Assemblymember Michael Blake - Statement Regarding Officer Daniel Pantaleo and Justice for Eric Garner

Today, Deputy Commissioner of Trials, Rosemarie Maldonado recommended that NYPD officer Daniel Pantaleo should be fired for his direct involvement in the death of Eric Garner. After half a decade, we are on the road towards long-awaited justice.   But that's not enough. I call on Commissioner O'Neill to fire all parties involved with Mr. Garner's death and the subsequent cover-up, including Officers Justin D’Amico, Mark Ramos and Craig Furlani, Sergeant Kizzy Adonis and Lieutenant Christopher Bannon. I standby the Garner family on their call for New York Police Commissioner James O'Neill to do his job and fire Pantaleo, without pension or benefits. It has been five years. Five years since Mr. Garner's tragic death at the hands of an individual who swore to protect and serve his community. Five years since we've been waiting for justice to be served. We will not allow this to be swept under the rug. Eric Garner deserves justice beyond recommendations for the firing of the man who murdered him in broad daylight and in cold blood. Officer Pantaleo's suspension is not enough. All officers involved must be charged and fired for their conduct. New Yorkers deserve to know that bad actors in the NYPD will be held responsible for misconduct, regardless of their name and title. We will continue to fight and make our voices heard until all parties involved have been held accountable for their actions.

Sincerely,  Assembly Member Michael A. Blake

WILLIAMS' STATEMENT ON THE PANTALEO TRIAL RECOMMENDATION

 Public Advocate Jumaane D. Williams issued the following statement after the judge in the NYPD disciplinary trial for Daniel Pantaleo recommended that the officer be fired for his role in the death of Eric Garner.

  "The judge confirmed what many of us have known for years - Daniel Pantaleo used a banned chokehold and killed Eric Garner. The world saw it on camera, heard Eric Garner say 'I can't breathe' eleven times, watched Pantaleo ignore those pleas. It has always been clear that he should be fired - that removing him from the NYPD is the absolute minimum of what some semblance of justice looks like. 

"Nothing can undo what occurred five years ago on a Staten Island sidewalk. Nothing can truly heal the pain caused by years of inaction since. Eric Garner lost his life. Gwen Carr lost her son. Daniel Pantaleo may lose his job. 

"I turn to Commissioner O'Neill and Mayor de Blasio. All of the work done toward better policing in this city is overshadowed if there is no accountability for someone who killed a man on camera. Accept this recommendation, and the refrain echoed for five long years from the streets of this city to the stage in Detroit. Fire Pantaleo."

D.A. VANCE, NYS INSPECTOR GENERAL, NYC DOI COMMISSIONER, ANNOUNCE INDICTMENT OF NON-PROFIT HEAD FOR STEALING $631K FROM ADDICTS REHABILITATION CENTER FOUNDATION AND ADDICTS REHABILITATION CENTER FUND

Reginald Williams Charged With Years-Long Theft From Publicly-Funded Organizations

 Manhattan District Attorney Cyrus R. Vance, Jr., New York State Inspector General Letizia Tagliafierro, and New York City Department of Investigation (“DOI”) Commissioner Margaret Garnett today announced the indictment of REGINALD WILLIAMS, 67, for stealing more than $631,271 from the Addicts Rehabilitation Center Foundation, Inc. (“ARC Foundation”) and the Addicts Rehabilitation Center Fund Inc. (“ARC Fund”), while he served as the President and CEO of the ARC Fund, and the Chairman of the Board (and previously President and CEO) of the ARC Foundation. The ARC Foundation and the ARC Fund are taxpayer-funded not-for-profit entities that contract with City and State agencies to provide housing and social services to New Yorkers with substance and alcohol use disorders, HIV/AIDS, and others. NAOMI BARRERA, 42, who served as the President and CEO of the ARC Foundation, and BENNIE HADNOTT, 74, president of Tondah Consulting Group, which provided financial consulting services to the ARC Foundation, are also charged for their roles in WILLIAMS’s schemes. The defendants are charged in a New York State Supreme Court indictment with various counts of Grand Larceny in the Second and Third Degree, as well as Offering a False Instrument for Filing in the First Degree. [1]

 D.A. Vance said: “As alleged, these defendants shamelessly stole from publicly funded organizations dedicated to helping vulnerable New Yorkers. Even while their organizations struggled financially – failing to meet contractual obligations and even furloughing employees without pay – these defendants continued to drain the coffers for their personal gain. I would like to thank the New York State Inspector General’s Office and the New York City Department of Investigation for their valuable partnership, and urge anyone who knows of similar abuse of public funds to contact my Office at 212-335-8987.”

New York State Inspector General Tagliafierro said: “The defendants engaged in fraud to steal taxpayer dollars awarded to non-profits assisting vulnerable New Yorkers in need of housing, social services, and drug treatment. I thank District Attorney Vance and his office for their commitment to this case and the New York City Department of Investigation Commissioner Margaret Garnett and her office for their efforts and cooperation in the investigation.”

DOI Commissioner Garnett said: “These defendants should have safeguarded the finances of these taxpayer-funded nonprofits. Instead, they diverted public funds from their intended mission to provide housing and social services to individuals overcoming alcohol and substance abuse and those living with HIV/AIDS. They then used this stolen money for their personal benefit, including paying for personal travel and hotels, according to the charges. DOI thanks the Manhattan District Attorney’s Office and the State Inspector General for their partnership in this joint investigation.”

According to court documents and statements made on the record in court, since 2010, WILLIAMS – at times acting in concert with HADNOTT and BARRERA – has stolen $65,432.76 from the ARC Fund, and $565,839.56 from the ARC Foundation through multiple schemes. 

During one scheme, the ARC Foundation paid HADNOTT’s Tondah Consulting Group $40,000 each year for financial consulting services under WILLIAMS’s direction. In exchange, HADNOTT kicked back approximately 25% to WILLIAMS each year between 2010 and 2015, totaling more than $54,000. All but one of these checks were made payable to Alternative Strategies, a shell entity controlled by WILLIAMS, which he used to conceal and spend stolen funds.

WILLIAMS, acting in concert with BARRERA, also stole from the ARC Foundation on two separate occasions after the Foundation received an influx of cash, including after receiving bridge loans and after the sale of Heritage House, one of its affordable housing properties. As a result of these schemes, WILLIAMS received $135,000 and BARRERA received $30,000. BARRERA also filed a false document with the New York City Human Resources Administration when applying for the bridge loans on behalf of the ARC Foundation.

Finally, WILLIAMS stole funds from the ARC Foundation and the ARC Fund by requesting reimbursements for personal matters that he falsely claimed were business expenses. WILLIAMS received more than $100,000 for near-monthly travel expenses to the Bahamas, Jamaica, and the Dominican Republic for himself, family, and friends, including lodging, restaurant and bar tabs, and taxis. He was also paid more than $170,000 for frequent restaurant and bar tabs in New York City. At times, WILLIAMS submitted the same expenses to the ARC Fund and the ARC Foundation in order to receive double the reimbursement, or falsely inflated expenses by altering the receipts he submitted for reimbursement.

District Attorney Vance thanked the New York State Inspector General’s Office, particularly Senior Investigative Counsel Kenneth Michaels, Director of Audit Giovanni Liotine, Investigative Auditor Teresa Mohabir, Investigative Auditor Ran Chen, Investigative Auditor Angelus Okeke, and Investigative Auditor Alla Korsunskiy, under the direction of Special Deputy Inspector General Philip Foglia; and the New York City Department of Investigation, particularly Assistant Inspector General Sara Leibowitz, Investigative Auditor Lidia Bautista, and Senior Investigative Auditor/Special Investigator Tiffany Coles, who worked under the supervision of Senior Inspector General Andrew Sein, First Deputy Inspector General/Chief Forensic Auditor Ivette Morales, and Deputy Inspector General Peter Relyea, for their partnership in the investigation.  

Defendant Information: 

REGINALD WILLIAMS, D.O.B. 7/11/1952 New York, NY 

Charges: 

• Grand Larceny in the Second Degree, a class C felony, 4 counts

• Grand Larceny in the Third Degree, a class D felony, 1 count 

BENNIE HADNOTT, D.O.B. 11/23/1944 Teaneck, NJ Charge: 

• Grand Larceny in the Second Degree, a class C felony, 1 count 

NAOMI BARRERA, D.O.B. 5/24/1977 Teaneck, NJ Charges: 

• Grand Larceny in the Second Degree, a class C felony, 2 counts 

• Offering a False Instrument for Filing in the First Degree, a class E felony, 1 count

[1] The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. All factual recitations are derived from documents filed in court and statements made on the record in court. 

Former Chief Executive Officer And Chief Financial Officer Of Publicly Traded Company Charged With Accounting Fraud

Former Chief Accounting Officer and Senior Vice President of Company, a Real Estate Investment Trust, Have Pled Guilty and Are Cooperating with the Government’s Investigation

  Audrey Strauss, Attorney for the United States acting under authority conferred by 28 U.S.C. § 515 for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing of an Indictment in Manhattan federal court charging MICHAEL CARROLL and MICHAEL PAPPAGALLO, the respective former chief executive officer and chief financial officer of Brixmor Property Group (“Brixmor”), a publicly traded real estate investment trust (“REIT”), with fraud.  Specifically, CARROLL and PAPPAGALLO were charged with securities fraud in connection with their participation in a scheme to fraudulently “smooth” a key metric reported in Brixmor’s public filings and used by the investing public to evaluate the financial performance of publicly traded REITs such as Brixmor.  The case is assigned to U.S. District Judge Colleen McMahon.

MICHAEL CARROLL and MICHAEL PAPPAGALLO are expected to be presented later today before Judge McMahon in Manhattan federal court.

Deputy U.S. Attorney Audrey Strauss said:  “As alleged, the most senior executives at Brixmor engaged in a years-long scheme to cook the books and deceive the investing public.  When executives allegedly lie to the investing public about their company’s performance and thereby harm the integrity of the market, they must be held accountable.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “By devising schemes to make Brixmor more appealing to the investing public, Carroll and Pappagallo not only committed criminal acts, their actions led them down a path of distrust from shareholders.  The investing public depends on the veracity of information released by publicly traded companies and the U.S. Postal Inspection Service is devoted in protecting the integrity of this information.”

According to the allegations contained in the Indictment[1] unsealed today in Manhattan federal court and statements made in related court filings and proceedings:

Brixmor is a publicly-traded REIT headquartered in New York, New York.  At all relevant times, Brixmor owned and operated hundreds of commercial shopping centers located in cities around the United States.  From the time of its initial public offering in 2013 until 2015, MICHAEL CARROLL served as Brixmor’s chief executive officer, MICHAEL PAPPAGALLO served as Brixmor’s chief financial officer, Steven Splain served as Brixmor’s chief accounting officer, and Michael Mortimer served as a senior vice president for management accounting.  As a publicly traded company, Brixmor was required to file, and filed, quarterly and annual reports with the U.S. Securities and Exchange Commission (the “SEC”) that were also available to the investing public.  These reports contained important information regarding Brixmor’s financial performance for the relevant reporting period.  As the respective CEO and CFO of the company, CARROLL and PAPPAGALLO were required to sign these reports and file certifications entitled “Certification of Periodic Report Under Section 302 of the Sarbanes-Oxley Act of 2002” that attested to, among other things, the veracity of Brixmor’s SEC filings.  Brixmor, like many public companies, also filed, and otherwise released to the investing public, supplemental documents along with their periodic filings that provided additional representations regarding Brixmor’s performance and financial condition.

In addition to financial metrics governed by Generally Accepted Accounting Principles (“GAAP”), Brixmor, like many REITs, reported a non-GAAP metric related to its financial performance known as Same Store Net Operating Income (“SS-NOI”).  SS-NOI measures the amount of income derived from a set group of properties (the “Property Pool”).  In addition to SS-NOI, Brixmor also reported a metric that tracked the increase (or decrease) in SS-NOI (“SS-NOI Growth”) for a set group of properties between one period and the same period in the prior year.  More specifically, SS-NOI Growth is derived from comparing SS-NOI in a particular reporting period (the “Current Period”) with SS-NOI in a past period, for example, the same quarter in the prior year, (the “Comparison Period”) for the same Property Pool.  SS-NOI Growth was a key performance metric utilized by investors when assessing investments in publicly traded REITs such as Brixmor.  Because of the importance of this metric, Brixmor also provided forecasts to the investing public on what it expected SS-NOI Growth to be for each annual reporting period, often narrowing that guidance over the course of a given year.    

From 2013 through 2015, CARROLL and PAPPAGALLO regularly touted Brixmor’s consistent SS-NOI Growth from quarter to quarter and understood that the investing public paid significant attention to this metric.  For example, on August 6, 2014, CARROLL stated during a quarterly earnings call for the second quarter of 2014 that Brixmor had “a steady state portfolio with a large same property pool that is delivering consistent organic growth. . . . As I said, we are consistent, transparent and easy to understand.”  Similarly, on September 17, 2015, PAPPAGALLO spoke publicly at an industry conference in New York, New York, stating that “[S]ame-property NOI, which is certainly a metric which is looked at very, very carefully by REIT investors, it’s been at or above 3.4% for 12 quarters.  Very consistent same-property NOI growth coming from our primary drivers.”  CARROLL and PAPPAGALLO also understood that the investing public paid careful attention to whether Brixmor’s SS-NOI Growth fell within previously forecasted guidance for the year.  For every quarter between the fourth quarter of 2013 and the third quarter of 2015, Brixmor’s reported SS-NOI that fell squarely within its forecasted guidance for the year. 

In reality, however, Brixmor’s SS-NOI Growth was not as steady and consistent quarter over quarter as represented to the public, and instead fluctuated significantly – often outside the bounds of what Brixmor’s guidance was for the relevant year.   From 2013 through 2015, however, CARROLL, PAPPAGALLO, Splain, and Mortimer engaged in a scheme to hide that volatility from the investing public and instead report SS-NOI Growth numbers each quarter that showed even growth and that always fell in line within the annual guidance.  Rather than report the true results of their operations, CARROLL and PAPPAGALLO dictated where Brixmor’s reported SS-NOI Growth should land each quarter, and others, including Splain and Mortimer, carried out the necessary manipulation to reach those results. 

CARROLL, PAPPAGALLO, Splain, and Mortimer engaged in this manipulation of SS-NOI Growth through three primary means.  First, in quarters in which Brixmor generated more than enough income to meet the bottom, or in some cases middle, of its guidance range, it illicitly “stored” reportable income instead of immediately recognizing it, a deceptive practice often referred to as “cookie jar” accounting.  In fact, certain Brixmor employees frequently referred to a particular account that was used to hold such income as the “cookie jar.”  Brixmor employees then utilized that income in later quarters as necessary to inflate SS-NOI Growth in order to report the desired steady and smooth SS-NOI Growth to the investing public.  For example, on April 6, 2015, PAPPAGALLO emailed Splain, Mortimer, and others to schedule a meeting “regarding same property NOI planning” the “objective” of which was “to try to make decisions on 1Q number – push a little or squirrel away stuff for 2Q & 3Q.” 

Second, Brixmor reported in all of its public filings that it did not take lease termination income (“LSI”) into account when calculating SS-NOI.  LSI is money that a tenant pays as a lump sum payment upon the early termination of a lease.  Notwithstanding these representations, CARROLL, PAPPAGALLO, Splain, and Mortimer included some portion of LSI within SS-NOI when doing so helped show steady SS-NOI Growth or to meet guidance. 

Third, CARROLL, PAPPAGALLO, Splain, and Mortimer at times removed payments that had been included in SS-NOI in a prior Comparison Period in order to the boost SS-NOI Growth for the current period.  Because SS-NOI Growth effectively measures the SS-NOI change from one period to another, retroactively reducing the SS-NOI for a prior Comparison Period has the effect of creating a bigger spread to SS-NOI in the current period, thereby increasing the SS-NOI Growth metric for the current period.  For example, after the close of the third quarter of 2015 but before reporting SS-NOI Growth for that period, CARROLL instructed certain Brixmor employees as to what SS-NOI Growth figures he wanted the company to show for the third and fourth quarters of the year.  CARROLL, PAPPAGALLO, Splain, Mortimer, and others then went to work manipulating Brixmor’s SS-NOI Growth number for the third quarter, including by making multiple changes to the Comparison Period, in order to report the SS-NOI Growth number that had been pre-determined by CARROLL – a number that showed consistent growth over the year and was within guidance.  Toward the end of these discussions, on October 6, 2015, PAPPAGALLO sent an email to Splain and Mortimer, stating “[Splain] and [Mortimer] LLC Bratwurst at its Finest,” to which Mortimer responded with an image of a man holding a batch of sausage.

As a result of these manipulations, Brixmor reported steady quarter-by-quarter SS-NOI Growth between 2013 and 2015 that consistently fell within the company’s public annual guidance.  The below chart shows Brixmor’s reported SS-NOI Growth as compared to reported guidance:

 The below chart shows the actual SS-NOI Growth figures absent manipulation:

MICHAEL CARROLL, 51, of New York, New York, and MICHAEL PAPPAGALLO, 60, of Trumbull, Connecticut, were each charged in the Indictment with conspiracy to commit securities fraud and other offenses (Count One), securities fraud (Count Two), making false statements in filings with the SEC (Counts Three and Four); and filing false certifications (Counts Five and Six).  The securities fraud, false filings charges, and false certification charges each carry a maximum prison term of 20 years.  The charge of conspiracy carries a maximum prison term of five years.

Steven Splain, 57, of Cheshire, Connecticut, pled guilty on July 16, 2019, before United States District Judge Vernon S. Broderick to one count of conspiracy to commit securities fraud and to make false filings with the SEC, and one count of securities fraud.  The conspiracy charge carries a maximum prison term of five years and the securities fraud charge carries a maximum prison term of 20 years.

Michael Mortimer, 49, of Yardley, Pennsylvania, pled guilty on July 10, 2019, before United States District Judge Valerie E. Caproni to one count of conspiracy to commit securities fraud and to make false filings with the SEC, and one count of securities fraud.  The conspiracy charge carries a maximum prison term of five years and the securities fraud charge carries a maximum prison term of 20 years.

The maximum potential sentences 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.

Ms. Strauss praised the investigative work of the U.S. Postal Inspection Service, and thanked the Federal Bureau of Investigation for its assistance.  She also thanked the Securities and Exchange Commission, which has brought a civil action against the defendants.

 [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.

Former President Of Investment Adviser Firm Sentenced And Former Comptroller Charged In Multimillion-Dollar Investment Fraud

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that HECTOR MAY, the president of Executive Compensation Planners, Inc. (“ECP”), a registered investment adviser and financial planning firm located in New City, New York, was sentenced to 13 years in prison for participating in a conspiracy to defraud certain investment advisory clients (the “Victims”) out of more than $11 million.  MAY was sentenced yesterday by United States District Judge Vincent Briccetti.

U.S. Attorney Berman also announced the return of an indictment charging VANIA MAY BELL, MAY’s daughter and former comptroller of ECP, with participating in the conspiracy to defraud certain investment advisory clients.  She was arraigned this afternoon before U.S. District Court Judge Nelson S. Roman.

U.S. Attorney Geoffrey S. Berman said:  “For more than two decades, May conceived and orchestrated a multimillion-dollar Ponzi scheme.  His conduct was marked by extreme cunning, ruthlessness, and utter disregard for the well-being of his victims, including aging couples, close friends, relatives, and an employment pension plan.”  

At the sentencing hearing, Judge Briccetti said that MAY is “a fraud and a thief,” and that his conduct was “appalling, reprehensible, and evil.”

According to the allegations in the Information to which MAY pled guilty, court filings, statements made in court, and the Indictment charging BELL[1]:      

Since 1982, MAY was the president of ECP and provided financial advisory services to numerous clients.  Since 1994, MAY was a registered representative of a broker dealer (“Broker Dealer-1”).  In its role as a broker dealer, Broker Dealer-1 facilitated the buying and selling of securities for clients of Broker Dealer-1’s registered representatives, including clients of MAY.  To that end, Broker Dealer-1 and associated clearing firms maintained securities accounts for ECP’s clients and, through those accounts, held ECP’s clients’ money, executed their securities trades, produced account statements reflecting activity in the clients’ accounts, and forwarded these account statements to ECP’s clients.

In order to obtain money from the Victims’ securities accounts with Broker Dealer-1, MAY advised the Victims, among other things, that they should use money from those accounts to have ECP, rather than Broker Dealer-1, purchase bonds on their behalf.  He further represented that by purchasing bonds through ECP directly, the Victims could avoid transaction fees.  Because MAY lacked the authority to withdraw money directly from the Victims’ accounts with Broker Dealer-1, he persuaded the Victims to withdraw the money themselves and to forward that money to an ECP “custodial” account (the “ECP Custodial Account”), so that he could use the money to purchase bonds on their behalf. 

With the assistance of BELL, MAY guided the Victims, first, to withdraw their money from their Broker Dealer-1 accounts, and second, to send that money to the ECP Custodial Account by wire transfer or check.  At times, MAY falsely represented that the funds being withdrawn from Victims’ Broker Dealer-1 accounts were the proceeds of prior bond purchases MAY had made.  After the Victims sent their money to the ECP Custodial Account, MAY did not use the money to purchase bonds.  Instead, MAY and BELL spent the money on business expenses, personal expenses, and to make payments to certain Victims in order to perpetuate the scheme and conceal the fraud. 

Specifically, in some cases, MAY used Victims’ funds to make purported bond interest payments to other Victims.  In other cases, MAY used Victims’ funds to make payments to other Victims who wished to withdraw funds from their accounts.  MAY and BELL also created phony “consolidated” account statements that they issued through ECP and sent to the Victims.  These “consolidated” account statements purported to reflect the Victims’ total portfolio balances and included the names of bonds MAY falsely represented that he purchased for the Victims and the amounts of interest the Victims were supposedly earning on the bonds.  In order to create the phony consolidated account statements, MAY provided BELL with bond names and false interest earnings, and BELL created ECP computerized account statements and distributed them to the Victims.

To keep track of the money that the co-conspirators were taking from the Victims, BELL processed the Victims’ payments for the purported bonds, entered them in a computerized accounting program, and, through that program, kept track of how MAY and BELL received and spent the Victims’ stolen money.  In this way, from the late 1990’s through March 9, 2018, MAY and BELL induced Victims to forward them more than $11,400,000.

In addition to his prison term, MAY, 78, of Orangeburg, New York, was ordered to serve three years of supervised release, pay $8,041,233 in restitution, and forfeit $11,452,185.

BELL, 54, of Montvale, New Jersey, is charged with one count each of conspiracy to commit wire fraud and wire fraud.  Each count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the U.S. Postal Inspection Service, Special Agents of the United States Attorney’s Office, and the Federal Bureau of Investigation.  He also thanked the Securities and Exchange Commission, which initiated civil proceedings against MAY and BELL, for its assistance.

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

Army Reservist Pleads Guilty To Participating In Money Laundering Scheme

Emeka Nnawuba Opened Bank Accounts with Fake Identities and Laundered More Than $2,000,000 in Fraud Proceeds

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that EMEKA NNAWUBA, a/k/a “Benjamin Alabie,” who is a member of the United States Army Reserves, has pled guilty to participating in a scheme to launder the proceeds of frauds perpetrated against dozens of victims.  NNAWUBA pled guilty today before United States District Judge Katherine Polk Failla, who will impose sentence on January 7, 2020.

U.S. Attorney Geoffrey S. Berman said:  “Emeka Nnawuba admitted today that he received over $1 million from unsuspecting women in internet romance scams and laundered those proceeds to conceal their origin.  Nnawuba callously preyed upon victims looking for companionship, only to come away as victims of theft.  Nnawuba tried his luck in love and lost, as he now faces time in prison.”

According to the allegations in the Superseding Indictment and statements made in court:

From at least 2016 until 2018, NNAWUBA participated in a scheme to launder the proceeds of frauds perpetrated against dozens of victims.  Among other things, NNAWUBA used false identities and false passports to open bank accounts, received or attempted to receive more than $2,000,000 in fraud proceeds, withdrew tens of thousands of dollars of fraud proceeds in cash, and transferred more than $1 million of fraud proceeds to bank accounts controlled by co-conspirators in an effort to conceal the source of funds.

The funds laundered by NNAWUBA were procured principally by (a) romance scams, in which members of the scheme trolled dating websites to find unsuspecting women and stole their money on false pretenses, and (b) business compromise scams, in which members of the scheme impersonated individuals, professionals, or businesses in the course of otherwise ordinary financial transactions, and then fraudulently induced the counterparties to those transactions to transfer funds to bank accounts controlled and operated by NNAWUBA or other members of the scheme.

NNAWUBA, 29, of Fayetteville, Arkansas, pled guilty to one count of participating in a conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.  

Five other individuals previously were charged and pled guilty in connection with their participation in the scheme. 

On February 12, 2018, Ifeanyi Ezeji pled guilty to participating in a conspiracy to commit money laundering.  On May 31, 2018, Judge Failla sentenced Ifeanyi Ezeji to 40 months in prison and three years of supervised release, and ordered him to forfeit $2,080,347.14 and pay restitution in the amount of $873,891.31.

On May 31, 2018, Christopher Ezeji pled guilty to passport counterfeiting.  On October 4, 2018, Judge Failla sentenced Christopher Ezeji to five years of probation, and ordered him to forfeit $500.00 and pay restitution in the amount of $873,891.31.

On June 22, 2018, Peter Abbah pled guilty to aggravated identity theft.  On October 2, 2018, Judge Failla sentenced Abbah to 24 months in prison and one year of supervised release, and ordered him pay restitution in the amount of $218,498.76.

On July 27, 2018, Michael Akhiero pled guilty to participating in a conspiracy to commit bank fraud.  On April 22, 2019, Judge Failla sentenced Akhiero to seven months in prison and three years of supervised release, and ordered him to forfeit $600.00 and pay restitution in the amount of $143,192.99.

On January 11, 2019, Okechukwu Peter Ezika pled guilty to engaging in monetary transactions in property derived from specified unlawful activity.  Ezika’s sentencing has not yet been scheduled.

Mr. Berman praised the outstanding investigative work of the U.S. Secret Service, and thanked United States Immigration and Customs Enforcement’s Homeland Security Investigations for its assistance. 

Attorney General James Announces Texas Joins Lawsuit To Block T-Mobile And Sprint Megamerger

Momentum Grows for States’ Lawsuit with Addition of 15^th AG

  New York Attorney General Letitia James today announced that the State of Texas has agreed to join the multistate lawsuit blocking the anticompetitive megamerger of telecommunications giants T-Mobile and Sprint.

“We welcome Texas’s resolve to block this anticompetitive merger, and are pleased to announce that Attorney General Ken Paxton will assume a key leadership role in this case, along with Attorney General Becerra and myself,” said New York Attorney General Letitia James. “Along with 14 other Attorneys General from across the nation, we are more confident than ever that enforcing our antitrust laws — as they were meant to be enforced — is the best way to protect competition in the mobile marketplace. Whether Americans reside in big states or in small, in rural areas or in urban centers, on the coasts or in the heartland, it is clear that this merger is bad for consumers, bad for workers, and bad for innovation, and our growing momentum clearly continues to make that point.”

“While we appreciate the time and effort that went into the agreement between the parties and the U.S. Department of Justice, the Texas Attorney General has an independent obligation to protect Texas consumers. After careful evaluation of the proposed merger and the settlement, we do not anticipate that the proposed new entrant will replace the competitive role of Sprint anytime soon,” said Texas Attorney General Ken Paxton. “It is the Attorney General’s responsibility to preserve free market competition, which has proven to result in lower prices and better quality for consumers. The bargain struck by the U.S. Department of Justice is not in the best interest of working Texans, who need affordable mobile wireless telecommunication services that are fit to match the speed and technological innovation demands of Texas’ growing economy.”

Texas Attorney General Ken Paxton will become the 15^th Attorney General to challenge the merger of T-Mobile and Sprint, adding to the momentum initiated by Attorney General James and the Attorneys General of California, Colorado, Connecticut, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, Virginia, Wisconsin, and the District of Columbia.

Last week, following news of a proposed deal between the U.S. Department of Justice and T-Mobile/Sprint, the states involved in the lawsuit expressed serious concerns about whether the deal with satellite TV operator DISH would create a fourth independent competitor that could replace the competition otherwise lost as a result of this megamerger. The states also expressed concerns about intrusive government market intervention, with federal regulators appearing to pick winners and losers rather than enforcing antitrust laws. 

The Office of the Texas Attorney General has been a leader on antitrust issues, with a deep and experienced group of antitrust litigators. Additionally, Texas’ many dense urban centers, large rural areas, and key innovative industries would face many of the same potential issues as the other litigating states, including New York, if the merger of T-Mobile and Sprint were to be finalized.

T-Mobile US Inc. and Sprint Corporation are the third and fourth largest mobile wireless networks in the U.S., and are the lower-cost carriers among the “Big Four” — Verizon Wireless and AT&T round out the market. Intense competition, spurred in particular by T-Mobile and Sprint, has meant declining prices, increased coverage, and better quality for all mobile phone subscribers. 

T-Mobile currently has more than 79 million subscribers, and is a majority-owned subsidiary of Deutsche Telekom AG. Sprint currently has more than 54 million subscribers, and is a majority-owned subsidiary of SoftBank Group Corp. 

Attorney General James Secures $6 Million From Cisco Systems In Multistate Settlement

Whistleblower Came Forward to Expose

Security Camera Software Vulnerable to Hackers

  Attorney General Letitia James today announced she has led a coalition of 19 Attorneys General in settling a multistate lawsuit against Cisco Systems, Inc. concerning security surveillance system software sold to New York, a collection of other states, and the federal government. A whistleblower came forward under the False Claims Act to assert that Cisco’s software had major flaws rendering the system vulnerable to hackers, and that despite learning of the exposure, Cisco failed to report or remedy this security flaw for several years.

“Security camera software must be secure — it’s that simple,” said Attorney General Letitia James. “Cisco’s failure to keep their software safe could have endangered the safety of New Yorkers across our state. We are holding the company accountable and will ensure that software manufacturers dealing with our state not only have the most secure software possible, but diligently report and repair any flaws they learn about. This is about our security, privacy, and protection.”

In 2009, according to the action, Cisco discovered security flaws in a software product designed to control security camera systems sold to New York, multiple other states, and the federal government, but the company failed to report or remedy these flaws until 2013, and only after commencement of the investigation of the action.

The now-discontinued software contained flaws that would permit unauthorized access to the system, with the potential to control and otherwise manipulate security cameras and the recorded footage. 

The investigation began after New York State — and the additional parties involved in the settlement — received information from a former Cisco employee who came forward as a whistleblower and filed an action under the federal False Claims Act, the New York False Claims Act, and whistleblower acts of the other states involved. The joint investigation uncovered no evidence that a hack or any unauthorized access of security surveillance systems ever took place.

The $6 million fine will be distributed among the plaintiff states, with a share for the whistleblower. The New York False Claims Act allows private persons to file civil actions on behalf of the government, and to share in any recovery. New York will receive approximately $1.3 million of the total settlement payment.

The New York State Attorney General’s Office conducted this investigation in coordination with the States of California, Delaware, Florida, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Rhode Island, Tennessee, Virginia, and the District of Columbia.