CONCORD, N.H. - Gary Peter Borak, 50, formerly of the Pelham, New Hampshire area, pleaded guilty Tuesday to one count of tax evasion and two counts of making false statements on tax returns, announced Acting United States Attorney John J. Farley.

         According to court documents and statements made in court, Borak filed a legitimate federal income tax return for 2007 – prepared by his accountant -- that established that he had an outstanding tax debt of more than $50,000. In response to IRS efforts to collect that debt after Borak failed to pay it, Borak engaged in a series of ploys in an attempt to defeat the payment of the tax and the assessment of new income taxes for future tax years.

          Among other things, in 2011, Borak filed an amended return for 2007 and an original, but delinquent, tax return for 2008 in which he made bogus claims that he had large amounts of Original Issue Discount (often abbreviated “OID”) income and large amounts of corresponding withholding from a so-called non-existent “straw man” financial account. He claimed that the withholding not only satisfied his outstanding tax debt from 2007, but also qualified him for large tax refunds. To support his false claims, Borak created fake IRS forms purportedly prepared and issued by a particular bank and sent the IRS volumes of correspondence and other documents containing highly unconventional and meritless claims about the tax laws. Borak persisted in pressing his bogus claims even after the IRS and his accountant told him that they were frivolous. He also attempted to satisfy his tax debt by submitting sham financial instruments to the IRS.

          Borak’s conduct resulted in an actual tax loss to the U.S. Treasury of about $168,147. Including his false claims for refunds that were not paid, Borak intended a tax loss of approximately $1.3 million.

          Borak’s sentencing is scheduled for December 15, 2017.

          This matter was investigated by the Manchester office of Criminal Investigation of the Internal Revenue Service and the Treasury Inspector General for Tax Administration. They were assisted by the Rockingham County and Hillsborough County Sheriff Departments and the Atkinson, Hudson, Salem, and Pelham police departments. The case is being prosecuted by Assistant U.S. Attorneys Seth Aframe and Bill Morse.

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FOR IMMEDIATE RELEASE                                                              ContactELIZABETH MORSE

www.justice.gov/usao/md                                                                        at (410) 209-4811

Greenbelt, Maryland – On September 5, 2017, U.S. District Judge Paul W. Grimm sentenced Christopher Dame, age 51, of Gaithersburg, Maryland, to six months in federal prison, six months home confinement, and three years of supervised release for theft of government property. Dame, a former Visual Information Specialist for the National Institutes of Health’s (NIH) Medical Arts Division, which is located in Bethesda, Maryland, previously pled guilty to stealing NIH property and selling it online without authorization.

The sentence was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Special Agent in Charge Nicholas DiGiulio of the Department of Health and Human Services Office of the Inspector General; and Special Agent in Charge Paul L. Bowman of the U.S. Postal Service Office of Inspector General.

According to admissions made in connection with his guilty plea, Dame was responsible for designing, printing, and displaying decorative and informational materials in NIH buildings, as well as directing his colleagues to place purchase orders of printing ink for the Medical Arts Division. At no point did Dame have authority to remove NIH property from the main campus or sell NIH property.

Dame admitted that from January 3, 2013, through January 12, 2017, he regularly stole medical research equipment, photography equipment, and printing supplies belonging to NIH, and sold such items through an e-commerce corporation. Dame also deceived his colleagues into purchasing surplus ink for NIH, with the intent to ultimately steal the ink which he then sold online for his own benefit. Between 2013 and 2017, Dame stole over 400 items belonging to NIH. As part of his plea agreement, Dame will be required to pay restitution in the full amount of the loss, which is $75,613.14.

Acting United States Attorney Stephen M. Schenning commended the Department of Health and Human Services Office of Inspector General, the United States Postal Service Office of Inspector General, the United States Postal Inspection Service, and the NIH Division of Police for their work in the investigation. Mr. Schenning thanked Assistant U.S. Attorney Michael T. Packard and Trial Attorney Simon J. Cataldo from the Department of Justice, Public Integrity Section, who are prosecuting the case.

United States Attorney Randolph J. Seiler announced that a Rapid City, South Dakota, man convicted of Willful Failure to Collect and Pay Over Tax was sentenced on August 30, 2017, by Chief Judge Jeffrey L. Viken, U.S. District Court. The Defendant was charged on January 30, 2017, and pleaded guilty on February 12, 2017.

Kenneth E. Orrock, age 48, was sentenced to 12 months of imprisonment, ordered to be served on weekends, followed by 3 years of supervised release. He was further ordered to pay a $100 special assessment to the Federal Crime Victims Fund, and $280,257.72 in restitution to the Internal Revenue Service.

During the years 2011 through 2015, Orrock was the sole member of Black Hills Asset Protection Group, LLC, a limited liability company located in Rapid City that offers security-related services in western South Dakota under the trade name “Black Hills Patrol.”

During the same period, Orrock withheld taxes from his employees’ wages, including federal income tax, social security, and Medicare taxes for employees of Black Hills Patrol, and willfully failed to pay over those taxes to the United States. Orrock also willfully failed to pay the employer’s portion of taxes on wages paid to employees during the same period. Rather than paying over the taxes, Orrock used a portion of the withholdings for his own personal use.

Orrock, who was a licensed attorney until recently, served as the Bennett County State’s Attorney until January 2017.

This case was investigated by the Internal Revenue Service Criminal Investigation Division. Assistant U.S. Attorney Kirk Albertson prosecuted the case.

Seventeen people were indicted in federal court for their roles in a conspiracy to purchase large amounts of powder cocaine, cook the drug into crack cocaine and then sell it in and around Medina County, law enforcement officials said.

Indicted in federal court are: Troy Bankhead, 47, of Cleveland; Dona Battle, 44, of Cleveland; William Battle, 45, of Cleveland; Aaron Watson, 31, of Medina; Anthony Patterson, 50, of Columbia Station; Carlos Tripp, 44, of Medina; Dale Lind, 58, of Medina; Douglas Cameron, 48, of Medina; Erica Latten, 29, of Cleveland; Fannie Tripp, 60, of Medina; Felicia Finowski, 49, Columbia Station; Jennifer Cayce, 38, of Medina; Jermaine Tripp, 36, of Medina; John Spickler, 38, of Brunswick; John Wise, 53, of Medina; Michael Powell, 52, of Medina, and Raymel King, 30, of Cleveland.

Twelve other people have been charged state court.

According to the six-count indictment unsealed today:

Bankhead sold large amounts of powder cocaine to Dona Battle between August 2016 and February 2017. Battle then cooked the cocaine into crack cocaine at 26799 Royalton Road, Columbia Station (the residence of Patterson and Finowski), 5651 Columbia Road, Medina (the residence of Cameron and Cayce) and 1406 West 75^th Street, Apartment 3, Cleveland (the residence of Latten).

Dona Battle then sold the crack cocaine to several other dealers, including Watson, Lind, Carlos Tripp, William Battle, Raymel King and Jermaine Tripp, who then sold it to drug users.

Dona Battle used 417 Bronson Street, Apartment A, Medina (the residence of Fannie Tripp) and 997 Substation Road, Brunswick (the residence of Spickler) as drug houses from which he could sell crack and powder cocaine.

Spickler, Latten, Wise, Patterson and Finowski also provided transportation for Battle to obtain crack and powder cocaine for further distribution.

These cases are the result on an 18-month investigation, which was a cooperative effort between the DEA, Ohio Bureau of Criminal Investigation and the Medina County Drug Task Force. The investigation consisted of undercover purchases of drugs, the execution of search warrants, and other investigative techniques.

This investigation resulted in several significant seizures including more than 37 pounds of cocaine, $516,975 in cash, a tractor-trailer, five other vehicles and five firearms.

“This organization used homes and apartments to cook crack cocaine, which it sold in and around Medina,” U.S. Attorney Justin E. Herdman said. “It was a spoke in a larger organization that trafficked a lot of cocaine. These defendants will now be held accountable for their actions.”
 

DEA Special Agent in Charge Timothy J. Plancon said:“Putting a stop to this criminal conspiracy is significant. The seizure of 37 pounds of cocaine and over half a million dollars of drug-dealing proceeds indicates that this group was connected with drug traffickers at the highest levels. Halting their activities makes everyone in the region safer. The efforts of the Medina County Drug Task Force and the Ohio Bureau of Criminal Investigation have been particularly integral to this investigation’s success.”

“I created a specialized unit at the Ohio Bureau of Criminal Investigation to focus on large-scale drug trafficking operations, and we are pleased that we were able to work with local and federal authorities to help bring down this drug trafficking organization,” said Ohio Attorney General DeWine. “These drugs have no place on our streets, and our agents will continue to work diligently to investigate those who are pushing drugs in Ohio.”

“This investigation was initiated by agents from the Medina County Drug Task Force and Cleveland office of the Drug Enforcement Administration,” said Gary Hubbard, director of the Medina County Drug Task Force. “The intent was to address local drug trafficking issues in the city of Medina with a focus on repeat drug trafficking offenders. The hard work and commitment by all of the agents involved resulted in one of the largest drug trafficking investigations and narcotics seizures in Medina County history. This investigation lead to the seizure of the 17 kilos of cocaine, six ounces of heroin and over $500,000 in U.S. currency that was first reported in February 2017. The success of this case was made possible by the longstanding partnerships between the Medina County Drug Task Force, DEA, Ohio Bureau of Criminal Investigation and the many other law enforcement agencies involved.”

This case was investigated by the Drug Enforcement Administration, Ohio Attorney General’s Bureau of Criminal Investigation, Medina County Drug Task Force, Medina County Sheriff’s Office, Medina Police Department, National Guard Intelligence, Ohio State Highway Patrol, Cleveland Division of Police, Cleveland Heights Police Department, Cuyahoga County Sheriff’s Department, Lorain County Drug Task Force, Lake County Narcotics, Akron Police Department, Summit County Drug Unit, Ashtabula County Sheriff’s Office, U.S. Border Patrol and Suburban Police Anti-Crime Network Drug Enforcement Unit, with assistance from the Medina County Prosecutor’s Office. It is being prosecuted by Assistant U.S. Attorney Henry F. DeBaggis.

If convicted, the defendants’ sentences will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violations. In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.

An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that CRAIG CARTON and MICHAEL WRIGHT were arrested this morning and charged with securities fraud, wire fraud, and conspiracy to commit those offenses.

As alleged, CARTON, WRIGHT, and another individual (“CC-1”) worked together to induce investors to provide them with millions of dollars, based on representations that the investor funds would be used to purchase blocks of tickets to concerts, which would then be re-sold on the secondary market. CARTON and CC-1 purportedly had access to those blocks of tickets based on agreements that CC-1 had with a company that promotes live music and entertainment events (the “Concert Promotion Company”) and that CARTON had with a company that operates two arenas in the New York metropolitan area (the “Sports and Entertainment Company”). In fact, neither the Concert Promotion Company nor the Sports and Entertainment Company had any such agreement with CARTON, WRIGHT, or CC-1, or any entity associated with them. After receiving the investor funds, CARTON, WRIGHT, and CC-1 misappropriated those funds, using them to, among other things, pay personal debts and repay prior investors as part of a Ponzi-like scheme.

CARTON and WRIGHT will be presented later today in Manhattan federal court.

Manhattan U.S. Attorney Joon H. Kim said: “As alleged, Craig Carton and Michael Wright deceived investors and raised millions of dollars through misrepresentation and outright lies. Their schemes were allegedly propped up by phony contracts with two companies to purchase blocks of concert tickets, when in fact, Carton and Wright had no deals to purchase any tickets at all. As alleged, behind all the talk, the Wright and Carson show was just a sham, designed to fleece investors out of millions ultimately to be spent on payments to casinos and to pay off other personal debt.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Carton and Wright thought they could get off easy by allegedly paying off their debts with other people’s money. They then attempted to pay off investors with money that would eventually become future debt, as alleged. We see this time and time again, the rise and fall of a Ponzi scheme destined for failure. The truth is, the time will come when your luck runs out. Unfortunately for those arrested today, that time is now.”

According to the Complaint unsealed today Manhattan federal court^[1]:

In the fall of 2016, CARTON, WRIGHT, and CC-1 exchanged emails and text messages regarding their existing debts. On September 5, 2016, for example, WRIGHT emailed CARTON and CC-1, “for the sake of our conversation tomorrow,” and outlined “the debt past due and due next week.” WRIGHT listed several apparent creditors, to whom he, CC-1, and/or CARTON were personally indebted for over a million dollars. WRIGHT listed eight possible options for repaying the debt, including “Run to Costa Rica, change name, and start life all over again – may not be an option.” CARTON responded to WRIGHT and CC-1, stating “don’t forget I have $1m coming tomorrow from ticket investor[.] will need to be discussed how to handle.” On September 7, 2016, CARTON emailed WRIGHT and CC-1, referenced a potential investor (“Investor-1”) in an upcoming holiday concert tour, and suggested “borrow[ing] against projected profits” on that investment.

Later in the fall of 2016, CARTON began negotiating with a hedge fund (the “Hedge Fund”) regarding a transaction in which the Hedge Fund would extend CARTON capital to finance CARTON’s purchase of event tickets, which CARTON would then re-sell at a profit. In early December 2016, CC-1 texted CARTON and WRIGHT and discussed using the Hedge Fund’s capital “to repay debts,” and not for the purchase of tickets.

The next day, December 7, 2016, CARTON emailed the Hedge Fund five agreements between (i) CC-1 and a company controlled by CC-1 (the “CC-1 Entity”) and (ii) the Concert Promotion Company. In each of the purported agreements, the Concert Promotion Company agreed to sell the CC-1 Entity up $10 million worth of tickets to different concert tours. However, as alleged, these agreements were fraudulent and had not, in fact been entered into by the Concert Promotion Company.

The following day, the Hedge Fund and CARTON executed the revolving loan agreement (the “Revolving Loan Agreement”), under which the Hedge Fund agreed to provide CARTON with up to $10 million, for the purpose of funding investments in the purchase of tickets for events. The Revolving Loan Agreement provided, in sum and substance, that the proceeds of the loan would be used only to purchase tickets pursuant to agreements for the acquisition of tickets, including the agreements with the Concert Promotion Company and for limited business expenses. The Hedge Fund would receive a share of the profits from the resale of the tickets.

The Hedge Fund then sent $700,000 to the CC-1 Entity to finance the purchase of tickets pursuant to the agreements between the CC-1 Entity and the Concert Promotion Company. CC-1, however, then sent this money to a bank account controlled by WRIGHT, who then, on December 12, sent $200,000 to CARTON’s personal bank account (the “CARTON Bank Account”), which CARTON then wired to a casino. Also on December 12, WRIGHT sent another $500,000 to an individual who had previously lent CARTON $500,000, which was due to be repaid that day.

Later in December 2016, the Hedge Fund sent an additional $1.9 million to the CC-1 Entity, to finance the purchase of tickets pursuant to agreements between the CC-1 Entity and the Concert Promotion Company. Once again, the Concert Promotion Company had not entered into any such agreements. CC-1, WRIGHT, and CARTON engaged in text messages regarding the disposition of these funds. Some of the money was used by CC-1 to repay two individuals who had previously invested with CC-1 in a related scheme involving the purported investment in the resale of tickets, and by CARTON to pay casinos and to pay Investor-1 a purported return on an earlier investment in a ticket-related venture.

CARTON also induced the Hedge Fund to wire $2 million to the Sports and Entertainment Company, based purportedly on an agreement he had with the Sports and Entertainment Company (the “Sports and Entertainment Company Agreement”). The Sports and Entertainment Company Agreement purportedly gave an entity controlled by CARTON (the “CARTON Entity”) the right to purchase $2 million of tickets to concerts at one of the venues operated by the Sports and Entertainment Company. CARTON, among other things, sent the Hedge Fund a copy of the Sports and Entertainment Company Agreement that purportedly had been signed by the chief executive officer of the Sports and Entertainment Company. However, this agreement was fraudulent and had never been entered into by the Sports and Entertainment Company or signed by the chief executive officer.

On December 20, 2016, when the Hedge Fund wired the $2 million to the Sports and Entertainment Company, CARTON contacted the Sports and Entertainment Company and told them, in sum and substance, that the wire had been sent in error and should be sent to the bank account for an entity operated by CARTON and WRIGHT, for which WRIGHT is the signatory. After the money was rewired to that account, WRIGHT wired $966,000 to WRIGHT’s personal bank account and $700,000 to the CARTON Bank Account. CARTON then wired approximately $188,000 from the CARTON Bank Account, including at least $133,000 in wires to several casinos.

* * *

CARTON, 48, of New York, New York, and WRIGHT, 41, of Upper Saddle River, New Jersey, are each charged with one count of conspiracy to commit securities fraud and wire fraud, one count of wire fraud, and one count of securities fraud. The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Kim praised the investigative work of the FBI and thanked the Boston Regional Office of the U.S. Securities and Exchange Commission, which has filed civil charges against CARTON and CC-1 in a separate action. He added that the FBI’s investigation is ongoing.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brendan F. Quigley and Elisha J. Kobre are in charge of the prosecution.

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

STATESVILLE, N.C. – U.S. District Judge Richard L. Voorhees handed down yesterday lengthy prison terms to five methamphetamine traffickers, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

Carlos Antonio Flores, 34, of El Salvador, was sentenced to life in prison; Randy Lee Bivens, 35, of Hickory, N.C. was sentenced to 169 months in prison and five years of supervised release; Franklin Martinez Hernandez, 46, of Mexico was sentenced to 135 months in prison and five years of supervised release; Jerico Nathaniel Chapman, 29, of Valdese, N.C. was sentenced to 130 months in prison and five years of supervised release; and Nathan Ray Bumgarner, 55, of Connelly Springs, N.C. was sentenced to 130 months in prison and five years of supervised release.

According to court documents and yesterday’s sentencing hearings, the drug conspiracy was responsible for trafficking more than 15 kilograms of crystal methamphetamine, with a street value of approximately $1.5 million. Flores and Hernandez had leadership roles within the drug ring. According to evidence presented at Flores’s trial, law enforcement officials seized one kilogram of 96% pure crystal methamphetamine which Flores was transporting hidden in a box of cat litter.

All of the defendants were charged as part of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation. According to court documents, since 2015, more than 170 individuals have been prosecuted as a result of the investigation. Court records show that the members of the drug trafficking organizations involved have trafficked several millions worth of methamphetamine. Over the course of the investigation, law enforcement seized more than 20 kilograms of crystal methamphetamine, $500,000 in U.S. currency and other assets, and dozens of firearms.

OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

In making today’s announcement U.S. Attorney Rose thanked ICE-Homeland Security Investigations (HSI); the Charlotte Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; the North Carolina State Bureau of Investigation; the North Carolina State Highway Patrol; the Boone Police Department; the Hickory Police Department; the Mooresville Police Department; the Wilkesboro Police Department; the Caldwell County Sheriff’s Office; the Catawba County Sheriff’s Office; the Iredell County Sheriff’s Office; the Wilkes County Sheriff’s Office; and the Burke County Sheriff’s Office for their investigative efforts.

The prosecution is being handled by Assistant U.S. Attorney (AUSA) Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte. Carlos Flores’s trial was conducted by Assistant U.S. Attorneys Steven R. Kaufman and Sanjeev Bhasker.

A 33-count superseding indictment was unsealed today in United States District Court for the Eastern District of New York charging six defendants with new racketeering predicate acts including assault in aid of racketeering, arson, extortion and unlawful firearms dealing.  Five of the defendants are in custody and one—Viktor Zelinger—remains at large. Defendant Artiom Pocinoc was arrested yesterday and will be arraigned this afternoon before United States Magistrate Judge James Orenstein in federal court in Brooklyn. Defendant Vyacheslav Malkeyev, who previously pled guilty to marijuana distribution conspiracy as charged in the original indictment, was rearrested yesterday on new charges and will be also be arraigned before Judge Orenstein. 

The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), Angel M. Melendez, Special Agent-in-Charge, Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI), James D. Robnett, Special Agent-in-Charge, Criminal Investigation Division, Internal Revenue Service (IRS-CID), James P. O’Neill, Commissioner, New York City Police Department (NYPD) and George Beach, Superintendent, New York State Police (NYSP).  The arrests resulted from a long-term investigation by the DEA’s New York Organized Crime Drug Enforcement Strike Force.[1]  Ms. Rohde also thanked the New York City Fire Department for its investigation of the arson and its heroic efforts in rescuing the residents.

 As alleged in the superseding indictment and other court documents filed by the government, the defendants were members of an Eastern European organized crime syndicate that operated in the Brighton Beach and Coney Island neighborhoods of Brooklyn, as well as overseas.  Syndicate members in Brooklyn were linked to high-level members of organized crime, known as “thieves in law” or “Thieves,” based in various former states of the Soviet Union and Israel.  The Thieves helped the defendants extort money from individuals living abroad and authorized the use of physical force by the defendants in the United States.    

Defendants Zelinger, Malkeyev, Leonid Gershman and Aleksey Tsvetkov are charged with crimes related to the arson of a residential building at 2220 Voorhies Avenue in Brooklyn.  The defendants—who allegedly operated an illegal high-stakes poker game at 2663 Coney Island Avenue—conspired to burn down the Voorhies building because it housed a rival poker game on the ground floor.  The second and third floors of the building contained residences.

As alleged, shortly after 1:00 a.m. on May 2, 2016, members of the Syndicate broke into the building and set fire to it.  The building quickly went up in flames, leaving two  residents trapped in a third-floor apartment.  Their rescue by New York City Fire Department firefighters was recorded on amateur video.  The footage shows a firefighter climbing a ladder through dense smoke to pull the trapped teens out of a window and down the ladder to safety.  Both residents and five firefighters were injured in the fire, with one firefighter suffering burns to his face.  The building, and every apartment inside it, were destroyed.

Gershman, Tsvetkov and Malkeyev are charged with other crimes of violence, including the pistol-whipping and beating of an individual suspected of stealing from a narcotics “stash” house operated by members of the Syndicate.  Violence and threats of violence were also a key feature of the extortion-related crimes committed by Gershman, Tsvetkov and Pocinoc.   Court filings quote Gershman on a recorded telephone call describing Pocinoc to a victim as a “boxer with cauliflower ears” who would be collecting the victim’s payments.  Pocinoc is also charged with participating in the beating of a victim and with extorting two others.  Gershman is also charged with illegally selling one or more firearms to two buyers between 2008 and 2013. 

Three of the defendants—Zelinger, Gershman and Malkeyev—are naturalized U.S. citizens who immigrated to the United States from Eastern European countries.  Tsvetkov is a citizen of Ukraine, Pocinoc is a citizen of Moldova, and Rivera is a U.S. citizen by birth.

The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted of all counts, Zelinger faces a mandatory minimum sentence of 17 years’ imprisonment and a maximum sentence of 40 years;  Gershman, Tsvetkov and Malkeyev face a mandatory minimum sentence of 27 years’ imprisonment and a maximum term of life; Librado Rivera faces a mandatory minimum of five years’ imprisonment and a maximum term of 40 years; and Pocinoc faces a maximum sentence of 20 years’ imprisonment.

Five other defendants charged previously in this case have entered pleas of guilty to racketeering and related crimes. 

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Matthew J. Jacobs and Andrey Spektor are in charge of the prosecution.

The Defendants:

VIKTOR ZELINGER, also known as “Vitya” and “Vityok”

Age: 38

Residence: Brooklyn, New York

LEONID GERSHMAN, also known as “Lenny,” “Lenny G.,” “Lyonchik” and “Lyonya”

Age: 34

Residence: Brooklyn, New York

ALEKSEY TSVETKOV, also known as “Pelmin,” “Lesha” and “Lyosha”

Age: 39

Residence: Brooklyn, New York

VYACHESLAV MALKEYEV, also known as “Steve Bart”

Age: 33

Residence: Manhattan, New York

ARTIOM POCINOC

Age: 28

Residence: Brooklyn, New York

LIBRADO RIVERA, also known as “Macho” and “Max”

Age: 36

Residence: Brooklyn, New York

E.D.N.Y. Docket No. 16-CR-553 (BMC)

TRENTON, N.J. – A Farmingdale, New Jersey, man was arrested and charged today with defrauding investment clients out of more than $1.8 million, Acting U.S. Attorney William E. Fitzpatrick announced.

Scott Newsholme, 42, is charged by criminal complaint with one count each of mail fraud, wire fraud, and securities fraud. He was arrested by FBI and IRS special agents this morning and will appear later this afternoon before U.S. Magistrate Judge Tonianne J. Bongiovanni in Trenton federal court.

According to the complaint:

Since 2002, Newsholme owned and operated at least three different financial advisory and tax return preparation businesses. Between 2007 and 2016, Newsholme recommended to multiple clients that they invest their money with him, which he would use on their behalf to purchase various securities, including bond instruments issued by a private New Jersey country club, a bond investment in a video-game production company, and investments in the production of a movie. Newsholme also represented to clients that he would invest their money in more traditional securities, including mutual funds, annuities, life insurance policies, college education accounts, and money market funds.

Newsholme directed his investment clients to write checks to him or one of his companies so that he could execute the investments on their behalf.

However, rather than invest them as promised, Newsome used the funds for personal expenses, including multiple vehicles, bedroom furniture, debits at casinos, bank transfers to Newsholme’s personal bank accounts, and ATM withdrawals. In many cases, the investments that Newsholme recommended did not even exist.

In addition, Newsholme concealed his scheme by diverting incoming investment funds to pay other clients who had requested to withdraw funds from their investment portfolios. Newsholme also provided his clients phony account statements, security instruments, and other documentation showing the purported investments made on his clients’ behalf. Overall, Newsholme’s alleged scheme caused investment losses of over $1.8 million.

The mail and wire fraud counts each carry a maximum potential penalty of 30 years in prison and a $1 million fine. The securities fraud count carries a maximum potential penalty of 20 years in prison and $5 million fine.

In a separate civil action, the U.S. Securities and Exchange Commission (SEC) today filed a complaint against Newsholme in Trenton federal court.

Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, Newark Division, Red Bank Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher, and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation. He also thanked the SEC’s New York Regional Office, under the direction of Andrew Calamari, and the N.J. Bureau of Securities, under the direction of Bureau Chief Christopher Gerold, for their assistance.

The government is represented by Assistant U.S. Attorney J. Brendan Day of the U.S. Attorney’s Office’s Criminal Division in Trenton.

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

If you believe you are a victim of or otherwise have information concerning this alleged scheme, you are encouraged to contact the FBI at 973-792-3000.

Defense Counsel: Gregory E. Tomczak Esq., Scottsdale, Arizona

CAMDEN, N.J. – A Monmouth County, New Jersey, man was sentenced today to 36 months in prison for conspiring to defraud 76 victims of more than $4 million and evaded paying more than $273,000 in taxes, Acting U.S. Attorney William E. Fitzpatrick announced.

Peter Zuck, 67, of Middletown, New Jersey, previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez to an information charging him with one count of conspiracy to commit wire fraud and four counts of tax evasion. Judge Rodriguez imposed the sentence today in Camden federal court.

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

Zuck was a co-founder of Osiris Partners LLC and Osiris Partners Fund Limited. Starting in 2009, Zuck was employed in a management role with Osiris Partners LLC and Osiris Partners Fund Limited, including as a managing member and portfolio manager of the fund. Between June 2009 and November 2011, Osiris Fund Limited Partnership solicited 76 investors to invest $12 million in the Fund. Zuck, Michael Spak, who previously pleaded guilty to one count of conspiracy to commit wire fraud for his role in the scheme, and other conspirators defrauded investors by concealing investments losses in the fund, misappropriating assets from the fund for their own personal use, and obtaining management fees based on a fraudulently inflated net asset value.

Zuck admitted that members of the Osiris Fund Limited Partnership diverted $4 million in investors’ funds from the fund and fraudulently drew $3.9 million in management fees to which they were not entitled.

Zuck also admitted that he was issued $1.3 million in checks in connection with his employment at Osiris Partners LLC and Osiris Fund Limited Partnership, which he used to pay for personal expenditures but which he did not report as income to the IRS. Instead, Zuck concealed his income by causing the checks to be deposited in an account that he controlled but that was in his son’s name and falsely assigning the income to his son on IRS forms. He admitted that he attempted to evade $273,417 in income tax.

In addition to the prison term, Judge Rodriguez sentenced Zuck to three years of supervised release. Restitution will be determined at a later date.

Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher, and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Elaine K. Lou, David M. Eskew, and Shirley Emehelu of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Tim Anderson Esq., Red Bank

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Carl J. Kotowski, the Special Agent-in-Charge of the New Jersey Division of the Drug Enforcement Administration (“DEA”), announced that MAURICE MALIN pled guilty today before U.S. Magistrate Judge Andrew J. Peck to conspiring to illegally sell over 5 million prescription Butalbital pills to customers across the United States who did not have valid prescriptions for the drugs. MALIN also agreed today to forfeit $9 million to the United States, which represented his proceeds from the illegal scheme. MALIN’s case is before U.S. District Judge Kimba M. Wood.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As Maurice Malin admitted today in court, he made millions of dollars illegally dispensing drugs over the Internet to customers who had no valid prescriptions and had never seen a doctor. Pharmacists entrusted with the sale of controlled substances must safeguard the health of consumers, not scheme to profit from illegal drug sales.”

DEA Special Agent-in-Charge Carl J. Kotowski said: “Unfortunately, this is another example of a pharmacist who was more interested in making fast money than he was in helping the public. His actions help to erode the public’s trust in those in positions of responsibility.”

According to the allegations contained in the Complaint and the Information filed against MALIN and statements made in court filings and proceedings, including at today’s guilty plea:

MAURICE MALIN, the defendant, was a licensed pharmacist who operated pharmacies in the Bronx, New York (the “Malin Pharmacies”). Between at least March 2014 and July 2016, MALIN engaged in a scheme to dispense Butalbital, a Schedule III controlled substance, to customers who had not consulted with a physician and did not possess a valid prescription for the drug. Specifically, customers ordered Butalbital pills by filling out online medical questionnaires that typically posed a series of “yes” or “no” questions (the “Prescription Websites”). Customers ordered the drugs on the Prescription Websites without ever seeing or speaking to a physician or medical practitioner and without obtaining a valid prescription.

After the orders were placed by customers on the Prescription Websites, these orders were then sent to pharmacies, including the Malin Pharmacies, that dispensed the prescription drugs to customers. The Malin Pharmacies filled the prescriptions for customers who had placed orders via the Prescription Websites, and then sent the drugs, specifically Butalbital, through the mail to customers located across the United States. Customers paid for the drugs by, among other means, money orders made out to business entities associated with the Malin Pharmacies and MALIN.

During the course of the investigation, undercover agents made numerous purchases of Butalbital on the Prescription Websites that were fulfilled by the Malin Pharmacies. In certain instances, MALIN’s name was listed as the fulfilling pharmacist on the Butalbital bottles agents received. In addition, many of the bottles that were received as a result of the undercover buys did not bear the name of any doctor who had prescribed the Butalbital, and instead repeated the name of the patient in the location on the label where the doctor’s name should have appeared had there been a valid prescription. MALIN was also captured on recorded phone calls with undercover agents acknowledging that he was aware that customers who placed orders on the Prescription Websites had not met with or consulted with a physician prior to placing their online order.

MALIN was arrested on August 10, 2016.

* * *

MALIN, 83, of Suffern, New York, pled guilty today to conspiring to distribute and possess with the intent to distribute a controlled substance, which carries a maximum term of 10 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. MALIN’s sentencing date will be set by Judge Wood. In connection with his guilty plea, MALIN agreed to forfeit to the United States $9 million and certain specific property including funds in bank accounts and real property representing the proceeds of the scheme.

Mr. Kim praised the outstanding work of the DEA New Jersey Division in the investigation and thanked the U.S. Postal Inspection Service and the U.S. Food and Drug Administration for their assistance.

The case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Drew Skinner and Noah Solowiejczyk are in charge of the prosecution. Assistant U.S. Attorney Noah Falk of the Office’s Money Laundering and Asset Forfeiture Unit is in charge of the forfeiture aspects of the case.

          WASHINGTON - The U.S. Department of Justice announced today that it has reached a settlement with the owners and manager of three Edmonds, Washington apartment buildings to resolve a lawsuit filed earlier this year alleging that those landlords refused to rent their apartments to families with children, in violation of the Fair Housing Act.

          “The Fair Housing Act prohibits apartment owners and managers from denying housing to families because they have children,” said Acting Assistant Attorney General John M. Gore of the Justice Department’s Civil Rights Division. “We will continue to vigorously enforce the Fair Housing Act’s prohibition of discrimination against families with children.”

          “Equal access to housing is essential for all Americans, including families with young children,” said U.S. Attorney Annette L. Hayes of the Western District of Washington. “Particularly in our tight housing market, landlords must follow the law and make units available without discrimination based on race, color, religion, sex, national origin, disability or familial status.”
 

          “No family should be denied a place to live simply because they have a child,” said Anna Maria Farias, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD will continue to work with the Justice Department to ensure that property owners comply with their obligations under the nation’s fair housing laws.”

          The three apartment buildings that are the subject of the settlement are located at 201 5^th Ave. N., 621 5^th Ave. S., and 401 Pine Street in Edmonds, Washington. They are owned and managed by defendants Debbie A. Appleby, Apple One, LLC, Apple Two, LLC, and Apple Three, LLC, of Stanwood, Washington. Under the settlement, the defendants will:

• Pay a total monetary settlement of $95,000, comprised of:

$35,000 in damages to a family that they turned away because the family had a small child;

$35,000 that will be used to compensate other families that were harmed by defendants’ practices; and

$25,000 as a civil penalty to the United States;

• Adopt non-discriminatory policies and practices that ensure compliance with Fair Housing Act; and

• Submit to record keeping and monitoring requirements for the three-year period of the settlement agreement.

          Today’s settlement resolves a complaint filed by the department in March 2017 which alleged that in March 2014 defendant Appleby told a woman seeking an apartment for herself, her husband and their one-year-old child that the apartment buildings were “adult only.” The complaint also alleged that defendants advertised their apartments as being in “adult buildings.” The family filed a complaint with the U.S. Department of Housing and Urban Development (“HUD”), which conducted an investigation, issued a charge of discrimination against the defendants, and referred the case to the Justice Department

          Any individuals who believe they were discriminated against by the defendants because they have children should contact the Civil Rights Division at 1-800-896-7743, Option 96.

          The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the civil rights laws it enforces is available at www.usdoj.gov/crtandhttps://www.justice.gov/usao-wdwa/civil-rights. Individuals who believe that they have been victims of housing discrimination may call the Justice Department at 1-800-896-7743, email the Justice Department at fairhousing@usdoj.gov, or contact HUD at 1-800-669-9777 or through its website at www.hud.gov.
 

          The case is being jointly handled by Trial Attorney Kathryn Legomsky for the Civil Rights Division for the U.S. Department of Justice, and Assistant United States Attorney and Civil Rights Program Coordinator J. Michael Diaz, for the United States Attorney’s Office for the Western District of Washington.

St. Louis, MO - William “Chuckie” Clarett was sentenced to 120 months in prison after having been found guilty of conspiracy to commit murder for hire.

According to court documents, on April 22, 2015, Travis Hayden was murdered in Berkeley, MO. A witness identified William Clarett, a/k/a “Chuckie” as the shooter. That same day, the witness gave a written statement to police and picked Clarett out in a photospread. On December 31, 2015, investigators arrested Clarett for the murder of Travis Hayden. A complaint was issued on January 1, 2016, charging Clarett with Murder 1st Degree and Armed Criminal Action. Clarett was detained at the St. Louis County Justice Center.

On February 10, 2016, the witness testified before a grand jury in St. Louis County and the Grand Jury returned a true bill on the murder and ACA counts. The witness’ name and address were publicly disclosed in connection with the indictment. While Clarett was detained in the Justice Center on the murder, Clarett began talking to an inmate that he knew from the neighborhood. The inmate advised authorities that Clarett was asking him to help find someone to kill the witness. ATF then arranged to have an Undercover Officer (UC) pose as a potential hitman. Between June 14, 2016 and June 30, 2016, Clarett spoke to UC six times over the phone about killing the witness. On July 1, 2016, Clarett met with UC at the Justice Center and told him he would provide UC with the down payment for the murder. Thereafter, Clarett released $500 from his commissary which was later given to the UC along with the photograph of the witness.

Clarett, 34, Berkeley, MO, was convicted in May to one count of conspiracy to commit murder for hire, and appeared today for sentenced before United States District Judge Audrey Fleissig.

This case was investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives and the Cottleville Police Department.