Attorney General, Mayor's Office To Hold Clean Power Plan “People's Hearing” In New York On January 9Th

With Trump EPA Ignoring AG Schneiderman’s Request for Public Hearings in NY, Hearing Gives New Yorkers Chance to Make Their Voices Heard on Proposed Repeal 

New Yorkers Are Encouraged to Testify or Submit Testimony on Importance of the Clean Power Plan in Combating Climate Change

  With the Trump administration ignoring Attorney General Eric Schneiderman’s request that the EPA hold public hearings in New York on the proposed repeal of the Clean Power Plan, the Attorney General’s and NYC Mayor’s offices will hold a “people’s hearing” on January 9^th to ensure New Yorkers’ voices are heard.

New Yorkers are on the front lines of climate change, as tragically demonstrated by Hurricanes Sandy and Irene. The country’s reliance on dirty, non-renewable fossil fuels for power generation is a major contributor of climate change pollution and its impacts on the lives and livelihoods of New York’s residents, including more frequent and intense storms, rising sea levels, higher temperatures, and increased air pollution. The Clean Power Plan is a vital tool to slash greenhouse gas emissions from one of the leading causes of climate change pollution, fossil-fuel burning power plants. EPA has refused to schedule any public hearings east of West Virginia, despite the direct climate impacts facing residents of New York and other states on the eastern seaboard.

New Yorkers are encouraged to sign up to testify and/or submit testimony on the Trump Administration’s proposal to scrap the Clean Power Plan. Testimony will be compiled and submitted to the U.S. Environmental Protection Agency (EPA) ahead of the January 16, 2018 deadline for comments.

The hearing will be held in in partnership with Councilmember Costa Constantinides and The New School, and co-sponsored by a number of New York organizations.

Attorney General Schneiderman leads a coalition of states and localities – including New York City – that is legally defending the Clean Power Plan.

WHAT: New York City “People’s Hearing” on the Repeal of the Clean Power Plan

WHEN:

Tuesday, January 9, 2018

Session 1 (2:30pm-5:00pm)

Session 2 (6:00pm-8:00pm)

WHERE:

The New School – Auditorium

66 West 12^th Street

New York, NY 10011 

SUBMIT TESTIMONY OR SIGN UP TO TESTIFY:

https://ag.ny.gov/clean-power-plan-peoples-hearing-registration

Four Men Plead Guilty In Manhattan Federal Court To Two 2016 Bank Burglaries

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that four defendants have pled guilty to participating in two bank burglaries.  In April and May 2016, MICHAEL MAZZARA, CHARLES KERRIGAN, and ANTHONY MASCUZZIO, assisted by CHRISTOPHER KERRIGAN, stole more than $5 million in cash, jewelry, collectables, and other valuables from the banks’ vaults and safe deposit boxes.

Acting U.S. Attorney Joon H. Kim said:  “Like a scene from a movie, these defendants used blow torches to cut into bank roofs, and subsequently vaults and safe deposit boxes, to steal more than $5 million in cash and customer valuables.  But the scene in court today was of guilty pleas under oath and the prospect of real-life prison.”

According to the Complaint and Indictments filed in Manhattan federal court, as well as previous court filings and statements made in public court proceedings:

In April and May 2016, MAZZARA, CHARLES KERRIGAN, MASCUZZIO, and CHRISTOPHER KERRIGAN formed a crew that burglarized banks in Brooklyn and Queens, New York, by cutting into the banks’ vaults and the safe deposit boxes inside.  Specifically, from about April 8 to April 10, 2016, MAZZARA, CHARLES KERRIGAN, and MASCUZZIO, with the assistance of CHRISTOPHER KERRIGAN, burglarized an HSBC Bank branch in Brooklyn, and from about May 19 to May 22, 2016, MAZZARA, CHARLES KERRIGAN, and MASCUZZIO, with the assistance of CHRISTOPHER KERRIGAN, burglarized a Maspeth Federal Savings Bank branch in Queens.  On both occasions, the burglars used acetylene blowtorches to cut into the top of the banks’ vaults from the roof of the building.  At the Maspeth Federal Savings Bank branch, they shielded their activities from view by constructing a plywood shed on the roof of the bank.  The burglars then entered the vaults from above and took cash belonging to the bank and broke open customers’ safe deposit boxes, stealing the valuables inside.  In total, the crew obtained more than $600,000 in cash and more than $4.3 million in valuables from both banks.  Surveillance footage captured some of the burglars’ activities as they prepared for and executed the burglaries.  Financial records and video surveillance also showed MAZZARA and MASCUZZIO purchasing some of the supplies that appear to have been used in the Maspeth burglary. 

MAZZARA, 45, of Brooklyn, New York, pled guilty before Hon. Katherine B. Forrest on December 13, 2017, to two counts of bank theft, each of which carries a maximum sentence of 10 years in prison.  MAZZARA will be sentenced by Judge Forrest on April 13, 2017. 

CHARLES KERRIGAN, 42, of Brooklyn, New York, pled guilty before Judge Forrest on December 11, 2017, to one count of conspiracy to commit bank burglary and bank theft, which carries a maximum sentence of five years in prison, two counts of bank burglary, each of which carries a maximum sentence of 20 years in prison, and two counts of bank theft, each of which carries a maximum sentence of 10 years in prison.  CHARLES KERRIGAN also pled guilty to one count of witness retaliation while on pre-trial release, in connection with his assault of an individual who he believed had provided information regarding the burglaries to the Federal Bureau of Investigation (“FBI”) and the New York City Police Department (“NYPD”).  That count carries a maximum sentence of 20 years in prison, and a mandatory consecutive term of 10 years in prison.  CHARLES KERRIGAN will be sentenced by Judge Forrest on April 6, 2017.

MASCUZZIO, 38, of Brooklyn, New York, pled guilty before Judge Forrest on December 15, 2017, to two counts of bank theft, each of which carries a maximum sentence of 10 years in prison.  MASCUZZIO will be sentenced by Judge Forrest on May 4, 2018.

CHRISTOPHER KERRIGAN, 40, of Staten Island, New York, pled guilty before Judge Forrest on November 9, 2017, to one count of conspiracy to commit bank burglary and bank theft, which carries a maximum sentence of five years in prison, one count of bank burglary, which carries a maximum sentence of 20 years in prison, and one count of bank theft, which carries a maximum sentence of 10 years in prison.  CHRISTOPHER KERRIGAN will be sentenced by Judge Forrest on March 30, 2018.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Kim praised the outstanding investigative efforts of the FBI and NYPD.

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900.  For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html.

Canadian-Iranian Citizen Sentenced In White Plains Federal Court To 32 Months In Prison For Conspiring To Violate Iran Sanctions

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the Federal Bureau of Investigation in New York (“FBI”), announced that ALI SOOFI, a Canadian-Iranian dual citizen, was sentenced to 32 months in prison for his participation in a conspiracy to violate the International Emergency Economic Powers Act (“IEEPA”).  SOOFI was charged and arrested by special agents of the Federal Bureau of Investigation (“FBI”) following a federal investigation.  SOOFI pled guilty to one count of conspiracy to violate IEEPA on September 7, 2017, before U.S. District Judge Nelson S. Román, who imposed today’s sentence.

           

According to the Indictment filed against SOOFI, other court documents publicly filed in this case, and statements made in court proceedings, including today’s sentencing:

          

Between 2014 and December 2016, SOOFI conspired to export military items from the United States to Iran, both directly and through transshipment to intermediary countries, without a license.  In particular, SOOFI acted as a broker on behalf of Iranian clients, including a high-ranking official in the Iranian Revolutionary Guard Corps (“IRGC”), who sought American military technology.  Over the course of the conspiracy, SOOFI sought to purchase and ship numerous items, including helicopters, high-tech machine gun parts, tank parts, and military vehicles, from the United States to Iran, all without a license and while knowing that such shipments were illegal under U.S. law.  During the multi-year conspiracy, SOOFI worked to fill specific orders for the IRGC by contacting other individuals with access to the requested military items through email, phone, and in-person meetings. 

           

The IRGC consists of an army, navy, and air force, Basij Resistance Force, and Qods Force.  Current IRGC forces consist of approximately 150,000 naval, ground, and air fighters, although the number of Qods Force fighters is unknown.  The IRGC has been designated as a Specially Designated Global Terrorist, for its activities in support of the Qods Force, which consistently provides support to terrorist groups including Hezbollah, Hamas, and the Taliban.

One of SOOFI’s customers was a Commander in the IRGC, who acted as a key figure at the Iranian Ministry of Defense responsible for procurement of parts and weapons.  Among the weapons SOOFI sought on behalf of the IRGC were dampeners – or shock absorbers – which allow high-tech machine guns to be mounted on helicopters and boats.  In addition, SOOFI sought to obtain slewing rings for tanks, military helicopters, target sights, jet engines, and military vehicles such as Humvees for the IRGC.  During one meeting in December 2016 during which SOOFI sought to acquire some of these military items, SOOFI explained that the items he sought were “for military for defense” and emphasized that the IRGC specifically wanted American military technology.

In addition to the prison term, SOOFI, 63, of Canada, was sentenced to one year of supervised release.

Mr. Kim praised the outstanding investigative work of the FBI.  SOOFI’s arrest is the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York, the FBI, and the U.S. Department of Justice’s National Security Division.

Former Honduran Congressman And Businessman Sentenced To 36 Months For Money Laundering

Yani Benjamin Rosenthal Hidalgo, a Former Honduran Politician and Prominent Businessman, Was Sentenced for Laundering Drug Proceeds for the Cachiros, a Major Honduran Drug Trafficking Organization

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced todaythat Yani Benjamin Rosenthal Hidalgo was sentenced to 36 months in prison for engaging in monetary transactions in property derived from drug trafficking offenses.  ROSENTHAL pled guilty on July 26, 2017, before U.S. District Judge John G. Koeltl, who imposed today’s sentence.  During the course of the money laundering scheme, ROSENTHAL was a Honduran congressman between 2010 and 2014, and a candidate for president of Honduras between 2012 and 2013.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As he previously admitted in court, Yani Rosenthal was a prominent Honduran politician and businessman who moonlighted as a money launderer for the Cachiros, a violent Honduran drug organization.  Now this former presidential candidate has received a prison sentence called for by his crimes committed on behalf of a ruthless criminal syndicate.”

According to the Indictment, other court filings, and statements made during court proceedings[1]: 

ROSENTHAL and his co-defendants – including Jaime Rolando Rosenthal Oliva, ROSENTHAL’s father and a former vice president and congressman in Honduras – used entities associated with a holding company controlled by the Rosenthal family, Inversiones Continental (Panama), S.A. de C.V. (“Inversiones Continental”), to launder drug proceeds for the Cachiros, a prolific and violent Honduran criminal syndicate that distributed huge quantities of cocaine before being dismantled by the Drug Enforcement Administration (“DEA”).  Through his conduct, which occurred over a period of at least approximately five years, ROSENTHAL provided the Cachiros with sources of funding for their criminal enterprise, a means to launder their narcotics proceeds, and public legitimacy, thereby contributing to an environment of impunity that allowed the Cachiros to thrive in Honduras and to import tons of cocaine into the United States. 

ROSENTHAL and his co-defendants helped the Cachiros launder drug money and gain access to the international financial system.  ROSENTHAL enriched himself through this conduct by profiting from business transactions with the Cachiros.  In 2012, while ROSENTHAL acted as a Honduran congressman and campaigned for the Honduran presidency, he accepted hundreds of thousands of dollars in drug proceeds from one of the leaders of the Cachiros and another major Honduran drug trafficker who led a separate drug trafficking organization, which were styled as purported campaign contributions.  Several aspects of the Cachiros money laundering scheme also received support from Fabio Porfirio Lobo, the son of a former president of Honduras.  Lobo was sentenced on September 5, 2017, by U.S. District Judge Lorna G. Schofield in United States v. Lobo, No. 15 Cr. 174 (LGS) to 24 years in prison based on his conviction for participating in a conspiracy with members of the Cachiros and others to import cocaine into the United States.

ROSENTHAL’s money laundering conduct involved a trade-based scheme in which the Cachiros used a front company, Ganaderos Agricultores Del Norte S De RL De CV (“Ganaderos”), to purchase cattle with drug proceeds at auctions in Honduras.  ROSENTHAL and others used Empacadora Continental, S.A. de C.V. (“Empacadora”), a cattle- and meat-processing firm affiliated with Inversiones Continental, to purchase the narcotics-derived cattle from Ganaderos.  Between 2008 and 2013, while Rosenthal acted as the vice president of Empacadora, he caused Empacadora to buy cattle from Ganaderos, knowing that Ganaderos was financed and supported by drug trafficking proceeds of the Cachiros.  By knowingly authorizing Empacadora to engage in transactions in criminally derived property, ROSENTHAL used the company in connection with a process that allowed the Cachiros to conceal the criminally derived nature of the Ganaderos assets, and to obtain fresh funds from Empacadora that were used to promote Cachiros drug trafficking activities and purchase other assets.  Empacadora, in turn, processed and exported the meat to the United States, among other places, in exchange for payments to Empacadora from U.S.-based companies that totaled approximately $500,000 between 2008 and 2013.  Over that same period, Empacadora paid a total of $6.8 million to Ganaderos in connection with the scheme.          

In addition to the prison term, ROSENTHAL, 52, was ordered to forfeit $500,000 and to pay a $2.5 million fine.  ROSENTHAL also remains designated as a Specially Designated Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act, along with Rosenthal Oliva, Yankel Antonio Rosenthal Coello (ROSENTHAL’s cousin and co-defendant), Inversiones Continental, Empacadora, and Banco Continental, among other entities, as announced in October 2015 by the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”). 

Mr. Kim praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office, as well as OFAC and the U.S. Department of Justice’s Office of International Affairs.

The charges contained in the Indictment against Jaime Rolando Rosenthal Oliva are merely accusations, and Rosenthal Oliva is presumed innocent unless and until proven guilty.

 

[1] The descriptions set forth below of conduct by co-defendant Jaime Rolando Rosenthal Oliva constitute only allegations, and every fact described should be treated as an allegation with respect to Rosenthal Oliva.

Mobile Phone Industry Executive Convicted At Trial In Multimillion-Dollar Consumer Fraud Scheme

CEO of Mobile Aggregation Company Participated in Scheme to Bill Consumers for Fraudulent Text-Messaging Charges

  Joon H. Kim, the United States Attorney for the Southern District of New York, announced today that DARCY WEDD, the CEO of a U.S. mobile aggregation company called Mobile Messenger, was convicted after a two-week jury trial on eight counts for his participation in a scheme to charge mobile phone customers millions of dollars in monthly fees for unsolicited, recurring text messages without the customers’ knowledge or consent – a practice known as “auto-subscribing.” 

           

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As a Manhattan jury has unanimously found today, Darcy Wedd engaged in a scheme known as ‘auto-subscribing,’ forcing mobile phone users to pay charges for unsolicited and unwanted text messaging services, including horoscopes and celebrity gossip.  The conduct of Wedd and his co-conspirators ultimately netted over a hundred million dollars in illegal profits.  Thanks to the diligence of the IRS and FBI, the message is clear: perpetrators of consumer fraud schemes beware, federal investigators and prosecutors will protect everyday consumers and look to hold you accountable for your criminal fraud.”

According to the allegations contained in the Superseding Indictment and evidence presented at trial, from in or about 2011, through in or about 2013, WEDD and other co-conspirators engaged in a multimillion-dollar scheme to defraud consumers by placing unauthorized charges for premium text messaging services on consumers’ cellular phone bills, without the consumers’ knowledge or consent, through a practice known as “auto-subscribing.”

WEDD was the Chief Operating Officer, and eventually the Chief Executive Officer, of Mobile Messenger.  In the relevant time period, mobile aggregators like Mobile Messenger compiled, or “aggregated,” charges for premium text messaging services – such as monthly horoscopes, celebrity gossip, and trivia facts – on consumers’ mobile phone bills.

In or about 2010, Lin Miao, one of WEDD’s co-conspirators, who was the CEO of another company in the cellphone industry that provided premium text messaging content (the “Content Provider”), decided to begin auto-subscribing mobile phone users to the Content Provider’s premium text messaging services in order to boost the Content Provider’s sagging revenues.  Miao and others built a computer program that could spoof the required consumer authorizations for premium text messaging services – i.e., a program that could generate the text message correspondence that one would ordinarily see if a consumer was genuinely signing up to receive the services (the “Auto-Subscription Platform”), which was operational by in or about the middle of 2011. 

           

In or about October 2011, Miao met with WEDD and told him, in sum and substance, that MIAO wanted to auto-subscribe consumers through Mobile Messenger’s billing platform and needed phone numbers to do so.  WEDD agreed to assist Miao.  WEDD further told Miao, in sum and substance, that co-conspirator Michael Pajaczkowski, who was the Vice President of Compliance and Consumer Protection at Mobile Messenger, would provide phone numbers and assistance to Miao and that all payments needed to go through Pajaczkowski.  WEDD later received his portion of the payments from Miao via Pajaczkowski.

Also in or about early 2012, WEDD, Pajaczkowski, and two other co-conspirators, Erdolo Eromo and Fraser Thompson, had discussions about how to increase revenues at Mobile Messenger, which were flagging because premium text messaging services had become less profitable.  Among other things, WEDD, Pajaczkowski, Eromo, and Thompson agreed to allow co-conspirator Eugeni Tsvetnenko, who operated a content provider in Australia (“the Australian Content Provider”), to begin auto-subscribing consumers through Mobile Messenger.  By at least in or about April 2012, Tsvetnenko had started auto-subscribing consumers.  Over the course of the next several months through in or about mid-2013, Tsvetnenko and the Australian Content Provider auto-subscribed hundreds of thousands of phone numbers through Mobile Messenger and generated millions of dollars of revenue, which Tsvetnenko shared with WEDD, Pajaczkowski, Eromo, and Thompson.

The auto-subscription scheme affected hundreds of thousands of consumers and generated over $100 million dollars in proceeds, which the defendants apportioned among themselves and used to fund lavish lifestyles of expensive vacations, luxury cars, and gambling.

                       

WEDD, 40, was convicted of two counts of conspiracy to commit wire fraud, two counts of wire fraud, and two counts of conspiracy to commit money laundering, each of which carries a maximum term of 20 years in prison.  WEDD was also convicted of two counts of aggravated identity theft, each of which carries a minimum term of two years in prison.  WEDD was remanded into custody following the verdict and is scheduled to be sentenced on April 2, 2018, before Judge Katherine B. Forrest.  

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

To date, six additional defendants, Andrew Bachman, Miao, Pajackowski, Jonathan Murad, Francis Assifuah, and Eromo have pled guilty in connection with their participation in the fraud, and one additional defendant, Thompson, was convicted by a jury on September 5, 2017, following a three-week trial.

Assifuah was sentenced to 33 months in prison.  Thompson is scheduled to be sentenced on January 12, 2018.  Sentencing dates have not been set for Bachman, Miao, Pajackowski, Murad, or Eromo.

           

Mr. Kim praised the investigative work of the IRS-CI and the FBI, and expressed his sincere gratitude to the Federal Trade Commission for their support and assistance with the investigation. 

Manhattan U.S. Attorney Announces Charges Against President Of Park Avenue Art Gallery In Manhattan For Defrauding Art Dealers And Collectors Of Valuable Artwork And Millions Of Dollars

Gallery President Defrauded Art Dealers into Sending Him Money and Artwork Worth Millions of Dollars

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Division (“FBI”), announced today the unsealing of a complaint charging EZRA CHOWAIKI with fraud and transportation of stolen property for using his art gallery located on Park Avenue in Manhattan to defraud art dealers and collectors of millions of dollars.  EZRA CHOWAIKI surrendered this morning to FBI agents and will be presented before Magistrate Judge Katharine H. Parker this afternoon.

Acting U.S. Attorney Joon H. Kim said:  “While Ezra Chowaiki appeared to buy and sell high-end artwork in his upscale Manhattan gallery, as alleged, he sold clients nothing more than an illusion. Chowaiki allegedly tricked his clients into investing hundreds of thousands of dollars in artwork that he never actually bought and secretly sold artwork that they had entrusted to him.  As a result of Chowaiki’s alleged fraud, valuable works of art have been stolen from their rightful owners and unlawfully distributed all over the world.”

FBI Assistant Director William F. Sweeney Jr. said:  “Investors believed the subject in this case had their best interests at heart, taking their money in an investment, but never followed through on his promises.  When they dared to demand their money back, he allegedly refused.  We believe there may be others out there who could be a victim of this scheme, and we ask that they contact us at NYArtcrime@fbi.gov

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

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

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

For example, a number of victims reported being asked by CHOWAIKI to invest money to purchase artwork through the Gallery that would then be sold by the Gallery, thereby generating profit for the investors.  After a number of these investors sent hundreds of thousands of dollars to CHOWAIKI, CHOWAIKI did not use the funds to purchase the artwork, nor did he return the money to the investors.  Similarly, other victims reported consigning artwork to CHOWAIKI for sale by the Gallery.  After these victims attempted to cancel the consignments, CHOWAIKI refused to return the artwork and, in some cases, purported to sell the artwork to other galleries and auctioneers located in the United States and abroad with the authorization of the work’s rightful owner.

At the time the Gallery filed for bankruptcy and CHOWAIKI was removed as president, the Gallery purported to have only approximately $276,681 in assets, whereas the Gallery owed at least approximately $11.8 million in claims to dozens of art dealers and others, including those who had sent money to the Gallery to buy artwork or who had consigned artwork to the Gallery that was never returned. 

 CHOWAIKI, 49, of Brooklyn, New York, is charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum potential sentence of 20 years in prison, and one count of interstate transportation of stolen goods, which carries a maximum potential sentence of 10 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 a judge.

Mr. Kim praised the work of the FBI and the New York City Police Department’s Major Case Squad.  Any person who believes he/she is a victim of this crime is encouraged to send an email to NYArtCrime@fbi.gov

[1] As the introductory phrase signifies, the entirety 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.

Former Comptroller Of Mortgage Lender Charged With Bank Fraud And Wire Fraud

  Joon H. Kim, Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Maria T. Vullo, Superintendent of the New York State Department of Financial Services (the “DFS”),announced today the unsealing of an Indictment charging JOHN REIMER with bank fraud and mortgage fraud in connection with his participation in a scheme to defraud banks of money intended for individuals seeking loans to purchase or refinance their homes.  REIMER was arrested today in Boca Raton, Florida, and was presented in U.S. District Court for the Southern District of Florida earlier today before United States Magistrate Judge James M. Hopkins.

Acting U.S. Attorney Joon H. Kim said:  “As alleged, John Reimer, vice president of a mortgage bank, defrauded several other financial institutions of more than $12 million.  Reimer allegedly falsified documents, kept funding for mortgages that never closed, and even acquired funding multiple times for the same loans as part of the scheme.  Fraud schemes that target money intended for home loans can taint the market for honest homebuyers seeking to secure mortgages.  We will continue to work with our law enforcement and regulatory partners to ensure that schemes like the one charged here are stopped.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Reimer capitalized on his knowledge of the mortgage-lending industry to exploit its vulnerabilities, causing serious damage to a number of warehouse banks fronting him an advance for the loans his bank was in the business of providing.  Mortgage fraud not only affects individual victims and institutions, it risks the overall stability of the housing market, accumulating losses across the board.  The FBI continues to support partnerships within the mortgage industry and law enforcement as we work together to combat this serious crime.”

Financial Services Superintendent Maria T. Vullo said:  “This defendant allegedly used his position and access as a banker to obtain millions of dollars in fraudulent loans.  As regulator of New York’s Financial Services industry, the Department of Financial Services is proud to have assisted the United States Attorney’s Office for the Southern District of New York in bringing this defendant to justice.”

According to the allegations made in the Indictment:[1]

REIMER, who was the vice-president and comptroller of a mortgage lending institution (the “Mortgage Bank”), participated in a scheme to defraud several financial institutions (the “Warehouse Banks”) by causing the Warehouse Banks to provide funds to the Mortgage Bank, ostensibly to fund mortgage loans for residential properties, based on false and fraudulent documentation and representations made and provided by Reimer to the Warehouse Banks.

The Mortgage Bank was in the business of providing mortgage loans for residential properties (“Loans”).  Pursuant to agreements, the Warehouse Banks advanced sums of money to the Mortgage Bank so that the Mortgage Bank could fund Loans (the “Warehouse Advances”).  Once a Loan closed, the Mortgage Bank typically sold the loan to an investor and used the proceeds of the sale to re-pay the Warehouse Bank for the Warehouse Advance.

In order to obtain a Warehouse Advance for a particular loan, the Mortgage Bank was required, among other things, to provide the Warehouse Bank with certain documents and information about the Loan.  In addition, the notes and mortgages executed by the residential mortgagors were provided to the Warehouse Banks as collateral for the Warehouse Advances.  REIMER was responsible for providing the Warehouse Banks with the information and documents necessary to obtain the Warehouse Advances.

However, according to the Indictment, with respect to certain Loans, REIMER “double-pledged” residential properties by obtaining multiple Warehouse Advances from more than one Warehouse Bank to fund the same Loan, thus misleading each Warehouse Bank into believing that the Warehouse Advance it made to the Mortgage Bank was fully collateralized.

Moreover, according to the Indictment, with respect to certain Loans, REIMER falsely represented to the Warehouse Banks that the Loans were going to close imminently, when, in fact, such Loans were not imminently closing at the time the Warehouse Advances were made.  In some cases, the Loans never closed, but the Mortgage Bank nevertheless retained the Warehouse Advances made for those particular Loans.  In other cases, the Loans did close, but the Mortgage Bank used those Warehouse Advances to repay other Warehouse Advances.

According to the Indictment, in furtherance of the scheme, REIMER provided the Warehouse Banks with fraudulent documents, including mortgage notes on which REIMER falsified the signatures of the purported residential mortgagors.

According to the Indictment, from November 2008 through January 2009, REIMER used fraudulent misrepresentations to cause the Warehouse Banks to wire the Mortgage Company at least over $12 million.

REIMER, 60, of Boca Raton, Florida, is charged with one count of bank fraud and one count of wire fraud, each of which carries a maximum sentence of 30 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 a judge. 

Mr. Kim thanked the FBI and DFS for their outstanding work on the investigation.

The charges contained in the Indictment 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 Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as allegations.

A.G. Schneiderman Leads Coalition Of 11 AGs In Challenging Trump EPA's Illegal Delay Of Clean Water Protections

AGs: Proposed Two-Year Suspension of “Clean Water Rule” Would Violate Federal Law and Rollback Decades of Clean Water Protections

Rollback Would Put At Risk 5,700 Miles Of Streams That Feed Into NY’s Drinking Water Sources – Which Help Provide Drinking Water To 56% Of New Yorkers

Further, Administrator Pruitt Has Illegally Refused to Recuse Himself – Despite Previously Bringing Litigation Against Clean Water Rule and Appearing in Anti-Clean Water Rule Promo Videos While Leading EPA

  Attorney General Eric T. Schneiderman, leading a coalition of 11 Attorneys General, challenged the legality of a Trump Administration proposed two-year suspension of the “Clean Water Rule,” a federal regulation that defines “waters of the United States” under federal law. In comments addressed to the Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (ACOE), the coalition charges that the proposed suspension of the Clean Water Rule – which is designed to ensure the nation’s lakes, rivers, streams, and wetlands receive proper protection under the federal Clean Water Act – would violate federal law in multiple respects.

Click here to read the comments. Joining Attorney General Schneiderman in the comments are the Attorneys General of California, Hawaii, Maine, Maryland, Massachusetts, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia.

“Clean water is a basic right – fundamental to New Yorkers’ health, environment, and economy,” Attorney General Schneiderman said. “The Trump administration’s proposed suspension of the Clean Water Rule is clearly illegal, and would jeopardize the clean, healthy water on which New Yorkers rely. Attorneys General will fight back against this reckless ‘dirty water’ proposal, and the Trump administration’s continued assault on our nation’s core public health and environmental protections.” 

A lake, river, stream, wetland, or any other kind of surface water is afforded protection under the Clean Water Act only if it is a “water of the United States.” Supreme Court decisions in 2001 and 2006, and ambiguity in regulations dating back to 1980, led to substantial uncertainty as to whether some waters – particularly, small, seasonal, or rain-dependent streams, wetlands, and tributaries – are considered waters of the United States. As a result, roughly 20,000,000 wetland acres and 2,000,000 miles of streams in the Continental United States were lost, or were placed in jeopardy of losing, their protections under the Clean Water Act. These at-risk streams help provide drinking water to 117 million Americans – including 56 percent of New Yorkers.

The uncertain protection of waters put at risk 60 percent of our nation’s streams – and at least 55 percent of New York’s stream miles – and millions of acres of wetlands nationwide of federal protection.  This left these waters – and the downstream waters with which they connect – vulnerable to increased flooding, pollution, damage to hunting and fishing habitat, and fouling of the drinking water supplies. 

The 2015 Clean Water Rule, which the Trump Administration wants to suspend, clarified what types of waters are covered by the Clean Water Act, thereby securing their protection. The Rule was based on over 1,200 peer-reviewed scientific studies that demonstrated how many waters are connected by networks of tributaries, intermittent streams, and wetlands. Because of this “interconnectivity,” physical, chemical, and biological pollution from wetlands and relatively small or infrequently-flowing upland streams often impact larger downstream waters, such as rivers, lakes, estuaries, and oceans. All of the lower 48 states have waters that are downstream of other states; New York, for example, is downstream of 13 states. As such, New York and other states are recipients of water pollution generated not only within their borders, but also from upstream sources outside their borders over which they lack jurisdiction.

On November 22, 2017, the EPA and ACOE proposed to suspend applicability of the Clean Water Rule for two years and reinstate the old and inadequate regulations – dating back to at least 1980 – that had been in place prior to the Clean Water Rule. It was these nearly 40-year-old rules, whose dated science and lack of clarity as to which waters are “waters of the United States,” that had led to years of confusing and inconsistent interpretations by agencies and federal courts. If the suspension rule is finalized, the outdated 1980 regulations would replace the Clean Water Rule. 

In their comments, the coalition of Attorneys General state that EPA and ACOE are in “wholesale breach of foundational administrative law principles” and that the suspension rule is “in blatant violation” of federal law requirements, and is otherwise arbitrary, capricious, and exceeds the agencies’ legal authority. The coalition charges that, among other things, the agencies have:

• Failed to provide a meaningful opportunity for public comment on the substance of the suspension rule – allowing only a 21-day comment period during the Thanksgiving/Christmas holiday season, and specifically rejecting any comments on the content, basis, or impact of the reinstated four-decade-old regulations – demonstrating that the agencies “lack the required flexible and open-minded attitude” necessary for a proper rulemaking;   

• Failed to consider important aspects of defining “waters of the United States,” including the “well-known ambiguities and inconsistencies that result from applying the 1980 regulations, and the further complications arising from Supreme Court and federal case law interpreting ‘water of the United States’,” and

• Disregarded the voluminous scientific basis and factual findings supporting the Clean Water Rule, including that the 1980 regulations do not specifically address the interconnectivity of waters and thereby leave many floodplains, wetlands, and tributaries without certain protection under the Clean Water Act. 

Further, the coalition notes that while EPA Administrator Scott Pruitt had pledged to recuse himself from the litigation he brought as Oklahoma Attorney General to repeal the Clean Water Rule, he has refused to recuse himself from this rulemaking involving the very same issues. Since becoming EPA Administrator, Pruitt has appeared in promotional videos for private organizations that have brought suit challenging the Clean Water Rule, and in those ads has clearly misstated the rule’s provisions. The coalition charges that Administrator Mr. Pruitt’s involvement in this rulemaking is “illegal” and “renders a final rule invalid due to his refusal to follow ethics review procedures [under federal law] in light of his lack of impartiality, and because the clear and convincing evidence demonstrates his closed mind on the matter in violation of due process.”

On September 27^th, Attorney General Schneiderman, joined by the Attorneys General of California, Maine, Maryland, Massachusetts, Oregon, Vermont, Washington, and the District of Columbia, challenged the legality of a Trump Administration’s previous proposal to outright repeal the Clean Water Rule. The coalition charged that the proposal was “arbitrary and capricious and not in accordance with law.” They also charged that EPA Administrator Scott Pruitt’s involvement in the effort, after suing to negate the Clean Water Rule as Oklahoma Attorney General, was “illegal” and would render any repeal invalid. Click here to read these comments.