Attorney General James Sues to Stop Precious Metals Scheme That Defrauded Seniors Out of Millions

 

New York Attorney General Letitia James today announced that she, along with 29 additional states and the U.S. Commodity Futures Trading Commission (CFTC), have filed a lawsuit against Metals.com and a host of other entities and individuals for defrauding seniors across New York and the rest of the nation by soliciting more than $185 million and by charging exorbitant fees for overpriced precious metals. The lawsuit specifically names as defendants TMTE Inc. (also known as Metals.com, Chase Metals Inc., and Chase Metals LLC), Barrick Capital Inc., and Tower Equity LLC, along with the individuals Simon Batashvili and Lucas Asher.

“These investors may have been sold on the comfort of investing in precious metals, but the defendants tarnished their dreams,” said Attorney General James. “This fraudulent scheme capitalized on investors’ fears of economic uncertainty, causing hundreds of seniors nationwide to lose substantial amounts of their retirement savings by relying on bald-faced lies. Our bipartisan coalition filed this lawsuit because we won’t allow fraudulent companies to target seniors or other vulnerable investors and profit off of lies and other misrepresentations.”

The lawsuit — filed in the U.S. District Court for the Northern District of Texas — charges the Beverly Hills, California-based firm and its sales representatives with targeting elderly investors through traditional and social media and defrauding them into transferring funds from their traditional individual retirement accounts (IRA) into self-directed IRAs by misrepresenting that metals purchased from the defendants were a safe and conservative investment. In reality, however, the defendants charged undisclosed and excessive fees on precious metals sold to investors that resulted in instant and substantial losses, with many investors losing the majority of their investment funds immediately upon consummating the transaction. Often, the market value of the precious metals sold to investors was substantially lower than the value of the securities and other retirement savings investors had liquidated to fund their purchase of precious metals. The complaint charges the defendants with violating the Commodity Exchange Act and various state securities laws.

The lawsuit asks the court to enjoin the defendants from engaging in any additional commodity-related activity, to order the defendants to return money to defrauded investors, and to stop the defendants from violating both federal and state laws. The petition also requests that a receiver be appointed to take over the companies in order to marshal funds for the benefit of investors across the country.

Today’s coordinated state and federal action was a result of a multi-state collaboration by members of the North American Securities Administrators Association (NASAA) — of which the Office of the New York Attorney General is a member — and the CFTC’s Office of Cooperative Enforcement.

The Office of the New York Attorney General encourages any investors who suspect they have been targeted by similar precious metals investment schemes to come forward by contacting the office’s Investor Protection Bureau by emailing Metals.Complaints@ag.ny.gov.

Joining Attorney General James and the CFTC in filing today’s lawsuit are securities regulators and the attorneys general from various states, including Alabama, Alaska, Arizona, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Washington, West Virginia, and Wisconsin.

Comptroller Stringer Demands Gowanus Power Plant Be Replaced With Sustainable Alternatives, Not More Fossil Fuel Infrastructure

 

Current proposal to redevelop the plant would lock in decades of future emissions, all while forcing ratepayers to ultimately pay for power plant that pollutes their own air

Urges the State to instead accelerate a transition to a clean energy future by facilitating the deployment of solar generation, battery storage, demand management, and energy efficiency measures

Stringer: “Rather than reinforcing the fossil fuel status quo, it is now past time to overhaul our energy infrastructure and permanently retire all polluting ‘peaker plants’ in New York City and replace them with renewable and battery powered solutions that generate both reliable power and good jobs.”

 New York City Comptroller Scott M. Stringer called on the New York State Board on Electric Generation Siting and the Environment to reject the Astoria Generating Company’s Gowanus Repowering Project Proposal.  In his letter, Comptroller Stringer argued that the proposal would put our climate goals further out of reach and perpetuate local air pollution that puts neighboring communities at risk. Rather than continuing to allow peaker plants to run off of fossil fuels and pollute our neighborhoods and climate, the Comptroller argued we must be seeking every opportunity to leverage new technology that would allow for the closure of peaker plants across the city with the aim of enhancing environmental justice.

Astoria Generating Company’s redevelopment plans would redevelop its existing peaker plant, located on barges floating on Gowanus Bay, with larger turbines powered by fracked natural gas. Comptroller Stringer urged the State to evaluate the project against sustainable alternatives that would rely on renewable power generation and large utility-scale batteries to ensure reliability of the grid. Comptroller Stringer questioned how the project is compatible with the State and City’s ambitious climate goals and how the City can achieve a transition to a green energy future if it continues to allow the installation of new fossil fuel infrastructure. Citing several energy efficiency programs that New York is already pursuing, Comptroller Stringer recommended doubling down on a clean energy strategy to generate green, well-paid jobs that will help jumpstart New York’s economic recovery and should be prioritized over the replacement of the Gowanus plant.

Comptroller Stringer also raised concerns that the proposal jeopardizes the health and safety of the surrounding community made up of working-class people of color who have already been disproportionately impacted by COVID-19. Even absent a global pandemic, exposure to fine air pollution claims the lives of more than 3,000 New Yorkers every year.

Comptroller Stringer supports a moratorium on all major fossil fuel infrastructure and recently expressed his opposition against plans for a gas powered peaker plant in Astoria.

To read the full letter from Comptroller Stringer to Secretary Michelle L. Phillips, see below or click here.

Head Of Investment Management Firm Sentenced To 85 Months In Prison In Connection With $18 Million Pre-IPO Securities Fraud Scheme

 

 Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that FRED ELM, a/k/a “Frederic Elmaleh,” the founder and manager of Elm Tree Investment Advisors LLC (“ETIA”), was sentenced today to 85 months in prison for participating in a scheme to defraud investors in multiple investment funds created and controlled by ELM and Ahmad Naqvi, ETIA’s chief operating officer.  Among other illicit activity, ELM and Naqvi fraudulently induced more than 50 investors to invest over $18 million based on false representations that investor money would be invested, through the funds, in the shares of well-known privately held technology companies before their initial public offerings (“IPOs”).  Instead, the majority of investor funds was misappropriated for personal use, lost through poor trading, or used to repay investors in a Ponzi-like fashion.  ELM pled guilty to conspiracy to commit securities fraud and securities fraud on May 15, 2020, before U.S. District Judge Edgardo Ramos, who also imposed today’s sentence.  Naqvi pled guilty before Judge Ramos on May 4, 2020, and was sentenced on June 29, 2020. 

Acting U.S. Attorney Audrey Strauss said:  “Fred Elm told investors the Elm Tree Funds would generate huge profits from investments in privately held technology companies.  In fact, the Elm Tree Funds never invested in these pre-IPO companies and never returned a profit.  Further, Elm lied to investors to conceal that their money was being comingled, misused, and lost.  Now Elm is headed to prison for his crimes.”

According to the Superseding Indictment charging ELM and Naqvi, and other filings in the case:

From at least June 2013 through December 2014, ELM and Naqvi engaged in a scheme to defraud investors in funds that ELM and Naqvi created and controlled at ETIA, where ELM was the founder and manager, and Naqvi was the chief operating officer.  ELM and Naqvi raised more than $18 million from over 50 investors in four limited partnerships for which ETIA acted as the fund manager:  Elm Tree Investment Fund, LP; Elm Tree Emerging Growth Fund, LP; Elm Tree ‘e’Conomy Fund, LP; and Elm Tree Motion Opportunity, LP (collectively the “Elm Tree Funds”). 

ELM and Naqvi falsely represented that the Elm Tree Funds used investor capital to purchase shares in privately held technology companies before their IPOs.  These companies included Twitter, Alibaba, Uber, Square, Pinterest, and GoDaddy.  Moreover, ELM and Naqvi falsely represented that they had access to these pre-IPO shares because of their relationships with leading venture capital firms, such as Kleiner Perkins Caufield & Byers, Benchmark Capital, and Silver Lake.  In truth and in fact, ELM and Naqvi did not invest in the pre-IPO shares of these companies and did not have relationships with these venture capital firms.

ELM and Naqvi comingled the approximately $18 million that was invested in the Elm Tree Funds in a single investment account and then invested only a portion of the money, approximately $7.1 million.  At no point did any of the Elm Tree Funds return a profit.  Instead, for example, between January 2014 and November 2014, the Elm Tree Funds lost approximately $3.9 million in poor trading.

Moreover, of the investor funds that ELM and Naqvi did not lose in securities trading, ELM routinely converted investor funds to his own use in the form of cash withdrawals and to pay personal expenses, including to purchase a multimillion-dollar home, high-end furnishings, and other personal items, such as jewelry, daily living expenses, and luxury automobiles, including a Bentley, a Maserati, and a Range Rover.

The conversion of investors’ funds was contrary to the representations that ELM and Naqvi made to investors concerning their and ETIA’s fees.  ELM and Naqvi falsely represented that they and ETIA would take a two percent annual management fee plus a performance fee of 20 percent of any profits that the Elm Tree Funds earned.  In truth and in fact, ELM converted investor money that far exceeded the two percent management fee.  Moreover, because the Elm Tree Funds never returned a profit, ELM, Naqvi, and ETIA were not entitled to any profit-based performance fees.

ELM and Naqvi also used approximately $5.2 million of new investor funds to make payments to earlier investors in a Ponzi-like fashion.  To prevent or forestall redemptions, and continue to raise money to fund their scheme, ELM and Naqvi also generated fictitious account statements and made oral and written misrepresentations that their trading strategies were generating consistently positive returns. 

ELM was initially arrested in April 2016 and released on bail.  In June 2017, approximately one week before his then-scheduled guilty plea, ELM fled to Canada.  ELM was subsequently arrested in Canada and extradited to the United States in January 2020.  Naqvi, who had been a fugitive since his indictment in 2016, was arrested in Canada and extradited to the United States in November 2019. 

ELM, 51, was also sentenced to three years of supervised release, ordered to forfeit $8,318,840.07, and to pay restitution in the amount of $12,426,293.11.

Ms. Strauss praised the work of Homeland Security Investigations and the U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division, and thanked the U.S. Securities and Exchange Commission for its assistance.  Ms. Strauss also thanked Canadian law enforcement for its support and assistance.

Governor Cuomo Updates New Yorkers On State's Progress During COVID-19 Pandemic - SEPTEMBER 25, 2020

 

0.95 Percent of Yesterday's COVID-19 Tests were Positive

7 COVID-19 Deaths in New York State Yesterday

SLA and State Police Task Force Visits 1,455 Establishments; Observes 10 Establishments Not in Compliance

Confirms 908 Additional Coronavirus Cases in New York State - Bringing Statewide Total to 453,755; New Cases in 45 Counties

 Governor Andrew M. Cuomo today updated New Yorkers on the state's progress during the ongoing COVID-19 pandemic. The number of new cases, percentage of tests that were positive and many other helpful data points are always available at forward.ny.gov.

"New Yorkers' ability to stay vigilant and conscientious toward their fellow citizens is critical as we continue to battle COVID-19 throughout the state. That mindset—that I wear a mask not just to protect myself, but to protect you as well—is what will get us through to the other side," Governor Cuomo said. "New Yorkers need to keep wearing masks, socially distancing and washing their hands, and local governments need to keep enforcing state guidance. There is a long road ahead, but we will tackle it together by staying New York Tough." 

Yesterday, the State Liquor Authority and State Police Task Force visited 1,455 establishments in New York City and Long Island and observed 10 establishments that were not in compliance with state requirements. A county breakdown of yesterday's observed violations is below: 

• Queens - 3
• Suffolk - 7

Today's data is summarized briefly below:

• Patient Hospitalization - 511 (+11)
• Patients Newly Admitted - 93
• Hospital Counties - 33
• Number ICU - 154 (+9)
• Number ICU with Intubation - 76 (+4)
• Total Discharges - 76,456 (+74)
• Deaths - 7
• Total Deaths - 25,446

 

CAPACITY FUND GRANT PROGRAM The COVID-19 pandemic has made fundraising more challenging than ever, but with the right project idea you can still receive funding through our Capacity Fund Grant Program. We give out small grants of up to $3000 to community groups dedicated to their local parks, gardens, and green spaces. Join us at the following webinars to learn more.   Design Support Webinar. Our design support offers help with brochures, websites, postcards, banners, and business cards customized to help your group’s outreach efforts—all covered by our grant program. In this session, you will work with our art director to create a publication or website for your community group.  Wednesday, September 30 from 6:00 pm to 7:30 pm. REGISTER   Info Session Webinar. We’ll share everything you need to know about funding eligibility, project examples, and our timeline for announcements. Wednesday, October 7 from 12:00 pm to 1:30 pm. REGISTER   Application Webinar. We’ll walk through the entire project application, discussing what makes a strong response to each question as well as other best practices when applying. Thursday, October 15 from 6:00 pm to 7:30 pm. REGISTER Registration for these sessions is required and will close the day before the event. You will receive information on how to join the webinar once you register. Contact Becca Cohen at rcohen@cityparksfoundation.org with any questions. IT'S MY PARK After a five-month suspension of It's My Park due to the pandemic, last month, hundreds of volunteers got to work in green spaces across the city for IMP-act Day. From raking leaves and removing litter to painting benches the color of the Pan-African flag to honor Black lives, community groups in all five boroughs came out to show their love for parks and their communities. Bring in the fall by caring for your local park! We're thrilled to announce a series of It’s My Park projects in green spaces across the city for the next month. Interested in setting up a project in your park? Repy to this email and we'll connect you to an outreach coordinator to get you started.

#WEAREPFP PfP turned 25 this year and we couldn’t have done it without you! Celebrate with us by sharing memories of the work you’ve done in NYC green spaces. Post a photo and story on Facebook, Instagram, or Twitter using #WeArePfP for a chance to be featured on our social media platforms OR featured in our upcoming exhibition "It’s Our Park: 25 Years of Communities in Action." Your stories and photos will help us document the transformation that is possible when communities come together to effect change. Now, you can also use one of the sample posts and/or graphics in our social media toolkit to help spread the word!

Generous private support is provided by The Leona M. and Harry B. Helmsley Charitable Trust, Craig Newmark Philanthropies, Altman Foundation, Con Edison, the Greenacre Foundation, TD Bank, and the MJS Foundation. Public support is provided by the NYC Council under the leadership of Speaker Corey Johnson through the Parks Equity Initiative.

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Partnerships for Parks is a joint program of City Parks Foundation and NYC Parks that supports and champions a growing network of leaders caring and advocating for neighborhood parks and green spaces. We equip people and organizations with the skills and tools needed to transform these spaces into dynamic community assets.

STATEMENT FROM MAYOR DE BLASIO, NYC CENSUS DIRECTOR JULIE MENIN ON CENSUS 2020 EXTENSION

 

This is welcome news as New Yorkers are working tirelessly to avoid an undercount for so many already underrepresented communities. Our city celebrates this extension as our fair share of $1.5 trillion in annual federal funding and congressional representation is at risk. We will continue our hard work to get every New Yorker counted.”

 

Statement from Julie Menin, Director of NYC Census 2020 and Executive Assistant Corporation Counsel, NYC Law Department:

 

“Once again, the Trump Administration tried to throw up a politically insidious and illegal roadblock to stop people from filling out the census and once again, they’ve failed spectacularly. This ruling, which will extend the census into October, and sends a clear message that the current December 31 deadline for data reporting cannot work, is a major victory in our fight to ensure New Yorkers get every ounce of the money, power, and respect to which we’re entitled.”

Doctor Pleads Guilty In Manhattan Federal Court To Illegal Distribution Of Oxycodone Pills

 

 Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced that RUVIM KRUPKIN, a New York state-licensed doctor, pled guilty today to conspiring to illegally distribute large quantities of oxycodone from a medical office in Brooklyn, New York.  As part of his guilty plea, KRUPKIN also agreed to forfeit $124,000 in proceeds obtained through his illicit distribution of oxycodone.  KRUPKIN pled guilty before United States District Judge Analisa Torres in Manhattan federal court.    

Acting U.S. Attorney Audrey Strauss said:  “As he admitted in court today, Ruvim Krupkin, for more than a decade, wrote thousands of medically unnecessary prescriptions for oxycodone, enriching himself at the expense of others, while the country suffered from a devastating opioid epidemic.  He now awaits sentencing for his crime.”

According to the allegations contained in the Indictment and statements made during court proceedings:

KRUPKIN, a licensed internal medicine doctor with specialties in oncology and hematology, practiced at a medical office in Brooklyn.  From 2006 to July 2017, KRUPKIN prescribed over four million oxycodone pills to individuals he knew had no legitimate medical need for the pills.  KRUPKIN charged each patient $200 in cash for each visit, payable directly to him.   

As a hematologist, KRUPKIN treated patients who had, or claimed to have, sickle cell anemia – a medical condition that can cause pain for which oxycodone, in conjunction with other treatments, may be legitimately prescribed.  However, KRUPKIN wrote thousands of prescriptions for large quantities of oxycodone to patients, knowing that they in fact had no legitimate medical need for the prescriptions.  KRUPKIN generally performed little to no physical examination on these patients; indeed, the medical notes for each patient were largely the same from one visit to the next. 

In addition, KRUPKIN typically issued patients prescriptions for a large dose of oxycodone – typically 180 80-milligram pills, until approximately 2010, when the formula for oxycodone changed, reducing the street value of the 80-milligram pills.  At that time, KRUPKIN began prescribing 180 or 240 30-milligram pills.  KRUPKIN’s patients filled their prescriptions at pharmacies throughout New York, and in certain cases, sold the oxycodone pills they received to drug dealers, who in turn re-sold the pills at high value on the street.  KRUPKIN knew that certain of his patients were diverting the oxycodone pills he was prescribing, but he nonetheless continued writing prescriptions of oxycodone for such individuals. 

KRUPKIN, 69, of Summit, New Jersey, pled guilty to one count of participating in a conspiracy to distribute narcotics, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.

KRUPKIN is scheduled to be sentenced by Judge Torres on January 26, 2021, at 11:00 a.m.

Ms. Strauss praised the outstanding investigative work of the FBI-NYPD Health Care Fraud Task Force.  Ms. Strauss also thanked the New York City Human Resources Administration for its work on the investigation.

U.S. Accountant In Panama Papers Investigation Sentenced To 39 Months In Prison

 

 Audrey Strauss, the Acting United States Attorney for the Southern District of New York, and Brian C. Rabbitt, Acting Assistant Attorney General of the Criminal Division of the U.S. Department of Justice, announced today that RICHARD GAFFEY, a/k/a “Dick Gaffey,” was sentenced in Manhattan federal court to 39 months in prison for wire fraud, tax fraud, money laundering, aggravated identity theft, and other charges.  GAFFEY, a resident of Massachusetts, was charged along with Harald Joachim von der Goltz, Ramses Owens, and Dirk Brauer in connection with a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (“Mossack Fonseca”), a Panama-based global law firm, and its related entities.  GAFFEY previously pled guilty to the charges, and was sentenced today by U.S. District Judge Richard M. Berman.

Acting U.S. Attorney Audrey Strauss said:  “Richard Gaffey was a tax accountant who specialized in sheltering his clients’ assets and income, aiding and abetting their evasion of their U.S. tax obligations.  Now, after nearly two decades of felonious hide-and-seek, Gaffey has been sentenced to prison for his crimes.”

According to the allegations contained in the Indictments,[1] other filings in this case, and statements during court proceedings, including GAFFEY’s guilty plea and sentencing hearings:

Since at least 2000 through 2018, GAFFEY conspired with others to defraud the United States by concealing his clients’ assets and investments, and the income generated by those assets and investments, from the Internal Revenue Service (“IRS”) through fraudulent, deceitful, and dishonest means.  During all relevant times, GAFFEY assisted U.S. taxpayers who were required to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts.  GAFFEY helped those U.S. taxpayers evade their tax reporting obligations in a variety of ways, including by hiding the beneficial ownership of his clients’ offshore shell companies and setting up bank accounts for those shell companies.  These shell companies and bank accounts made investments totaling tens of millions of dollars.  For one U.S. taxpayer, GAFFEY advised how to covertly repatriate approximately $3 million to the United States by reporting to the IRS a fictitious company sale that never actually occurred to evade paying the full U.S. tax amount.  GAFFEY was assisted in this scheme through the use of Mossack Fonseca, including Ramses Owens, a Panamanian lawyer who previously worked at Mossack Fonseca.

GAFFEY was the U.S. accountant for Harald Joachim von der Goltz.  From 2000 until 2017, von der Goltz was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income.  In furtherance of von der Goltz’s efforts to conceal his assets and income from the IRS, GAFFEY falsely claimed that von der Goltz’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and – unlike von der Goltz – was not a U.S. taxpayer.  In support of this fraudulent scheme, GAFFEY submitted the name, date of birth, government passport number, address, and other means of identification of von der Goltz’s elderly mother to a U.S. bank in Manhattan.

GAFFEY, 76, a U.S. citizen and resident of Medfield, Massachusetts, pled guilty to one count of conspiracy to commit tax evasion and to defraud the United States; one count of wire fraud; one count of money laundering conspiracy; four counts of willful failure to file Reports of Foreign Bank and Financial Accounts, FINCEN Reports 114; and one count of aggravated identity theft.  In addition to the prison term, Judge Berman ordered GAFFEY to serve three years of supervised release, to pay forfeiture in the amount of a sum of $5,373,609 and restitution in the amount of $3,459,315, and to pay a fine in the amount of $ 25,000.

Harald von der Goltz was sentenced by Judge Berman on September 21, 2020, principally to 48 months in prison.  Owens and Brauer remain at large. 

Ms. Strauss praised the outstanding investigative work of IRS-CI and HSI, and thanked the Justice Department’s Tax Division and the Federal Bureau of Investigation for their significant assistance in the investigation.  Ms. Strauss also thanked the U.S. Justice Department’s Office of International Affairs of the Department’s Criminal Division and law enforcement partners in France, the United Kingdom, and Germany for their assistance in the case.