Two Men Charged for Operating $25M Cryptocurrency Ponzi Scheme

 

A superseding indictment was unsealed yesterday charging an Australian national and a California man with operating a cryptocurrency Ponzi scheme that defrauded victims of more than $25 million.

According to court documents, David Gilbert Saffron, 51, of Australia, and Vincent Anthony Mazzotta Jr., 52, of Los Angeles, allegedly conspired to operate a fraudulent scheme to induce victims to invest in various trading programs that falsely promised to employ an artificial intelligence automated trading bot to trade victims’ investments in cryptocurrency markets and earn high-yield profits. Saffron and Mazzotta promoted the investment programs under various names including Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital. Rather than investing victims’ funds in cryptocurrency, Saffron and Mazzotta allegedly misappropriated victims’ funds to pay for personal expenses including private chartered jet flights, luxury hotel accommodations, private mansion rentals, a personal chef, and private security guards.

To execute the scheme, Saffron and Mazzotta allegedly created a fictious entity called the Federal Crypto Reserve. The indictment alleges that, after inducing victims to invest in one of the cryptocurrency investment programs, Saffron and Mazzotta fraudulently solicited victims to pay the Federal Crypto Reserve to investigate and recover the victims’ losses. To conceal his identity, Saffron often allegedly solicited victims under various aliases, including David Gilbert and Dave Gabe, and under various online personas, including the Blue Wizard and Bitcoin Yoda.

Saffron and Mazzotta also allegedly conspired to obstruct official proceedings by concealing assets, concealing or destroying evidence, and falsifying records. The defendants also allegedly conspired to conceal the source and location of victims’ cryptocurrency investments through various means, including using methods known as “blockchain hopping” and through services known as “mixers” or “tumblers” that are designed to prevent cryptocurrency tracing.

Saffron and Mazzotta are charged with conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering, and money laundering. Saffron is also alleged to have committed felonies while on pre-trial release. If convicted, they each face a maximum penalty of 20 years in prison for each count of conspiracy to commit wire fraud and money laundering, 20 years in prison for each wire fraud count, 10 years for each money laundering count, and five years for conspiracy to obstruct justice. Saffron also faces up to 10 years in prison consecutive to any other sentence for committing felonies while on pre-trial release.

Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, U.S. Attorney Martin Estrada for the Central District of California, and Special Agent in Charge Tyler Hatcher of the IRS Criminal Investigation (IRS:CI) Los Angeles Field Office made the announcement.

IRS:CI is investigating the case.

Trial Attorneys Theodore Kneller and Siji Moore of the Criminal Division’s Fraud Section and Assistant U.S. Attorney James Hughes for the Central District of California are prosecuting the case.

The Commodity Futures Trading Commission previously charged Saffron by complain. 

If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov. To learn more about victims’ rights, please visit www.justice.gov/criminal/criminal-vns/victim-rights-derechos-de-las-v-ctimas.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Attorney General James Secures More Than $22 Million from Cryptocurrency Platform for Operating Illegally

 

KuCoin Required to Refund New York Users, Cease New York Operations, and Pay $5.3 Million Penalty

New York Attorney General Letitia James today secured more than $22 million from KuCoin, one of the largest cryptocurrency trading platforms, for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange. Today’s consent order resolves Attorney General James’ lawsuit against KuCoin and requires the company to refund over 150,000 New York investors more than $16.7 million and pay more than $5.3 million to the state. KuCoin is also banned from trading securities and commodities in New York and is prohibited from making its platform available to New Yorkers. This consent order continues Attorney General James’ work to increase oversight and regulation of cryptocurrency companies and protect New York investors, which has recovered more than $500 million from predatory cryptocurrency platforms to date.

“Unregistered offshore crypto platforms pose a risk to investors, consumers, and the broader economy,” said Attorney General James. “Crypto companies should understand that they must play by the same rules as other financial institutions, and my office will hold them accountable when they don’t. This settlement will ensure every New Yorker who put their money into KuCoin can get it back and that KuCoin won’t be able to put other New York investors at risk. I will continue to take action against any company that brazenly disregards the law and jeopardizes New Yorkers’ savings and investments.”  

KuCoin is a Seychelles-based cryptocurrency trading platform that allows investors to buy and sell cryptocurrency through its website and mobile app. An investigator from the Office of the Attorney General (OAG) was able to create an account with KuCoin using a computer with a New York-based IP address to buy and sell cryptocurrencies, including popular tokens like ETH, LUNA, and UST. However, New York law requires securities and commodities brokers providing services in New York to register with the state, which KuCoin failed to do. By trading cryptocurrencies that are commodities and securities with its New York users, KuCoin violated state law. This included its own “KuCoin Earn” investment product, in which KuCoin pooled investors’ cryptocurrencies to generate income for its investors.

In addition, KuCoin claimed to be an exchange, but was not registered with the Securities and Exchange Commission as a national securities exchange or appropriately designated by the Commodity Futures Trading Commission as is required under New York Law.

KuCoin is required to provide full refunds totaling $16,766,642 to 177,800 New York investors. Investors can receive their refund by withdrawing their assets directly from KuCoin over the next 90 days. After 90 days, eligible investors can file a claim to receive their cryptocurrency by emailing kucoinrefund@ag.ny.gov.

In addition, KuCoin must take steps to prevent New Yorkers from accessing their platform and is prohibited from creating any new accounts for New York customers. Existing New York customers will only be able to withdraw their crypto from the platform. KuCoin must also cooperate with U.S. law enforcement by timely responding to requests to freeze assets and information requests.

Today’s announcement continues Attorney General James’ efforts to enforce New York laws in the cryptocurrency industry. In October, Attorney General James sued cryptocurrency companies Gemini, Genesis, and DCG for defrauding investors through DCG and Genesis’s concealment of $1.1 billion in losses and Gemini’s repeated lies to investors. In June, Attorney General James recovered $1.7 million from crypto exchange Coinex for operating illegally. In May, Attorney General James announced sweeping cryptocurrency legislation that will increase regulations of the cryptocurrency industry to protect New York investors. In January, Attorney General James and a multistate coalition recovered $24 million from the cryptocurrency platform Nexo for operating illegally. Attorney General James also sued the former CEO of Celsius for defrauding investors and concealing the company’s dire financial condition. In October 2021, Attorney General James directed unregistered crypto lending platforms to cease operations for not registering with the state. In September 2021, Attorney General James recovered $479.9 million from GTV Media for failing to register cryptocurrency sales. In February 2021, Attorney General James required Bitfinex and Tether to end all trading activity in New York and required iFinex and Tether and their related companies to pay $18.5 million in penalties.

Attorney General James urges New Yorkers who have been affected by deceptive conduct in virtual assets markets to report these issues to OAG. Attorney General James also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to file an online whistleblower complaint with her office, which can be done anonymously.

Governor Hochul Announces Completion of 74-unit Public Housing Redevelopment in Nassau County

Rehabilitation of Laurel Homes in North Hempstead Preserves Affordability, Enhances Safety, and Adds New Apartments for Seniors

Governor Kathy Hochul announced completion of the major redevelopment of Laurel Homes, a previously dilapidated public housing complex in North Hempstead’s Roslyn Heights. The project replaced obsolete buildings and expanded the development to 74 quality, energy-efficient apartments, including eight for seniors on a modern and family-friendly campus.

“My administration’s commitment to increasing the supply of affordable, energy-efficient apartments is coming to life in communities throughout the state,” Governor Hochul said. “We are making ongoing investments to preserve and revitalize our existing housing stock, including in important public housing developments like Laurel Homes. As we look ahead to 2024 and beyond, I will continue to do everything in my power to boost the supply of housing and help ensure families have a safe, comfortable place to live.”

In the last five years, New York State Homes and Community Renewal has created or preserved more than 5,600 affordable homes on Long Island. Laurel Homes continues this effort and complements Governor Hochul's $25 billion comprehensive Housing Plan that will create or preserve 100,000 affordable homes across New York, including 10,000 with support services for vulnerable populations, plus the electrification of an additional 50,000 homes.

Laurel Homes is a North Hempstead Housing Authority public housing development, originally constructed in 1958 with 66 units. The reconstruction and expansion of Laurel Homes provides 74 apartments in eight two-story modular buildings and a separate community building. The apartments are a mixture of one-, two-, three-, four-, and five-bedroom units. All apartments are affordable to households earning at or below 60 percent of the Area Median Income.

Laurel Homes was designed in accordance with energy efficiency and green building standards required for Energy Star and Enterprise Green Communities certifications. Energy efficient features incorporated into the development include a building envelope with high thermal performance, LED lighting, high-efficiency water heaters, and water-conserving certified fixtures.

The development’s new community building features computers, laundry facilities and a playground. The redevelopment project also enhanced security features, with new cameras positioned around the complex to help ensure resident safety. The complex is within a short walk of the Long Island Railroad’s Roslyn station.

The development team is the North Hempstead Housing Authority and Georgica Green Ventures, LLC.

State financing for the $50 million development includes $17 million in Federal Low-Income Housing Tax Credits, $10 million in permanent tax-exempt bonds, and $14 million in subsidy from HCR. Nassau County provided $1 million.

 EDITOR'S NOTE :

Governor Kathy Hochul: How about doing something about the dilapidated houses of the New York City Housing Authority like you have done here. We have many Bronx dilapidated NYCHA buildings that you can redevelop. How about it?

CONSUMER ALERT: NYS DEPARTMENT OF STATE’S DIVISION OF CONSUMER PROTECTION ISSUES WARNING OVER RISKS OF CHILDREN’S TECHNOLOGY TOYS

 

December is Safe Toys & Gifts Month 

Tips For Parents Buying Technology Toys This Holiday Season

Secretary Rodriguez: “As the season of giving continues, it’s important that parents and guardians keep the safety and privacy of children in mind before purchasing increasingly popular tech toys as gifts.” 

Follow the New York Department of State on Facebook, Twitter and Instagram for “Tuesday’s Tips” – Practical Tips to Educate and Empower New York Consumers on a Variety of Topics 

As technology evolves, so do the toys that children play with. Technology toys are becoming increasingly popular among kids of all ages, but with this trend comes the need for data privacy protection and increased safety measures. During Safe Toys and Gifts Month, it's important for parents to be aware of potential risks and take steps to ensure their child's safety while playing with tech toys.

Common types of internet-connected toys include interactive games, robots, dolls, and wearable gadgets. These toys incorporate technology to enhance the play experience for children. However, there are concerns about the potential security and privacy risks associated with these toys.

“As the season of giving continues, it’s important that parents and guardians keep the safety and privacy of children in mind before purchasing increasingly popular tech toys as gifts,” said Secretary of State Robert J. Rodriguez. “While these toys can be a great form of entertainment and even learning resources for kids, they can also pose risks to their privacy, so following these tips from the NYS Division of Consumer Protection will help ensure their safety." 

Here are some tips to make the user experience safer for children:

Before buying

• Confirm that the toy is age appropriate.Make sure the toy is designed for your child's age group. If buying a toy for a small child, confirm that it doesn't pose a choking hazard, and monitor your child while they play with the toy to ensure they are using it safely and correctly. If shopping for video games or a video game console, learn about age-appropriate content ratings and make informed choices about which games are suitable for your child by visiting https://www.esrb.org/   
• Understand the key features.Does the toy have a camera, microphone, or facial or speech recognition? Make sure you understand what the toy can do and what settings are defaulted when you use the toy.
• Look for information on parental controls.Some interactive toys and games may come with important parental control information. The Children’s Online Privacy Protection Act (COPPA) requires that companies provide notice and obtain parental approval before collecting, using or disclosing a child’s personal information. COPPA gives you tools to control the personal information collected from your kids by online services or apps. 
• Read the policies.As children interact with technology-enabled and connected toys, usage, and personal information (like location) may be continuously uploaded to company servers. Read the policy documents to see what information is stored and what is automatically deleted. If this information is not clear, consider choosing another product.
• Research complaints:Parent blogs, social media, and security company websites often sound the alarm well before news stories hit. Check for known security issues before considering a purchase.

After buying 

Make sure you are present when Internet-connected toys are being set up.

• Create an alias. If setup requires additional information, provide a different name or nickname, alternative birthdate, and other modifications to sensitive information. If the toy is hacked, this decreases the chance of child identity theft.
• Ensure privacy settings are set for maximum protection. Opt in to all privacy safeguards and block access to chat rooms. Additionally, do occasional checks and keep software up to date.
• Supervise. When children are playing with technology-enabled toys, watch their interactions closely to understand how the toys work and quickly identify when something is not right with a toy. If the toy lets your child send emails or connect to social media accounts, have an age-appropriate conversation with them about online safety and risky behaviors. For ideas on how to approach the conversation, check out the FTC website: https://consumer.ftc.gov/articles/kids-socializing-online 
• Keep the connection secure. Never use technology-enabled toys on public Wi-Fi. Hackers can gain access to the toy and use it to capture other protected information in the home.
• Strengthen passwords. Make sure your passwords are unique and updated regularly. Try using a passphrase instead of a password and include special characters and numbers. 
• Watch out for accessories associated with the toy, such as video games and downloadable apps. Educate children about in-app purchases and explain the importance of getting permission before making any purchases. 
• Stay informed. Fill out any product registration cards entirely and send them back to the manufacturer so you are notified of recalls.
• Turn it off. When a child is done playing with a toy or leaves it, make sure the toy is first disconnected from the internet and then turned off. When toys remain connected to the internet in sleep mode, your personal privacy and information can still be accessed.
• Stay offline. Finally, it’s important to set limits on screen time and encourage children to engage in other forms of play as well. Old-fashioned games, books and puzzles are making a comeback. Consider a family game night – without technology toys!

If you believe your child’s toy was hacked, report it to the Internet Crime Complaint Center.

For more information on Child Identity Theft, visit the Division of Consumer Protection website. 

Follow the New York Department of State on Facebook, Twitter and Instagram and check in every Tuesday for more practical tips that educate and empower New York consumers on a variety of topics. Sign up to receive consumer alerts directly to your email or phone here.

The New York State Division of Consumer Protection provides resources and education materials to consumers on product safety, as well as voluntary mediation services between consumers and businesses. The Consumer Assistance Helpline 1-800-697-1220 is available Monday to Friday from 8:30am to 4:30pm, excluding State Holidays, and consumer complaints can be filed at any time at www.dos.ny.gov/consumer-protection.

For more consumer protection tips, follow the Division on social media at Twitter: @NYSConsumer and Facebook: www.facebook.com/nysconsumer.

Release of Body Worn Camera Footage from an Officer Involved Shooting that Occurred on April 13, 2023 in the confines of the 50th Precinct

 

The NYPD is releasing today body-worn camera footage from an officer-involved shooting that occurred on April 13th, 2023 in the confines of the 50th Precinct..

The video includes available evidence leading up to the incident as well as during the incident. The NYPD is releasing this video for clear viewing of the totality of the incident.

All NYPD patrol officers are equipped with body-worn cameras. The benefits of cameras are clear: transparency into police activity, de-escalation of police encounters and accountability for police officers, through an independent account of interactions between the police and the citizens they serve. Body-worn cameras serve as a vital part of ongoing efforts to increase trust between the police and all New Yorkers.

You can find the video here

Leader Of Black-Market HIV Medication Fraud Scheme Pleads Guilty

 

Damian Williams, the United States Attorney for the Southern District of New York, announced that BORIS AMINOV pled guilty to conspiracy to commit health care fraud in connection with engaging in a years-long scheme to defraud Medicaid, Medicare, and private insurance companies out of at least $20 million.  10 other defendants were charged in connection with the scheme in two separate indictments unsealed in March and October 2023.  AMINOV pled guilty before U.S. District Judge Mary Kay Vyskocil and is scheduled to be sentenced on April 17, 2024. 

U.S. Attorney Damian Williams said: “Boris Aminov orchestrated a scheme to get rich by lying to Medicaid, Medicare, and private insurance companies and by depriving vulnerable HIV patients of legitimate and safe medications.  Aminov also made millions of dollars through buying and distributing black-market HIV medications to pharmacies all over New York City.  This Office will be tireless in its pursuit of those who seek to line their pockets by preying on vulnerable members of society.” 

According to the allegations contained in the Superseding Indictments and statements made in court proceedings:

From at least in or about 2017 through at least in or about 2023, AMINOV and others engaged in a scheme that defrauded Medicaid, Medicare, and private insurance companies out of at least approximately $20 million through trafficking in black-market HIV medication.  In doing so, they exploited at least hundreds of low-income individuals who had been prescribed HIV medication, jeopardizing the health and safety of those vulnerable patients. 

AMINOV distributed black-market HIV medications to pharmacies that were owned and operated by other co-conspirators.  That medication was then dispensed to unknowing patients who believed they were receiving legitimate medication.  To further their scheme and conceal their proceeds, co-conspirators used bank accounts associated with their respective pharmacies to funnel money to shell companies controlled by AMINOV.

AMINOV, 47, of Brooklyn, New York, pled guilty to one count of conspiracy to commit health care fraud, which carries a maximum potential sentence 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.

Mr. Williams praised the outstanding investigative work of the FBI.

Justice Department Announces Distribution of Over $158.9M to Nearly 25,000 Victims of Madoff Ponzi Scheme

 

The Justice Department announced that the Madoff Victim Fund (MVF) began its ninth distribution of over $158.9 million in funds forfeited to the U.S. government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme.

In this distribution, payments will be sent to 24,875 victims across the globe, bringing their total recoveries to 91% of their fraud losses. Through its nine distributions, MVF has paid over $4.22 billion to 40,843 victims as compensation for losses they suffered from the collapse of BLMIS.

“The department’s Madoff Victim Fund has exceeded expectations in the level of recovery provided to victims of the fraud committed by Bernard Madoff, which devastated thousands of lives,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division. “To date, the Madoff Victim Fund has assisted more than 40,800 individual victims in recovering over 90% of victim losses. The department continues to prioritize the use of civil asset forfeiture to ensure compensation is available for victims of fraud.” 

“In 2009, when the Southern District of New York charged Bernie Madoff for his $64 billion securities fraud ‘Ponzi’ scheme, it was one of the most prolific financial crimes in American history. Among Madoff’s many victims were not only wealthy and institutional investors, but charities and pension funds alike — some of which invested money with Madoff on behalf of individuals working paycheck-to-paycheck who were relying on their pension accounts for their retirements,” said U.S. Attorney Damian Williams for the Southern District of New York. “The financial toll on those who entrusted their money with Madoff was devasting, and this office’s unprecedented efforts to return money to Madoff’s victims has now resulted in clawbacks of 91% of fraud losses to their rightful owners. I commend the career prosecutors of this office for today’s distribution of over $158 million and for their relentless pursuit of justice for victims of Wall Street fraudsters, like Bernie Madoff.”

According to court documents and information presented in related proceedings, for decades, Bernard L. Madoff used his position as chairman of BLMIS, the investment advisory business he founded in 1960, to steal billions of dollars from his clients. On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle.

On June 29, 2009, Madoff was sentenced to 150 years in prison for running the largest fraudulent scheme in history. Of the over $4 billion that has been made available to victims, approximately $2.2 billion was collected as part of the historic civil forfeiture recovery from the estate of deceased Madoff investor, Jeffry Picower. An additional $1.7 billion was collected as part of a deferred prosecution agreement with JPMorgan Chase Bank N.A. and civilly forfeited in a parallel action. The remaining funds were collected through a civil forfeiture action against investor Carl Shapiro and his family, and from civil and criminal forfeiture actions against Madoff, Peter B. Madoff, and their co-conspirators.

The MVF’s payouts would not have been possible without the extraordinary efforts of the Criminal Division’s Money Laundering and Asset Recovery Section, U.S. Attorney’s Office for the Southern District of New York, and FBI in the prosecution of Madoff’s crimes and the recovery of assets supporting the forfeiture in the case.

The MVF is overseen by Richard Breeden, former chairman of the U.S. Securities and Exchange Commission, who serves as Special Master appointed by the Justice Department to assist in connection with the victim remission proceedings. Breeden and his team at MVF provided essential assistance to evaluate over 68,000 remission petitions involving billions in cash flows, and to compute each victim’s fraud losses to enable payments to be made. 

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

Governor Hochul Announces New York City Subway Sets New Weekend Day Ridership Record

 

Subways Record More Than 2.9 Million Paid Rides on December 9, Topping Previous Post-Pandemic Saturday Record Set October 28, 2023

OMNY Accounted for Record High 58.5 Percent of Those Rides

Governor Kathy Hochul  announced that New York City subway recorded 2,918,691 paid rides on Saturday, December 9, surpassing the previous post-pandemic weekend high set on October 28. The 2.9 million paid rides are a six percent improvement on the October 28 record and represents the highest weekend day for ridership in four years

“New York at the holidays is the stuff of dreams, and it comes as no surprise that this time of year brings a boom in subway ridership,” Governor Hochul said. “There is no doubt the MTA is ready to welcome New Yorkers and visitors alike thanks to the investments we have made in safety and service throughout the system.”

MTA Chair and CEO Janno Lieber said, "The MTA is hitting its stride to close the year. This is the second time in less than two months that subways set a Saturday record – a huge vote of confidence in mass transit from riders. With more gridlock days ahead New Yorkers, and those visiting, know the subway is the best way to restaurants, shows and all the great holiday activities New York City has to offer.”

The record subway Saturday was driven by taps into the system – 58.5 percent of all rides were tap-and-go customers, a single-day record. OMNY, the Metropolitan Transportation Authority’s (MTA) contactless fare payment method, accounts overall for nearly half of all paid subway rides.

The ridership and OMNY records came two days before the MTA activated OMNY customer vending machines in The Bronx, Brooklyn, Manhattan and Queens, allowing riders to use cash at the vending machines to purchase OMNY cards. Credit and debit cards and digital wallets are also accepted for purchases.

OMNY cards provide another way to take advantage of OMNY’s financial flexibility to pay-as-you-go and never spend more than $34.00 in 7 days.

The record comes in the middle of a Gridlock Alert, issued by the New York City Department of Transportation. The MTA reminded New Yorkers of subway capacity during the first day of Gridlock on December 6. The subway has capacity for 2 million more people than it carries today, and in recent months has seen service added during the off-peak hours.