Additional Members Of 59 Brims Gang Charged In Manhattan Federal Court With Racketeering, Narcotics, And Firearms Offenses

 

 Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), and Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced the unsealing of a Superseding Indictment charging three members of the 59 Brims gang with racketeering, narcotics, and firearms offenses. 

Acting U.S. Attorney Audrey Strauss said:  “As alleged, Robert Baley, Augustus Ingram, and Quaveon Ross participated in the activities of a violent gang, conspired to sell significant quantities of heroin, fentanyl, and crack cocaine, and unlawfully possessed firearms.  Now they face significant charges in federal court.  We commend our partners at the NYPD and HSI for their outstanding work on this ongoing investigation.  This Office, working with our law enforcement partners, continues its efforts to prosecute gun violence in New York City.”

NYPD Commissioner Dermot Shea said:  “Gang violence puts all of us in peril – not simply the vicious gang members.  I commend our NYPD detectives and our law enforcement partners for using all of our lawful tools to ensure that the New Yorkers we serve can live free from the threat of it.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “HSI and NYPD continue to relentlessly dismantle violent gangs in the New York Metro area.  The gangsters we take off the street are responsible for numerous murders, deadly drug distribution, and senseless violence throughout our communities.  As alleged, we cut the 59 Brims at their roots, arresting the ‘Godfather’ of New York.  This was the culmination of the systematic and successful indictment of the entire 59 Brims’ top leadership across all 5 boroughs.  Our agents and officers have done outstanding work during the course of this investigation and I applaud their tireless commitment to public safety.”

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

ROBERT BALEY, a/k/a “Dead Eye,” AUGUSTUS INGRAM, a/k/a “Elevator,” and QUAVEON ROSS, a/k/a “Bullet,” are members of the 59 Brims gang, a criminal organization whose members engaged in, among other activities, acts involving murder, robbery, fraud, and the distribution of controlled substances. 

The 59 Brims operate in and around Manhattan, the Bronx, Queens, and Brooklyn, New York.  Members of the 59 Brims engaged in a series of violent disputes with rivals of the 59 Brims, including those within the 59 Brims who were deemed disloyal.  During these disputes, members and associates of the 59 Brims committed multiple murders, shootings, robberies, and assaults against their rivals and against fellow members of the 59 Brims.  Members of the 59 Brims sold heroin, fentanyl, crack cocaine, and marijuana, and committed, or attempted to commit, acts of violence to protect and expand their narcotics business.

Today’s Superseding Indictment follows initial charges brought in February 2020 against 18 members and associates of the 59 Brims gang, who were charged with racketeering, narcotics, and firearms offenses, including murder and attempted murder. 

BALEY, 43, of Brooklyn, New York, was arrested on October 15, 2020, in Scranton, Pennsylvania.  INGRAM, 49, of New York, New York, was arrested on October 14, 2020, in New York, New York.  ROSS, 23, of New York, New York, remains at large.  This case is assigned to United States District Judge George B. Daniels.

A chart containing the charges and maximum penalties for the defendants is set forth below.  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.

Ms. Strauss praised the outstanding investigative work of the NYPD and HSI.  Ms. Strauss also praised the New York City Department of Correction, Correction Intelligence Bureau, and the Bronx District Attorney’s Office for their assistance in the investigation.  Ms. Strauss also thanked the Pennsylvania State Police - Bureau of Criminal Investigations - North East and South Central Drug Enforcement Divisions and Blooming Grove Barracks for their assistance in the arrest of Baley.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Michael D. Longyear, Jacob Warren, Adam S. Hobson, and Peter J. Davis are in charge of the prosecution.           

The charges contained in the Superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

COUNT	DEFENDANT(S)	MAX. TERM OF IMPRISONMENT
Count One: Conspiracy to Commit Racketeering (18 U.S.C. § 1962(d))	All Defendants	Life imprisonment
Count Two: Conspiracy to Distribute Controlled Substances (21 U.S.C. § 846)	All Defendants	Life imprisonment; Mandatory Minimum Sentence of 10 years
Count Three: Possession of a Firearm in Furtherance of a Drug Trafficking Crime (18 U.S.C. §§ 924(c)(1)(A)(i) and 2)	All Defendants	Life Imprisonment; Mandatory Minimum Sentence of 5 years

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

Governor Cuomo Announces Most Movie Theaters Outside of New York City Can Reopen on October 23

 

Theaters Must Open at 25 Percent Capacity; No More Than 50 People in Front of Each Movie Screen

Theaters in Certain Counties Outside of New York City Do Not Meet State Requirements and Cannot Reopen

159,972 Test Results Reported to New York State Yesterday—New Record High

Statewide Positivity Rate is 1.11 Percent 

Positive Testing Rate in Hot Spot Areas is 4.34 Percent; New York State Positivity Without Red Zone Focus Areas Included is 1.02 Percent

9 COVID-19 Deaths in New York State Yesterday

 Governor Andrew M. Cuomo today announced that movie theaters outside of New York City can reopen at 25 percent capacity under state guidance starting October 23. No more than 50 people are allowed in front of each screen in each movie theater at once. Theaters can only open outside of New York City in counties that have COVID-19 positivity rates of less than 2 percent on a 14-day average and do not have any cluster zones. Theaters will be subject to rigorous state guidance and enforcement.

The governor also announced that 159,972 test results were reported to New York State yesterday—a new record high.

"We hit 160,000 tests in one day, which is a record number and the highest we've ever done. When you're doing that level of tests you get down to the block level. And then, when you start to see a cluster, you oversample in that cluster, so you get even more data," Governor Cuomo said. "Beginning October 23, movie theaters outside of New York City will be allowed to reopen at 25 percent capacity with up to 50 people maximum per screen. This is outside of New York City in areas that have infection rates below 2 percent on a 14-day average and have no cluster zones."

Theaters cannot reopen in the following counties: 

• Allegany
• Broome
• Cattaraugus
• Chautauqua
• Chemung
• Cortland
• Greene
• Orange
• Rockland
• Schuyler
• Steuben
• Tioga

State guidance on the reopening of theaters includes the following conditions:

• Masks will be required at all times except when seated and eating or drinking. 
• Assigned seating will be required in all theaters.
• Social distancing between parties will be required at all times.
• Additional staffing will be required to control occupancy, traffic and seating to ensure compliance.
• Enhanced air filtration, ventilation and purification standards must be met by theaters. 

In "Red Zone" focus areas included as part of the Governor's Cluster Action Initiative, the positivity rate for test results reported yesterday is 4.34 percent - down from 4.84 the day before.

Within the "Red Zone" focus areas, 4,305 test results were reported yesterday, yielding 187 positives or a 4.34 percent positivity rate. In the remainder of the state, not counting these "Red Zone" focus areas, 155,667 test results were reported, yielding 1,597 positives or a 1.02 percent positivity rate. The state's overall positivity rate is 1.11 percent with focus areas included. The "Red Zone" focus areas are home to 2.8 percent of the state population yet had 10.5 percent of all positive test results reported to the state yesterday, and 11.6 percent of all positive case results reported to the state this current week.

Today's data is summarized briefly below:

• Patient Hospitalization - 929 (+11)
• Patients Newly Admitted - 139 
• Hospital Counties - 41
• Number ICU - 195 (-5)
• Number ICU with Intubation - 103 (+6)
• Total Discharges - 78,235 (+118)
• Deaths - 9
• Total Deaths - 25,637

Governor Cuomo Announces Actions to Expand Eligibility and Ease Access to Food Assistance for New Yorkers

 

Supplemental Nutrition Assistance Program Eligibility Boosted for Up to Nearly 75,000 Community College Students

Elderly and Disabled New Yorkers Can Now Use New Simplified Application for Food Benefits

 Governor Andrew M. Cuomo today announced actions aimed at reducing food insecurity among community college students, older adults and disabled New Yorkers. These actions include expanding Supplemental Nutrition Assistance Program eligibility to up to nearly 75,000 low-income college students enrolled in career or technical education course work and shortening the SNAP application for those on fixed incomes in an effort to encourage greater enrollment among eligible older adults and disabled individuals.

"From the community college student seeking to advance their career to the senior living on a fixed income, food insecurity and hunger are a reality for a wide breadth of low-income New Yorkers and we have an obligation to help them during their time in need," Governor Cuomo said. "These measures will help a greater number of individuals and families access benefits that will prevent them from facing the dire reality of food insecurity."

Under Governor Cuomo's direction, the state Office of Temporary and Disability Assistance worked with the State University of New York and City University of New York to implement a new policy expanding SNAP eligibility to low-income college students engaged at least half-time in career and technical education courses. The expanded eligibility will help students avoid food insecurity while advancing their education.

Income-eligible students enrolled at least half-time in a career or technical education program offered at a SUNY, CUNY, comprehensive, technical, or community college will now be eligible for SNAP. Additionally, income-eligible individuals attending any of the 10 Educational Opportunity Centers in New York State and enrolled at least half-time in a career and technical education program, remedial courses, basic adult education, literacy, or English as a second language will be also be included in this new policy. Previously, these students did not qualify for SNAP assistance, unless they met certain criteria such as working at least 20 hours per week, or caring for a child, or were unable to work, among others.

This policy change adds another criteria that would allow certain college students and EOC participants to meet the student eligibility requirement for SNAP. Through SUNY and CUNY community colleges, technology campuses, EOCs, and Advanced Technology Training and Information Networking centers, nearly 75,000 students attend part time to take career and vocational courses. At SUNY, about 31,000 students are in those programs and may be eligible. At CUNY, about 42,000 students may be eligible.

Governor Cuomo also directed OTDA to seek permission from the U.S. Department of Agriculture to offer a simplified application for SNAP benefits in an effort to encourage greater enrollment among eligible elderly or disabled individuals. SNAP applicants on a fixed income or with limited financial resources can complete a single sheet application, front and back, which will greatly reduce the amount of time and effort required to apply or recertify for benefits.

Although New York is the national leader for the rate of SNAP participation among adults age 60, older, or disabled, this rate is still lower than the state's overall average. About 70 percent of eligible seniors and disabled individuals are enrolled to receive benefits, which is significantly lower than the statewide participation rate estimate of roughly 93 percent.

One leading reason proposed for this lower participation is the length and complexity of the application forms to apply for SNAP. The regular application includes nine pages of questions and information geared at determining a household's eligibility. Because many elderly and disabled individuals live on fixed incomes and generally experience far fewer household changes, much less information is required to verify their eligibility and calculate benefits.

Under Governor Cuomo's leadership, New York State has made a strong commitment to fighting hunger and SNAP has been a key part of those efforts. The Governor has launched several groundbreaking initiatives to bring healthier foods to underserved communities, including expanding SNAP, eliminating unnecessary requirements and simplifying the application process, removing key barriers to reducing hunger for children and adults, while continuing efforts to maximize benefits for all those who are eligible.

In his 2018 State of the State address, the Governor announced a five-point plan to combat hunger for students in kindergarten through college. As part of that plan, the Governor tasked SUNY and CUNY with the establishment of physical food pantries on campus or stigma-free access to free food, which was completed that year.

At SUNY, in addition to the expansion of and access to food pantries, a task force helped establish and grow innovative intervention programs on campuses, including mobile food trucks, local farm crop sharing, a subsidized on campus grocery store, and programming that allows students to "pay" a campus parking ticket in food donations to an on-campus pantry.

The Healthy CUNY program employs a multifaceted approach to address food insecurity on CUNY campuses. To date, food pantries or food vouchers are available at 18 CUNY 2- and 4-year campuses.

Office of Temporary and Disability Assistance Commissioner Mike Hein said, "Under Governor Cuomo's leadership, we continue to help an increasing number of low-income individuals and families avoid the crushing feeling of food insecurity. These changes will help numerous college students and older New Yorkers qualify for SNAP, ensuring they can more easily afford healthy, nutritious food."

SUNY Chancellor Jim Malatras said, "Food insecurity continues to be a significant struggle for far too many Americans, and New York State has been a leader in our approach to getting resources to those most in need—through food banks on every college campus or nearby, and through innovative programs like mobile food trucks, local farm crop sharing, and even gardens on campus. And today by expanding eligibility for SNAP benefits, we are telling students your course work is vitally important and we want you to stay on track to get the credentials you need. My thanks to Governor Cuomo for leading our state's efforts to provide food security, and to Commissioner Hein and CUNY Chancellor Rodríguez in this collaboration to get additional benefits to our students most in need."

Governor Cuomo Updates New Yorkers on State's Progress During COVID-19 Pandemic - OCTOBER 16, 2020

 

Statewide Positivity Rate is 1.25 Percent

Positive Testing Rate in Hot Spot Areas is 4.84 Percent; New York State Positivity Without Red Zone Focus Areas Included is 1.14 Percent

10 COVID-19 Deaths in New York State Yesterday

 Governor Andrew M. Cuomo today updated New Yorkers on the state's progress during the ongoing COVID-19 pandemic. In "Red Zone" focus areas included as part of the Governor's Cluster Action Initiative, the positivity rate for test results reported yesterday is 4.84 percent - unchanged from the day before.

"New York's numbers remain steady, despite the handful of clusters we are currently focused on. We are addressing these clusters through our targeted approach to ensure that they don't become community spread," Governor Cuomo said. "As we go through the fall and into the winter and cases continue to rise across the country, it's going to take the work of all New Yorkers to maintain our progress. We cannot and will not risk going backwards to where we were in the spring. Our progress is thanks to New Yorkers, who rose to the occasion and came together like no other community. But we have to keep it up - we must all keep washing our hands, wearing our masks and remaining socially distant. This is about caring for one another and being New York Tough, which means being loving."

Within the "Red Zone" focus areas, 4,133 test results were reported yesterday, yielding 200 positives or a 4.84 percent positivity rate. In the remainder of the state, not counting these "Red Zone" focus areas, 131,906 test results were reported, yielding 1,507 positives or a 1.14 percent positivity rate. The state's overall positivity rate is 1.25 percent with focus areas included. The "Red Zone" focus areas are home to 2.8 percent of the state population yet had 11.7 percent of all positive test results reported to the state yesterday, and 11.9 percent of all positive case results reported to the state this current week.

Today's data is summarized briefly below:

• Patient Hospitalization - 918 (+21)
• Patients Newly Admitted - 143
• Hospital Counties - 42
• Number ICU - 200 (+3)
• Number ICU with Intubation - 97 (+2)
• Total Discharges - 78,117 (+111)
• Deaths - 10
• Total Deaths - 25, 628

Former Stockbroker Sentenced In Scheme To Defraud Elderly Victims Through The Sale Of Worthless Stock

 

 Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that VLADIMIR ZISKIND was sentenced today in Manhattan federal court to 28 months in prison for participating in a scheme to use false statements to promote and sell worthless stock in various companies.  ZISKIND pled guilty on October 9, 2019, to one count of securities fraud and one count of securities fraud conspiracy before U.S. District Judge Vernon S. Broderick, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Audrey Strauss said:  “Vladimir Ziskind heartlessly preyed on innocent investors – many of them elderly – who believed they were investing in a promising IPO or other time-sensitive lucrative investment, when in fact they were being fleeced by Ziskind and his co-conspirators.  As this prosecution and today’s sentence reflect, this kind of predatory fraud will not be tolerated.”

According to the allegations contained in the Complaint, the Indictment, and statements made in related court filings and proceedings:[1]

For several years, ZISKIND and his co-defendants operated a fraudulent scheme in which a salesman named “Mike Palmer” would call elderly persons on the phone and offer them what he claimed was a time-sensitive opportunity to buy stock in certain companies.  In fact, there was no “Mike Palmer,” and the salesman was actually ZISKIND or co-defendant Kevin Weinzoff, who were taking turns using the fake alias.  The purported time-sensitive investment opportunity was also fabricated by the defendants, as the companies in which they solicited investments were actually companies under their control.  In one intercepted phone call conversation, ZISKIND described to co-defendant Keith Orlean, the chief executive officer of the company, his strategy for a successful investor sales pitch as: “You ram it down their fucking throat.”  In another intercepted call between ZISKIND and Orlean, upon learning that a particular victim investor died, ZISKIND remarked: “I knew I should have pulled the last $10,000 out of him.”  

The most recent version of the defendants’ phony sales pitch included false representations about an impending initial public offering, or “IPO,” for their company, Digital Donations Technologies, Inc.  For example, in April 2018, ZISKIND assured a victim investor that “our company is doing great,” that the company had an offer for an IPO valued at approximately $300 million, and that Orlean was considering a private sale of the company for more than $1.5 billion.  In truth, however, the defendants knew that the company had little or no actual commercial value and that no such IPO or sale was taking place.  

The FBI estimates that since April 2014, the defendants have convinced more than approximately 50 elderly persons to purchase stock in companies controlled by one or more of  the defendants based on false representations.  During the scheme, the defendants solicited more than $2 million in stock purchases from victims.

In addition to a prison term, ZISKIND, 52, of Brooklyn, New York, was sentenced to 3 years of supervised release, and ordered to pay a forfeiture money judgment in the amount of $732, 018.

Keith Orlean was previously sentenced to a prison term of 32 months.  Kevin Weinzoff, who previously pled guilty, awaits sentencing.

Ms. Strauss praised the outstanding work of the FBI.

[1] As for the defendants who have pled not guilty, the description of the charges set forth herein constitute only allegations.

Bronx Murder Rate Hits 2019 Total Number in October of 2020 - Is Crime Still Going Down as Mayor de Blasio Would Have You Think?

 The number of murders in the Bronx for 2019 totaled 84. In the CompStat Report Covering the week of 10/5/2020 through 10/11/2020 the number of murders in the Bronx was 84, thus equaling the 2019 number with more than 11 weeks of CompStat reporting to go. At that rate there should be 17 more Bronx murders in 2020 which would bring the total murders in 2020 over 100. According to the CompStat reports the Bronx murder rate in 1998 was 166 murders. 

Shooting incidents and victims in 2020 are closing in on double the number of 2019. We don't have a figure what they were in 1998, because those numbers are not listed in the CompStat report

If we look at another category, in 2020 (again, with 11 weeks to go) the GLA (Grand Theft Auto aka cars stolen) number is 1491 whereas for the entire year 2019 the GLA number was 924. At that rate the number of GLA's in the Bronx should come close to 1,700. The number of GLA's in 1998 was 7,169. 

Why has the number of GLA's decreased so much over the past 22 years, that is because car makers have made it harder to steal cars by adding anti theft devices. One can no longer just take a screw driver and start a car like they did in 1998. I once had a discussion with then Chief of Strategic Policing Shea (now Commissioner Shea) telling him that if the GLA figures from 1990 and on were taken out of the CompStat report there would be little decrease in crime since the dropping GLA numbers were an indication of the largest drop in crime. He said that the department worked hard with anti theft units to decrease the GLA figures.

I asked Commissioner Shea this year how much crime goes unreported, and his answer was that there is no way to gauge how much crime goes unreported, but that much crime goes unreported, not going into any specific areas. If you do not report even the smallest crime to the police department, do not ask why there are no police officers on patrol, because the number of police officer is determined by the number of crimes in a precinct. You do not have to wait for a patrol car to come, as you can always go to your local precinct to report a crime, just make sure you have all the details.

Reference - Police Department City of New York

CompStat Bronx Report Covering the Week 10/5/2020 Through 10/11/2020 

SCHUMER, GILLIBRAND ANNOUNCE OVER $830 THOUSAND IN APPALACHIAN REGIONAL COMMISSION FUNDING FOR SOUTHERN TIER COMMUNITIES

 

Southern Tier West In Allegany County To Receive $426,304 For Broadband Project, Tompkins County Area Development To Receive $404,170 For Fiber Broadband Trunk

Senators Say Funding Will Increase Broadband Capacity In The Southern Tier To Position The Region For New Opportunities And Jobs

Schumer, Gillibrand: ARC Funding Is Investment Sparking Southern Tier’s Broadband Future

 U.S. Senator Charles E. Schumer and U.S. Senator Kirsten Gillibrand today announced $830,474 in federal funding allocated through the Appalachian Regional Commission. The funding will be used to revitalize broadband in the Southern Tier’s coal-impacted communities.

“In today’s modern economy, access to reliable, fast internet service is crucial to a community’s success,” said Senator Schumer. “These projects will ensure that the Southern Tier is up to date on state-of-the-art broadband technology that is essential for attracting and growing new industries and new jobs in the region. I am proud to have secured this federal funding that will help revitalize the Southern Tier’s broadband future.”

“As New Yorkers continue working remotely amidst the coronavirus pandemic, it is more important than ever that our communities have access to reliable internet,” said Senator Gillibrand. “This funding will provide high speed internet services to thousands of households and hundreds of businesses across the Southern Tier, strengthening innovation and creating jobs in the region. I will continue fighting to ensure that every New Yorker has access to telehealth services, online learning, and other vital services during this pandemic.”

Specifically, Southern Tier West will receive $426,304 for an Allegany county-wide broadband project, using fixed wireless equipment at 12 sites, and Tompkins County Area Development will receive $404,170 for a fiber broadband trunk from Ithaca to the recently retired Cayuga coal plant in Lansing, which is the site of a proposed high capacity data center focusing on artificial intelligence and machine learning.

The Appalachian Regional Commission (ARC) is an economic development agency of the federal government and 13 state governments focusing on 420 counties across the Appalachian region.

Attorney General James Announces Criminal Conviction and Civil Judgment Against Queens Investment Advisor for Defrauding Elderly Clients of Over $11 Million

 

Owner and Manager of Mustaphalli Capital Partners Fund, LP Sentenced to 3 to 9 Years in Prison

Mustaphalli Pays $260,000 in Restitution and Is Permanently Barred from Securities Industry

 New York Attorney General Letitia James announced the conviction of former investment advisor Dean S. Mustaphalli — the owner of the now defunct Mustaphalli Capital Partners Fund, LP (MCPF) — for operating a multi-million-dollar securities fraud scheme aimed at defrauding over 50 investors — many of whom were elderly and at or near retirement. Mustaphalli invested much of these 50 individuals’ monies in his hedge fund without their knowledge or consent, bringing in more than $11 million between 2011 and 2016, and resulting in many of his victims losing their life savings. Today, in Queens County State Supreme Court — upon his guilty pleas to 22 felony charges, including Grand Larceny and Securities Fraud under the Martin Act — Mustaphalli was sentenced to 3 to 9 years in prison; paid $260,000 in criminal restitution; and signed confessions of judgment in favor of the victims named in the indictment, totaling more than $2.3 million dollars. As part of a separate civil order filed by the Office of the Attorney General (OAG) in New York County State Supreme Court, Mustaphalli entered into an additional judgment in favor of his victims in the amount of $6 million, and he is permanently barred from engaging in any business related to the issuance or sale of securities in New York.

“Dean Mustaphalli stripped numerous New Yorkers of their independence and security when he invested millions from their retirements in high-risk ventures without their consent,” said Attorney General James. “In just four years, Mustaphalli’s massive fraud drove immigrants and individuals nearing retirement into the poorhouse and left them with pennies on the dollar, forcing many back into the workforce. We will not allow this greed to go unchecked in New York, which is why we will continue to use every resource at our disposal to pursue all who attempt to defraud and take advantage of those most vulnerable.”

Mustaphalli’s brazen scheme primarily targeted elderly New Yorkers, most of whom were immigrants or female, and who had been his clients for many years. These victims had very little investment experience and relied upon his advice. As their investment advisor, Mustaphalli knew his victims’ conservative investment objectives and that many of them were planning for retirement. Nevertheless, without their knowledge and consent, Mustaphalli diverted his victims’ safe investment portfolios into MCPF, a hedge fund he solely controlled. Many of these illicit transfers were made at his victims’ most vulnerable moments, such as after the loss of a child or spouse, during a divorce, or while battling an illness.

Mustaphalli targeted his first wave of over 20 investors in 2011, by moving $7.1 million of their money into his hedge fund, MCPF. Mustaphalli then engaged in a series of high-risk investment strategies, and, by the end of 2012, MCPF lost 92 percent of its value. In one instance, Mustaphalli bet $2.5 million on the volatility of the price of Mastercard stock, which lost his clients over $2 million in a single trade. By 2014 — just three years after the initial investments — the fund only had $200,000 of the $7.1 million left in it.  

After losing almost $7 million of his investors’ life savings, Mustaphalli transferred the savings of 30 more clients into his hedge fund by 2015, collecting an additional $5 million in investor funds. Again, Mustaphalli targeted mostly elderly individuals who had been his clients for many years and who trusted him. By December 2015, history repeated itself, with this second wave of investors also falling victim to Mustaphalli’s scheme and losing 80 percent of their investments. What had taken these victims a lifetime to save, Mustaphalli lost in a matter of months. In the aftermath of these devastating losses, Mustaphalli used shell companies that he created to divert $100,000 of the remaining hedge fund balance to himself, leaving investors with, at most, 20 percent of their original investment.

To further his scheme and conceal MCPF’s unsuitability for his elderly clients from investment platforms, Mustaphalli created fake email accounts for his clients, many of whom had never even used a computer. He also forged his clients’ initials next to the portion of the documents entitled “Accredited Investor Status,” which falsely stated that each investor’s net worth was over $1 million, when, in reality, almost none of Mustaphalli’s clients had a net worth of over $1 million. Notably, it is a requirement that hedge fund investors meet the definition of an “accredited investor,” which is a person whose net worth exceeds $1 million.

This massive securities fraud scheme was uncovered by the OAG’s Investor Protection Bureau. In September 2016, the Investor Protection Bureau obtained an order pursuant to General Business Law § 354, which preliminarily restrained Mustaphalli and his related entities from making withdrawals from any bank account in the name of his various businesses affiliated with MCPF. In May 2017, the Investor Protection Bureau obtained a second order pursuant to General Business Law § 354, preliminarily freezing assets of various shell entities used by Mustaphalli to divert money from MCPF. And in June 2017, the Investor Protection Bureau filed a 49-page civil complaint against Mustaphalli in New York County State Supreme Court, alleging numerous violations of New York statutes and laws, including the Martin Act and common law fraud. 

Knowing that he was the target of an OAG investigation still did not deter Mustaphalli from continuing his unlawful activity. Instead, Mustaphalli tried to thwart both the OAG’s investigation and an investigation by the Financial Industry Regulatory Authority (FINRA) by concealing his criminal activities and continuing to fraudulently solicit new victims. 

Mustaphalli subsequently became the target of a criminal investigation by the OAG’s Criminal Enforcement and Financial Crimes Bureau. In May 2018, Mustaphalli was arrested on a 99-count criminal indictment, charging him with Grand Larceny in the Second and Third Degrees, Forgery in the Second Degree, Criminal Possession of a Forged Instrument in the Second Degree, Falsifying Business Records in the First Degree, felony Securities Fraud under the Martin Act, and Scheme to Defraud in the First Degree.  

Last December, Mustaphalli pleaded guilty to 25 felony counts of the OAG’s criminal indictment — including Grand Larceny in the Second Degree, Scheme to Defraud, Falsifying Business Records, and felony Securities Fraud under the Martin Act — before the Honorable Gene Lopez in Queens County State Supreme Court. Earlier this year, in February, the court heard victim impact statements from multiple investors, who shared the devastating impact that Mustaphalli’s crimes continue to have on their lives. Many victims worked multiple jobs to save money for their retirement, but now have had to re-enter the work force or must rely on their children for financial support. Multiple victims testified that Mustaphalli robbed them of more than just their financial independence, but also of their goal of leaving something for their children and grandchildren. The devastating financial impact of the coronavirus disease 2019 (COVID-19) has hit many of these victims, who lost a lifetime of savings particularly hard. Two victims have passed away since Mustaphalli pleaded guilty from other causes.

Today, Mustaphalli was sentenced to 3 to 9 years in prison, having paid $260,000 in criminal restitution to the victims named in the indictment. Mustaphalli also executed confessions of judgment in favor of the victims named in the indictment, totaling over $2.3 million. 

In addition to the criminal conviction, as part of a separate civil order and judgment filed in New York County State Supreme Court in August 2020, Mustaphalli forfeited the approximately $50,000 remaining in his corporate account and confessed judgment in the amount of $6 million in favor of all of his victims. The OAG’s civil order also permanently bars Mustaphalli from engaging in any business related to the issuance or sale of securities in New York.

The OAG wishes to thank FINRA and, in particular, its Criminal Prosecution Assistance Group, for their valuable assistance on this case. 

The criminal case is being handled by Assistant Attorneys General Maureen Grosdidier and Kristen Bitetto of the Criminal Enforcement and Financial Crimes Bureau and Assistant Attorney General Kenneth Haim of the Investor Protection Bureau, with the assistance of Legal Analysts Lyncee Stroman and Sabrina Farahani, and Supervising Legal Analyst Paul Strocko. Forensic accounting was performed by Forensic Auditor Marcos Perez and Principal Forensic Auditor Investigator Jason Blair, under the supervision of Chief Auditor Kristen Fabbri and Deputy Chief Auditor Sandy Bizzarro of the Forensic Audit Section. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Stephanie Swenton and Deputy Bureau Chief Joseph G. D’Arrigo.

The criminal investigation was conducted by Investigator Brian Metz, under the supervision of Supervising Investigator Michael Leahy and Deputy Chief John McManus. The Investigations Bureau is led by Chief Oliver Pu-Folkes and Deputy Chief John Reidy. Both the Criminal Enforcement and Financial Crimes Bureau and the Investigations Bureau are part of the Division for Criminal Justice, which is overseen by Chief Deputy Attorney General Jose Maldonado.

The civil case is being handled by Assistant Attorney General Tanya Trakht, with the assistance of Legal Assistant Eddie Aguilar — both of the Investor Protection Bureau. The Investor Protection Bureau is led by Bureau Chief Peter Pope and Deputy Bureau Chief Kevin Wallace. The Investor Protection Bureau is part of the Division for Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo.