MAYOR DE BLASIO APPOINTS DAVID HANSELL COMMISSIONER OF THE ADMINISTRATION FOR CHILDREN’S SERVICESMAYOR DE BLASIO APPOINTS DAVID HANSELL COMMISSIONER OF THE ADMINISTRATION FOR CHILDREN’S SERVICES

Former Obama Administration official to lead ACS, deepen agency’s mission to protect NYC’s most vulnerable children

   Mayor Bill de Blasio today appointed David Hansell Commissioner of the New York City Administration for Children’s Services (ACS). Hansell, a skilled manager with decades of experience overseeing large-scale agencies and delivering effective social services for at-risk communities, comes to ACS after a nearly five-year tenure as Managing Director and head of the Global Human & Social Services Center of Excellence at KPMG.

Hansell has built a reputation as a proven manager with a data-driven focus on improving outcomes for vulnerable populations, especially at-risk families and children. Hansell has worked at the national, state and local levels in child welfare and social services, including prior service in the New York City government in the Department of Health and the Human Resources Administration, in addition to his experience in the private and non-profit sectors.

“Our most solemn responsibility is to provide vulnerable children with the care and support they deserve,” said Mayor Bill de Blasio. “David Hansell understands this mission deeply – and that’s why I know he’s the right choice to lead ACS and implement an aggressive reform agenda focused on preventive services for kids and families. David has spent his career on the frontlines working with at-risk communities, and I have no doubt he’ll tackle this job with the same focus and intensity that’s defined his career.”

“David Hansell has dedicated his career to uplifting some of our most vulnerable populations, including at-risk children, low-income families, and New Yorkers living with HIV/AIDS,” said Deputy Mayor for Health and Human Services Dr. Herminia Palacio. “He’s a skilled manager with exactly the type of experience and vision needed to lead a complex child welfare agency like ACS. I know he’ll be a tenacious advocate for the welfare of children across the City, and couldn’t be prouder to bring him onto our team.”

“I am honored to lead ACS at this critical time, and confident that my long-term experience in government well-prepared me to strengthen ACS’ mission and programs,” said Administration for Children's Services Commissioner David A. Hansell. “Under my leadership, ACS will continue implementation of needed reforms to better protect and serve our most vulnerable children and families throughout New York City.”

The de Blasio administration has invested over $122 million in new funding to strengthen the child welfare system. Currently, fewer than 10,000 children are in foster care – the lowest number in decades – due to better child protective investigations, more preventive services and improvements in foster care practices. During 2015, more than 46,000 children received preventive services, creating a universe of 22,000 families benefiting from preventive services during that year. In 2016, ACS hired more than 600 new Child Protective Specialists to increase staffing for those dedicated workers who carry out the critical work of responding and investigating reports of child abuse or neglect.

Hansell will begin his position at the Administration for Children’s Services on March 6, 2017.

About David Hansell

David Hansell is an accomplished manager with decades of experience in social services work across the public, private, and non-profit sectors.

Since 2012, Hansell has been a Managing Director at KPMG, and served as head of its Global Human & Social Services Center of Excellence. In this position, Hansell expanded advisory relationship with government agencies both in the U.S. and across the world, with a focus on social service delivery in areas such as child welfare, income security, nutritional support, and employment training. He previously served as a consultant to the non-profit Case Commons, Inc., where he helped further the use of Casebook, a collaborative, family-centered case management system for child welfare work.

From 2009 to 2011, Hansell served as Acting Assistant Secretary and Principal Deputy Assistant Secretary for the Administration for Children and Families in the U.S. Department of Health and Human Services. At HHS, Hansell helped oversee a division with an approximately $50 billion annual budget and managed a staff of approximately 1,400 employees across headquarters and ten regional offices. His areas of responsibilities included child welfare, economic support, early childhood education, and special population programs. In his role, Hansell helped implement the “Fostering Connections to Success Act”, which incentivized state child welfare systems to create new kinship care arrangements, improve services for older foster care youth, and enhance educational continuity for children in the foster care system.

In 2007, Hansell was appointed by former New York State Governor Elliot Spitzer as Commissioner of the New York State Office of Temporary and Disability Assistance, becoming the first openly gay man to become a commissioner in the state of New York. For the next three years, he oversaw a roughly $5 billion budget, with responsibility for administering New York State’s public assistance, food stamp, child support, and homeless housing programs, among others. He supervised a staff of approximately 2,400 employees, spanning offices in Albany, New York City, and across the state. In this position, Hansell helped achieve an all-time high level of household participation through the Working Families Food Stamp Initiative and helped reform New York State’s child support programs to heighten compliance and increase payments to custodial parents and children.

From 2002 to 2006, Hansell served as Chief of Staff of the New York City Human Resources Administration under Commissioner Verna Eggleston. He has also held a variety of roles in the New York City Department of Health, including Associate Commissioner of Planning and Program Implementation (2000) and Associate Commissioner of HIV Services (1997 to 2000). As part of his HIV treatment and prevention work, Hansell managed a portfolio of over $100 million in medical care and social support programs.

Hansell has served as a consultant to several non-profit, government, and philanthropic organizations on a diverse array of health and social services policy and advocacy issues. From 1998 to 1994, he served in various roles as an advocate and activist during the height of the HIV/AIDS epidemic, including Director of Legal Services and Deputy Executive Director of Gay Men’s Health Crisis, which served as the largest privately-run AIDS services agency in New York. Early in his career, he served as an Associate at Berle, Kass & Case, specializing in environmental and land use law, and as a law clerk for Judge Irving R. Kaufman of the U.S Court of Appeals for the Second Circuit. He is a former aide to U.S. Senators Donald Riegle, Jr. and Carl Levin and began his career as a sixth grade teacher in Cleveland, Ohio.

Hansell, 63, received his JD from Yale Law School, where he served as an Editor of the Yale Law Journal. He graduated Magna Cum Laude from Haverford College with a BA in Psychology.

Managing Director Of Investment Bank Sentenced To 3 Years In Prison For Insider Trading

   Preet Bharara, the United States Attorney for the Southern District of New York, announced that SEAN STEWART, a former managing director at an investment advisory firm headquartered in Manhattan, was sentenced today to 36 months in prison by U.S. District Judge Laura Taylor Swain for tipping his father and co-defendant Robert Stewart with inside information about five health care company mergers and acquisitions before they were publicly announced.  SEAN STEWART was convicted after a jury trial that ended on August 17, 2016. 

Manhattan U.S. Attorney Preet Bharara said:  “As proven at trial, Sean Stewart used his position as an investment banker to feed confidential inside information about clients to his father so that he could profit illegally from well-timed trades.  Despite his various efforts to cover-up his scheme, including claiming he did not recognize his own father’s name on a FINRA list of those who had traded in advance of an acquisition, Stewart has been held to account by a jury and sentenced to three years in federal prison.  This case and today’s sentence is a victory for all who believe in a fair securities market.” 

According to the allegations contained in the Indictment as well as the evidence presented during trial:

In early 2011, SEAN STEWART, who at the time held the position of Vice President in the Healthcare Investment Banking Group of a global bank headquartered in Manhattan (“Investment Bank A”), began tipping his father, Robert Stewart, with material nonpublic information about upcoming mergers and acquisitions, including with the names of the companies that were acquisition targets, both when the target was an Investment Bank A client and when the bank represented the acquirer, as well as with information that indicated the likely timing of an upcoming deal. 

The first of these deals involved the acquisition of Kendle International Inc. by INC Research, LLC, which was announced publicly on May 4, 2011.  SEAN STEWART worked on the deal, representing Kendle.  Robert Stewart made about $7,900 in profits on purchases of Kendle stock executed in February and March of 2011.  When questioned by the Securities and Exchange Commission about his Kendle trades in May 2013, Robert Stewart reported that he used the proceeds of those trades to pay expenses related to SEAN STEWART’s June 2011 wedding.    

The second deal about which SEAN STEWART tipped Robert Stewart was the acquisition of Kinetic Concepts, Inc. (“KCI”) by Apax Partners, announced on July 13, 2011.  Although Robert Stewart purchased some stock in KCI based on SEAN STEWART’s tip, he sold that stock before the acquisition was announced, around the same time that SEAN STEWART learned the Financial Industry Regulatory Authority (“FINRA”) was conducting an inquiry into Robert Stewart’s Kendle trading. 

Also around this time, in the spring of 2011, Robert Stewart expressed a concern to co-conspirator Richard Cunniffe that Robert Stewart was “too close to the source” to be trading in KCI stock his own account, and asked Cunniffe to make purchases of KCI call options for Robert Stewart in Cunniffe’s brokerage account.  Cunniffe agreed to do so, and also mirrored for his own benefit the KCI trades that Robert Stewart was directing.

In connection with the FINRA inquiry, FINRA prepared a list of persons and entities that had traded in advance of the Kendle deal.  The list included Robert Stewart’s name.  When Investment Bank A asked SEAN STEWART whether he knew anyone on the list, he initially denied recognizing the name of his father; later, when confronted by lawyers from Investment Bank A, SEAN STEWART acknowledged that his father was on the list but told a series of lies designed to make it seem as if Robert Stewart had independently decided to invest in Kendle.  SEAN STEWART told these lies one day after meeting with his father to apprise his father of the FINRA inquiry and to get their stories straight. 

When the KCI/Apax Partners deal was announced, Robert Stewart and Cunniffe reaped profits totaling approximately $107,790.  At around this time, Robert Stewart told Cunniffe that the source of the KCI tip and the earlier Kendle tip had been Robert’s son.  Later, around the spring of 2012, Robert Stewart clarified for Cunniffe that the son in question was SEAN STEWART, who worked on the “sell side” on Wall Street.

In October 2011, SEAN STEWART left Investment Bank A.  A few months later, he joined an investment banking advisory firm headquartered in Manhattan (“Investment Bank B”) as a managing director.

During SEAN STEWART’s tenure with Investment Bank B, based on tips concerning nonpublic acquisition-related information supplied by SEAN STEWART, Robert Stewart had Cunniffe conduct options trading in advance of the public announcements of three more deals: (1) the acquisition of Gen-Probe Inc. by Hologic, Inc., announced on April 30, 2012; (2) the acquisition, by tender offer, of Lincare Holdings Inc. by Linde AG, announced on July 1, 2012; and (3) the acquisition of CareFusion Corp. by Becton, Dickinson & Co. (“Becton”), announced on October 5, 2014.  Investment Bank B represented Hologic in connection with its acquisition of Gen-Probe; Linde in connection with its acquisition of Lincare; and CareFusion in connection with its acquisition by Becton.  The profits that Robert Stewart and Cunniffe reaped from illegal insider trading in advance of the announcements of these three deals totaled over $1 million. 

During the course of the scheme, SEAN STEWART became aware that his father was having financial problems.  Rather than loan his father money, SEAN STEWART gave his father stock tips, the proceeds of which Robert Stewart used to benefit himself and his son.

In March and April of 2015, Cunniffe, who was then cooperating with the Government, recorded meetings he had with Robert Stewart.  During one such meeting, Robert Stewart accepted a payment of $2,500 cash from Cunniffe, which was the balance of the proceeds owed to Robert Stewart for profitable trading executed in Cunniffe’s account in advance of the CareFusion acquisition announcement.  Also during this meeting, Robert Stewart admitted that SEAN STEWART once chastised him for failing to make use of a tip, saying, “I can’t believe I handed you this on a silver platter and you didn’t invest in it.”  

In addition to his prison sentence, SEAN STEWART, 35, of New York, New York, was sentenced to three years of supervised release, which includes one year of home detention.  Judge Swain will set a restitution amount at a future proceeding. 

Robert Stewart pled guilty on August 12, 2015, to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer and was sentenced to four years’ probation, with the first year to be served in home detention, and $150,000 in forfeiture.

Richard Cunniffe pled guilty on May 12, 2015, to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer, one count of conspiracy to commit wire fraud, three counts of securities fraud, and one count of fraud in connection with a tender offer.

Mr. Bharara praised the investigative work of the FBI and also thanked the Securities and Exchange Commission.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov.

Father And Son Sentenced In Manhattan Federal Court For Market Manipulation Scheme

   Preet Bharara, the United States Attorney for the Southern District of New York, announced that JOHN GALANIS and his son DEREK GALANIS were each sentenced today to six years in prison for manipulating the market for Gerova Financial Group, Ltd. (“Gerova”), a publicly traded company listed on the New York Stock Exchange, and defrauding the shareholders of that company. JOHN GALANIS and DEREK GALANIS each pled guilty to one count of conspiracy to commit securities fraud and one count of securities fraud, on July 20, 2016, and August 15, 2016, respectively. Both were sentenced today by United States District Judge P. Kevin Castel.

U.S. Attorney Preet Bharara said: “John and Derek Galanis conspired to have more than $70 million worth of stock issued, hiding Jason Galanis’s control of those shares, so that they could cash out at the expense of unwitting victim investors. Today, they have been sentenced to prison for their securities fraud.”

According to the allegations contained in the Indictment filed against JOHN GALANIS, DEREK GALANIS, and their co-conspirators, and statements made in related court filings and proceedings:

The Gerova Scheme

From 2009 to 2011, JOHN GALANIS, DEREK GALANIS, and co-conspirators Jason Galanis, Gary Hirst, Ymer Shahini, and Gavin Hamels, engaged in a scheme to defraud the shareholders of Gerova, and the investing public, by effecting securities transactions in Gerova stock for the purpose of conferring millions of dollars of undisclosed remuneration on the co-conspirators, without adequate disclosure of Jason Galanis’s role in directing the transactions or the benefits received by Jason Galanis and his co-conspirators.

As a part of the scheme to defraud, Jason Galanis obtained sufficient control over Gerova to be able to cause Gerova to enter into transactions of his design, and for his benefit, including the issuance of Gerova stock. Jason Galanis obtained this control without causing himself to be identified as an officer or director of Gerova in order to appear to abide by an SEC-imposed bar that forbade him from holding such positions at publicly traded companies. Among other means and methods, Jason Galanis, with the assistance of Hirst, caused over five million shares of Gerova stock, which represented nearly half the company’s public float and which were intended for Jason Galanis’s ultimate benefit, to be issued to and held in the name of Ymer Shahini, who knowingly served as a foreign nominee for Jason Galanis. DEREK GALANIS recruited his longstanding friend Shahini to the scheme, telling Shahini in an email, “All we need is a foreign national we trust which is where you come in my friend.” DEREK GALANIS, JOHN GALANIS, Jason Galanis, Hirst, and Shahini understood that the purpose of the stock grant to Shahini was to disguise Jason Galanis’s ownership interest in the stock, and to evade the SEC’s regulations for issuing unregistered shares of stock.

At the same time, and as a further part of the scheme to defraud, JOHN GALANIS, with the assistance of DEREK GALANIS and the knowledge and approval of Jason Galanis, opened and managed brokerage accounts in the name of Shahini (the “Shahini Accounts”), effected the sale of Gerova stock from the Shahini Accounts, and received and concealed the proceeds, knowing that this activity was designed to conceal from the investing public Jason Galanis’s ownership of and control over the Gerova stock.

Jason Galanis, among others, also fraudulently induced investment advisers, including Gavin Hamels, to purchase shares of Gerova stock in the investment advisers’ client accounts by offering compensation and/or other benefits to the respective investment adviser. JOHN GALANIS and Jason Galanis thereafter coordinated the purchase of Gerova stock at the time, quantity, and/or price of their choosing, thus effectuating the sale of large quantities of Gerova stock from the Shahini Accounts while artificially maintaining the price of Gerova stock through match trading. Such coordinated trading served to manipulate the market for Gerova stock and deceive the investing public. In total, JOHN GALANIS, DEREK GALANIS, Jason Galanis, and their co-conspirators sold nearly $20 million worth of Gerova shares from the Shahini accounts for their own benefit.

In addition to the prison terms, JOHN GALANIS, 73, and DEREK GALANIS, 44, were each sentenced to three years of supervised release, and each ordered to forfeit $19,038,650.53. Judge Castel will set a restitution amount for each at a future proceeding.

Jason Galanis, who pled guilty to two counts of conspiracy to commit securities fraud, one count of securities fraud, and one count of investment adviser fraud, was sentenced to a term of 135 months in prison on February 15, 2017. Jared Galanis, who pled guilty to misprision of a felony, was sentenced to a term of 150 days in prison on January 11, 2017. Gary Hirst, who was found guilty after trial of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, and wire fraud, is scheduled to be sentenced on March 17, 2017. Defendant Ymer Shahini remains a fugitive. The allegations contained in the Indictment as to Shahini are merely accusations, and he is presumed innocent unless and until proven guilty.

Mr. Bharara praised the work of the U.S. Postal Inspection Service and the Federal Bureau of Investigation, and thanked the SEC.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.

A.G. Schneiderman Announces Guilty Plea Of Uber Driver For His Role In Operating Interstate Gun Trafficking Ring

   Joint AG-NYPD Investigation Leads To Guilty Plea For Defendant Marlon Manswell, Who Will Be Sentenced To 4 Years In Prison

Manswell Participated In Trafficking Ring Which Smuggled Guns From South Carolina, North Carolina And Tennessee To The Port Authority Bus Terminal

   Attorney General Eric T. Schneiderman announced the guilty plea of Marlon Manswell for his role in a high-volume gun trafficking ring that funneled firearms from South Carolina, North Carolina and Tennessee to New York City, often aboard Greyhound busses.  The investigation, led by the Attorney General’s Organized Crime Task Force and the NYPD’s Gang Squad Brooklyn North, relied on undercover work, wiretaps, and other surveillance resulting in the seizure of 50 illegal guns smuggled into New York City from out-of-state. Manswell, of Brooklyn, pled guilty today to criminal sale of a firearm in the second degree, criminal possession of a weapon in the second degree, and conspiracy in the fourth degree. He will be sentenced to 4 years in prison followed by five years of post-release supervision.

“Gun trafficking rings like the one Marlon Manswell participated in fuel the gun violence that threatens New York families and law enforcement. Even as we work to make our streets safer, illegal out-of-state guns make our job that much harder -- but today’s guilty plea makes clear that we won’t be deterred, and we will bring gun traffickers to justice,” said Attorney General Schneiderman. 

The investigation, which began in June 2015, led to the arrests of Donovan Bryant, Shantae Blue, Marlon Manswell and Colby Inabinet for their alleged participation in the illegal gun trafficking ring.  Bryant – with the aid of Blue, Manswell, and Inabinet – were charged with transporting dozens of guns to New York City from South Carolina and selling them to an undercover officer between June 18 and October 21, 2015.  Bryant, a North Carolina resident who uses a wheelchair, allegedly brought guns from South Carolina to the Port Authority bus terminal in Manhattan.  He then contacted Manswell, an Uber driver, to pick him up and drive him to meet with the undercover officer in Brooklyn’s Williamsburg and East New York neighborhoods.

Inabinet previously pled guilty and the cases against Bryant and Blue are still pending. Manswell is scheduled to be sentenced on March 15.

The charges against the remaining defendants are merely accusations and the defendants are presumed innocent until and unless proven guilty.

In October of 2016, Attorney General Schneiderman released a first-of-its-kind analysis of tens of thousands of “crime guns” recovered by law enforcement, illustrating gun trafficking trends that undermine New York’s strong laws. The ground-breaking analysis shows that 74 percent of all crime guns recovered by law enforcement originated out-of-state, and nearly nine out of ten (86 percent) of recovered handguns come from out-of-state.

Jason Galanis Sentenced To More Than 11 Years In Prison For Securities Fraud

   Preet Bharara, the United States Attorney for the Southern District of New York, announced that JASON GALANIS was sentenced today to 135 months in prison for manipulating the market for Gerova Financial Group, Ltd. (“Gerova”), a publicly traded company listed on the New York Stock Exchange, and to defrauding the shareholders of that company. JASON GALANIS was also sentenced for defrauding the clients of an investment advisory firm. JASON GALANIS pled guilty on July 21, 2016, to two counts of conspiracy to commit securities fraud, one count of securities fraud and one count of investment adviser fraud. GALANIS was sentenced today by United States District Judge P. Kevin Castel.

U.S. Attorney Preet Bharara said: “As he previously admitted in his guilty plea, Jason Galanis swindled the shareholders and clients of Gerova Financial and Tag Virgin Islands out of tens of millions of dollars in a massive fraud scheme. Today, he was sentenced to a lengthy prison term for his participation in these fraud schemes.”

According to the allegations contained in the Indictment filed against JASON GALANIS and his co-conspirators and statements made in related court filings and proceedings:

The Gerova Scheme

From 2009 to 2011, JASON GALANIS, along with his co-conspirators John Galanis, Gary Hirst, Derek Galanis, Ymer Shahini, and Gavin Hamels, engaged in a scheme to defraud the shareholders of Gerova and the investing public by effecting securities transactions in Gerova stock for the purpose of conferring millions of dollars of undisclosed remuneration on JASON GALANIS and his co-conspirators, without adequate disclosure of JASON GALANIS’s role in directing the transactions or the benefits received by JASON GALANIS and his co-conspirators.

As a part of the scheme to defraud, JASON GALANIS obtained sufficient control over Gerova to be able to cause Gerova to enter into transactions of his design, and for his benefit, including the issuance of Gerova stock. JASON GALANIS obtained this control without causing himself to be identified as an officer or director of Gerova in order to appear to abide by an SEC-imposed bar that forbade him from holding such positions at publicly traded companies. Among other means and methods, JASON GALANIS, with the assistance of Hirst, caused over five million shares of Gerova stock, which represented nearly half the company’s public float and which were intended for JASON GALANIS’s ultimate benefit, to be issued to and held in the name of Ymer Shahini, who knowingly served as a foreign nominee for JASON GALANIS. JASON GALANIS, John Galanis, Derek Galanis, Hirst, and Shahini understood that the purpose of the stock grant to Shahini was to disguise JASON GALANIS’s ownership interest in the stock, and to evade the SEC’s regulations for issuing unregistered shares of stock.

At the same time, and as a further part of the scheme to defraud, JASON GALANIS’s co-conspirators, with his knowledge and approval, opened and managed brokerage accounts in the name of Shahini (the “Shahini Accounts”), effected the sale of Gerova stock from the Shahini Accounts, and received and concealed the proceeds, knowing that this activity was designed to conceal from the investing public JASON GALANIS’s ownership of and control over the Gerova stock.

JASON GALANIS, among others, also fraudulently induced investment advisers, including Gavin Hamels, to purchase shares of Gerova stock in the investment advisers’ client accounts by offering compensation and/or other benefits to the respective investment adviser. By causing the purchase of Gerova stock at the time, quantity, and/or price of their choosing, JASON GALANIS and others were able to, among other things, effectuate the sale of large quantities of Gerova stock from the Shahini Accounts that JASON GALANIS controlled while artificially maintaining the price of Gerova stock through coordinated match trading. Such coordinated trading served to manipulate the market for Gerova stock and deceive the investing public. As a result, JASON GALANIS and his co-conspirators reaped nearly $20 million in profits.

The Scheme to Defraud Clients of TAG Virgin Islands, Inc.

From 2007 to 2010, JASON GALANIS, along with an investment adviser named James Tagliaferri, participated in a scheme to defraud the clients of Tagliaferri’s investment advisory firm, which was called TAG Virgin Islands, Inc. (“TAG”). Often in exchange for compensation from JASON GALANIS, Tagliaferri caused TAG’s clients to invest in notes issued by entities associated with JASON GALANIS.

When obligations owed by entities associated with JASON GALANIS became due, Tagliaferri used client funds to purchase either notes issued by other entities associated with JASON GALANIS or publicly traded shares held by such entities. The funds generated were then used to pay the original obligations owed to other TAG clients. Through these securities trades, funds in client accounts of one set of TAG investors were used to pay obligations owed to a different set of TAG investors by entities associated with JASON GALANIS.

In addition to the prison term, GALANIS, 46, was sentenced to three years of supervised release, and was ordered to forfeit $37,591,681.10, as well as his interests in properties in New York and Los Angeles. Judge Castel will set a restitution amount at a future proceeding.

JASON GALANIS’s co-defendant Jared Galanis, who pled guilty to misprision of a felony in connection with the Gerova scheme, was sentenced to a term of 150 days in prison on January 11, 2017. John Galanis and Derek Galanis, each of whom pled guilty to conspiracy to commit securities fraud and securities fraud in connection with the Gerova scheme, are scheduled to be sentenced on February 16, 2017. Gary Hirst, who was found guilty after trial of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, and wire fraud, is scheduled to be sentenced on March 17, 2017.

Defendant Ymer Shahini remains a fugitive. The allegations contained in the Indictment as to Shahini are merely accusations, and he is presumed innocent unless and until proven guilty.

Mr. Bharara praised the work of the U.S. Postal Inspection Service and the Federal Bureau of Investigation, and thanked the SEC.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Aimee Hector, and Rebecca Mermelstein are in charge of the prosecution.

Manhattan U.S. Attorney Announces Federal Civil Rights Charges Against Correction Officer In Sexual Assault Of Inmate At Bedford Hills Correctional Facility For Women

   Preet Bharara, the United States Attorney for the Southern District of New York, and Anthony J. Annucci, Acting Commissioner of the New York State Department of Corrections and Community Supervision (“DOCCS”), announced today the unsealing of a criminal complaint charging a former New York State Correction Officer in the sexual assault of a female inmate (“Victim-1”) at the Bedford Hills Correctional Facility for Women (the “Bedford Facility”). JEFFREY GREEN, then a correction officer at the Bedford Facility, was charged with assaulting and forcing himself upon Victim-1 by licking, biting, kissing, fondling, groping, and restraining her against her will, in violation of her civil rights under the United States Constitution. GREEN was arrested today on charges contained in a Criminal Complaint and is expected to be presented in federal court later today.

Manhattan U.S. Attorney Preet Bharara said: “As alleged, Jeffrey Green, a former New York State correction officer at Bedford Hills Correctional Facility, entered a prison cell, pushed a defenseless female inmate against a wall, and sexually assaulted her. Green’s alleged predatory conduct not only betrayed his duty as an officer to protect those under his charge, but violated our Constitution. The protections of our Constitution do not end at our prisons’ walls, and when inmates’ civil rights are violated, as they allegedly were here, we will act.”

DOCCS Acting Commissioner Anthony J. Annucci said: “DOCCS has zero tolerance for any criminal activity involving staff or inmates within our facilities. This latest arrest highlights the successful investigation by the Department’s Office of Special Investigations, Westchester County District Attorney and the US Attorney’s Office for the Southern District, all cooperating in this pursuit of justice.”

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

The Bedford Facility is a jail complex located in Bedford Hills, in Westchester County, New York, maintained by the New York State Department of Corrections and Community Supervision. At the time of the assault, Victim-1 was an inmate incarcerated at the Bedford Facility.

In the late evening hours of March 10, 2016, GREEN unlocked and opened the cell of Victim-1, and entered her cell unaccompanied by any other correction officer or other Bedford Facility staff. GREEN then grabbed Victim-1 by her arms, held her with her back against the wall of her cell, and began to lick, kiss, and bite her neck area, and to fondle her chest. After Victim-1 pushed GREEN away, he grabbed her, pushed her up against the wall of her cell, and again forced himself on her. GREEN then pulled up the shirt and bra of Victim-1 and bit, licked, and kissed her neck, chest, and breast and nipple areas, and fondled Victim-1’s groin area. The assault stopped only when GREEN was interrupted by the arrival of another correction officer knocking on a door to be admitted into the unit, upon which GREEN immediately departed Victim-1’s cell.

Victim-1 reported the assault the following morning, and a medical examination produced samples taken from Victim-1’s neck, left breast, and right breast that gave positive results with a presumptive test for saliva. A swab from Victim-1’s left breast generated a single-source male profile. Surveillance video and audio recordings from the Bedford Facility show GREEN entering Victim-1’s cell without any other correction officer the evening of March 10 and also audibly saying at one point “[y]ou ready [unintelligible] me my blow job?”

 

JEFFREY GREEN, 48, of Brooklyn, New York, is charged with one count of deprivation of rights under color of law, which carries a maximum penalty of 10 years in prison.

The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Mr. Bharara praised the investigative work of the New York State Department of Corrections and Community Supervision Office of Special Investigations and the Criminal Investigators at the United States Attorney’s Office.

This case is being handled by the Office’s Civil Rights and Public Corruption Units. Assistant U.S. Attorneys Alex Rossmiller and Ellen Blain are in charge of the prosecution.

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

 

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

Emergency Medical Technician For The Fire Department Of The City Of New York Arrested For Possessing And Receiving Child Pornography

Alfred Pabon Used Online Messaging Service to Obtain and Distribute Child Pornography

  Preet Bharara, the United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced the arrest of ALFRED PABON, an Emergency Medical Technician with the Fire Department of the City of New York, stemming from his possession and receipt, as well as distribution of child pornography. PABON was arrested today and presented in Manhattan federal court before U.S. Magistrate Judge Gabriel W. Gorenstein.

U.S. Attorney Preet Bharara said: “As alleged, Alfred Pabon frequented online chat groups for the explicit purpose of finding children and child pornography. In one his chats, Pabon allegedly expressed interest in taking a trip to Mexico in search of ‘something teenish.’ Thanks to the work of Homeland Security Investigations, Pabon’s alleged predatory search for children and child pornography has been brought to an end.”

HSI Special Agent-in-Charge Angel Melendez said: “Using online chat groups to post photos and videos of children being sexually exploited is a sickening crime made even more disturbing when it is committed by an individual who holds the public's trust as a member of the FDNY. Every day HSI agents stationed around the country, use innovative techniques to search the internet and chat rooms to bring these pedophiles to justice and keep our children safe.”

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

From in or about November 2015, up to and including at least in or about January 2017, ALFRED PABON, an Emergency Medical Technician for the Fire Department of the City of New York, posted images and videos containing child pornography in chat groups of an online messaging application. The chat groups were used almost exclusively to trade child pornography, discuss child pornography, and/or discuss engaging in sexual activity with minors. In or about December 2015, PABON exchanged private messages through the online messaging application with an undercover HSI Special Agent (“UC-1”). Through these exchanges, PABON, using a particular account username (the “Pabon Account”) indicated to UC-1 that he was interested in a trip to Mexico and was looking for “something teenish.” PABON posted an image of two girls, who appear to be prepubescent minors, posing nude on a bed as an example of the type of girls in whom he was interested. In August 2016, a second undercover HSI Special Agent (“UC-2”) observed additional postings by PABON in another online chat room, at least one of which appeared to include an image of child pornography. UC-2 later used a link that PABON had posted to download approximately 33 videos, most of which contained child pornography.

PABON was arrested at his residence in the Bronx, New York. On the morning of his arrest, he admitted to law enforcement that he was the user of the Pabon Account and had used that account to copy and forward images and videos containing child pornography as recently as within the last month.

ALFRED PABON, 49, of the Bronx, New York, is charged with one count of distribution and receipt of child pornography, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison, and one count of possession of child pornography, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Any individuals who believe they have information concerning ALFRED PABON that may be relevant to the investigation should contact HSI at its toll-free hotline: 1-866-DHS-2ICE; TTY for hearing impaired: (802) 872-6196. This hotline is staffed around-the-clock by investigators.

Mr. Bharara praised the efforts of HSI in this investigation. He added that the investigation is continuing.

The prosecution is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Lara Pomerantz is in charge of the prosecution.

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

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

Bronx Man Sentenced To 25 Years In Prison For Production Of Child Pornography

   Preet Bharara, the United States Attorney for the Southern District of New York, announced today that KELVIN ACOSTA was sentenced to 300 months in prison and supervised release for 10 years for producing child pornography. ACOSTA pled guilty on September 26, 2016, before U.S. District Judge Paul A. Crotty, who also imposed today’s sentence. In imposing sentence, the Court characterized the defendant’s misconduct as the “most deplorable, depraved act that I can imagine.”

U.S. Attorney Preet Bharara stated: “For years, Kelvin Acosta preyed on our community’s youth by tricking them into supplying personal information, using that information to hack their email accounts, and then extorting them into producing child pornography for him. Today, he has been sentenced to federal prison for his predatory criminal behavior.”

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

From at least December 2013 through November 2015, KELVIN ACOSTA engaged in a pattern of “sextortion” by hacking into email accounts belonging to teenage girls and extorting them into producing child pornography for him. ACOSTA did so by messaging the girls on Facebook and tricking them into revealing personal information, which he exploited to hack their email accounts. ACOSTA then told his minor victims that he had hacked their email accounts and found compromising material (sex videos and/or nude photographs), which he threatened to send their family, friends, and schools – unless they created child pornography for him via video chat and/or paid him money.

On March 29, 2016, ACOSTA was arrested in the Bronx. On that day, ACOSTA admitted that, for years, he had hacked and extorted girls and women, aged 13 to 25; he had exploited about 40 to 50 accounts of minors that had nude photographs or sex videos, which he viewed; he had about 10 to 20 minors produce child pornography for him; and he had extorted at least three victims – including at least one minor – into bringing him money.

ACOSTA, 27, of the Bronx, New York, pled guilty on September 26, 2016, to one count of sexual exploitation of a child, in violation of Title 18, United States Code, Sections 2251(a), (e), and 2.

Mr. Bharara praised the investigative work of the Federal Bureau of Investigation and the New York City Police Department, and thanked the Brooklyn District Attorney’s Office for its valuable cooperation in this matter.