U.S. Attorney Announces Charges Against Leadership Of The Sinaloa Cartel And 25 Other Defendants In Massive Fentanyl Importation And Trafficking Conspiracies

 

Three Sons of “El Chapo,” Known as the “Chapitos,” Led Efforts to Manufacture and Transport Staggering Quantities of Fentanyl Made from Chinese Chemicals to the United States

 Damian Williams, the United States Attorney for the Southern District of New York, Merrick B. Garland, the Attorney General of the United States, Lisa O. Monaco, the Deputy Attorney General of the United States, and Anne Milgram, the Administrator of the U.S. Drug Enforcement Administration (“DEA”), announced today the unsealing of fentanyl trafficking, weapons, and money laundering charges contained in three Indictments charging 28 defendants, including 23 based in Mexico, four based in China, and one based in Guatemala.

Since at least in or about 2014, the Sinaloa Cartel has run a global fentanyl manufacturing and distribution operation, sending massive quantities of fentanyl — a drug that has killed unprecedented numbers of Americans — into the United States.  Cartel leadership includes three sons of the Sinaloa Cartel’s former leader, Joaquín Archivaldo Guzmán Loera, a/k/a “El Chapo,” known as the “Chapitos”: IVAN ARCHIVALDO GUZMAN SALAZAR, JESUS ALFREDO GUZMAN SALAZAR, a/k/a “Alfredo,” and OVIDIO GUZMAN LOPEZ, a/k/a “Raton.”  Together with their co-conspirators, the Chapitos allegedly controlled extensive, multi-faceted, and international operations covering the fentanyl trade, which was designed to pump staggering quantities of fentanyl into the United States — in IVAN ARCHIVALDO GUZMAN SALAZAR’s words, to flood the United States with fentanyl in order to supply “streets of junkies.”  The Indictments returned today charge not only the Chapitos but also top lieutenants and leadership of the Sinaloa Cartel; alleged manufacturers and distributors of the Sinaloa Cartel’s fentanyl; the managers of the violent armed security apparatus that protects the Sinaloa Cartel’s drug trafficking operations; the sophisticated money launderers who repatriate the Sinaloa Cartel’s drug proceeds back to Mexico; and multiple chemical precursor suppliers in China that fuel the Sinaloa Cartel’s fentanyl distribution operation.  Through these efforts, the Chapitos and the Sinaloa Cartel allegedly reaped hundreds of millions of dollars in profits by flooding the United States with fentanyl.  Seven defendants are in custody pending extradition proceedings: OVIDIO GUZMAN LOPEZ was arrested in Mexico; CARLOS OMAR FELIEX GUTIERREZ and SILVANO FRANCISCO MARIANO, a/k/a “Rayo,” were arrested in Colombia; SERGIO DUARTE FRIAS, ANA GABRIELA RUBIO ZEA, and HUMBERTO BELTRAN CUEN, a/k/a “Don Chino,” were arrested in Guatemala; and ANASTACIO SOTO VEGA, a/k/a “Tachin,” was arrested in Greece.  Additionally, JULIO MARIN GONZALEZ was previously arrested in the United States and will be arraigned before U.S. District Judge Katherine Polk Failla.

U.S. Attorney Damian Williams said: “For over a decade, the illicit fentanyl trade has created a plague of addiction, death, and misery for Americans and New Yorkers of all walks of life.  As alleged, the sons of the infamous Sinaloa Cartel leader ‘El Chapo,’ Ivan Archivaldo Guzman Salazar, Jesus Alfredo Guzman Salazar, and Ovidio Guzman Lopez, commanded the Sinaloa Cartel’s fentanyl manufacturing and trafficking operation.  Today’s charges target not only Sinaloa Cartel leadership but the Cartel’s entire fentanyl infrastructure, including the armed enforcers who use abhorrent violence to protect the Cartel, the lab operators who produce untold quantities of fentanyl, the drug traffickers who move their deadly fentanyl into and throughout the United States, the money launderers who funnel proceeds back to the Cartel, and the China-based chemical suppliers who service the Cartel.  I commend the career prosecutors of the Southern District of New York and our partners at the Drug Enforcement Administration for their tireless efforts to disrupt the Sinaloa Cartel’s fentanyl trafficking at all levels.  We hope that today’s charges are a major step toward accountability for those who have for so long pushed this poison into our communities.”

Attorney General Merrick B. Garland said: “Today, the Justice Department is announcing significant enforcement actions against the largest, most violent, and most prolific fentanyl trafficking operation in the world – run by the Sinaloa Cartel, and fueled by Chinese precursor chemical and pharmaceutical companies.  Families and communities across our country are being devastated by the fentanyl epidemic.  Today’s actions demonstrate the comprehensive approach the Justice Department is taking to disrupt fentanyl trafficking and save American lives.”

Deputy Attorney General Lisa O. Monaco said: “The fentanyl crisis in America – fueled in large part by the Sinaloa cartel – threatens our public health, our public safety, and our national security.  Today’s indictments target every element of the Sinaloa Cartel's trafficking network and reflect the Justice Department's commitment to attacking every aspect of this threat: from the chemical companies in China that spawn fentanyl precursors, to the illicit labs that produce the poison, to the networks and money launderers and murderers that facilitate its distribution.  Just as we have gone on offense against terrorists and cyber criminals around the globe, the Department is now waging a relentless campaign to disrupt the production and trafficking of fentanyl – before it can reach its victims.”

DEA Administrator Anne Milgram said: “Today’s indictments send a clear message to the Chapitos, the Sinaloa Cartel, and criminal drug networks around the world that the DEA will stop at nothing to protect the national security of the United States and the safety and health of the American people.  The Chapitos pioneered the manufacture and trafficking of fentanyl – the deadliest drug threat our country has ever faced – flooded it into the United States for the past eight years and killed hundreds of thousands of Americans.  Over the last year and a half, the DEA proactively infiltrated the Sinaloa Cartel and the Chapitos network, obtained unprecedented access to the organization’s highest levels, and followed them across the world.  I am grateful to the men and women of the DEA for their exceptional work on this case, which is the beginning of our work as ‘One DEA’ to dismantle every part of the criminal cartels that are killing Americans at record rates.”

According to the allegations contained in the Indictments, other court filings, and statements made during court proceedings:[1]

The Sinaloa Cartel (the “Cartel”) is one of the most powerful drug cartels in Mexico and is largely responsible for the manufacturing and importing of fentanyl for distribution in the United States.  Fentanyl is a dangerous synthetic opioid that is more than 50 times more potent than heroin.  Fentanyl is now the leading cause of death for Americans ages 18 to 49, and it has fueled the opioid epidemic that has been ravaging families and communities across the United States for the past approximately eight years.  Between 2019 and 2021, fatal overdoses increased by approximately 94%, with an estimated 196 Americans dying each day from fentanyl.

The Cartel is led, in part, by IVAN ARCHIVALDO GUZMAN SALAZAR, JESUS ALFREDO GUZMAN SALAZAR, and OVIDIO GUZMAN LOPEZ, who are sons of the Cartel’s notorious former leader, Joaquín Archivaldo Guzmán Loera, a/k/a “El Chapo,” and are known collectively as the “Chapitos.”

Since in or about 2014, the Chapitos’ alleged fentanyl trafficking operation for the Cartel has grown exponentially in volume, scale, and sophistication.  Under the Chapitos’ leadership, the Cartel operates a vast fentanyl trafficking operation that integrates each step in the fentanyl trade, from manufacture to distribution.  Members and affiliates of the Cartel purchase and import fentanyl precursor chemicals from China directly or through third countries, manufacture fentanyl in laboratories in the mountains of Sinaloa, move that fentanyl across the border into the United States, distribute that fentanyl through various networks operating across the United States, and launder the proceeds back to Mexico.

As a critical part of the fentanyl trafficking enterprise, the Cartel relies on and directs hundreds of violent, heavily armed soldiers (known as sicarios) to protect the Cartel’s fentanyl operations at every step and intimidate others who might attempt to cheat, interfere with, or compete against the Cartel through kidnapping, torture, and murder using machineguns and other weaponry.  As alleged, the Chapitos’ sicarios operated under the direction of the Chapitos and OSCAR NOE MEDINA GONZALEZ, a/k/a “Panu,” NESTOR ISIDRO PEREZ SALAS, a/k/a “Nini,” and JORGE HUMBERTO FIGUEROA BENITEZ, a/k/a “27,” to kidnap, torture, and kill anyone who opposed the Chapitos.

To manufacture fentanyl, the Cartel uses precursor chemicals procured principally from China.  As alleged, the Cartel relies on brokers such as ANA GABRIELA RUBIO ZEA, a/k/a “Gaby,” who procure fentanyl precursor chemicals for the Cartel through Chinese chemical companies and the owners and operators of the Chinese chemical companies, including KUN JIANG, YONGHAO WU, a/k/a “Tim,” YAQIN WU, a/k/a “Lily,” and HUATAO YAO, a/k/a “Yao.”

The Cartel also employs skilled chemists — or “cooks” — who have expertise in synthesizing fentanyl from the China-sourced precursor chemicals.  In one day alone, a Cartel cook can manufacture over 100,000 pills using pill press machines.  In some instances, Cartel traffickers under the Chapitos have tested the purity of their fentanyl by testing it on others.  For example, in or about 2022, PEREZ SALAZ and FIGUEROA BENITEZ experimented on a woman by injecting her repeatedly with doses of fentanyl until she died.

Led by the Chapitos, the trafficking of finished fentanyl powder and pills is a main goal of the Cartel and one of its most lucrative endeavors.  Most often, the Cartel’s fentanyl crosses into the United States at ports of entry, including concealed in secret compartments of cars, disguised among goods in tractor-trailers, hidden in luggage on planes, obscured through fake paperwork in shipping containers, or secreted on or in the bodies of drug mules.

Once the Cartel’s fentanyl is transported into the United States, Cartel traffickers maintain designated stash locations where the fentanyl is stored, and the Cartel’s U.S.-based distribution network then sells the fentanyl wholesale for retail distribution throughout the United States, including in New York City.  In 2022, alone, the DEA seized over 57 million fentanyl-laced pills and over 13,000 pounds of fentanyl powder — the equivalent of approximately 410 million potentially deadly doses of fentanyl.  

Finally, as alleged, the Cartel relies on increasingly sophisticated ways of laundering fentanyl proceeds from the United States back into Mexico to enrich the Chapitos.  For example, over the course of approximately two years, a single Cartel trafficker in the United States assisted in the laundering of more than $24 million in narcotics proceeds belonging to OVIDIO GUZMAN LOPEZ by providing to Cartel money launderers in the United States approximately $15 million and by sending approximately $9 million in bulk cash to Mexico hidden in secret compartments in cars.  Other alleged Cartel money launderers, including MARIO ALBERTO JIMENEZ CASTRO, a/k/a “Kastor,” and SERGIO DUARTE FRIAS, have used cryptocurrency wallets to launder hundreds of thousands of dollars in fentanyl proceeds for the Cartel.

A chart containing the charges and minimum and maximum penalties each defendant faces is attached.  The statutory minimum and maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by a judge.

Mr. Williams praised the outstanding investigative work of the DEA’s Special Operations Division, Bilateral Investigations Unit; Atlanta Division Office; Aviation Division; Boston Division Office; Denver Division Office; Imperial County District Office; Indianapolis District Office; Los Angeles Division Office; Nashville District Office; Newark Division Office; New York Division Office; Omaha Division Office; Orlando District Office; Philadelphia Division Office; Phoenix Division Office; Riverside District Office; Salt Lake City District Office; San Diego Division Office; San Ysidro District Office; Madrid Country Office; Athens Country Office; Bogota Country Office; Canberra Country Office; Guatemala City Country Office; Vienna Country Office; and multiple DEA offices throughout Mexico, as well as the assistance of the Office of International Affairs of the Justice Department’s Criminal Division; the U.S. Department of the Treasury, Office of Foreign Assets Control; and the U.S. Department of State, Rewards for Justice Program.

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

United States v. Ovidio Guzman Lopez, 23 Cr. 42

Defendant	Age	Charges	Minimum and Maximum Penalties
OVIDIO GUZMAN LOPEZ, a/k/a “Raton”	33	Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Mandatory life in prison

United States v. Ivan Archivaldo Guzman Salazar, et al., 23 Cr. 180 

Defendant	Age	Charges	Minimum and Maximum Penalties
IVAN ARCHIVALDO GUZMAN SALAZAR	39	Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Mandatory life in prison
JESUS ALFREDO GUZMAN SALAZAR, a/k/a “Alfredo”	36	Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Mandatory life in prison
OSCAR NOE MEDINA GONZALEZ, a/k/a “Panu”	39	Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Mandatory life in prison
NESTOR ISIDRO PEREZ SALAS, a/k/a “Nini”	31	Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Mandatory life in prison
JORGE HUMBERTO FIGUEROA BENITEZ, a/k/a “27”	31	Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Mandatory life in prison
LIBORIO NUNEZ AGUIRRE, a/k/a “Karateca”	65	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
NOEL PEREZ LOPEZ, a/k/a “Tio”	42	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
SAMUEL LEON ALVARADO	34	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
LUIS JAVIER BENITEZ ESPINOZA, a/k/a “El Fourteen”	22	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
ALAN GABRIEL NUNEZ HERRERA	29	Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering	Life in prison; mandatory minimum of 10 years in prison
JUAN PABLO LOZANO, a/k/a “Camaron”	30	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
CARLOS LIMON	19	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
JESUS TIRADO ANDRADE	26	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
CARLOS OMAR FELIX GUTIERREZ	22	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
SILVANO FRANCISCO MARIANO, a/k/a “Rayo”	41	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
JULIO MARIN GONZALEZ	32	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
MARIO ALBERTO JIMENEZ CASTRO, a/k/a “Kastor”	34	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
SERGIO DUARTE FRIAS	26	Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering	Life in prison; mandatory minimum of 40 years in prison
ANA GABRIELA RUBIO ZEA, a/k/a “Gaby”	32	Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering	Life in prison; mandatory minimum of 10 years in prison
KUN JIANG	Unknown	Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering	Life in prison; mandatory minimum of 10 years in prison
YONGHAO WU, a/k/a “Tim”	31	Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering	Life in prison; mandatory minimum of 10 years in prison
YAQIN WU, a/k/a “Lily”	30	Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering	Life in prison; mandatory minimum of 10 years in prison
HUATAO YAO, a/k/a “Yao”	32	Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering	Life in prison; mandatory minimum of 10 years in prison

United States v. Leobardo Garcia Corrales, et al., S2 23 Cr. 136 

Defendant	Age	Charges	Minimum and Maximum Penalties
LEOBARDO GARCIA CORRALES, a/k/a “Leo”	53	Fentanyl importation conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices	Life in prison; mandatory minimum of 40 years in prison
MARTIN GARCIA CORRALES, a/k/a “Tano,” a/k/a “Cachuchas”	43	Fentanyl importation conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices	Life in prison; mandatory minimum of 40 years in prison
HUMBERTO BELTRAN CUEN, a/k/a “Don Chino”	69	Fentanyl importation conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices	Life in prison; mandatory minimum of 40 years in prison
ANASTACIO SOTO VEGA, a/k/a “Tachin”	45	Fentanyl importation conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices	Life in prison; mandatory minimum of 40 years in prison

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

MAYOR ADAMS AWARDS KEY TO THE CITY OF NEW YORK TO BROADWAY LEGEND LORD ANDREW LLOYD WEBBER

 

Key to the City of New York Presented as The Phantom of the Opera — Broadway’s Longest-Running Show — Ends Run This Weekend

New York City Mayor Eric Adams today awarded a Key to the City of New York to Broadway legend Lord Andrew Lloyd Webber. Mayor Adams presented the key to Lloyd Webber as the composer’s musical, The Phantom of the Opera — the longest-running Broadway show in history — will close out its run this Sunday, April 16^th, and as his latest musical, Bad Cinderella, has begun its Broadway run.

 

“For more than 50 years, Lord Andrew Lloyd Webber’s music has defined Broadway,” said Mayor Adams. “From Jesus Christ Superstar to The Phantom of the Opera — Broadway’s longest-running show — to Bad Cinderella, Andrew’s legacy has inspired countless generations and attracted tens of millions of people to our city. Although he may come from across the pond, Andrew’s story is a New York City story. An EGOT winner, a Knight, a Lord — and now I am proud to add one more honor to that long list — recipient of the Key to New York City.”

 

“For nearly five decades, Broadway has acted as my second home, dating all the way back to 1971 with Jesus Christ Superstar,” said Lord Andrew Lloyd Webber. “I am honored to receive a Key to the City of New York, a symbol of how pivotal New York City is to my personal life and professional career in theater. I thank Mayor Eric Adams for this gift and with Bad Cinderella, I’m looking forward to performing my work under Broadway’s iconic lights once again.”

 

Andrew Lloyd Webber is one of the most successful composers of musical theater in history. He has been nominated for 23 competitive Tony Awards, winning six, as well as a Special Tony Award for Lifetime Achievement. He has also been nominated for 14 Grammy Awards, winning three. With his 1996 Oscar and his 2018 Emmy Award, he became one of just 16 people to achieve EGOT status (winning at least one of each: an Emmy, a Grammy, an Oscar, and a Tony). In 1992, Lloyd Webber was knighted by Queen Elizabeth II.

 

The Key to the City of New York was first awarded in 1702 by New York City Mayor Phillip French, when he offered “Freedom of the City” to Viscount Edward Cornbury, governor of New York and New Jersey. By the mid-1800s, it became customary to award the Key to the City of New York as a direct symbol of the city’s wish that a guest feel free to come and go at will. Today, the Key to the City of New York is a beloved symbol of civic recognition and gratitude reserved for individuals whose service to the public and the common good rises to the highest level of achievement.

VCJC News & Notes 4/14/23

 

Van Cortlandt Jewish Center
News and Notes

Here's this week's edition of the VCJC News and Notes email. We hope you enjoy it and find it useful! Reminders Shabbos Shabbos information is, as always, available on our website, both in the information sidebar and the events calendar. Here are the times you need:   Shabbos Candles Friday 4/14/23 @ 7:16 pm Shabbos morning services at 8:40 am.  Please join the services if you can do so safely.  Shabbos Ends Saturday 4/15/23 @ 8:20 pm   Yizkor Yizkor was said on Thursday, April 13. It is customary to make a charitable donation in conjunction with Yizkor.  If you wish to donate to VCJC as part of your Yizkor observance, it can be done in person at the office, by check, or online through our website   HOLOCAUST MEMORIAL PROGRAM Sunday April 16        10:00 am Speaker:  Larry Hartstein        Topic:  The Nazi SS:  A Criminal Organization Van Cortlandt Jewish Center 3880 Sedgwick Ave Bronx, NY 10463

New York City Comptroller’s Office Releases FY 2022 Claims Report

 

New York City Comptroller Brad Lander released the Annual Claims Report, summarizing claims filed against or settled by the City during fiscal year 2022.

In FY 2022, 12,188 claims and lawsuits against New York City cost $1.5 billion—the highest annual amount in the city’s history. The increase from FY21 is largely due to the Gulino class action lawsuit, filed in 1996 for discrimination by the City as a result a State-mandated teacher certification examinations. Of the top 11 largest individual claims settled by the City in FY 2022, seven were for wrongful convictions.

“Of the eleven largest individual tort claim settlements against the City last year, seven were for wrongful convictions, two for medical malpractice, one for an assault at Rikers Island, and an accident involving a science experiment at a public school. We’d so much rather spend the $1.5 billion we spent on claims this year to improve our schools, parks, and neighborhoods. The Annual Claims Report can serve as a tool to identify and mitigate risks, reduce harms to New Yorkers, and improve the City’s bottom line,” said Comptroller Brad Lander.

Personal injury and property damage claims (collectively, “tort claims”) payouts cost the City $688.4 million, up from the $583.0 million spent in FY 2021, an 18% increase. The five costliest types of tort claim settlements in FY 2022 were civil rights, motor vehicle crashes (explored in detail over the past decade in the Comptroller’s recent Wreckless Spending report), police action, accidents in schools, and medical malpractice claims. Together, these five claim types cost $482.7 million and accounted for 71% of all personal injury claim settlements in FY 2022.

Salary Claims Account for Largest Share of Law Settlements

In FY 2022, the City paid out $819.2 million in law claims, a 117% increase from the $377.0 million paid out in FY 2021. Salary claims represent more than half the cost of all law claims. Total salary claim payouts increased dramatically from $18 million in FY 2021 to $437.5 million in FY 2022, primarily due to judgments in Gulino v. Board of Education.

The Gulino v. Board of Education class action lawsuit was filed in 1996 and alleged that two of the Department of Education (DOE) mandated teacher certification examinations had a disparate impact on Black and Latino teachers. After years of litigation courts decided that use of the examinations as part of the selection process for teachers violated Title VII because the examinations had a disparate impact on Black and Hispanic test takers and there was a lack of proof that the examinations were a valid device for selecting teachers. Ultimately, the DOE was required to pay backpay and other damages and costs, resulting in payments of $366.8 million in FY 2022.

Excluding judgments on that lawsuit, payouts on salary claims still increased by 293%. This increase is due to several other multimillion-dollar payments, including two eight-figure collective action settlements alleging violations of the Fair Labor Standards Act. Excluding Gulino v. Board of Education, the cost of salary claim payouts increased by $52.7 million, from $18.0 million in FY 2021 to $70.8 million in FY 2022.

Wrongful Conviction Settlements Account for Largest Share of Tort Settlements

For the first time since FY 2017, City payouts on tort claims rose in part due to the 17% rise in civil rights claims. The cost of civil rights claim payouts increased to $143.2 million in FY 2022 up from $95.2 million in FY 2021.

Some of the highest tort claim payouts were 16 wrongful conviction claims that settled for an average of $5.43 million each, costing the City a total of $86.8 million in payouts. Six of these settlements were settled by the Bureau of Labor Law pre-litigation and cost the city $25 million. Pre-litigation settlements ensure prompt relief for claimants and help both the City and claimants avoid costly legal fees.

Under the New York City Charter, the Comptroller has the power to settle or adjust all claims against or on behalf of the City. This work is performed by the Comptroller’s Office Bureau of Law and Adjustment (BLA), which, under the direction of the Comptroller, the General Counsel, and the Assistant Comptroller for BLA, comprises attorneys, claims professionals, engineers, and administrative staff.

The full Annual Claims Report for Fiscal Year 2022 can be read here.

New York Litigation Funder Convicted In Trip-And-Fall Fraud Scheme Sentenced To 36 Months In Prison

 

 Damian Williams, the United States Attorney for the Southern District of New York, announced that ADRIAN ALEXANDER, a New York litigation funder, was sentenced to 36 months in prison for his participation in a scheme to obtain large insurance settlements and lawsuit recoveries from fraudulent trip-and-fall accidents.  ALEXANDER is the 11th defendant to plead guilty or be convicted at trial for his participation in this fraud scheme and the fifth defendant to be sentenced.  Defendants Ryan Rainford, Bryan Duncan and Robert Locust, who recruited patients into the scheme and were convicted at trial in May 2019, were previously sentenced on January 7, 2020, July 27, 2020, and July 9, 2021, respectively.  Defendant Sady Ribeiro, a surgeon who participated in the scheme, was previously sentenced on March 23, 2023.  U.S. District Judge Sidney H. Stein imposed all sentences. 

U.S. Attorney Damian Williams said: “Adrian Alexander knowingly exploited some of the most vulnerable members of society – many of whom were poor, drug addicts, or homeless – in order to enrich himself and his investors.  Today’s sentence should serve as a warning to unscrupulous litigation funders that, together with our law enforcement partners, we will hold accountable those who engage in unlawful practices and prey on litigants without the means to avail themselves of the judicial process.”

According to the Indictment, the Superseding Information, evidence presented in court, and statements made in court:

ALEXANDER, among others, was involved in an extensive fraud scheme through which fraud scheme participants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents.

The fraud scheme participants recruited individuals (the “Patients”) to stage or falsely claim to have suffered trip-and-fall accidents at particular locations throughout the New York City area (the “Accident Sites”).  In the course of the fraud scheme, scheme participants recruited more than 400 Patients.  Members of the fraud scheme often recruited Patients who were extremely poor.  For example, it was common for Patients to ask for food when they would appear for their intake meetings with the lawyers.  Many of the Patients did not have sufficient clothing to keep them warm during the winter and had poor-quality shoes.  Members of the fraud scheme also recruited Patients who were drug addicts, and it was common for scheme participants to recruit Patients from homeless shelters in New York City.

In the beginning, scheme participants would instruct Patients to claim they had tripped and fallen at a particular location, when in fact, the Patients had suffered no such accidents.  Eventually, at the direction of the lawyers who filed fraudulent lawsuits on behalf of the Patients, scheme participants began to instruct Patients to stage trip-and-fall accidents, i.e., to go to a location and deliberately fall.  Common Accident Sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks, and purported “potholes.”

After the staged trip-and-fall accidents, Patients were referred to specific attorneys who would file personal injury lawsuits (the “Fraudulent Lawsuits”) against the owners of the Accident Sites and/or insurance companies of the owners of the accident sites (the “Victims”).  The Fraudulent Lawsuits did not disclose that the Patients had deliberately fallen at the Accident Sites or, in some cases, had not fallen at all.  During the course of the fraud scheme, the defendants, together with others known and unknown, attempted to defraud the Victims of more than $31,000,000.

The Patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including Ribeiro.  The fraud scheme participants advised the Patients that if they intended to continue with their lawsuits, they were required to undergo surgery, which was critical to boosting the value of any potential settlement.  Fraud scheme participants, including ALEXANDER, looked for doctors who were willing to perform surgeries, even when others would not.  For example, in a May 2015 email, after one doctor informed ALEXANDER that a particular patient was “not . . . a surgical candidate,” ALEXANDER directed a Patient recruiter and case manager to “[t]ake him to [another doctor]—Nothing is done until its done.” 

As an incentive to getting surgery, the recruited Patients were offered a payment, in the form of loans, typically between $1,000 and $1,500 after they completed surgery (“Post-Surgery Loans”).  Patients generally were told to undergo two surgeries. 

The Patients’ legal and medical fees were usually paid for by litigation funding companies (the “Funding Companies”), including a funding company owned by ALEXANDER, even if the Patient maintained medical coverage through an insurance company or a government-subsidized program.  The Funding Companies also paid the fraud scheme organizers and participants referral fees, typically $1,000 to $2,500, for each Patient who signed a funding agreement.  In an April 2015 email about a particular Patient’s staged accident, Alexander wrote to two of the recruiters and case managers, “I am sure you realize I want to do these deals; I am just trying to see how we can, without getting in trouble.”

In exchange for funding Patients’ medical and legal costs, the Funding Companies charged the Patients high interest rates, sometimes up to 50% on medical loans and up to 100% on personal loans.  The interest rates were so high that oftentimes the majority of the proceeds that were awarded in the Fraudulent Lawsuits were paid to the Funding Companies, lawyers, doctors, and others, with the Patients receiving a much smaller percentage of the remaining recovery. 

In addition to the high-interest rates charged by the Funding Companies, ALEXANDER also profited from the Fraud Scheme through an MRI facility that he owned and operated (“MRI Facility-1”).  ALEXANDER pushed the case managers to send Patients to MRI Facility-1, which routinely prepared MRI reports that were “positive” for medical conditions justifying surgery, even though the Patients had not sustained any injuries.  ALEXANDER received $1,000 per MRI that MRI Facility-1 prepared as part of the scheme. 

In addition to the prison term, ALEXANDER, 76, of New York, New York, was sentenced to three years of supervised release.  ALEXANDER was further ordered to pay $659,011 in forfeiture.  Restitution will be determined by the Court within 90 days. 

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Williams also thanked the National Insurance Crime Bureau for their assistance in the investigation.