Former Arkansas State Senator And Consultant Convicted For Bribery Scheme

  Former Arkansas State Senator and an Arkansas consultant have been convicted for a bribery scheme in which state funds were directed to non-profit entities in exchange for kickbacks funneled through the consultant’s business, announced Duane (DAK) Kees, United States Attorney for the Western District of Arkansas and Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division.

Jonathan E. Woods, 40, of Springdale, Arkansas, was convicted of one count of conspiracy to commit honest services mail and wire fraud in violation of Title 18 U.S.C. §  1349, twelve counts of honest services wire fraud, one count of honest services mail fraud and one count of money laundering.  Randell G. Shelton Jr., 38, of Alma, Arkansas, was convicted of one count of conspiracy to commit honest services mail and wire fraud in violation of Title 18 U.S.C. §  1349, ten counts of honest services wire fraud and one count of honest services mail fraud. 

“Jonathan Woods abused his position as an Arkansas State Senator by soliciting and accepting kickbacks and Randall Shelton covered it up by funneling the kickbacks through his consulting company,” said Acting Assistant Attorney General Cronan. “The Criminal Division is committed to preserving the public’s confidence in our government by investigating and prosecuting corrupt public officials and those that help them conceal their crimes.” 

“Abuse of the public trust cannot be tolerated and must be met with severe consequences.” said U.S. Attorney Kees. “I hope this verdict serves as a warning to all those that have been entrusted with serving the people.”

According to the evidence presented at trial, Woods served as an Arkansas State Senator from 2013 to 2017.  Between approximately 2013 and approximately 2015, Woods used his official position as a senator to appropriate and direct government money, known as General Improvement Funds (GIF), to two non-profit entities by, among other things, directly authorizing GIF disbursements and advising other Arkansas legislators – including former State Representative Micah Neal, 43, of Springdale, Arkansas, to contribute GIF to the non-profits.  Specifically, Woods and Neal authorized and directed the Northwest Arkansas Economic Development District, which was responsible for disbursing the GIF, to award a total of approximately $600,000 in GIF money to the two non-profit entities.  The evidence further showed that Woods and Neal received bribes from officials at both non-profits, including Oren Paris III, 49, of Springdale, Arkansas, who was the president of a college.  Woods initially facilitated $200,000 of GIF money to the college and later, together with Neal, directed another $200,000 to the college, all in exchange for kickbacks.  To pay and conceal the kickbacks to Woods and Neal, Paris paid a portion of the GIF to Shelton’s consulting company.  Shelton then kept a portion of the money and paid the other portion to Woods and Neal.  Paris also bribed Woods by hiring Woods’s friend to an administrative position at the college. 

For his part in the scheme, Neal pleaded guilty on Jan. 4, 2017, before U.S. District Judge Timothy L. Brooks of the Western District of Arkansas to one count of conspiracy to commit honest services fraud.  Paris pleaded guilty on April 5, 2018, before Judge Brooks to one count of honest services wire fraud.  Sentencings will be scheduled at a later date.

The FBI and IRS investigated the case.  

President Of Park Avenue Art Gallery In Manhattan Pleads Guilty To Defrauding Art Dealers And Collectors Of Millions Of Dollars Of Artwork

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that EZRA CHOWAIKI pled guilty today to defrauding art dealers and collectors out of millions of dollars by entering into fraudulent agreements with these dealers and collectors to buy or sell artwork through his Manhattan art gallery (the “Gallery”), and using these dealers’ and collectors’ funds and artwork for unauthorized purposes, such as to repay other dealers to whom CHOWAIKI had outstanding debts.

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today in federal court, Ezra Chowaiki ran a multimillion-dollar fraud on art dealers and collectors around the country.  In some instances, Chowaiki sold artwork, purportedly on consignment, without the owners’ authorization.  In other instances, he took money from clients purportedly to purchase artwork, and kept the money but purchased no art.  This Office is committed to holding the perpetrators of such fraud responsible and returning these valuable works of art to their rightful owners.”

According to the allegations contained in the Information and other documents filed in federal court, as well as statements made in public court proceedings:

Until November 2017, EZRA CHOWAIKI was the president and the minority owner of a private art gallery located on Park Avenue in New York, New York (the “Gallery”).  CHOWAIKI founded the Gallery in or about 2004, and since that time, CHOWAIKI has used the Gallery to facilitate the purchase, sale, and consignment of works of fine art, as well as for the hosting of various art exhibitions featuring works of art and sculptures by well-known artists such as Pablo Picasso, Alexander Calder, Marc Chagall, Edgar Degas, and others.  CHOWAIKI lost control of the Gallery in or about November 2017 when the Gallery filed for bankruptcy and was taken over by a trustee to oversee its liquidation.

Between at least in or about 2015 and 2017, through the Gallery, CHOWAIKI engaged in a scheme to deceive other dealers and collectors of fine artwork into sending him money or valuable artwork under the false pretenses that CHOWAIKI would engage in legitimate transactions such as the purchase, sale, or consignment of these and other artworks.  In truth, however, CHOWAIKI did not, and often could not, conduct the transactions as promised, and instead kept funds and artwork for himself and the Gallery, or sold or consigned them to others both in and outside the United States, without authorization.  Through these fraudulent transactions, CHOWAIKI fraudulently transferred over $16 million of artwork.

CHOWAIKI, 49, of Brooklyn, New York, pled guilty to one count of wire fraud.  That offense carries a maximum prison term of 20 years.  The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

CHOWAIKI is scheduled to be sentenced on September 12, 2018, at 4:00 p.m.  

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation (“FBI”).  To date, the FBI has seized millions of dollars of artwork that was fraudulently transferred through CHOWAIKI’s scheme.  Any person who believes he or she is a victim of this crime is encouraged to send an email to NYArtCrime@fbi.gov

Three Men Arrested For Scheme To Defraud Elderly Victims In The Sale Of Worthless Stock

Vladimir Ziskind, a/k/a “Mike Palmer,” Keith Orlean, a/k/a “Jack Allen,” and Kevin Weinzoff, a/k/a “Mike Palmer,” Solicited Stock Purchases from Elderly Victims Using Fake Names, False Information, and Bogus Promises of High Returns

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrests of VLADIMIR ZISKIND, a/k/a “Mike Palmer,” KEITH ORLEAN, a/k/a “Jack Allen,” and KEVIN WEINZOFF, a/k/a “Mike Palmer,” and unsealing of a criminal complaint charging ZISKIND,  ORLEAN, and WEINZOFF with conspiracy, securities fraud, and wire fraud in connection with their scheme to target elderly persons to solicit purchases of stock in a series of valueless companies through a variety of lies and misrepresentations.  The defendants are expected to be presented this afternoon before U.S. Magistrate Judge Debra Freeman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants worked together over several years to trick elderly individuals into investing millions of dollars in worthless stock.  The defendants allegedly deceived their victims into handing over their hard-earned money in exchange for nothing but lies and false promises.  Today’s arrests demonstrate that this profoundly harmful and cynical alleged conduct will not be tolerated.”

FBI Assistant Director William F. Sweeney Jr. said:  “We take all cases of securities fraud seriously, but there are few fraud schemes sleazier than defrauding elderly victims through deceit and manipulation.  The defendants allegedly solicited more than $2 million in stock purchases from their more than four dozen victims.  While nothing could restore the damage that has already been done, today we begin the process of holding those charged accountable for their actions.”

According to the allegations in the Complaint filed today in Manhattan federal court:[1]

For several years, the defendants operated a fraudulent scheme in which a salesman named “Mike Palmer” would call elderly persons on the phone and offer them what he claimed was a time-sensitive opportunity to buy stock in certain companies.  In fact, there was no “Mike Palmer,” and the salesman was actually VLADIMIR ZISKIND or KEVIN WEINZOFF, who were taking turns using the fake alias.  The purported time-sensitive investment opportunity was also fabricated by the defendants, as the companies in which they solicited investments were actually companies under their control.  In one intercepted phone call conversation, ZISKIND described to KEITH ORLEAN his strategy for a successful investor sales pitch as: “You ram it down their fucking throat.”  In another intercepted call between ZISKIND and ORLEAN, upon learning that a particular victim investor died, ZISKIND remarked:  “I knew I should have pulled the last $10,000 out of him.”   

The most recent version of the defendants’ phony sales pitch included false representations about an impending initial public offering, or “IPO,” for their company, Digital Donations Technologies, Inc.  For example, in April 2018, one of the defendants assured a victim investor that “our company is doing great,” that the company had an offer for an IPO valued at approximately $300 million, and that defendant KEITH ORLEAN was considering a private sale of the company for more than $1.5 billion. In truth, however, the defendants knew that the company had little or no actual commercial value and that no such IPO or sale was taking place.   

The FBI estimates that since April 2014, the defendants have convinced more than approximately 50 elderly persons to purchase stock in companies controlled by one or more of the defendants based on false representations.  The defendants appear to have solicited more than $2 million in stock purchases from victims.

ZISKIND, 49, of Brooklyn, New York, ORLEAN, 60, of Dix Hills, New York, and WEINZOFF, 53, of Brooklyn, New York, are each charged with one count of conspiracy to commit securities fraud, one count of securities fraud, one count of conspiracy to commit wire fraud, and one count of wire fraud.  The securities fraud, wire fraud, and wire fraud conspiracy counts each carry a maximum penalty of 20 years in prison.  The conspiracy to commit securities fraud count carries a maximum penalty of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding work of the FBI.

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

 [1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation. 

Hector Rivera Sentenced To Life In Prison Plus 25 Years For Ordering 2004 Murder Of Jeweler In Midtown Manhattan

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that HECTOR RIVERA was sentenced today to life in prison plus 25 years for murder-for-hire, murder-for-hire conspiracy, and use of a firearm resulting in death, in connection with his role in ordering the 2004 murder of Eduard Nektalov, a Manhattan diamond dealer.  RIVERA was convicted following a six-day trial in November 2017 before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “Hector Rivera ordered the execution-style murder of Eduard Nektalov, who was brazenly gunned down on a crowded street in midtown Manhattan nearly 14 years ago.  Thanks to the extraordinary work of our law enforcement partners, Rivera will now spend the rest of his life in prison.”

According to the allegations in the Indictment and the evidence presented in court during the trial:

RIVERA was the leader of a violent robbery crew that operated in the Diamond District in midtown Manhattan.  In 2004, RIVERA commissioned the murder of Eduard Nektalov because of a business dispute between Nektalov and one of RIVERA’s criminal associates.  During the evening rush hour on May 20, 2004, a hitman hired by RIVERA followed Nektalov from his jewelry store on West 47th Street.  Less than a block from the store, the hitman shot Nektalov once in the head and twice in the back, in the middle of a crowded sidewalk on Sixth Avenue.  Nektalov was pronounced dead within 20 minutes of the shooting.  RIVERA paid the hitman and another participant a combined total of $30,000 to carry out the murder.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and the New York City Police Department. He also thanked the Manhattan District Attorney’s Office and the Bronx District Attorney’s Office for their assistance with the prosecution.  

Comptroller Stringer Report: NYC Renters Paid an Additional $616 Million in 2016 Due to Airbnb

Stringer report finds Airbnb responsible for nearly 10 percent of citywide rental increase between 2009 and 2016

Tenants in Murray Hill, Gramercy, Stuyvesant Town, Williamsburg, and Greenpoint pay an average of more than $100 per month in additional rent due to Airbnb listings

Airbnb exacerbating NYC’s affordability crisis

  In the midst of an affordability crisis fueled by rising rents, a new report released by New York City Comptroller Scott M. Stringer found renters citywide paid a whopping $616 million in additional rent in 2016 due to the exponential growth of Airbnb listings. The new analysis sheds light on how Airbnb listings, particularly in neighborhoods where they are most heavily concentrated, exacerbate New York City’s affordability challenges and make it harder for working- and middle-class families to make ends meet.

Comptroller Stringer’s groundbreaking report – the first that’s empirically estimated a monetary impact on New Yorkers due to Airbnb’s rapid growth – shows how tenants in neighborhoods from Chelsea to Bushwick have seen their rents skyrocket in no small measure because of the heavy concentration of Airbnb listings in their communities. Comptroller Stringer’s report drills down to the neighborhood level and analyzes data for the years 2009 to 2016. Among the Comptroller’s findings:

• Airbnb listings were heavily concentrated in parts of Manhattan and Brooklyn and had a greater impact on these neighborhoods. Approximately 20% of the increase in rental rates was due to Airbnb listings in midtown and lower Manhattan, including neighborhoods such as Chelsea, Clinton, and Midtown Business District; Murray Hill, Gramercy, and Stuyvesant Town; Chinatown and Lower East Side; Battery Park City, Greenwich Village, and Soho.
• In aggregate, New York City renters had to pay an additional $616 million in 2016 due to price pressures created by Airbnb, with half of the increase concentrated in the neighborhoods highlighted above;
• For each one percent of all residential units in a neighborhood listed on Airbnb, rental rates in that neighborhood went up by 1.58 percent.
• Between 2009 and 2016, approximately 9.2 percent of the citywide increase in rental rates can be attributed to Airbnb.

“For years, New Yorkers have felt the burden of rents that go nowhere but up, and Airbnb is one reason why. From Bushwick to Chinatown and in so many neighborhoods in-between, affordable apartments that should be available to rent never hit the market, because they are making a profit for Airbnb,” said New York City Comptroller Scott M. Stringer. “Airbnb has grown exponentially at the expense of New Yorkers who face rising rents and the risk of being pushed out of communities they helped build. If we’re going to preserve the character of our neighborhoods and expand our middle class, we have to put people before profits. It’s that simple.”

New Yorkers have been squeezed by rapidly rising rents, which rose 25% on average citywide between 2009 and 2016, or $279 per month. Rents rose most rapidly in Brooklyn, by 35% ($340 per month) followed by Queens by 22% ($242 per month); The Bronx by 21% ($171 per month); Manhattan by 19% ($276 per month); and Staten Island by 14% ($129 per month).

During the same period, Airbnb listings skyrocketed, from 1,000 in 2010 to over 43,000 in 2015, before declining to slightly under 40,000 in 2016 according to data from AirDNA – most in violation of existing State or City laws.

Airbnb listings are most heavily concentrated in Manhattan, which accounted for 52% of all listings in 2016, and Brooklyn, with 35% of all listings in 2016, but are found in every borough. In 2016, Airbnb listings are particularly concentrated in Manhattan below 59th Street and in parts of Brooklyn, including:

• Chelsea, Clinton and Midtown Business District – 11.3% of citywide listings;
• Battery Park City, Greenwich Village and Soho – 7.9%;
• Chinatown and Lower East Side – 6.9%;
• Murray Hill, Gramercy and Stuyvesant Town – 5.9%;
• Greenpoint and Williamsburg – 8.3%;
• Bedford-Stuyvesant – 5.1%;
• Bushwick – 5.0%.

Airbnb Driving up Rents

The share of Airbnb listings ballooned to 4.1% of all residential units in the Chelsea, Clinton and Midtown Business District neighborhood and 4.6% in Greenpoint and Williamsburg in 2016.  The largest relative Airbnb effects on the rental market occurred in Chelsea, Clinton and Midtown Business District (21.6%) and Murray Hill, Gramercy & Stuyvesant Town (21.5%). Average monthly rents went up in these neighborhoods by $398 and $488 respectively, of which $86 and $105 per month could be attributed to Airbnb’s exponential growth.

The largest absolute effect occurred in Greenpoint and Williamsburg where average rents increased by $659 between 2009 and 2016, of which $123 can be attributed to Airbnb’s growth.

And overall, rents in the eight neighborhoods highlighted above rose at substantially higher rates than the borough average between 2009 and 2016.

By neighborhood, during this time period average monthly rent up by:

• Greenpoint and Williamsburg – 62.6% ($659 per month)
• Bedford-Stuyvesant – 47.2% ($407 per month)
• Bushwick – 39.5% ($369 per month)
• Murray Hill, Gramercy and Stuyvesant Town – 25.9% ($488 per month)
• Chelsea, Clinton and Midtown Business District – 23.4% in ($398 per month)
• Chinatown and Lower East Side – 23% ($242 per month)
• Battery Park City, Greenwich Village and Soho – 21.4% ($411 per month).

In this report, Comptroller Stringer sought to measure the “Airbnb effect” by the removal of units from the rental market because they were listed on Airbnb by the owners instead. The Comptroller’s office compared the growth in what rents would have been if there had been no Airbnb effect to what they actually were.  Citywide, the report found that the loss of supply due to Airbnb listings drove rents up by an additional 9.2% between 2009 and 2016, after taking into account other factors that drive rent increases.

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MAYOR DE BLASIO ANNOUNCES NYC FERRY NOW PLANNING FOR 9 MILLION ANNUAL RIDERS, GROWING TO MEET DEMAND

New forecast for 2023 ridership is double past projections, City investing in more and bigger boats to meet demand

  Mayor Bill de Blasio today announced that NYC Ferry’s ridership could grow to as many as 9 million annual passengers by 2023, twice as many passengers as initially projected, and that the City will invest in a bigger ferry fleet to meet that demand. The Executive Budget includes $300 million in new capital over the next several years for new 350-passenger capacity ferries, improvements to piers and docks, and a second homeport where ferries will be maintained and repaired. The Mayor made the announcement in Bay Ridge, where new ferry service launched last year.

“New Yorkers have spoken. We’re going to need bigger boats,” said Mayor de Blasio. “We’re gearing up to meet the extraordinary demand for more public transit on our waterways.”

NYC Ferry launched on May 1, 2017. Original projections predicted 4.6 million riders once all six routes are operational and fully rolled-out. However, NYC Ferry carried 3.7 million passengers in its first year, with only four routes operating—and only two of them running for the entire 12 months. Updated projections based on the first year of service now show that demand could reach as high as 9 million riders per year by 2023.

The final two routes of the first phase of ferry service – Soundview and the Lower East Side – are expected to begin operating in late summer 2018. They join the four existing routes: East River, Rockaway, South Brooklyn and Astoria. The City’s Economic Development Corporation will study potential route expansions later this year.

The City is preparing to invest $300 million in capital over the next five years, including $35 million in Fiscal Year 2019. Those investments will include:

Increasing capacity by expanding ferry fleet, nearly doubling its size

A second homeport facility to house and maintain the expanded fleet, in addition to the first homeport at the Brooklyn Navy Yard nearing completion

Infrastructure improvements and upgrades to existing NYC Ferry barges and landings to accommodate larger crowds

Improvements to the City’s two main ferry terminals, Pier 11/Wall Street and E 34th Street, which see the highest traffic on a daily basis. These include wider gangways and new bow-loading locations to increase the number of vessels that can dock simultaneously.

Preparations for a busy spring and summer are in full swing. To meet the expected surge in demand, NYC Ferry will:

Deploy 3 brand new 350-passenger capacity NYC Ferry boats by later this summer to service the busiest routes.

Deploy up to 8 charter vessels this summer, each with capacity between 250-500 passengers.

Beginning Memorial Day Weekend, Governors Island will now be the last stop on the East River and South Brooklyn routes, increasing service to the popular summer destination.

Increase service frequency with boats arriving every 20-30 minutes on weekdays and weekends on all four routes, compared to 25-60 headways for the same service last summer.

Launch a new express service on the Rockaway route to and from Pier 11/Wall Street during weekday rush hour and on weekends, doubling capacity during these busiest times.

Increase service from Brooklyn Army Terminal by 20 percent on the Rockaway route.

Increase staffing at ferry landings to assist riders with queuing and boarding.

Since its launch one year ago, NYC Ferry has already employed over 250 people and is currently hiring for 75+ new positions, including captains, deckhands, customer service agents, ticketing, operations and more.  New Yorkers of all backgrounds and skill levels are welcome to apply. Jobseekers can apply directly at ferry.nyc.

“NYC Ferry’s overwhelming success in its first year of service indicates the need to make smart investments for the future now. This capital investment will support system improvements over the next five years, ultimately enhancing customer experience and strengthening the City’s waterfront infrastructure,” said NYCEDC President and CEO James Patchett.

“NYC Ferry is a great success story, and the expansion being announced today – two new routes this year along with more and bigger boats -- is more good news for New Yorkers looking to our beautiful waters to get themselves around,” said DOT Commissioner Polly Trottenberg.  “But under Mayor de Blasio’s leadership, it is not only new ferries; we are creating an exciting multi-modal system of transportation options – from Select Bus Service to more bike lanes and expanded bike share – that will help us meet the challenges of getting around a City that has seen unprecedented growth in population, jobs and tourism.”