Partner At International Law Firm Sentenced For Insider Trading

  Geoffrey H. Berman, the United States Attorney for the Southern District of New York, announced today that WALTER C. LITTLE, a/k/a “Chet,” a former partner at an international law firm (the “Firm”), was sentenced today to 27 months in prison for conspiring to commit insider trading from at least February 2015 through May 2016.  LITTLE pled guilty on November 9, 2017, before U.S. District Judge Katherine Polk Failla, who also imposed today’s sentence.

U.S. Attorney Geoffrey H. Berman said:  “Walter Little, a law firm partner with access to sensitive nonpublic client information, selfishly chose to exploit it for personal gain rather than safeguard it.  Today’s sentence underscores the seriousness of insider trading, as Little will now serve serious time in prison.”

According to allegations in a Complaint and Indictment filed in Manhattan federal court, as well as previous court filings and statements made in public court proceedings:

LITTLE began working for the Firm as an associate in 2005 and eventually became a partner.  The Firm provided legal services in connection with financial transactions and regulatory issues to a wide variety of clients.  Those clients entrusted the Firm with nonpublic information when using its services.  Contrary to Firm policies requiring that this information be kept secret and be used only for business purposes, LITTLE improperly accessed sensitive information on the Firm’s servers and used it to make profitable securities trades.  LITTLE viewed numerous documents that contained material nonpublic information about, among other things, an anticipated delisting from the NASDAQ stock exchange, unannounced mergers and acquisitions, anticipated earnings releases, and a planned securities offering.  All of these events had predictable impacts on the associated stocks’ prices, and, between February 2015 and May 2016, LITTLE made hundreds of thousands of dollars trading stocks and options based on the information contained in these documents.

In addition to trading on the information himself, LITTLE also provided the information to Andrew Berke, his business associate and friend, who also traded on it and made hundreds of thousands of dollars in illegal gains as well.  At LITTLE’s request, Berke subsequently kicked back portions of his own profits to LITTLE through the use of fake legal invoices.  Berke pled guilty on December 28, 2017, to his role in the scheme and is scheduled to be sentenced on April 17, 2018.  

In addition to the prison sentence, LITTLE, 44, was sentenced to three years of supervised release.  The Court further ordered LITTLE to forfeit a sum of $452,998.           

Mr. Berman praised the work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance. 

Wave Hill Events Mar 9‒Mar 16

 Fri, March 9    The Garden and Beyond: An Afternoon of History at Wave Hill

This elegant and intimate afternoon celebrates Wave Hill’s rich historical legacy and extraordinary gardens. Relish a light-fare buffet—inspired by a traditional afternoon tea—as you enjoy a historical lecture and behind-the-scenes tour of the early spring gardens. The presentation takes place in the Mark Twain room, the former library of the estate, and continues outside with a walking tour of working areas of the garden. The afternoon concludes in The Shop at Wave Hill with a complimentary gift and a 10% discount on all purchases. Space is limited. $50/$45 Wave Hill Member. Registration required, online at wavehill.org or onsite at the Perkins Visitor Center.

WAVE HILL HOUSE, 1‒3:30PM

Sat, March 10    Family Art Project: Avifauna Fun Monoprints

Notice the elegant and distinctive shapes of our local bird species. Working with simple templates or your own design, use large pieces of construction paper and tempera paint to make simple, bold, large-scale birdy monoprints. Free, and admission to the grounds is free until noon.

WAVE HILL HOUSE, 10AM‒1PM

Sat, March 10    Art Workshop: Embossed Mementoes Paper-Making Workshop

Take a tour of Michele Brody’s Winter Workspace studio and learn the art of paper-making, embossing and embedding natural materials or mementos into one-of-a-kind, handmade paper. Experiment with paper pulp to create sentimental works of art that can be decorative and practical. Ages 12 and older welcome with an adult. $55; 10% discount to Wave Hill Members. Registration required, online at wavehill.org or onsite at the Perkins Visitor Center.

MEET AT GLYNDOR GALLERY, 10AM–1PM

Sat, March 10    Talk & Tasting: Wine-Growing in the Hudson Valley

Viticulturist and winemaker J. Stephen Casscles has evaluated all of the grape varieties historically grown in New York State, and recently re-introduced several heirloom cultivars back into the commercial market. Join him for a talk and tasting of heirloom wines as he speaks about the fascinating story of this locally-produced beverage. Followed by a signing of his bookGrapes of the Hudson Valley. Free with admission to the grounds.

WAVE HILL HOUSE, 1–2PM

Sun, March 11    Spring Birding

Welcome migratory birds back to Wave Hill this spring. Explore the gardens and woodlands with naturalist Gabriel Willow on a quest to spot both resident and rare birds as they pass through on their northern journey or settle down for the season. Ages 10 and older welcome with an adult. Severe weather cancels. Free with admission to the grounds. NYC Audubon Members enjoy two-for-one admission. 

MEET AT PERKINS VISITOR CENTER, 9:30AM

Sun, March 11    Family Art Project: Avifauna Fun Monoprints

Notice the elegant and distinctive shapes of our local bird species. Working with simple templates or your own design, use large pieces of construction paper and tempera paint to make simple, bold, large-scale birdy monoprints. Free with admission to the grounds.

WAVE HILL HOUSE, 10AM‒1PM

Sun, March 11 Family Nature Walk

Join naturalist and educator Gabriel Willow on a family-friendly walk through the gardens or woodlands. Registration not required. Ages six and older welcome with an adult. Severe weather cancels. Free with admission to the grounds.

MEET AT WAVE HILL HOUSE, 1PM

Sun, March 11    Pre-Concert Tea

Enjoy Afternoon Tea in the Mark Twain Room prior to today’s concert in Armor Hall. The Café at Wave Hill pairs a classic menu with an assortment of green, black and herbal teas. This traditional tea service includes the four classic elements of savory, scones, sweets and tea. The menu, presented by Great Performances, includes an array of tea sandwiches, scones and bite-sized desserts. Afternoon Tea also includes a glass of sparkling wine. Afternoon Tea Service is $36. Wave Hill Members receive a 10% discount. Advance registration is required online. We will take reservations until 5PM, Thursday, March 8.

WAVE HILL HOUSE, NOON–2PM

Sun, March 11    Winter Workspace Drop-In Sunday

Artists in the Winter Workspace program share their studio practice with visitors on this Drop-In Sunday. This year’s Session 2 artists are Michele Brody, Tamara Kostianovsky, Athena LaTocha, Maika’i Tubbs and two New York Community Trust Van Lier Fellows, Ashton Agbomenou and Yelaine Rodriguez. For more about who is in residence on Sundays, visit wavehill.org. Free with admission to the grounds.

GLYNDOR GALLERY, 1–3PM

Sun, March 11    Concert: Ann Schein, Piano

The Washington Post reveres Ann Schein as a pianist who “simply reaches right into the heart of whatever she is playing—and creates music so powerful you cannot tear yourself away." She is one of the greatest pianists of her generation. Over the course of her career, Schein has earned similar high praise in major American and European cities and in more than 50 countries around the world. Since her debut in Mexico City in 1957 when she performed both the Rachmaninoff 3rd Concerto and the Tchaikovsky B-flat Concerto, she has performed thousands of concerts on every continent. In a return engagement at Wave Hill, Ms. Schein will offer works by Beethoven, Chopin and Rachmaninoff. Tickets for this concert are $28 plus admission to the grounds/$24 Wave Hill Member/$12 Children ages 8–18. Order tickets online at wavehill.org or onsite at the Perkins Visitor Center. For additional information, please call 718.549.3200 x251.

WAVE HILL HOUSE, 2PM

Sun, March 11    Garden & Conservatory Highlights Walk

Join a Wave Hill Garden Guide for an hour-long tour of seasonal garden highlights. Free with admission to the grounds.

MEET AT PERKINS VISITOR CENTER, 2PM

Mon, March 12

Closed to the public.

A 28-acre public garden and cultural center overlooking the Hudson River  and Palisades, Wave Hill’s mission is to celebrate the artistry and legacy of its gardens and landscape, to preserve its magnificent views, and to explore human connections to the natural world through programs in horticulture, education and the arts.

HOURS  Open all year, Tuesday through Sunday and many major holidays: 9AM–4:30PM, November 1–March 14. Closes 5:30PM, starting March 15.

ADMISSION  $8 adults, $4 students and seniors 65+, $2 children 6–18. Free Saturday and Tuesday mornings until noon. Free to Wave Hill Members and children under 6.

PROGRAM FEES  Programs are free with admission to the grounds unless otherwise noted.

Visitors to Wave Hill can take advantage of Metro-North’s one-day getaway offer. Purchase a discount round-trip rail far and discount admission to the gardens. More at http://mta.info/mnr/html/getaways/outbound_wavehill.htm

DIRECTIONS – Getting here is easy! Located only 30 minutes from midtown Manhattan, Wave Hill’s free shuttle van transports you to and from our front gate and Metro-North’s Riverdale station, as well as the W. 242nd Street stop on the #1 subway line. Limited onsite parking is available for $8 per vehicle. Free offsite parking is available nearby with continuous, complimentary shuttle service to and from the offsite lot and our front gate. Complete directions and shuttle bus schedule at www.wavehill.org/visit/.

Information at 718.549.3200. On the web at www.wavehill.org.

Comptroller Stringer Releases Analysis of New York City’s Preliminary FY 2019 Budget

Stringer creates new ‘agency watch list’ to spotlight City agencies that must deliver better results

Despite warning signs, budget cushion remains inadequate

Stringer renews call for more vigorous citywide savings program

  Amidst growing indications that the economic expansion of the last decade is waning, and as a hostile federal government targets the nation’s urban centers, New York City Comptroller Scott M. Stringer today presented his analysis of the Mayor’s fiscal year (FY) 2019 Preliminary Budget and Financial Plan. The Comptroller’s annual presentation rolled out a new ‘agency watch list’ to spotlight City agencies that raise the most budgetary concerns, and for which data-driven approaches are critically needed to measure and improve performance. Agencies included on the list for FY 2019 are the Departments of Homeless Services (DHS), Education (DOE), and Correction (DOC).

“Our economy is in solid position, but it won’t last forever, as economic and job growth slow in the years to come. With President Trump’s proposed budget cuts going after the most vulnerable New Yorkers, and his tax bill targeting our economy, it’s absolutely critical that New York City prepare today for whatever comes tomorrow. That means spending our limited resources in a way that achieves maximum impact,” said New York City Comptroller Scott M. Stringer. “Budgets are about priorities, and ours need to be on making sure that those who need our help the most get it, and that we can continue to provide all New Yorkers the critical City services they count on—in both good times and bad. Mayor de Blasio has offered a Preliminary Budget that puts forward a number of laudable initiatives that I support. But as we confront the challenges ahead, we will have to grow our budget cushion and implement a more vigorous agency savings program. That’s why this year, I’m introducing an ‘agency watch list,’ to shine a light on the departments that absolutely must deliver better results if we’re going to maintain City services, while keeping our fiscal house in order.”

The Comptroller’s wide-ranging presentation covered several aspects of the City Preliminary Budget and the state of the City’s economy, including:

Overview of the FY 2019 Preliminary Budget.

• Spending grows a modest 1.4% in FY 2019;
• Spending is projected to accelerate to an average annual rate of 2.6% over the entire Plan period, fiscal years 2018 to 2022;
• In contrast, revenues are projected to grow at an average 2.2% each year until FY 2022, resulting in budget gaps of $2.2 billion in FY 2020, $1.5 billion in FY 2021, and $1.7 billion in FY 2022; and
• So far this year, the February Plan shows a $2.6 billion budget surplus in FY 2018, down nearly $1.6 billion from the $4.2 billion budget surplus of FY 2017.

The Comptroller’s Economic Outlook

While the City’s economy is still growing, the Comptroller’s office forecasts that growth will slow.

• Any short-run stimulus effects of federal tax cuts and spending are likely to wear off quickly as the Federal Reserve and markets react to rising federal deficits and inflationary expectations.
• As a result, job growth in the City is expected to decelerate from an average of nearly 90,000 new jobs per year since the end of the Great Recession in 2010, to 22,700 in 2020, 15,900 in 2021, and 16,300 in 2022; and
• The City’s declining cash balances constitute an early warning signal, as they currently sit more than $2 billion below last year’s level, after falling to a low in December of $1 billion – the lowest point since 2010.

Agency Watch List

This year the Comptroller is introducing an Agency Watch List of the City agencies that are of most concern when it comes to budgeting.

DHS: Citywide Spending for Homeless Services Continues to Rise While Homeless Population Grows

• Citywide spending on homelessness across all agencies has more than doubled from $1.1 billion in FY 2013 to a projected $2.6 billion in FY 2019;
• Spending on shelters alone has nearly doubled since FY 2013 – from just over $1 billion to $1.9 billion dollars in FY 2019; and
• Despite major investments in prevention and housing, the number of individuals residing in shelters has steadily increased from 49,673 in 2013 to 61,029 as of February 2, 2018.

DOE:  More for the Classroom, Less for the Bureaucracy

• Since 2012, Central Administration staff has increased by more than 400, a 24% rate of growth – twice the rate of teaching staff growth, at 12%.
• There is rampant waste and lack of accountability at DOE. Comptroller audits have found:
  • In a sample of just 8 schools and one administrative site, one-third of computer hardware was unaccounted for, with no follow-up action to implement basic controls;
  • $1 billion investment in high-speed broadband while one in three teachers remain dissatisfied with the service; and
  • $2.7 billion in no-bid contracts.

DOC: Inmate Population is Down, but Spending – and Violence – Are Up

• In the last decade, the average daily inmate population has declined by over 30 percent, from 13,850 in 2008 to 9,500 in 2017;
• But over the same period, the average annual cost of housing an inmate on Rikers has more than doubled, from about $117,000 in 2008 to over $270,000 in 2017; and
• The number of violent incidents against both inmates and correctional officers has more than tripled over the same period, from 441 per 1,000 average daily population in 2008 to 1,332 per 1,000 average daily population in 2017.

Budget Cushion Must be Bolstered

The City’s projected budget cushion – the budget resources available at the beginning of each fiscal year to help the City weather unexpected events – is currently insufficient, at just 9% of adjusted FY 2019 spending.

• The optimal range for the City’s reserve cushion is between 12% and 18% of spending;
• At the start of the last recession in 2009, the City’s budget cushion was equivalent to more than 17% of spending;
• At the start of FY 2018, the City made progress towards the lower bound of the optimal range by boosting the budget cushion  to 11.7% of adjusted spending, up from 11.1% at the start of FY 2017;
• As of the February Plan, the City’s accumulated FY 2018 surplus is over $1.5 billion less than at the start of the year;
• That means that in the absence of adding more to the accumulated surplus or reserves before the end of the fiscal year, the City would start FY 2019 with a cushion equal to just 9% of projected spending – about $8.5 billion; and
• To reach the lower bound of the optimal range, the City needs to add more than $2 billion to the budget cushion.

Need for Vigorous Agency Savings Plan

The Mayor has proposed a $3.3 billion dollar Citywide Savings Program over the Financial Plan period. In the past, City agencies contributed more relative to the City-funds budget, and Comptroller Stringer once again recommends that City agencies do a serious scrub of their budgets and operations to identify more savings and efficiencies to help address potential risks – something City agencies have not been asked to do in the last four budget cycles.

• The average agency savings was about 2.7% of City-funds agency expenditures in FY 2008 through FY 2013; and
• However, the average agency savings in the Citywide Savings Program since amounts to 1.1%.

Items From Bronx District Attorney Darcel D. Clark

BRONX LAWYER REPAYS $34,600 AFTER PLEADING GUILTY TO FAILING TO FILE TAXES FOR THREE YEARS

Defendant Also Did Not Secure Workers’ Compensation for Employees

  Bronx District Attorney Darcel D. Clark today announced that a Bronx attorney who practices real estate law has repaid nearly $35,000 to New York State after pleading guilty to failing to file income taxes and failing to secure Workers’ Compensation for her employees. 

  District Attorney Clark said “The defendant showed a complete lack of respect for the law – a betrayal to her profession as an attorney and a slap in the face of hardworking taxpayers. We will not tolerate financial misbehavior from anyone.” 

  District Attorney Clark said that the defendant, Kathleen Bradshaw, 53, of Ardsley, N.Y., pleaded guilty to the misdemeanors of fourth-degree Tax Fraud and Failure to Secure Workers Compensation on January 31, 2018 before Bronx Supreme Court Justice Robert A. Neary. Today, after paying back $34,600 in back taxes, penalties and interest to the NYS Department of Taxation and Finance, she received a conditional discharge. 

  According to the investigation, Bradshaw allegedly failed to file New York State taxes from 2009 to 2011. She also allegedly falsely reported information on a 2014 NYS-45 form. Furthermore, Bradshaw allegedly violated the Workers’ Compensation Law, failing to provide coverage for her employees from 2012 to 2015.

  District Attorney Clark thanked the NYS Department of Taxation and Finance’s Criminal Investigations Division for their valuable assistance in this investigation.

BRONX PARENTS INDICTED ON ENDANGERMENT CHARGES; LEFT 5-YEAR-OLD SON ALONE IN HOME RIDDLED WITH VERMIN AND FECES

  Bronx District Attorney Darcel D. Clark today announced that a Bronx couple has been indicted on Endangerment charges for leaving their child alone in their apartment which was infested by rodents and spattered with blood and feces. 

 District Attorney Clark said, “This was a deplorable situation; a 5-year-old boy and his three siblings were living in such squalor. The parents had a duty to protect their children from these dangerously unhealthy conditions.” 

 District Attorney Clark said the defendants, Charlotte Lewis, 48, and Wilfred Lewis, 59, both of 3054 Kingsbridge Avenue, were indicted on first and second-degree Endangering the Welfare of an Incompetent or Physically Disabled Person and four counts of Endangering the Welfare of a Child. The defendants were arraigned today before Bronx Supreme Court Justice George Villegas. Bail was continued at $15,000 and they are due back in court on May 31, 2018. 

 According to the investigation, on January 26, 2018, authorities were called to the family’s apartment where they found a neglected 5-year-old boy. The child was found with insects on his body and the apartment was infested with dead and live rodents and insects, and walls were stained with blood and feces.

 District Attorney Clark thanked Assistant District Attorney Nick Lastella for his assistance in the case.

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

BRONX MAN INDICTED ON ASSAULT CHARGES FOR BEATING 4-YEAR-OLD DAUGHTER WITH ALUMINUM BASEBALL BAT 

Child Allegedly Hit During Parental Argument; Suffered Liver Damage

  Bronx District Attorney Darcel D. Clark today announced that a Bronx man has been indicted on first-degree Assault and other charges for repeatedly striking his daughter with a baseball bat and seriously injuring her. 

 District Attorney Clark said, “Allegations of abuse against a helpless, innocent child are more horrific and disturbing when they are against a family member meant to protect the child. This little girl was left alone with serious injuries until her mother found her. We will work hard to find a measure of justice and safety for both of them. ” 

 District Attorney Clark said the defendant, Noel Morales, 32, of 1145 Morrison Avenue, was indicted on first-degree Assault, three counts of second-degree Assault, third-degree Assault, fourth-degree Criminal Possession of a Weapon and Endangering the Welfare of a Child. He was arraigned today before Bronx Supreme Court Justice George Villegas. Bail was continued and he is due back on May 29, 2018. 

 According to the investigation, on January 14, 2018, inside an apartment shared by Morales, his daughter and the girl’s mother, Morales struck his four-year-old daughter three times with a baseball bat following an argument with the girl’s mother. The child’s mother, who was at work, later found the girl and rushed her to a hospital. The girl suffered severe injuries including contusions to the liver, bruising on her stomach and back and a broken arm.

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

A.G. Schneiderman And Comptroller DiNapoli Announce Arrest Of Former New York City Council Candidate Albert Alvarez

Felony Complaint Alleges that Alvarez Knowingly Accepted Straw Donations, Stole at Least $4,500 in NYC Public Matching Funds 

  Attorney General Eric T. Schneiderman and Comptroller Thomas P. DiNapoli today announced the arrest of former New York City Council candidate Albert Alvarez for allegedly accepting straw donations and stealing thousands of dollars in New York City public matching funds during Alvarez’s unsuccessful 2013 run for Council. The felony complaint filed today in New York County Supreme Court charges Alvarez with Offering a False Instrument for Filing in the First Degree, a class E felony, and Grand Larceny in the Third Degree, a class D felony.

“New York City’s public financing system is not a piggy bank for criminals,” said Attorney General Schneiderman. “As we allege, Mr. Alvarez took advantage of our campaign finance system, using straw donors and false filings to line his campaign’s coffers. We’ll continue to bring to justice those who abuse the law and violate the public trust.”

“Mr. Alvarez allegedly dodged campaign finance laws to illegally obtain matching funds,” said State Comptroller Thomas P. DiNapoli. “Thanks to the work of my investigators and auditors in partnership with Attorney General Schneiderman and Commissioner Peters’ offices, his scheme was exposed and he now faces felony charges.”

Alvarez previously served as Chief of Staff to New York City Council Majority Leader Joel Rivera. In 2013, Alvarez ran for Rivera’s seat in the 15^th New York City Council District, which covers the Central Bronx, but was unsuccessful in the Democratic primary.

As alleged in the felony complaint filed today, while running for office Alvarez knowingly accepted straw donations orchestrated by George Gonzalez and Anna Mendez, who were arraigned for their roles in the false filings on a separate felony complaint on January 10, 2018. Mendez and Gonzalez allegedly provided entity funds to six other employees of the New York City-based entity where they worked in order to contribute to Alvarez; employees who contributed by check or money order were reimbursed by Gonzalez.

The complaint alleges that Gonzalez distributed contribution cards to these employees, which he had them falsely fill out in their own names while Alvarez watched. Alvarez then allegedly collected the money and the false contribution cards from the straw donors, and falsely submitted them to the New York City Campaign Finance Board. In addition to accepting and falsely submitting the straw donations, Alvarez allegedly stole at least $4,500 in public matching funds as a result of the straw donations submitted to the NYCCFB; the straw donations were all made at a level that would qualify toward Alvarez’s receipt of public matching funds.

The Attorney General and Comptroller would like to thank the NYC Department of Investigation for its partnership in this investigation.

DOI Commissioner Mark G. Peters said, “This City Council candidate manipulated the campaign finance system, using fake donors and false filings to steal thousands of public dollars in matching funds, according to the charges. New York City’s public campaign finance system is a model for the country and DOI will continue to vigorously police its integrity. We are proud to work with the state Attorney General and state Comptroller to expose this defendant’s charged corruption.”

Since 2011, Attorney General Schneiderman and Comptroller DiNapoli have worked together to fight corruption through their Joint Task Force on Public Integrity. They have brought charges against dozens of individuals implicated in public corruption schemes around the state – resulting in the return of over $11 million in restitution to taxpayers through these convictions.

The Division of Investigations conducted the investigation for the Office of the State Comptroller. 

This case is being prosecuted by Assistant Attorney General Kevin B. Frankel of the Attorney General’s Public Integrity Bureau, under the supervision of Bureau Chief Daniel Cort and Deputy Bureau Chief Stacy Aronowitz. The Criminal Justice Division is led by Executive Deputy Attorney General Margaret Garnett. 

The investigation was led by Investigator Steven Broomer of the Attorney General’s Investigations Bureau, under the supervision of Supervising Investigator Mike Leahy and Deputy Chief Investigator John McManus. The Investigations Bureau is led by Chief Dominick Zarrella. Legal Support Analysts Rachel Demma and Katharine Litka of the Public Integrity Bureau also assisted in the investigation. 

The charges against the defendants are merely accusations and the defendants are presumed innocent unless and until proven guilty in a court of law.

New York Attorney Charged With Tax Fraud

Allegedly Did Not Report More Than $3 Million Embezzled From Deceased Client’s Estate

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Richard E. Zuckerman, Principal Deputy Assistant Attorney General of the Tax Division, and James D. Robnett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, New York Field Office (“IRS”), announced the arrest of STEVEN M. ETKIND, a New York-licensed attorney and partner at a New York law firm, for conspiring to defraud the United States, corruptly endeavoring to impede the internal revenue laws, and tax evasion.

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

ETKIND was the head of a New York law firm’s tax, trusts, and estates group and a Certified Public Accountant.  The indictment alleges that ETKIND performed legal work for a successful entrepreneur client, who died in 2008, naming ETKIND as the co-executor of his $35 million estate.

The client’s will directed the creation of charitable trusts, funded with assets from the client’s estate, for the sole purpose of donating to charitable organizations, including those aimed at assisting Jewish sponsored organizations.  ETKIND was named co-trustee of these trusts. 

The indictment charges that ETKIND and his co-conspirator set up a phony charitable organization and used it to steal more than $3.5 million from these charitable trusts – by first directing donations from the trusts to legitimate Jewish charitable organizations, then redirecting the funds to the phony charity accounts that ETKIND and his co-conspirator controlled.  ETKIND used part of the money he stole to purchase a 6,300-square-foot home with a swimming pool in Southampton, New York, titling it in a nominee name. 

To conceal his theft, ETKIND filed, and caused to be filed, fraudulent personal, corporate and charitable trust returns with the IRS and made several false and misleading statements to the IRS during the course of an audit and examination of the phony charity. 

If convicted, ETKIND, 57, faces a statutory maximum sentence of five years in prison on the conspiracy charge, five years on each of the tax evasion charges, and three years for obstructing the internal revenue laws.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Mr. Berman and Mr. Zuckerman praised the outstanding efforts by special agents of IRS Criminal Investigation. 

Mr. Berman also thanked the U.S. Department of Justice’s Tax Division for their significant assistance in the investigation. 

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

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment constitute only allegations, and every fact described should be treated as an allegation.

Operator Of Bitcoin Investment Platform Charged With Perjury And Obstruction Of Justice

Jon E. Montroll Allegedly Lied Repeatedly to SEC Staff During Testimony to Conceal Substantial Customer Losses Due to a Software Exploit

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that JON E. MONTROLL, a/k/a “Ukyo” was taken into federal custody today for giving false sworn testimony and false documentation to the staff of the New York Regional Office of the Securities Exchange Commission (“SEC”).  The defendant is expected to be presented this afternoon in U.S. District Court for the Northern District of Texas, before U.S. Magistrate Judge Jeffrey L. Cureton.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “SEC investigations rely on learning the full and accurate facts concerning financial markets and products.  As alleged, the defendant repeatedly lied during sworn testimony and misled SEC staff to avoid taking personal responsibility for the loss of thousands of his customers’ bitcoins.  These charges signify that we will use the full force of the federal criminal law to protect the integrity of the SEC’s investigative process.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “As alleged, Montroll committed a serious crime when he lied to the SEC during sworn testimony.  In an attempt to cover up the results of a hack that exploited weaknesses in the programming code of his company, he allegedly went to great lengths to prove the balance of bitcoins available to BitFunder users in the WeExchange Wallet was sufficient to cover the money owed to investors.  It’s said that honesty is always the best policy – this is yet another case in which this virtue holds true.”

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

JON E. MONTROLL operated two online bitcoin services: WeExchange Australia, Pty. Ltd. (“WeExchange”) and BitFunder.com (“BitFunder”).  WeExchange functioned as a bitcoin depository and currency exchange service.  BitFunder facilitated the purchase and trading of virtual shares of business entities that listed their virtual shares on the BitFunder platform.

During the summer of 2013, one or more individuals (the “Hackers”) exploited a weakness in the BitFunder programming code to cause BitFunder to credit the Hackers with profits they did not, in fact, earn (the “Exploit”).  As a result, the Hackers were able to wrongfully withdraw from WeExchange approximately 6,000 bitcoins, with the majority of those coins being wrongfully withdrawn between July 28, 2013, and July 31, 2013.  In today’s value, the wrongfully withdrawn bitcoin were worth more than $60 million.  As a result of the Exploit, BitFunder and WeExchange lacked the bitcoins necessary to cover what MONTROLL owed to users.

In November 2013, MONTROLL provided sworn testimony to the SEC’s New York Regional Office in connection with their investigation into the Exploit and BitFunder’s activities. In that testimony, MONTROLL denied that the Exploit had been successful, testifying that, “When [the Hackers] went to withdraw, the system stopped them because the amount was obviously causing issues with the system.”  MONTROLL later added that the software issue “was corrected immediately, whenever the system started having the problems, and I caught on to what was happening I’d say within a few hours.”

MONTROLL also produced to the SEC a screenshot purportedly documenting, among other things, the total number of bitcoins available to BitFunder users in the WeExchange Wallet as of October 13, 2013 (the “Balance Statement”).  The Balance Statement reflected “6,679.78 BTC” on hand as of that date.  In discussing the Balance Statement in his sworn testimony, MONTROLL explained that it represented “the collective pool of funds held for users on BitFunder. The collective pool of BTC held for users on BitFunder – users who transfer bitcoins to BitFunder, this is the total amount that’s being held by BitFunder of those users.”

Contemporaneous digital evidence, including chat logs and transaction data, revealed that the Balance Statement was a misleading fabrication.  Three days into the Exploit, MONTROLL had participated in an internet relay chat with another person (“Person-1”) in which he sought help in tracking down “Stolen coins.”  When that did not work, MONTROLL transferred some of his own bitcoin holdings into WeExchange to conceal the losses.  The Exploit, however, continued.  By the time of the Balance Statement, WeExchange actually held thousands of bitcoins less than MONTROLL had asserted through the false Balance Statement.

When confronted with that evidence during subsequent testimony, MONTROLL lied to SEC staff again.  While MONTROLL admitted that the Balance Statement was the product of his manual intervention in the WeExchange system, he claimed to have discovered the success of the Exploit only after the SEC had asked him about it during his first day of testimony and to have no knowledge of the chat with Person-1.

MONTROLL, 37, of Saginaw, Texas, is charged with two counts of perjury and one count of obstruction of justice. The perjury counts each carry a maximum penalty of five years in prison.  The obstruction of justice count carries a maximum penalty 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.

Mr. Berman praised the outstanding work of the FBI.  He also thanked the SEC, which has filed civil charges against MONTROLL in a separate action.

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

Bronx Man Pleads Guilty To Attempting To Provide Material Support To ISIS And Passport Fraud In Furtherance Of Terrorism

Sajmir Alimehmeti, a/k/a “Abdul Qawii,” Adorned His Apartment with an ISIS Flag, Purchased Combat Knives and Other Military-Type Equipment, Provided Advice and Assistance to an Individual He Believed to be Traveling to Syria to Fight with ISIS

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Edward C. O’Callaghan, Acting Assistant Attorney General for National Security, announced that SAJMIR ALIMEHMETI, a/k/a “Abdul Qawii,” pled guilty to attempting to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”), and to committing passport fraud in order to facilitate an act of international terrorism.  ALIMEHMETI pled guilty today to a Superseding Indictment in Manhattan federal court before U.S. District Judge Paul A. Engelmayer.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, Sajmir Alimehmeti took steps to travel overseas to support ISIS’s terror campaign.  He also bought military-type weapons and assisted another to get travel documents, equipment, and encryption technology to fight with ISIS in Syria.  Thanks to the FBI-NYPD Joint Terrorism Task Force, Alimehmeti now awaits sentencing for his admitted crimes in support of a terrorist organization.”

According to the allegations in the Superseding Indictment and the Complaint filed in this case, statements made during the plea proceeding, and other documents filed in the public record:

In October 2014, ALIMEHMETI attempted to enter the United Kingdom but was denied entry after U.K. authorities found camouflage clothing and nunchucks in his luggage.  About two months later, in December 2014, ALIMEHMETI was again denied entry into the United Kingdom, this time after U.K. authorities found that his cellphone contained images of ISIS flags.  Further forensic examination of the contents of the cellphone and ALIMEHMETI’s laptop computer showed numerous indicia of ALIMEHMETI’s support for ISIS, including a photograph of ALIMEHMETI with an ISIS flag in the background, images of ISIS fighters in the Middle East, a photograph of ALIMEHMETI making a gesture of support for ISIS, various files relating to jihad and martyrdom, and electronic communications in which ALIMEHMETI assisted another ISIS supporter in efforts to travel to Syria to join ISIS by providing contact information for an ISIS affiliate who could facilitate the travel.

After returning to the United States, ALIMEHMETI continued to support ISIS.  Among other things, ALIMEHMETI displayed an ISIS flag in his apartment in the Bronx and, in the course of recorded meetings with undercover law enforcement employees, ALIMEHMETI played multiple pro-ISIS propaganda videos on his computer and cellphone, including videos of ISIS fighters decapitating prisoners, and also indicated that he was interested in radicalizing other individuals in the Bronx area.  ALIMEHMETI also made repeated purchases of combat knives and other military-type equipment, including masks, handcuffs, a pocket chainsaw, a wire pocket saw, and a rucksack designed for tactical combat, which he stockpiled at his apartment in the Bronx.

In October 2015, ALIMEHMETI applied for a U.S. passport, falsely claiming in the application that his previous passport had been lost.  ALIMEHMETI later told an undercover law enforcement employee that his prior passport – which ALIMEHMETI showed to the undercover law enforcement officer – had not been lost and, instead, that he was applying for a new passport because he believed the rejection stamps in his existing passport resulting from his attempted entries into the United Kingdom would make it difficult to travel.  ALIMEHMETI further conveyed to undercover law enforcement personnel that he was seeking the new passport, without rejection stamps, to facilitate his travel overseas to join and fight for ISIS.

In May 2016, ALIMEHMETI attempted to assist an individual who was purportedly traveling from New York to Syria to train and fight with ISIS but who was actually an undercover law enforcement employee (the “UC”).  On May 17, 2016, ALIMEHMETI met with the UC in Manhattan.  The UC had purportedly arrived in New York earlier that day on a bus and was en route to John F. Kennedy International Airport (“JFK Airport”) to take an overseas flight later that night. 

ALIMEHMETI agreed to help the UC with several tasks prior to the UC’s purported travel.  ALIMEHMETI assisted the UC by locating stores so the UC could purchase supplies to use while traveling to, and fighting with, ISIS, including a cellphone, boots, a compass, a bag, and a flashlight, among other items.  ALIMEHMETI also gave the UC advice on which items to purchase and on the use of different kinds of encrypted communications services, including the service that ALIMEHMETI stated was currently being used by fellow ISIS supporters, whom ALIMEHMETI referred to as “the brothers.”  ALIMEHMETI also downloaded three encrypted communications applications on the UC’s newly purchased cellphone for use by the UC.   

Further, ALIMEHMETI assisted the UC in traveling from Manhattan to a hotel in Queens, so the UC could purportedly meet with an individual who was preparing travel documents that the UC would use to travel to Syria to join ISIS.  ALIMEHMETI gave the UC a piece of paper with his name and contact information, so the UC could provide that information to the purported document facilitator.  ALIMEHETI explained that he also wanted to travel to Syria and join ISIS, stating “I’m ready to . . . go with you man . . . you know I would.  I’m done with this place.”  After leaving the hotel in Queens, ALIMEHETI brought the UC to JFK Airport, via public transportation, so the UC could begin the purported journey to ISIS.  Within days of seeking to facilitate the UC’s travel to join ISIS, ALIMEHMETI indicated during a call to his brother in Albania that that he had learned of a new way to obtain a passport for his own travel (referring to the UC’s purported document facilitator), and that a “friend of mine” (referring to the UC) had “just [done] it two days ago.”

Following ALIMEHMETI’s arrest on the charges in this case in May 2016, the FBI executed a search of ALIMEHMETI’s Bronx apartment pursuant to a judicially authorized search warrant.  The FBI’s search of ALIMEHMETI’s apartment resulted in the seizure of, among other evidence, the following: (i) a laptop computer and a cellphone belonging to ALIMEHMETI that contain an array of materials further demonstrating his allegiance to ISIS and terrorist ideology, including images of the ISIS flag, photographs of ALIMEHMETI with an ISIS flag and making gestures supportive of ISIS, images of ISIS fighters overseas, and propaganda videos promoting and glorifying ISIS, including videos depicting ISIS fighters engaging in combat and beheading prisoners; (ii) a collection of combat knives and other military-type equipment that ALIMEHMETI had purchased and stored at his apartment, as discussed above; and (iii) an ISIS flag that was displayed on a wall in the apartment.

ALIMEHMETI, 24, of the Bronx, pled guilty to one count of attempting to provide material support or resources to a designated foreign terrorist organization, namely, ISIS, which carries a maximum sentence of 20 years in prison, and one count of making a false statement in an application for a U.S. passport with the intent to induce the issuance of a passport to facilitate an act of international terrorism, namely, traveling abroad to join, train with, and fight for ISIS, which carries a maximum sentence of 25 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.  Sentencing is scheduled for June 7, 2018, before Judge Engelmayer.   

Mr. Berman and Mr. O’Callaghan praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD, and the NYPD’s Intelligence Division.  Mr. Berman also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, the Department of Justice’s Office of International Affairs, the Albania State Police, and the Metropolitan Police Service’s Counter Terrorism Command of London, United Kingdom.