5 Members Of Slip-And-Fall Scheme Charged With Defrauding New York City-Area Businesses And Their Insurance Companies Of More Than $31.7 Million

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging PETER KALKANIS, BRYAN DUNCAN, KERRY GORDON, ROBERT LOCUST, and RYAN RAINFORD with conspiracy to commit mail and wire fraud, mail fraud, and wire fraud in connection with a scheme to obtain fraudulent insurance reimbursement and other compensation for fraudulent slip-and-fall accidents.  The Indictment also charges PETER KALKANIS with one count of aggravated identity theft.  The five defendants were arrested earlier this morning and will be presented today before United States Magistrate Stewart D. Aaron in Manhattan federal court.  The case has been assigned to United States District Judge Laura Taylor Swain.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants employed one of the oldest plays in the fraudster handbook – the fake slip-and-fall routine – to develop a network of ‘fall victims’ to obtain an astonishing $31 million in fraudulent insurance and compensation payouts.  Allegedly, some of the ‘victims’ went as far as having unnecessary surgery to increase the likelihood of a higher settlement.  Today, however, these defendants’ fraud careers are over, and they will be forced to answer for their alleged crimes.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “The intentional misrepresentation of an accidental slip and fall, and the subsequent defrauding of businesses and insurance companies, is a reprehensible crime in and of itself.  But perhaps the most shocking allegation revealed today is the fact that additional incentives were offered for participants to undergo surgery in order to receive payment for their involvement. One thing is for sure – the alleged activity carried out by Kalkanis and his co-conspirators was no accident, and neither are our charges today.”

As alleged in the Indictment unsealed today in Manhattan federal court[1]:

Since 2013, the defendants have been engaged in a widespread fraud scheme through which the defendants defrauded businesses and insurance companies by staging slip-and-fall accidents and filing fraudulent lawsuits arising from those staged slip-and-fall accidents.  The fraud scheme participants recruited individuals to stage slip-and-fall accidents at particular locations throughout New York City and to claim that they injured themselves as a result of their accidents.  The recruited patients were directed to claim that they had injured themselves and to seek medical treatment. 

After the staged slip-and-fall accidents, recruited patients were referred to specific attorneys who would file lawsuits against the owners of the accident sites and/or insurance companies of the owners of the accident sites (the “Victims”).  The lawsuits did not disclose that the recruited patients had deliberately fallen at the accident sites or, in some cases, had not fallen at all.  During the course of the fraud scheme, the defendants, together with others known and unknown, attempted to defraud the Victims of at least $31,791,000.

The recruited patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors.  The fraud scheme participants advised the recruited patients that if they intended to continue with their lawsuits, they were required to undergo surgery.  As an incentive to getting surgery, the recruited patients were offered a payment after they completed surgery as well as a percentage of any settlement payment from their lawsuit. 

KALKANIS, a former chiropractor, was the organizer and leader of the scheme.  As alleged in the indictment, KALKANIS paid his co-defendants to recruit patients into the scheme and transport the patients to medical and attorney appointments.  KALKANIS also organized the recruited patients’ legal and medical appointments, and assisted in procuring the funding for the recruited patients’ medical treatment and lawsuits.

DUNCAN, GORDON, LOCUST, and RAINFORD helped recruit patients into the fraud scheme, transported patients to medical and legal appointments, identified potential accident sites, and coached recruited patients on faking their injuries. 

KALKANIS, 70, Queens, New York, DUNCAN, 30, Queens, New York, GORDON, 34, Queens, New York, LOCUST, 52, Brooklyn, New York, and RAINFORD, 28, Queens, New York, are each charged with one count of conspiracy to commit mail and wire fraud, which carries a maximum sentence of 20 years in prison; one count of mail fraud, which carries a maximum sentence of 20 years in prison; and one count of wire fraud, which carries a maximum sentence of 20 years in prison.  KALKANIS is also charged with one count of aggravated identity theft, which carries a two year mandatory prison sentence.  The maximum potential sentences and minimum sentence in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI and the NYPD.  Mr. Berman also thanked the National Insurance Crime Bureau for their assistance in the investigation. 

The charges contained in the Indictment and Complaint are merely accusations, and the defendants are 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 an allegation.

Third Co-Founder Of Cryptocurrency Company Charged In Manhattan Federal Court With Scheme To Defraud Investors

  Robert Khuzami, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of RAYMOND TRAPANI, a/k/a “Ray,” a co-founder of a cryptocurrency company called Centra Tech, Inc. (“Centra Tech”), and the unsealing of a criminal complaint charging TRAPANI with securities fraud and wire fraud offenses in connection with a scheme to induce victims to invest more than $25 million in investments through material misrepresentations and omissions in connection with an initial coin offering.  TRAPANI was arrested this morning and will be presented in U.S. District Court for the Southern District of Florida.  Two other Centra Tech co-founders, Sohrab Sharma, a/k/a “Sam Sharma,” and Robert Farkas, a/k/a “RJ,” a/k/a “Bob,” were arrested earlier this month based on a criminal complaint charging them with the same crimes.

Deputy U.S. Attorney Robert Khuzami said:  “As alleged, Raymond Trapani conspired with his co-defendants to lure investors with false claims about their product and about relationships they had with credible financial institutions.  While investing in virtual currencies is legal, lying to deceive investors is not.”

According to the allegations in the criminal Complaint unsealed in Manhattan federal court against TRAPANI:[1]

After TRAPANI worked with Sharma and Farkas at a luxury car rental company called “Miami Exotics” in Florida, the three of them co-founded a company called Centra Tech that claimed to have developed a debit card, the “Centra Card,” that purportedly allowed users to spend cryptocurrency to make purchases at any establishment that accepts Visa or Mastercard.  In approximately July 2017, TRAPANI, along with Sharma and Farkas, began soliciting investors to purchase unregistered securities in the form of digital tokens issued by Centra Tech, through a so-called “initial coin offering” or “ICO.”  As part of this effort, TRAPANI and his co-conspirators, Sharma and Farkas, in oral and written offering materials that were disseminated via the internet, represented: (a) that Centra Tech had an experienced executive team with impressive credentials, including a purported CEO named “Michael Edwards” with more than 20 years of banking industry experience and a master’s degree in business administration from Harvard University; and (b) that Centra Tech had formed a partnership with Bancorp to have Bancorp issue Centra Cards licensed by Visa or Mastercard, among other claims.  Based in part on these claims, victims provided more than $25 million in investments for the purchase of Centra Tech tokens. 

The claims that TRAPANI and his co-conspirators, Sharma and Farkas, made to help secure these investments, however, were false.  In fact, the purported CEO “Michael Edwards” and another supposed member of Centra Tech’s executive team are fictional people who were fabricated to mislead investors, and Centra Tech had no relationships with Bancorp, Visa, or Mastercard.

On or about September 29, 2017 – the date on which the United States Securities and Exchange Commission (“SEC”) announced that it filed a civil complaint charging a company called “RECoin” and its founder, among others, with defrauding investors in an unregistered offering of securities styled as an initial coin offering – Sharma asked TRAPANI and Farkas to remove certain materials from Centra Tech’s website that contained “fufu,” or fake information, about Centra Tech’s purported relationship with Visa because, according to Sharma, “I rather cut any fufu . . . Now . . . Then worry . . . Anything that doesn’t exist current . . . We need to remove.”  Later that day, Sharma text messaged TRAPANI and Farkas that “Sec just shut down REcoin . . .  Read the article . . . We gotta clean up every single thing that we can’t do . . . And can’t offer today.”  Shortly thereafter, TRAPANI responded that RECoin “were pitching a straight security,” to which Sharma wrote “Yea . . . I know . . . But [still] fraud can be a word thrown around.”

In a separate action, the SEC filed civil charges against TRAPANI.  Earlier this month, the SEC also filed civil charges against Sharma and Farkas.  

TRAPANI, 27, is a resident of Florida.  TRAPANI is charged in a four-count criminal complaint with one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum potential sentence of 20 years in prison; one count of securities fraud, which carries a maximum potential sentence of 20 years in prison; and one count of wire fraud, which carries a maximum potential 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 defendants will be determined by the judge.          

Mr. Khuzami praised the work of the FBI and thanked the SEC for its assistance.

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.

BP DIAZ CELEBRATES ISRAELI INDEPENDENCE DAY

On Thursday, April 19, 2018, Bronx Borough President Ruben Diaz Jr. in conjunction with The Hebrew Institute of Riverdale -“The Bayit,” hosted the borough’s annual celebration to commemorate the independence of Israel.

The event, which marks the 70th anniversary of the independence of Israel, included a barbecue dinner, inflatable rides, puppet show, entertainment, music and much more.

Above - Rabbi Steven Exlier of the Hebrew Institute of Riverdale receives a proclamation from Deputy Bronx Borough President Marricka Scott-McFadden. 

Below - Rabbi Exlier poses with local elected officials Councilman Andrew Cohen Assemblyman Jeffrey Dinowitz, Deputy Bronx BP Scott-McFadden, State Senator Jeff Klein, and Richard Federman representing Congressman Eliot Engel. 

Bronx Borough President Ruben Diaz Jr. had four events to attend in a span of three hours in Manhattan and the Bronx. The Deputy BP will occasionally stand in for the BP when more than one event is held at the same time or when the BP is ill. 

MAYOR DE BLASIO ANNOUNCES CENTRAL PARK, WORLD’S MOST ICONIC GREENSPACE, WILL BECOME PERMANENTLY CAR-FREE

Center Drive, Terrace Drive, East Drive and West Drive will be permanently closed to cars; Decision will return park to its original purpose as a recreational space

  In advance of Earth Day 2018, Mayor Bill de Blasio announced that Central Park, the world’s most iconic greenspace, will become entirely car-free. Beginning on June 27, 2018, the day after the conclusion of public school classes and the first day outdoor pools are open across the city, the last sections of the park’s loop drives that remain open to cars will be permanently closed to them, returning the park to its original use as an urban refuge and recreation space. More than 42 million visitors flock to Central Park each year. Returning the park’s loop road to walkers, joggers and cyclists will reduce air pollution in the park and improve safety. It also signals New York City’s commitment to prioritizing people over cars in its premier public spaces.

Mayor de Blasio designated Prospect Park’s loop drive as permanently car-free this past January. Both of the city’s iconic 19th century Olmstead and Vaux parks will now share that status.

“Our parks are for people, not cars. For more than a century, cars have turned parts of the world’s most iconic park into a highway. Today we take it back. We are prioritizing the safety and the health of the millions of parents, children and visitors who flock to Central Park,” said Mayor Bill de Blasio.

"Like many New Yorkers, I count on Central Park to give me a much-needed dose of nature, and so I applaud the de Blasio administration for taking this important step. Making one of the most famous greenspaces in the world a little greener in honor of Earth Day is the perfect way to celebrate our planet. Summer in the city is going to be that much better now,” said City Council Speaker Corey Johnson.

“Today we proudly announce that Central Park will be car free,” said DOT Commissioner Polly Trottenberg.   “As with Brooklyn’s Prospect Park, which went permanently car-free earlier this year, the change will be welcome news to pedestrians, cyclists and those who love our parks.  We thank the Mayor for his leadership, and congratulate the advocates who fought for decades to make this day a reality. We look forward to the celebratory ride this summer.”

“Central Park is not just one of New York’s favorite parks – it’s one of the most-beloved, most-recognized parks in the entire world. Now, we’re making history by demonstrating just how clean, accessible, and safe an urban park can be,” said Parks Commissioner Mitchell J. Silver, FAICP.

Cars have used Central Park’s scenic loop drive for more than a century. Reductions in the hours during which cars are permitted began in the 1960s. Most recently, in 2015, Mayor de Blasio had announced that all park drives north of 72nd Street would be car-free. Northbound car traffic has continued to be permitted on Center Drive from 7am-7pm on weekdays, and southbound traffic has continued on West Drive, Terrace Drive and Center Drive from 8am-10am on weekdays.

The transverse roadways at 97^th, 86^th, 79^th and 65^th Streets are not affected by these changes. They were built into the park’s original design as fully-separated, below-grade streets to accommodate thru-traffic.

DOT, NYC Parks, NYPD and the Central Park Conservancy are coordinating on this transition. DOT analysis shows that traffic increases on surrounding areas is expected to be minimal. To help enforce this change, the NYPD will make additional Traffic Enforcement Agents available at local intersections. As the car-free hours take effect, DOT will closely monitor conditions to better accommodate traffic changes, as well as implement additional changes if necessary.

Mayor de Blasio, Comptroller Stringer, Pension Fund Trustees Launch Next Step in Comprehensive Effort to Divest from Fossil Fuels

NYC pension funds issue RFI to solicit input from wide-range of experts in unprecedented effort

RFI follows vote by NYCERS, TRS, and BERS to begin process of divestment from fossil fuel owners

  Mayor Bill de Blasio, Comptroller Scott M. Stringer and trustees of the New York City Employees’ Retirement System (NYCERS), the Teachers Retirement System (TRS), and the Board of Education Retirement System (BERS) today announced the next significant step toward achieving a first-in-the-nation goal of divestment from fossil fuel reserve owners. Launching one of the most significant and comprehensive divestment effort in the world to date, NYCERS, TRS, and BERS, which together represent 70 percent of the total assets of the City’s $193 billion pension funds, issued a Request for Information (RFI) to gather input and recommendations from a wide range of experts to determine a prudent strategy to divest from fossil fuel owners within five years. The RFI seeks insights from a variety of fields to ensure divestment from fossil fuels is conducted in a responsible way that is fully consistent with fiduciary obligations.

“New York City is standing strong for our planet and pensioners with this next step towards divestment,” said Mayor de Blasio. “The future is about clean energy and cleaner air as we continue fighting climate change. I thank Comptroller Stringer and Trustees for their leadership as we take important steps towards divesting from fossil fuels.”

“We know that the future is with big ideas in clean energy, not with big polluters, and we believe that a green economy is a thriving economy. Today’s historic action reflects our commitment to growing our funds for pension fund beneficiaries and protecting our planet,” said New York City Comptroller Scott M. Stringer. “Mayor de Blasio has been an incredible partner as we break new ground and forge a new path in this age of climate change. I thank him for his leadership, as well as the trustees for their partnership and focus on our fiduciary obligations to ensure a healthy retirement – and a healthy earth – for the hundreds of thousands of City workers and retirees we serve.”

  

In January, NYCERS, TRS, and BERS passed a joint resolution submitted by Mayor de Blasio and Comptroller Stringer to begin analyzing ways to divest from fossil fuel owners. The RFI issued today is the first major step toward achieving the groundbreaking goal of divestment within five years in a way that fulfills the fiduciary duties of the pension funds. In order to protect the long-term interests of the Systems’ beneficiaries and determine the most effective way to safeguard the Systems from the economic and investment risks of climate change, the RFI will collect advice, information and analysis from leading experts. Insights from experts in a variety of fields will be used to develop the Request for Proposal (RFP) for services to determine the path toward unwinding investments in fossil fuel owners from the pension fund portfolio. People who have backgrounds in investment, finance, legal, scientific and environmental policy, among others fields will be engaged, with responses due on June 1, 2018.

Those who respond to the RFI may be selected to make oral presentations to the Trustees and staff to allow greater understanding and discussion of their recommendations. After the Bureau of Asset Management (BAM) and the Mayor have fully reviewed all responses from the RFI, the Bureau will begin to develop and then issue the Request for Proposal (RFP) for services to create a strategy for divesting from fossil fuel owners.

To view the RFI, click here.

Comptroller Stringer serves as the investment advisor to, and custodian and a trustee of, the New York City Pension Funds. The New York City Pension Funds are composed of the New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund and the Board of Education Retirement System.

In addition to Comptroller Stringer, the participating New York City Pension Funds’ trustees are:

New York City Employees’ Retirement System: Mayor Bill de Blasio’s Representative, John Adler (Chair); New York City Public Advocate Letitia James; Borough Presidents: Gale Brewer (Manhattan), Melinda Katz (Queens), Eric Adams (Brooklyn), James Oddo (Staten Island), and Ruben Diaz, Jr. (Bronx); Henry Garrido , Executive Director, District Council 37, AFSCME; Tony Utano, President Transport Workers Union Local 100; Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.

Teachers’ Retirement System: Mayor Bill de Blasio’s Appointee, John Adler; Chancellor’s Representative, Raymond Orlando, New York City Department of Education; and Debra Penny, Thomas Brown and David Kazansky, all of the United Federation of Teachers.

Board of Education Retirement System: Schools Chancellor Richard Carranza; Mayoral: Issac Carmignami, T. Elzora Cleveland, Vanessa Leung, Gary Linnen, Lori Podvesker, Stephanie Soto, Benjamin Shuldiner, Miguelina Zorilla-Aristy; Michael Kraft (Manhattan BP), Debra Dillingham (Queens BP), General Chacon (Bronx BP) and Peter Calandrella (Staten Island BP); and employee members John Maderich of the IUOE Local 891 and Donald Nesbit of District Council 37, Local 372.

NEW YORK CITY’S AIR IS CLEANER THAN IT HAS EVER BEEN SINCE MONITORING BEGAN

DOHMH’s annual survey shows continued improvement in air quality

  In recognition of Earth Day on Sunday, the Mayor announced the release of DOHMH’s latest New York City Community Air Survey (NYCCAS) results, which found continued improvements in air quality. The report highlights significant progress toward the Mayor’s OneNYC goal of achieving the cleanest air of any large U.S. city by 2030. The report also found that New York City’s air was the cleanest it has ever been since monitoring began in 2008. NYCCAS is the largest ongoing urban air monitoring program of any U.S. city. The survey can be found here.

“Since the dawn of the industrial revolution, New Yorkers have not been able to breathe air this clean,” said Mayor de Blasio. “We are making significant strides in reducing air pollution to help protect the health of everyone in our city. That said, there is still much more work to do to bring down pollution in some parts of the city, where it disproportionately affects already vulnerable communities.”

“The latest New York City Community Air Survey shows that we are on the right track as air quality continues to improve, but there are still neighborhoods with poor air quality that can exacerbate respiratory disease,” said Health Commissioner Mary T. Bassett.  “Mayor de Blasio’s OneNYC initiative is bringing us closer to our goal of ensuring that all New Yorkers are not susceptible to developing serious health problems caused by pollutants and that all residents are breathing the same clean air.”

NYCCAS shows seasonal trends in air pollution levels from winter 2008-2009 through fall 2016. It highlights sources that contribute to high levels of pollutants in New York City neighborhoods and provides maps of neighborhood air pollution levels by year. 

NYCCAS findings:

·         Annual average levels of fine particulate matter, nitrogen dioxide, nitric oxide and black carbon have declined 28 percent, 27 percent, 35 percent and 24 percent, respectively.

·         The largest declines have been observed for sulfur dioxide due to City and State heating oil regulations,including the City’s efforts to phase out residual heating oil  – wintertime average levels have declined by 95 percent.

·         Summertime average ozone levels have remained stable.

·         High levels of fine particulate matter, nitrogen dioxide, and nitric oxide continue to be observed in areas of high traffic density, building density, and industrial areas. These pollutants have been linked to adverse health outcomes, including an exacerbation of cardiovascular and respiratory disease.

·         Higher sulfur dioxide levels are observed in areas with remaining residual oil boilers.

·         Ozone levels are higher in the outer boroughs, specifically in areas that are downwind of high emissions density. Meanwhile, areas with fresh combustion emissions reduce the concentration of ozone.

The Health Department, in collaboration with Queens College of the City University of New York, samples air quality with monitoring units mounted on lampposts 10 to 12 feet off the ground. The monitors include an air pump and filters to collect fine particulate matter, while samplers mounted on the outside of unit absorb the gaseous pollutants nitric oxide, sulfur dioxide, and ozone. Laboratory analysis determines the amount of pollutants collected and their concentration in the air.

In 2015, Mayor de Blasio signed into law the most sweeping update to the City’s Air Pollution Control Code in 40 years. The revisions to the Code deleted outdated provisions and focused new standards on pollution sources that have had little or no emissions control requirements, including commercial char broilers, fireplaces, food trucks, and refrigeration vehicles. These sources, viewed as a whole, emit a significant amount of particulate matter.

“As the federal government works to weaken environmental protections, New York City demonstrates the value of local action to improve air quality,” said Daniel Zarrilli, New York City's Senior Director of Climate Policy and Programs and Chief Resilience Officer. “Today’s announcement is great news for every New Yorker and highlights our success in reducing emissions and improving public health.”

“Clean air is one of the most important factors of public health and quality of life,” said Mark Chambers, Director of the Mayor’s Office of Sustainability.  “Transitioning to electric vehicles, throwing out less waste, and using less energy continue the work of making our air the cleanest it has been in half a century.”

“The use of heavy heating oil was one of the most serious contributors to air pollution in New York City and, with significant input from a variety of stakeholders, we developed sensible regulations that helped 5,300 buildings switch to a cleaner fuel resulting in significantly healthier air for all New Yorkers,” said DEP Commissioner Vincent Sapienza. “Under Mayor de Blasio’s leadership, New York City is delivering on our commitment to be a sustainable city and a leader in environmental stewardship.”

About the New York City Community Air Survey 

The de Blasio administration, through the Health Department’s NYCCAS and its OneNYC plan, is prioritizing the reduction of emissions and air quality improvement citywide. Among the many initiatives, in February 2016, the de Blasio administration and the Department of Environmental Protection announced that the 5,300 buildings which used the most polluting heating oil (No. 6 oil) in 2011 converted to a cleaner fuel as of December 31, 2015. This change has greatly reduce building emissions of sulfur dioxide and fine particles that contribute to premature deaths and hospital admissions from cardiovascular and lung disease. In September 2015, Mayor de Blasio launched the NYC Retrofit Accelerator, which provides free, personalized advisory services for building owners and operators to make energy efficiency improvements to their buildings. The program will prioritize assistance to buildings in high-poverty neighborhoods that are still using No. 4 heating oil, which also causes harmful pollution. 

Former U.S. Soldier And Two North Carolina Men Found Guilty For Conspiring To Kidnap And Murder As Part Of A Murder-For-Hire Scheme Overseas

Furtherance of the Scheme, the Defendants Killed a Woman in the Philippines by Shooting Her Multiple Times in the Face

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JOSEPH MANUEL HUNTER, a U.S. citizen and former member of the U.S. Army, and two co-defendants, ADAM SAMIA and CARL DAVID STILLWELL, both U.S. citizens, were convicted by a federal jury today of offenses relating to the February 2012 murder of a woman in the Philippines.  The defendants’ conviction followed a 12-day trial before U.S. District Judge Ronnie Abrams of the Southern District of New York.  Sentencing has been scheduled for HUNTER on September 7, 2018, and for SAMIA and STILLWELL for September 14, 2018, before Judge Abrams. 

U.S. Attorney Geoffrey S. Berman said:  “This horrifying real-life murder-for-hire case included details usually seen in action movies.  Hunter, Samia, and Stillwell conspired to end the lives of people overseas whom they had never met.  Today a unanimous jury convicted them for their craven indifference to human life.  I commend the DEA for bringing this tragic story to a just ending.”

According to the Superseding Indictment against HUNTER, SAMIA, and STILLWELL, other filings in Manhattan federal court, and the evidence admitted at trial:

HUNTER served from 1983 to 2004 in the U.S. Army, where he attained the rank of sergeant first class.  While in the Army, HUNTER led air-assault and airborne infantry squads; served as a sniper instructor; and trained soldiers in marksmanship and tactics as a senior drill sergeant.  Since leaving the Army in 2004, HUNTER has arranged for the murders of multiple victims in exchange for money, among other completed acts of violence undertaken for pay. 

SAMIA is a self-described “Personal Protection/Security Industry” professional.  According to SAMIA’s résumé, he has worked as an “Independent Contractor” for clients in the Philippines, China, Papua New Guinea, the Democratic Republic of the Congo, and the Republic of the Congo; and has training in tactics and weapons, including handguns, shotguns, rifles, sniper rifles, and machineguns.  STILLWELL also purported to have training and experience in the field of information technology and to have worked at a firm in North Carolina that provides firearms training.

In 2011 and 2012, HUNTER, SAMIA, and STILLWELL agreed to commit murders-for-hire in overseas locations in exchange for salaries and bonus payments for each victim.  In early 2012, SAMIA and STILLWELL traveled from North Carolina to the Philippines, where HUNTER provided them with, among other things, information about their intended victims and firearms to use to commit the murders. 

In January and February 2012, SAMIA and STILLWELL surveilled their intended victims in the Philippines as they formulated their murder plans.  On February 12, 2012, SAMIA and STILLWELL killed one of their intended victims – a Filipino woman – in the Philippines by shooting her multiple times in the face (“Victim-1”).  After killing Victim-1, SAMIA and STILLWELL disposed of her body on a pile of garbage, where it was later found by local authorities.  HUNTER paid SAMIA and STILLWELL $35,000 each for completing the murder, and SAMIA and STILLWELL sent thousands of dollars from the payments they received to the United States using, among other methods, structured wire transfers in amounts under $10,000. 

In late February and early March 2012, SAMIA and STILLWELL returned from the Philippines to North Carolina, where they continued to reside until their July 2015 arrests on these charges.

HUNTER, 52, of Owensboro, Kentucky, SAMIA, 43, of Roxboro, North Carolina, and STILLWELL, 50, of Roxboro, North Carolina, were each convicted of one count of conspiring to commit murder-for-hire and one count of committing murder-for-hire, each of which carries a maximum sentence of life in prison and mandatory minimum sentence of life in prison; and one count of conspiring to murder and kidnap in a foreign country and one count of using and carrying a firearm during and in relation to a crime of violence, each of which carries a maximum sentence of life in prison.  SAMIA and STILLWELL were also each convicted of conspiring to commit money laundering, 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 defendants will be determined by the judge. 

The charges against the defendants were the result of the close cooperative efforts of the United States Attorney’s Office for the Southern District of New York; DEA’s Special Operations Division, Bilateral Investigations Unit; DEA’s Manila Country Office; DEA’s Atlanta Field Division, Raleigh Resident Office; DEA’s Louisville Field Division; the Durham Police Department; the Raleigh Police Department; the Harnett County Sherriff’s Office; the Wake County Sherriff’s Office; the Person County Sherriff’s Office; the Cary Police Department; the North Carolina State Bureau of Investigations; the Bureau of Alcohol, Tobacco, Firearms and Explosives, Greensboro Field Office; the Customs and Border Protection’s National Targeting Center; the Royal Thai Police; the Philippines National Bureau of Investigation; and the Philippines National Police; and the Department of Justice’s Office of International Affairs.  Mr. Berman also thanked the United States Attorney’s Office for the Middle District of North Carolina and the Department of Justice’s Computer Crime and Intellectual Property Section for their support and assistance.

A.G. Schneiderman Launches Inquiry Into Cryptocurrency “Exchanges”

Virtual Markets Integrity Initiative Seeks to Improve Transparency and Accountability of Major Cryptocurrency Trading Platforms to Protect Virtual Currency Investors

AG’s Office Sends Letters to 13 Virtual Currency Trading Platforms or “Exchanges” Requesting Disclosures on Their Operations, Use of Bots, Conflicts of Interest, Outages, and Other Key Issues

  New York Attorney General Eric T. Schneiderman launched the Virtual Markets Integrity Initiative, a fact-finding inquiry into the policies and practices of platforms used by consumers to trade virtual or “crypto” currencies like bitcoin and ether. As part of a broader effort to protect cryptocurrency investors and consumers, the Attorney General’s office sent letters to thirteen major virtual currency trading platforms requesting key information on their operations, internal controls, and safeguards to protect customer assets. As the letters explain, the Initiative seeks to increase transparency and accountability as it relates to the platforms retail investors rely on to trade virtual currency, and better inform enforcement agencies, investors, and consumers.

“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” said Attorney General Schneiderman. “Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”

Virtual or “crypto” currency trading platforms match buyers and sellers of virtual currencies. Sometimes referred to as “exchanges,” these platforms are a key point of entry into the virtual currency market for professional and retail investors alike. They serve as repositories for sensitive personal information and custodians of vast sums of virtual and government-issued (or “fiat”) currency.

Ensuring that enforcement agencies, investors, and consumers have the information they need to understand the practices and the risks on these platforms is critical, given reports of the theft of vast sums of virtual currency from customer accounts, sudden and poorly explained trading outages, possible market manipulation, and difficulties when withdrawing funds from accounts. Often, the platforms lack the basic market protections of traditional investing platforms. Moreover, the extent of disclosures to customers about trading rules, internal controls, and other basic practices varies from platform-to-platform, making it difficult or impossible for prospective users to evaluate the actual risks of trading on a particular platform.

The Initiative stems from the Attorney General’s duty to protect consumers and ensure the fairness and integrity of the financial markets. Before trading on a new platform, sophisticated investors routinely demand robust disclosures, allowing them to assess the platform’s operations and the adequacy of its policies and internal controls. The questionnaire delivered to the virtual currency platforms asks for similar information so that average investors can better understand the risks and protections.

The questionnaires ask the platforms to disclose information falling within six major topic areas, including (1) Ownership and Control, (2) Basic Operation and Fees, (3) Trading Policies and Procedures, (4) Outages and Other Suspensions of Trading, (5) Internal Controls, and (6) Privacy and Money Laundering. Among other areas of interest, the questionnaires request that platforms describe their approach to combating suspicious trading and market manipulation; their policies on the operation of bots; their limitations on the use of and access to non-public trading information; and the safeguards they have in place to protect customer funds from theft, fraud, and other risks. The Attorney General’s office will analyze the responses, compare them across platforms, and at the conclusion of this process, present what it learned to the public. 

The Investor Protection Bureau of the Office of the Attorney General sent letters to the following virtual currency trading platforms: (1) Coinbase, Inc. (GDAX); (2) Gemini Trust Company; (3) bitFlyer USA, Inc.; (4) iFinex Inc. (Bitfinex); (5) Bitstamp USA Inc.; (6) Payward, Inc. (Kraken); (7) Bittrex, Inc.; (8) Circle Internet Financial Limited (Poloniex LLC); (9) Binance Limited; (10) Elite Way Developments LLP (Tidex.com); (11) Gate Technology Incorporated (Gate.io); (12) itBit Trust Company; and (13) Huobi Global Limited (Huobi.Pro).

The full text of the letters sent to the trading platforms can be found below. The questionnaire is available here.

We write on behalf of the New York State Office of the Attorney General (“OAG”) to request the participation of [company] in OAG’s Virtual Markets Integrity Initiative, which seeks to protect the interests of New York residents who trade virtual currency and related investment products.[1] OAG is asking major virtual currency trading platforms (often referred to as “exchanges”) to respond to a questionnaire addressing key aspects of their operations, including their fee structure, their internal controls, and the measures they take to safeguard funds in customer accounts.[2] Through this Initiative, OAG seeks to increase transparency and accountability in the virtual currency marketplace—and better inform the actions of enforcement agencies, investors, and consumers in this space.

As you know, bitcoin, ether, and other virtual currencies have captured the imagination of millions of people worldwide. Representing a technological advance, a medium of exchange, and an investment opportunity all at once, virtual currencies are inspiring innovators, entrepreneurs, and investors—and are fueling an increasingly diverse ecosystem of companies and applications. But virtual currency is also a highly speculative sector, featuring significant volatility, instability, and risk. Moreover, published reports indicate the sector has attracted fraudsters, market manipulators, and thieves. As the State’s chief law enforcement agency, OAG is responsible for protecting consumers and investors from these bad actors and ensuring the fairness and integrity of New York’s financial markets.[3]  See, e.g., N.Y. Exec. Law § 63(12); N.Y. Gen. Bus. Law § 349; N.Y. Gen. Bus. Law § 352.

As with other emerging sectors, the challenge with virtual currency is to prevent fraud and other abuses, safeguard market integrity, and protect individual investors—without stifling legitimate market activity or innovation. OAG’s Virtual Markets Integrity Initiative seeks to advance these objectives by promoting meaningful transparency, accountability, and the opportunity for government agencies, consumer advocates, and investors to compare the policies, procedures, and protections of virtual currency platforms. Sophisticated investors routinely require privately-owned trading venues on which they are considering trading to furnish robust disclosures about their operations, policies, and internal controls so that they can evaluate the risks of trading on a given platform. The enclosed questionnaire asks [company] to supply similar information, for the benefit of not only professional investors and financial firms, but all consumers who may trade virtual currency on platforms, so that they better understand their operations and the associated risks.

The topics set forth in our questionnaire address fundamental aspects of your operations or issues that have already attracted significant public attention.  Indeed, many may be covered in your web disclosures or regulatory filings. They range from your platform’s basic trading rules, to the policies and safeguards you have implemented to prevent conflicts of interest, fraud, and illegality; address the operation of bots; and protection of customer assets from theft and other risks. We will review and assess your responses, compare them with those of other platforms, and disclose certain information in a publicly accessible format.[4] As part of this disclosure, we will identify any platforms that decline to provide meaningfully complete responses.

We kindly ask that you provide detailed and clear responses for each topic, as well as a contact from whom we can seek supplemental information, as necessary. Please complete the enclosed questionnaire and return your responses to our attention no later than May 1, 2018. In the event you have any questions or concerns, please do not hesitate to reach out to us.

Sincerely,                                           

Simon G. Brandler, Senior Advisor & Special Counsel                               

John D. Castiglione, Asst. Attorney General, Investor Protection Bureau

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[1] As used here and in the enclosed questionnaire, “Virtual Currency” and other terms have the same meanings as set forth in 23 NYCRR § 200.2 (Definitions).

[2] We are aware that certain trading platforms have formal rules barring access in New York and may not have a license to engage in virtual currency business activity in New York. Among other topics, we are asking platforms to describe their measures for restricting trading from prohibited jurisdictions.

[3] This role is separate from, but complementary to, that of New York State’s Department of Financial Services, which established a first-in-the-nation licensing protocol that requires virtual currency trading platforms and other firms engaged in virtual currency business activities to receive approval to operate and follow certain regulatory requirements.

[4] You may designate and request confidential treatment for the portion of any response that contains a valid trade secret or may otherwise be exempt from disclosure under New York’s Freedom of Information Law.  N.Y. Pub. Off. Law §§ 87(2)(a)-(d).