Comptroller Stringer Statement Denouncing Confirmation of Judge Kavanaugh

  “We are in the midst of a defining moment for America, one that will shape how our children understand power and who wields it, who is believed and who is not. I want my two young boys to know that real power – the kind that matters – lies in recognizing each other’s full humanity. And we can’t do that without believing the brave survivors who come forward.

“This confirmation process exposed a profound lack of decency. Just this week the investigation into the allegations against Judge Kavanaugh was revealed to have been plainly partisan and incomplete. The president cruelly ridiculed Dr. Christine Blasey Ford, provoking laughter at her expense. Today’s vote to propel Judge Kavanaugh to our nation’s highest court – despite bipartisan concern about his judicial temperament and credibility – has been the final, searing insult.

“What must not get lost are the voices of the millions of people who spoke out in opposition, and we will not be silenced. We will only grow louder and stronger in our fight for equality, a woman’s right to choose, for families who come to this country for a better life, and for every person this administration tries to stifle. Our democracy depends on it.”

Engel on Senate Confirmation of Brett Kavanaugh to the Supreme Court

  “I’m deeply disappointed by the Senate’s vote today to confirm a man with so many red flags to our highest court. Brett Kavanaugh holds some dangerously conservative views, and the terrible damage he will do to women’s rights, workers’ rights, and civil rights as a Supreme Court Justice cannot be understated. But that’s just the tip of the iceberg when it comes to the problems surrounding his appointment. Judge Kavanaugh has also proven, beyond any doubt, that he is ill-tempered, highly partisan, and wholly unqualified to offer any objective judgements on the Supreme Court. This is to say nothing of the credible accusations levied against him by Dr. Ford and others, or the fact that it appears he repeatedly lied under oath to the Senate. Any one of these issues should have been more than enough to derail his confirmation. But the Senate GOP was undeterred, even in the face of overwhelming backlash from the American people.

“Senate Republicans have been right to call this process shameful. But the blame for that lies squarely with them, not the Democrats. By nominating an unfit candidate and ramming his nomination through—after having completely ignored the nomination of Merrick Garland by President Obama—the GOP has violated the spirit of the Constitution and directly undermined the institutions of both the Supreme Court and Senate. Their actions prove their allegiance belongs firmly to their ideology, not their country. Hopefully the voters remember that lesson in November.”

Former New York City Correction Officer Pleads Guilty to Conspiring to Smuggle Contraband into Jail

Six Co-defendants Previously Pleaded Guilty for Their Participation in the Conspiracy

  Carl Noel, a former correction officer employed by the New York City Department of Correction (“DOC”), pleaded guilty to conspiring to bribe Correction Officers at the Manhattan Detention Complex (“MDC”) in lower Manhattan.  The plea proceeding took place before United States District Judge Pamela K. Chen. 

Previously, co-defendants Christian Mizell, Warren Green, Patrick Johnson, Robert Martino, Malik Holloway and Asha Patterson pleaded guilty to the same charge for their roles in the conspiracy.  Noel was arrested on February 8, 2018, and he was dismissed from the DOC on February 21, 2018.  With Noel’s guilty plea today, all defendants charged in this conspiracy have entered guilty pleas.    

Richard P. Donoghue, United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), and Mark G. Peters, Commissioner, New York City Department of Investigation (DOI), announced the guilty pleas. 

As detailed in the indictment and other court filings, co-defendants Green and Johnson, both of whom were incarcerated at the MDC on charges unrelated to this conspiracy, arranged for marijuana and other contraband to be packaged and delivered covertly by co-defendants Martino, Holloway and Patterson to DOC Correction Officers Noel and Mizell.  In return, Noel and Mizell received thousands of dollars in bribes, among other benefits, from their co-defendants, to smuggle the narcotics past DOC security for eventual distribution inside the prison.

When sentenced, the defendants each face up to five years in prison, as well as fines of up to $250,000. 

The government’s case is being handled by Assistant United States Attorney Erik Paulsen of the Office’s Public Integrity Section and Nomi Berenson of the Office’s International Narcotics and Money Laundering Section.

The Defendants:

CARL NOEL
Age: 32
New York, New York

Christian MIzell
Age: 49
Queens, New York

WARREN GREEN
Age: 41
Pine City, New York

PATRICK JOHNSON
Age: 27
Bronx, New York

ROBERT MARTINO
Age: 37
Queens, New York

MALIK HOLLOWAY
Age: 23
Bronx, New York

ASHA PATTERSON
Age: 44
Queens, New York

EIGHT THERAPISTS ARRESTED IN SCHEME TO DEFRAUD PROGRAM FOR DEVELOPMENTALLY DISABLED CHILDREN

Defendants Allegedly Defrauded the New York State Early Intervention Program Out of More Than $600,000 Through Fraudulent Billing for Therapy Sessions that Never Occurred

  A criminal complaint was unsealed today in federal court in Brooklyn charging Kaderrah Doyle, Cara Steinberg, Marina Golfo, Ego Onaga, Lyubov Beylina, Danielle Scopinich, Patricia Hakim and Enock Mensah with stealing more than $600,000 in funds from Medicaid and the New York City Department of Health and Mental Hygiene through fraudulent billing practices in connection with the New York State Early Intervention Program (EIP). The EIP is a New York State program that provides remedial services to developmentally delayed children from birth to age three. The defendants, all EIP therapists, were arrested earlier today and are scheduled to make their initial appearance this afternoon before United States Magistrate Judge Sanket J. Bulsara.

  Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Mark G. Peters, Commissioner, New York City Department of Investigation (DOI), announced the charges.

  “As alleged in the complaint, the defendants defrauded government agencies out of hundreds of thousands of dollars in public funds designated for therapeutic care for developmentally disabled children.” stated United States Attorney Donoghue. “The victims of this fraud include not only the children and their families who were deprived of the therapeutic care that these defendants claimed to have performed, but ultimately the taxpayers whose taxes support Medicaid. This Office and our law enforcement partners are committed to ensuring that those who defraud benefit programs will be held accountable.” Mr. Donoghue also expressed his appreciation to the New York City Department of Health and Mental Hygiene for its assistance during the investigation.

 “As we allege today, these defendants stole hundreds of thousands of government dollars from a program designed to aid some of our city’s most vulnerable residents,” stated FBI Assistant Director-in-Charge Sweeney. “Rather than provide honest services, they chose to line their own pockets at the expense of taxpayers and the developmentally-delayed children and their families for whom these funds were targeted. Today’s arrests should serve as a reminder that the FBI will continue to be vigilant in our effort to root out fraud and abuse in programs intended to serve the public when these programs are corrupted by greed.”

 “These eight therapists shamefully benefited by stealing hundreds of thousands of dollars in public funds while developmentally disabled and delayed children in their care were denied thousands of crucial therapy sessions, according to the charges,” stated DOI Commissioner Peters. “DOI thanks the U.S. Attorney’s Office for the Eastern District of New York for its prosecution of these crimes.”

 According to the complaint, between approximately 2012 and 2018, the defendants submitted thousands of fraudulent session notes and accompanying invoices for nonexistent EIP therapy sessions. As a direct result of their fraudulent submissions, the defendants received hundreds of thousands of dollars in reimbursements from Medicaid and the New York City Department of Health and Mental Hygiene. On many occasions, the defendants were not present at the place where the therapy sessions supposedly occurred, including instances in which they were outside of New York State or even outside of the United States. For example, Beylina allegedly submitted approximately 51 fraudulent invoices for EIP therapy sessions that purportedly occurred when she was in the Dominican Republic. On other occasions, the defendants submitted documentation containing the forged signatures of the children’s caretakers, including parents, guardians, teachers and daycare providers. In other instances, the defendants falsely claimed to have performed EIP therapy sessions for two different children at two different locations at the exact same time. Many of the defendants also falsely claimed to have performed EIP therapy sessions when they were, in fact, at work elsewhere, including as full-time teachers with the New York City Department of Education.

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

 If convicted, the defendants face a statutory maximum of 10 years’ imprisonment.

The Defendants: 

KADERRAH DOYLE Age: 41 Bronx, New York 

CARA STEINBERG Age: 40 Old Bridge, New Jersey

MARINA GOLFO Age: 44 North Pelham, New York 

EGO ONAGA Age: 45 Staten Island, New York 

LYUBOV BEYLINA Age: 30 Brooklyn, New York 

DANIELLE SCOPINICH Age: 35 Ozone Park, New York 

PATRICIA HAKIM Age: 54 Forest Hills, New York

ENOCK MENSAH Age: 58 Mount Olive, New Jersey

Man Who Helped Run The “Silk Road” Website Pleads Guilty In Manhattan Federal Court

The Silk Road Website Was Responsible for Selling Over $200 Million in Illegal Narcotics and Other Contraband

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GARY DAVIS, a/k/a “Libertas,” pled guilty today to conspiring to distribute massive quantities of narcotics, a charge arising out of his role as a member of the small administrative staff of “Silk Road.”  During its operation from 2011 until 2013, Silk Road was used by thousands of drug dealers and other unlawful vendors to distribute illegal drugs and other illicit goods and services to more than 100,000 buyers, and to launder hundreds of millions of dollars derived from those unlawful transactions.  DAVIS pled guilty before United States District Judge Jesse M. Furman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Silk Road was a secret online marketplace for illegal drugs, hacking services, and a whole host of other criminal activity.  As he admitted today, Gary Davis served as an administrator who helped run the Silk Road marketplace.  Davis’s arrest, extradition from Ireland, and conviction should send a clear message: the purported anonymity of the dark web is not a protective shield from prosecution.”

According to the allegations in the Superseding Indictment, court filings, statements made in court, and evidence presented during the 2015 trial of Ross Ulbricht, Silk Road’s founder:

From January 2011, up to October 2, 2013, the “Silk Road” website hosted a sprawling black-market bazaar on the Internet, where illegal drugs and other illicit goods and services were regularly bought and sold by the site’s users.  During its more than two-and-a-half years in operation, Silk Road was used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over 100,000 buyers, and to launder hundreds of millions of dollars derived from these unlawful transactions.

The owner and operator of Silk Road, Ross William Ulbricht, a/k/a “Dread Pirate Roberts,” a/k/a “DPR,” a/k/a “Silk Road,” ran the website with the assistance of a small support staff, including both site administrators and forum moderators.  The site administrators were responsible for, among other things, monitoring user activity on Silk Road for problems, responding to customer service inquiries, and resolving disputes between buyers and vendors.  The forum moderators were responsible for, among other things, monitoring user activity on discussion forums associated with the site, providing guidance to forum users concerning how to conduct business on Silk Road, and reporting any significant problems discussed on the forums to the site administrators and to Ulbricht. 

From May 2013 up to June 2013, DAVIS served as a forum moderator for Silk Road.  From June 2013 up to October 2, 2013, DAVIS worked as a site administrator on Silk Road.  In his role as a site administrator, DAVIS’s responsibilities included (1) responding to customer support requests from Silk Road users who needed assistance with their buyer or seller accounts on the marketplace; (2) serving as an arbitrator by resolving disputes that arose between drug dealers and buyers on the site; and (3) enforcing the rules for doing business on Silk Road, which had been set by Ulbricht.  For instance, there was a rule against “out of escrow” sales—i.e., sellers and buyers arranging payments off the site to avoid paying Silk Road commissions.  When violations of this rule were discovered, DAVIS could terminate the vendor’s account, demote the vendor, or otherwise restrict the vendor’s privileges, and he typically reported such incidents to Ulbricht.  DAVIS was paid a weekly salary for his work as a site administrator.

DAVIS, 30, of Wicklow, Ireland, pled guilty to one count of conspiracy to distribute narcotics, which carries a maximum sentence of 20 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.  DAVIS is scheduled to be sentenced by Judge Furman on January 17, 2019 at 3:30 p.m.

Mr. Berman praised the outstanding joint efforts of the Federal Bureau of Investigation and its New York Special Operations and Cyber Division, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations—Chicago-O’Hare, the Drug Enforcement Administration’s New York Field Division, and the Internal Revenue Service—Criminal Investigation’s New York Field Office.  Mr. Berman also thanked the Irish Republic’s Computer Crime Investigation Unit of the An Garda Siochana for its valuable assistance and support.  Mr. Berman also thanked the U.S. Department of Justice’s Office of International Affairs for their support and assistance.

MAN INDICTED FOR FATALLY STABBING ESTRANGED WIFE

Defendant Allegedly Called Victim’s Family Members To Tell Them He Killed Her

 Bronx District Attorney Darcel D. Clark today announced that a man has been indicted for stabbing his estranged wife to death. The incident happened when the defendant was on parole. 

  District Attorney Clark said, “The defendant allegedly went to the victim’s house and stabbed her repeatedly. After the murder, he allegedly called the victim’s family members and his parole officer to tell them what he had done.” 

  District Attorney Clark said the defendant, Virgil Solis, 58, of 600 East 125th Street, Manhattan, was arraigned on second-degree Murder, first-degree Manslaughter and fourthdegree Criminal Possession of a Weapon before Bronx Supreme Court Justice George Villegas. He was remanded and is due back in court on January 9, 2019. 

 According to the investigation, on September 10, 2018, at 2411 Southern Boulevard, the defendant allegedly caused the death of Valerie Dash by stabbing her repeatedly with a knife. The victim suffered numerous stab wounds in the abdomen, back, and neck, and was disemboweled.

 The defendant allegedly accused the victim of cheating, and told investigators he intentionally dragged the knife across her abdomen, and later profanely boasted that he would not have to worry about her infidelity any longer.

 After the attack the defendant allegedly called multiple people, including the victim’s family members and his parole officer, to tell them he had killed Dash. Family members and Solis’ parole officer called police, who went to the victim’s home where she was pronounced dead. Solis was arrested in downtown Manhattan after he removed his ankle monitor and fled the crime scene.

 District Attorney Clark thanked Assistant District Attorney William Browne of the Domestic Violence Bureau for his assistance. District Attorney Clark also thanked NYPD Detective Lincoln Archambeau of the 48th Precinct and NYPD Detective Anthony Velez of Bronx Homicide for their work in the investigation.

  An indictment is an accusatory instrument and not proof of a defendant’s guilt.

Gang Leader Convicted Of Violent Crime In Aid Of Racketeering

Leonard Mathews Ordered A Shooting In The Bronx That Injured Three Bystanders

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LEONARD MATHEWS was convicted by a jury of assault with a dangerous weapon in aid of racketeering, as well as firearms, ammunition, and crack cocaine distribution offenses.  The verdict followed a seven-day trial before the Honorable J. Paul Oetken.     

According to allegations in the Indictment and evidence introduced at trial:

MATHEWS is a leader, or “big homie,” in the Gangsta Milla Bloods, or “GMB,” a subset of the United Bloods Nation gang that operates in the Bronx and engages in racketeering activity, including narcotics distribution.  On October 20, 2017, MATHEWS ordered a subordinate gang member to shoot someone with whom MATHEWS previously had a physical altercation.  The shooting resulted in the injury of three innocent bystanders on Morris Avenue between East Kingsbridge Road and East 196th Street in the Bronx.  On the night of the shooting, following a closed-door meeting with MATHEWS and other members of the gang, the same Bloods foot soldier that MATHEWS ordered to do the shooting stabbed and left for dead one of the principal witnesses to the shooting. 

MATHEWS, 27, of the Bronx, New York, was convicted of aiding and abetting or willfully causing assault with a dangerous weapon in aid of racketeering, which carries a maximum sentence of  20 years in prison; aiding and abetting or willfully causing the discharge of a firearm during and in relation to a crime of violence, which has a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; aiding and abetting or willfully causing the possession of ammunition by a felon, which carries a maximum sentence of 10 years in prison; and distribution and possession with intent to distribute crack cocaine, which carries a maximum sentence of 20 years in prison.  MATHEWS will be sentenced by Judge Oetken on January 17, 2019.       

The statutory maximum and minimum sentences are prescribed by Congress and are provided here for information purposes only, as any sentencing of the defendant would be determined by the judge.

Mr. Berman praised the investigative efforts of the Bronx Violent Crimes Squad of the New York City Police Department.

A.G. Underwood & NYC Corporation Counsel Carter Announce $30 Million Settlement With Investment Manager For Tax Abuses

New York Based Investment Manager Harbinger Capital Partners Offshore Manager LLC Evaded New York State and New York City Taxes

Company Admits to Failure in Income Apportionment, State and City Tax Underpayment

This Settlement Follows Earlier $40 Million Settlement with Harbert Management Corporation, Which Sponsored and Organized Principal Hedge Fund Managed by Offshore – Resulting in a Total of $70 Million Recovered

  New York Attorney General Barbara D. Underwood and New York City Corporation Counsel Zachary W. Carter announced a $30 million settlement with Harbinger Capital Partners Offshore Manager LLC (“Offshore Manager”), a hedge fund manager, resolving claims that Offshore Manager knowingly evaded New York State and New York City taxes. 

Offshore Manager earned incentive fees from successful trading that it conducted from an office in New York City. This income was subject to New York State income tax and New York City unincorporated business tax; however, Offshore Manager concealed its New York City business activities from State and City tax authorities. 

“Harbinger Capital Partners Offshore Manager earned hundreds of millions of dollars in New York State and New York City, but deliberately dodged paying its fair share of taxes,” said Attorney General Underwood. “Tax evasion forces ordinary New Yorkers to shoulder the bill. My office will continue to use every tool at our disposal to pursue those who knowingly violate the tax law and hold them accountable.”

NYC Corporation Counsel Carter said, “The New York False Claims Act, which expressly covers tax fraud, provides a powerful tool for government to use to compel tax law compliance. With the assistance of the New York City Department of Finance, we were successful in ensuring that City unincorporated business tax was paid for a hedge fund business that was operating out of a New York City office.”   

As a term of the settlement agreement, Offshore Manager admitted that it had an obligation to apportion income to New York State and to pay New York City unincorporated business tax, but it did not do so for several years. 

The investigation leading to the settlement announced today began with a whistleblower lawsuit filed in March 2015 under the New York False Claims Act. The Act, which expressly covers tax fraud, allows whistleblowers and the government to take legal action against companies or individuals that defraud the government. The settlement follows an earlier $40 million settlement in this investigation, concluded in April 2017, with Harbert Management Corporation (“HMC”), the Alabama-based investment management company that sponsored and organized the principal hedge fund managed by Offshore Manager. As a result, a total of $70 million will be recovered. Whistleblowers are entitled to rewards under the New York False Claims Act, and, as a result of the settlement announced today and the earlier settlement announced in April 2017, the whistleblower here will receive a total of $15.4 million for bringing this misconduct to light.  

Offshore Manager served as the investment manager for a hedge fund that aggregated investment capital from onshore and offshore funding vehicles and for its offshore feeder fund from 2003 through 2009. Offshore Manager’s investment activities were led by Philip Falcone, who rose to become Senior Managing Director of Offshore Manager. Mr. Falcone and others he managed carried on Offshore Manager’s investment activities from an office located at 555 Madison Avenue in Manhattan. The tax positions taken by Offshore Manager were developed and implemented by Offshore Manager’s officers and agents in Alabama, not by Mr. Falcone.    

The Attorney General and New York City Corporation Counsel filed a superseding complaint in the action in Manhattan Supreme Court, which alleges claims against Offshore Manager as described below. The Attorney General and New York City Corporation Counsel will subsequently discontinue those claims, upon compliance with the terms of the settlement agreement. The superseding complaint alleges:

• Offshore Manager earned incentive fee income in an amount equal to 20 percent of the net profits of the offshore feeder fund. Offshore Manager’s members were required to pay New York State income tax on the incentive fee income earned as a result of Offshore Manager’s investment management activities in New York. Offshore Manager failed to apportion to New York State any of this income, as required, for tax years 2004 through 2009. Offshore Manager also failed to pay New York City unincorporated business tax for tax years 2004 to 2007. Instead of apportioning income to New York, Offshore Manager apportioned all of its income to Alabama, which had lower tax rates. 
• As a result of Offshore Manager’s tax positions, Offshore Manager’s nonresident members avoided paying the New York State income tax that they owed, and Offshore Manager failed to pay millions of dollars in estimated taxes to New York State for those nonresident members as it was required to do. Further, Offshore Manager’s members who were New York residents paid less New York tax because no income was apportioned to New York State. 
• Offshore Manager ignored professional advice that it should pay New York State and City tax on its incentive fee income.
• Offshore Manager’s Chief Administrative Officer acknowledged, in his own handwritten notes, that apportioning none of the income to New York and all of the income to Alabama was “unsupportable.”
• When first confronted with the prospect of having to pay New York tax, an officer of Offshore Manager, who was an Alabama resident, responded to a question about why the issue arose by writing, “I think [the tax advisors] just figured it out; ugh…. I hate taxes especially having to support some place I don’t live. Another one of those high class problems.”
• Offshore Manager concealed its business activities in New York from the New York State Department of Taxation and Finance. For example, during a State audit examining the nature of Offshore Manager’s business activity and the source of its income, Offshore Manager’s agents in Alabama amended the company’s limited liability company agreement to change the location of the company’s longstanding principal office from New York, New York to Birmingham, Alabama and then caused statements to be made to state tax officials that highlighted the new Alabama address in the revised agreement without alerting them that the address had been changed during the audit.

As a term of the settlement agreement, Offshore Manager agreed to apportion to New York State and New York City 100 percent of the incentive fee income that it earned in the period 2004 through 2009 but had deferred for tax purposes. Offshore Manager also made a $4.8 million payment to the New York City Department of Finance relating to an outstanding tax judgment against the company. The Attorney General expresses her appreciation to the whistleblower, without whose information the misconduct might have remained concealed from the authorities, and to the whistleblower’s attorneys.