generated substantial performance fees and other compensation for defendant Homm and his co-conspirators. The co-conspirators then used the inflated performance figures to induce investments from unsuspecting victim-investors.

Ficeto and his co-conspirators worked together in an elaborate conspiracy to launder the illicit proceeds throughout the world.

Ficeto also engaged in unlawful monetary transactions by sending nearly $10 million of illicit proceeds to an account in the Cook Islands days before his testimony before the Securities and Exchange Commission, and then lied to the SEC about the Cook Islands account. Ficeto also used a hedge fund called the Hunter Fund, in which the Absolute Funds invested and also was used to conceal investments by the Absolute Funds in the penny stocks and to manipulate the stock market.

As the scheme unraveled, Homm abruptly resigned from the firm in the middle of the night on September 18, 2007, according to court documents.

In March 2013, Homm was taken into custody in Italy after being arrested at the Uffizi Gallery in Florence. Homm was arrested pursuant to a provisional arrest warrant sought by federal prosecutors in Los Angeles after they filed a criminal complaint containing charges related to the alleged fraud scheme. The United States sought Homm’s extradition to the United States and he was ordered extradited by the Italian Ministry of Justice, but Homm ultimately was released and is believed to have fled to Germany, where he remains a fugitive.

Colin Heatherington is in Canada and facing extradition to the United States.

United States District Judge Virginia A. Phillips has scheduled an October 7 sentencing hearing for Ficeto. Each charge of conspiracy to commit securities fraud and securities fraud carry a statutory maximum penalty of 25 years in federal prison. The money laundering charges each carry a maximum penalty of 10 years in federal prison. Each charge of investment adviser fraud, obstruction of justice, and false statements carry a maximum statutory penalty of five years in federal prison.

This matter was investigated by Federal Bureau of Investigation. The United States Securities and Exchange Commission, and the Financial and Regulatory Authority provided assistance to the FBI’s investigation.

This case is being prosecuted by Assistant United States Attorneys Cassie D. Palmer of the Public Corruption and Civil Rights Section, Scott Paetty of the Major Frauds Section, and Ian V. Yanniello of the General Crimes Section.

Violent Crime: R. Kelly Charged With Producing And Receiving Child Pornography

R. Kelly Charged With Producing And Receiving Child Pornography

Recording Artist R. Kelly Arrested on Federal Child Pornography and Obstruction Charges

CHICAGO — Chicago recording artist ROBERT SYLVESTER KELLY, also known as “R. Kelly,” has been arrested on federal child pornography and obstruction charges.

A 13-count indictment returned Thursday in U.S. District Court in Chicago charges Kelly with producing and receiving child pornography, and enticing minors to engage in criminal sexual activity. The charges accuse Kelly of engaging in sex acts with five minors and recording some of the abuse on multiple videos. The indictment also charges Kelly with conspiring to intimidate victims and conceal evidence in an effort to obstruct law enforcement, including an investigation in the 2000s that resulted in his trial in 2008 in Cook County on state child pornography charges.

Kelly, 52, of Chicago, was arrested Thursday night. He is scheduled to appear for an arraignment and detention hearing on Tuesday at 1:00 p.m. before U.S. District Judge Harry D. Leinenweber in Chicago. Kelly is charged with one count of conspiracy to receive child pornography, two counts of receiving child pornography, four counts of producing child pornography, five counts of enticement of a minor to engage in criminal sexual activity, and one count of conspiracy to obstruct justice.

The indictment also charges two former employees of Kelly’s music business: DERREL MCDAVID, 58, of Chicago (one count of conspiracy to receive child pornography, two counts of receiving child pornography, one count of conspiracy to obstruct justice), and MILTON BROWN, also known as “June Brown,” 53, of Chicago (one count of conspiracy to receive child pornography). McDavid is scheduled to make an initial court appearance today at 11:00 a.m. before U.S. Magistrate Judge Young B. Kim in Chicago, while Brown is scheduled to make an initial appearance before Judge Kim on July 19, 2019, at 11:00 a.m.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; James M. Gibbons, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Chicago; and Tara Sullivan, Acting Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. Substantial assistance was provided by the Cook County State’s Attorney’s Office and the Chicago Police Department. Assistant U.S. Attorneys Angel Krull, Abigail L. Peluso and Jeannice W. Appenteng represent the government.

“This indictment demonstrates our office’s commitment to holding individuals such as Kelly accountable for criminal sexual abuse of minors, protecting the victims of such crimes, and punishing those who obstruct law enforcement investigations,” said U.S. Attorney Lausch. “I thank the courageous individuals who provided law enforcement with important information related to these allegations, and I encourage others with helpful information to do the same. Together with our law enforcement partners and with the help of victims and other witnesses, we will continue to vigorously investigate and prosecute individuals who sexually exploit children.”

“Today’s arrest serves as a reminder of HSI’s commitment to protecting the most vulnerable members of our society – our children,” said HSI Special Agent-in-Charge Gibbons. “We will continue to work in partnership with fellow law enforcement agencies and prosecutors to bring those engaged in child exploitation to justice.”

A separate federal indictment was unsealed today in the Eastern District of New York charging Kelly with racketeering for allegedly operating a criminal enterprise that promoted Kelly’s music and recruited women and girls to engage in illegal sexual activity. Kelly will appear for a removal hearing on the New York charges today at 1:45 p.m. before U.S. Magistrate Judge Sheila Finnegan in Chicago.

Kelly is an award-winning recording artist and record producer who has operated various music businesses in Chicago. According to the indictment in the Northern District of Illinois, Kelly met the five victims in the late 1990s. Kelly engaged in sex acts with the victims while they were all under the age of 18, and he created numerous explicit videos with four of them, the indictment states. The charges allege that Kelly and McDavid in 2001 began paying an acquaintance hundreds of thousands of dollars to collect the videos for the purpose of concealing and covering up their existence. When the acquaintance later planned to hold a news conference to publicly announce that he recovered the videos, Kelly, McDavid and others paid him approximately $170,000 in exchange for agreeing to cancel the event, the indictment states.

Kelly and McDavid also agreed to pay one of the minors and another individual for their efforts to return the videos, but only after they took polygraph examinations to confirm they returned all copies in their possession, the charges allege.

The indictment seeks forfeiture of a personal money judgment of approximately $1.55 million.

The public is reminded that charges contain only accusations and are not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Producing child pornography carries a mandatory minimum sentence of ten years in prison and a maximum of 20 years. Receiving child pornography and conspiring to receive child pornography are each punishable by a mandatory minimum sentence of five years in prison and a maximum of 20 years. The maximum sentence for enticement of a minor is ten years. Conspiracy to obstruct justice is punishable by up to five years. If convicted, the Court must impose reasonable sentences under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.

If you believe you are a victim of sexual exploitation by Robert Sylvester Kelly, you are encouraged to contact HSI’s confidential tip line by calling 1-866-DHS-2-ICE (1-866-347-2423) or by logging on to https://www.ice.gov/webform/hsi-tip-form. The service is available 24 hours a day, seven days a week.

Financial Fraud: Dennis Blieden Charged With 11 Counts Of Wire Fraud, One Count Of Aggravated Identity Theft

Dennis Blieden Charged With 11 Counts Of Wire Fraud, One Count Of Aggravated Identity Theft

Former Hollywood Digital Marketing Executive and Professional Poker Player Charged with Embezzling $22 Million from His Employer

LOS ANGELES – A former executive at StyleHaul Inc., a digital marketing company that represents “influencers” on YouTube and Instagram, has been arrested pursuant to a federal grand jury indictment charging him with embezzling $22 million from his employer and using the stolen money for buy-ins at professional poker tournaments, crypto-currency investing, and other personal expenses.

Dennis Blieden, 29, formerly of Santa Monica and now residing in Nevada, was taken into federal custody yesterday in Las Vegas. The indictment, which a federal grand jury returned on Tuesday and was unsealed today, charges him with 11 counts of wire fraud, one count of aggravated identity theft, and two forfeiture counts.

Blieden made his initial court appearance today in United States District Court in Las Vegas, and he will be arraigned on the indictment in Los Angeles at a later date.

According to the indictment, between October 2015 and March 2019, Blieden was the controller and vice president of accounting and finance for StyleHaul, a digital company once based in Hollywood, but which relocated to London in April. In this role, Blieden had control over the company’s bank accounts, and allegedly abused this authority to wire the company’s money to his personal bank accounts.

Blieden is charged with disguising his fraudulent behavior in various ways, including creating a fictitious lease in May 2018 for the rental of a condominium in Rosarito Beach, Mexico, which bore a forged signature of a StyleHaul executive.

The indictment further alleges that Blieden illicitly transferred $230,000 of StyleHaul’s funds for his own personal use by falsely representing that the condominium was being rented for business purposes for StyleHaul’s clients and employees. Blieden also created fictitious wire transfer letters purportedly from Western Union to make it falsely appear that he had caused wire transfers from StyleHaul to a client to pay money due to the client, the indictment alleges.

Blieden, who has entered and won professional poker tournaments, also frequently engaged in online gambling with crypto-currency he purchased with embezzled money, according to the government’s motion requesting detention in this case. During the course of the alleged scheme, Blieden used money he stole from his employer to write $1,204,000 in personal checks to poker players, $1,134,956 was used to pay off his credit cards, and $8,473,734 was transferred to Blieden’s crypto-currency accounts, according to court documents.

Shortly before his dismissal from StyleHaul, on February 21 and 22, Blieden entered into two poker tournaments, wherein the buy-in amounts were $52,000 and $103,000, respectively, court papers state.

If convicted of all charges, Blieden would face a statutory maximum sentence of more than 200 years in federal prison.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

This case was investigated by the Federal Bureau of Investigation.

This matter is being prosecuted by Assistant United States Attorney Valerie L. Makarewicz of the Major Frauds Section.

Financial Fraud: John Muyeka Pleaded Guilty In Connection With His Role In a Phony Check Scheme

John Muyeka Pleaded Guilty In Connection With His Role In A Phony Check Scheme

New Jersey Man Admits Role in $2 Million Fraudulent Check Scheme Targeting Home-Improvement Stores

NEWARK, N.J. – A Middlesex County, New Jersey, man pleaded guilty today in connection with his role in a phony check scheme that resulted in the theft of over $2 million in merchandise from multiple home improvement stores throughout the country, U.S. Attorney Craig Carpenito announced.

John Muyeka, 44, of Sayreville, New Jersey, pleaded guilty to a superseding information charging him with one count of misprision of a felony before U.S. District Judge Katharine S. Hayden in Newark federal court.

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

Starting in December 2013 and continuing through February 2017, Muyeka and other conspirators agreed to obtain merchandise or store credit from home improvement stores in locations along the eastern United States, including New Jersey, by purchasing items with fraudulent checks.

The individuals entered home improvement and other retail stores and gathered several high-value items like air conditioners or hardwood flooring. They then typically “purchased” the items either by handing a cashier a fraudulent check with a phony name but authentic account and routing numbers, or by pretending to be an authorized signatory on a store credit account that the individuals had previously opened with a phony check.

During some of the transactions, the conspirators displayed fake driver’s licenses that had been created by Muyeka, which either duplicated the phony name imprinted on the fraudulent check they presented for payment or matched the name of an authorized signatory on a store credit account that they had previously opened.

In total, the conspirators allegedly stole over $2 million in merchandise from various retailers in New Jersey, New York, Pennsylvania, Delaware, North Carolina, Georgia, Virginia, Connecticut, Massachusetts, and South Carolina.

The count of misprision carries a maximum potential penalty of three years in prison and a $250,000 fine. Sentencing is scheduled for Oct. 15, 2019.

U.S. Attorney Carpenito credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn, and special agents of the U.S. Attorney’s Office, District of New Jersey, with the investigation. He also thanked the Union Township Police Department, the Holmdel Police Department, the Passaic County Prosecutor’s Office, the Totowa Police Department, and the Monroe Township Police Department for their assistance.

The government is represented by Assistant U.S. Attorney Jason S. Gould of the U.S. Attorney’s Office Criminal Division in Newark.

Financial Fraud: ROBERT J. BARRY Sentenced For Stealing From His Elderly Client Trust Accounts

Robert J. Barry Sentenced For Stealing From His Elderly Client Trust Accounts

Southbury Attorney Sentenced to Prison for Defrauding Elderly Clients

John H. Durham, United States Attorney for the District of Connecticut, announced that ROBERT J. BARRY, 78, of Woodbury, was sentenced today by U.S. District Judge Robert N. Chatigny in Hartford to 21 months of imprisonment, followed by three years of supervised release, the first six months of which Barry must serve in home confinement, for stealing from his elderly client trust accounts.

According to court documents and statements made in court, Barry was a partner in the law firm of Sturges and Mathes, located in Southbury. The firm specialized in trust and estates work, and Barry headed that practice. As part of his practice, Barry drafted trust agreements for clients designating himself as successor trustee in the event of the client’s death or incapacity. He also prepared wills for clients that named Barry as executor of the client’s estate upon death.

Beginning in June 2010 and continuing until approximately December 2015, Barry engaged in a scheme to defraud an elderly victim by stealing money from the victim’s client trust accounts while the victim was alive, and then stealing money from the victim’s estate after the victim died. Barry, in his role as executor and successor trustee for the victim, directed Sturges and Mathes staff members to prepare checks drawn on the victim’s accounts payable to the Sturges and Mathes operating account. Once the money was deposited into the firm’s operating account, Barry directed staff to cut a check against the firm operating account payable to a special account in the firm’s name over which Barry had exclusive control. Barry then wrote himself checks from the special account to his personal bank account.

In furtherance of the scheme, Barry caused numerous false and misleading statements to be sent to the victim and the victim’s residual beneficiary about the disposition of assets.

Through this scheme, Barry stole more than $2.4 million from the victim and the victim’s estate.

In order to hide the excess fees that he had taken, Barry also caused a false federal estate tax return to be filed with the IRS. The tax return underreported the amount of the victim’s estate by approximately $937,000.

Judge Chatigny ordered Barry to pay $2,440,285 to the victim’s estate, and $1,507,240 to residual beneficiaries of other estate clients.

On September 5, 2018, Barry pleaded guilty to one count of wire fraud.

Barry, who is released on a $100,000 bond, was ordered to report to prison on September 3, 2019.

This matter was investigated by the U.S. Postal Inspection Service and the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorneys Susan Wines and Jennifer Laraia.

Investment Fraud: Ronald Chernin Sentenced For His Role In A Multi-Year Insider Trading Scheme

Ronald Chernin Sentenced For His Role In A Multi-Year Insider Trading Scheme

California Man Sentenced to 18 Months in Prison for Role in Three-Year, Cross-Country Insider Trading Scheme that Netted More Than $3.9 Million

TRENTON, N.J. – A day trader from Oak Park, California, was sentenced today to 18 months in prison for his role in a multi-year insider trading scheme that made over $3.9 million in illicit profits by exploiting material information in violation of confidentiality agreements, U.S. Attorney Craig Carpenito announced.

Ronald Chernin, 70, of Oak Park, California, previously pleaded guilty before U.S. District Judge Michael A. Shipp to an information charging him with one count of conspiracy to commit securities fraud and one count of securities fraud. Judge Shipp imposed the sentence today in Trenton federal court

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

Chernin and co-defendant Steven Costantin, 58, of Farmingdale, New Jersey, worked as day traders for Costantin’s brother-in-law, Steven Fishoff, 62, of Westlake Village, California. Between May 2010 and August 2013, Chernin, Costantin, and Fishoff, as well as a business associate referred to as “Trader A,” expressed interest in participating in numerous stock offerings by publicly traded companies.

Chernin, Costantin, and other members of the day trading operation falsely characterized their trading entities as legitimate, full-service financial management firms with as much as $150 million in assets under management, in order to increase the likelihood that the investment bankers would solicit them to participate in the stock offerings.

Before providing confidential information concerning the companies or the terms of the proposed sales, the investment bankers first required that Chernin, Costantin, Fishoff, Trader A, and their associated trading entities, enter into confidentiality, or “wall-crossing,” agreements, whereby they agreed not to disclose or trade on the inside information and were brought “over the wall” for the narrow purpose of determining whether to purchase the offered securities.

Instead, Chernin, Costantin, and Fishoff violated the confidentiality agreements by directly or indirectly tipping each other and others with the inside information concerning the stock offerings; short selling the issuers’ stock in anticipation of a drop in price when the stock offerings were disclosed to the public; and covering their short positions once the stock offerings were disclosed. Additionally, Fishoff tipped his friend, Paul Petrello, 57, of Boca Raton, Florida, and another conspirator, Joseph Spera.

By trading on the nonpublic information, Chernin, Costantin, and their conspirators gained more than $3.9 million in illicit profits over the course of the three-year scheme. Chernin and Costantin shared 50 percent of their profits with Fishoff.

In addition to the prison term, Judge Shipp sentenced Chernin to three years of supervised release and fined him $2,000.

Costantin previously pleaded guilty to his role in the scheme and was sentenced to one year in prison. Petrello previously pleaded guilty to his role in the scheme and was sentenced to three years of probation. Fishoff pleaded guilty to his role in the scheme and was sentenced to 30 months in prison. Spera pleaded guilty to his role in the scheme and was sentenced to one year of probation.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s sentencing. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Marc Berger.

The government is represented by Nicholas P. Grippo, Attorney in Charge of the U.S. Attorney’s Trenton Office; Sarah Devlin, Chief of the Office’s Asset Recovery and Money Laundering Unit (ARMLU), and Senior Trial Counsel Barbara Ward of the ARMLU.

Cyber Crime: JEFFERY DOUGLAS MANN Sentenced For His Scheme With Gift Card Fraud

Jeffery Douglas Mann Sentenced For His Scheme With Gift Card Fraud

Leader of Gift Card Fraud Ring That Stole More Than $700,000 From Target and Customers Sentenced to 5 Years in Prison

Reverse-Engineered Gift Card Numbers and Stole Balances without ever Possessing the Cards

A 30-year-old man arrested last year in Snohomish County, Washington was sentenced today in U.S. District Court in Seattle to five years in prison and three years of supervised release for his scheme to defraud Target and its customers of more than $700,000, announced U.S. Attorney Brian T. Moran. JEFFERY DOUGLAS MANN, of Marysville, Washington, led a group of five people who used a system to decipher gift card identifying numbers and used them across five western states for fraud. U.S. District Judge James L. Robart ordered MANN to pay more than $214,000 in restitution saying MANN, “is obviously talented and used that talent to break the law… This is not a victimless crime — it impacts real people.”

According to records filed in the case, between May 2017 and December 2017, the ring stole gift card balances worth more than $700,000, and often sold illegally purchased goods or store gift cards for bitcoin on an internet marketplace. The co-conspirators used a formula to reverse-engineer and identify unique bar code numbers of thousands of authentic gift cards sold by Target to legitimate customers. Members of the scheme then used the retailer’s automated customer service telephone system to verify balances linked to the various stolen gift card numbers. They then loaded active gift card numbers onto a mobile or electronic wallet app on their phones, which the co-conspirators used to purchase merchandise and legitimate gift cards at various Target store locations across at least five states: Washington, Oregon, California, Nevada and Colorado. For example, on a single occasion in November 2017, MANN and others used roughly 180 compromised gift card numbers to make $6,900 in purchases at the Southcenter Mall Target store in Tukwila, Washington.

When the actual cardholders later tried to use their gift cards, they discovered that they had zero balance. In December 2017, Target modified its gift card system in response to the fraud, putting an end to the scheme. Target reimbursed customers for their losses.

MANN pleaded guilty to wire fraud in March 2019. Four other defendants have resolved their criminal charges: Corey Mosey was sentenced to 46 months in prison; Joshua Newman was sentenced to 38 months in prison and Derrick Quintana was sentenced to 27 months in prison. Kennady Weston is resolving her case with participation in federal drug court. Those defendants agreed to pay a total of roughly $263,000 in restitution in addition to that ordered from MANN.

The case was investigated by the U.S. Secret Service, with assistance from the Kirkland, Lynnwood, and West Linn (OR) Police Departments, and is being prosecuted by Special Assistant United States Attorney Benjamin Diggs and Assistant United States Attorney Steven Masada.