Coindawg Founder Arrested For Laundering Proceeds Of Fraudulently Obtained Small Business Administration Loans

 

Law Enforcement Officers Seized 18 Cryptocurrency ATMs in Texas and Oklahoma that Charles Constant Purchased to Start a Cryptocurrency ATM Business Using Fraudulently Obtained SBA Loans

 Damian Williams, the United States Attorney for the Southern District of New York, and Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today the arrest of CHARLES RILEY CONSTANT, a/k/a “Chuck Constant,” for charges in connection with a scheme to steal and launder over $1 million in fraudulently obtained loans from the Small Business Administration (“SBA”), including the use of fraud proceeds to purchase cryptocurrency ATMs.  CONSTANT was arrested yesterday morning and is being presented today before a U.S. Magistrate Judge in the Eastern District of Texas.  In connection with CONSTANT’s arrest, law enforcement agents seized, among other things, 18 cryptocurrency ATMs in Texas and Oklahoma that CONSTANT purchased with fraud proceeds to start a cryptocurrency ATM business named “Coindawg LLC,” as well as Coindawg’s website.

U.S. Attorney Damian Williams said: “As alleged, Charles Constant helped to launder over $1 million of proceeds from loans that his co-conspirators fraudulently obtained from the SBA.  He converted the bulk of the crime proceeds into Bitcoin for his co-conspirators and used a portion of the rest to start his own lucrative cryptocurrency ATM business.  Thanks to this Office’s teamwork with the HSI, Constant is now facing serious criminal charges for his alleged crimes.  We will continue to hold accountable people who steal funds intended for small businesses that struggled as a result of the COVID-19 pandemic.”     

HSI Special Agent in Charge Ivan J. Arvelo said: “As alleged, Charles Constant specifically exploited the Small Business Administration’s Economic Injury Disaster Loan program put in place to help our small businesses weather the COVID-19 pandemic, for the purpose of expanding his criminal money laundering enterprise.  Constant is accused of defrauding the federal government and robbing U.S. taxpayers with his illicit money-laundering scheme.  HSI New York will continue to exhaust every resource at our disposal to ensure criminals like this will be held accountable for their actions.”

According to the allegations in the Complaint, which was unsealed today in Manhattan federal court:[1]

CHARLES RILEY CONSTANT, a/k/a “Chuck Constant,” knowingly assisted others involved in a scheme to fraudulently obtain over $1 million in loans from the SBA, which CONSTANT and his co-conspirators laundered through Bitcoin transactions.  The perpetrators of the fraud against the SBA used false identities and non-existent companies to obtain seven Economic Injury Disaster Loans from the SBA — funds that were intended to help small businesses financially harmed by the COVID-19 pandemic.  The loan proceeds were transferred directly from the SBA to a bank account held by C2 LLC, an entity that CONSTANT owned and registered with the U.S. Treasury Department as a money services business.  CONSTANT then used approximately $700,000 of the crime proceeds — a portion of which he routed through a second bank account held by C2 LLC — to purchase Bitcoin from a cryptocurrency exchange headquartered in New York City.  CONSTANT directed the New York-based exchange to distribute the Bitcoin to his co-conspirators.

CONSTANT then stole the remaining $300,000 of fraud proceeds.  CONSTANT transferred $53,000 of the $300,000 to a third bank account held by C2 LLC and an additional $98,300 to an account in CONSTANT’s name at a cryptocurrency exchange headquartered in California.  Beginning in the fall of 2020, CONSTANT used a portion of these fraud proceeds to purchase, among other things, seven cryptocurrency ATMs (“Crypto ATMs”), cryptocurrency, and promotional services to start a cryptocurrency ATM business named “Coindawg LLC.”  CONSTANT used revenue generated by the seven Crypto ATMs to acquire additional Crypto ATMs and more cryptocurrency to expand Coindawg’s operations.  To date, Coindawg has exchanged over $3,000,000 worth of cryptocurrency and charged 15% in transaction fees.  Below is a photograph of one of the Coindawg Crypto ATMs seized by law enforcement in connection with CONSTANT’s arrest:

CONSTANT, 54, of Allen, Texas, is charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison; one count of theft of public money, which carries a maximum sentence of 10 years in prison; and one count of interstate receipt of stolen money, which carries a maximum sentence of 10 years in prison. 

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the investigative work of the HSI.  Mr. Williams also thanked the HSI Field Office in Dallas, Texas, for their assistance in the investigation of this case.

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

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

Housing Lottery Launches For 1169 River Avenue In Concourse, The Bronx

 

The affordable housing lottery has launched for 1169 River Avenue, a 19-story mixed-use building in Concourse, The Bronx. Designed by Aufgang Architects and developed by Community Access, a NYC supportive housing and social service non-profit, the structure yields 245 residences. Available on NYC Housing Connect are 96 units for residents at 60 to 80 percent of the area median income (AMI), ranging in eligible income from $31,852 to $132,400.

Amenities include a community center, playground, bike storage lockers, a shared laundry room, green space, pet-friendly policies, common area wifi, gym, party room, recreation room, business center, storage, outdoor terrace, concierge, doorman, and on-site resident manager. Residences come equipped with energy-efficient appliances, air conditioning, smart controls for heating and cooling, and name-brand countertops and finishes. Rent includes gas for heating and hot water. Tenants are responsible for electricity.

At 60 percent of the AMI, there are 36 studios with a monthly rent of $843 for incomes ranging from $31,852 to $64,080; 11 one-bedrooms with a monthly rent of $1,065 for incomes ranging from $39,875 to $72,060; and six three-bedrooms with a monthly rent of $1,482 for incomes ranging from $56,332 to $99,300.

At 70 percent of the AMI, there are two studios with a monthly rent of $1,003 for incomes ranging from $37,338 to $74,760; and two three-bedrooms with a monthly rent of $1,760 for incomes ranging from $65,863 to $115,850.

At 80 percent of the AMI, there are six studios with a monthly rent of $1,163 for incomes ranging from $42,823 to $85,440; 17 one-bedrooms with a monthly rent of $1,465 for incomes ranging from $53,589 to $96,080; seven two-bedrooms with a monthly rent of $1,770 for incomes ranging from $65,109 to $115,280; and nine two-bedrooms with a monthly rent of $2,037 for incomes ranging from $75,360 to $132,400.

Prospective renters must meet income and household size requirements to apply for these apartments. Applications must be postmarked or submitted online no later than May 22, 2023.

Two Injured One Fatality in Motorcycle Accident on Pelham Parkway West.

 

According to Highway Police a motorcycle traveling West on Pelham Parkway struck a seventy-two year old woman at the Williamsbridge Road intersection who died at the scene. Also hurt in the accident was a seventeen year old girl who was waiting for a BX 12 bus. It was not known if the forty-five year old driver of the motorcycle was injured. 

The accident occured at 4:30 PM and closed the Westbound Pelham Parkway from Eastchester Road to all westbound traffic except buses that exited at Williamsbridge Road for the Pelham Parkway North service road. Shortly after 6 PM the Highway Police shut down the complete intersection of Pelham Parkway and Williamsbridge Road to do an accident investigation. The intersection was reopened shortly before 9 PM. 

This was the scene after the accident, when Pelham Parkway Westbound was shut down as police cars and ambulances filled the intersection with Williamsbridge Road. The westbound parkway would be closed for four and a half hours. 

The entire front molding was ripped off the motorcycle during the accident.

The molding sits by the bus stop where the seventeen year old girl was hurt. 

Governor Hochul Proposes New Legislation to Improve New York's Nation-Leading Adult-Use Cannabis Industry by Cracking Down on Illegal Cannabis Stores

 

Legislation Will Allow State to Shut Down Illegal Cannabis Storefront Dispensaries as Quickly as Possible; Stores Could Be Fined More Than $10,000 Per Day for Unlawful Activities

Will Strengthen Ongoing Enforcement Efforts by Giving New Enforcement Powers to the Office of Cannabis Management and the Department of Taxation and Finance

Law Would Maintain New York's Nation-Leading Cannabis Equity Provisions While Ensuring a Heavily Regulated Cannabis Industry That Protects Consumers and Legal Sales

 Governor Kathy Hochul today proposed new legislation to increase civil and tax penalties for the unlicensed and illicit sale of cannabis in New York. The legislation would also provide additional enforcement power to the Office of Cannabis Management and the Department of Taxation and Finance to enforce the new regulatory requirements and close stores engaged in the illegal sale of cannabis.

"Over the past several weeks I have been working with the legislature on new legislation to improve New York's regulatory structure for cannabis products," Governor Hochul said. "The continued existence of illegal dispensaries is unacceptable, and we need additional enforcement tools to protect New Yorkers from dangerous products and support our equity initiatives. I am proud of our continued progress creating the entirely new legal cannabis industry and helping legal dispensaries open their doors to offer safer cannabis products to New Yorkers."

The new legislation, which is being introduced as a Governor's program bill in the Senate and Assembly, amends the Tax Law and the Cannabis Law to enable the Office of Cannabis Management (OCM), the Department of Taxation and Finance (DTF) and local law enforcement to enforce restrictions on unlicensed storefront dispensaries. The legislation does not impose any new penalties related to cannabis possession by an individual for personal use and does not allow local law enforcement to perform enforcement actions against individuals.

This legislation, for the first time, would allow OCM and DTF to crack down on unlicensed activity, protect New Yorkers, and ensure the success of new cannabis businesses in New York. The legislation would restructure current illicit cannabis penalties to give DTF peace officers enforcement authority, create a manageable, credible, fair enforcement system, and would impose new penalties for retailers that evade State cannabis taxes. Additionally, it would clarify and expand OCM's authority to seize illicit product, establish summary procedures for OCM and other governmental entities to shut down unlicensed businesses, and create a framework for more effective cross-agency enforcement effort. Violations of the law could lead to fines of $200,000 for illicit cannabis plants or products and would allow OCM to fine businesses $10,000 per day for engaging in cannabis sales without a license.

Office of Cannabis Management Executive Director Chris Alexander said, "The success of New York's historic equity-based approach to the cannabis industry depends on upholding our cannabis laws. Entrepreneurs looking to participate in our legal cannabis industry -- especially justice-involved individuals looking for a CAURD license -- are being economically harmed by bad actors filling their storefronts with products that are questionable, unregulated and potentially dangerous. The Office of Cannabis Management is fully committed to working with our partners across the state to permanently shut these operations down and allow legal, licensed businesses to grow and thrive."

The full legislative text is available here.

MAYOR ADAMS HOSTS RENOWNED CHEF MARCUS SAMUELSSON ON ‘GET STUFF DONE-CAST’

 

‘Get Stuff Done-Cast’ is Available Online

New York City Mayor Eric Adams today released the latest episode of his ‘Get Stuff Done-Cast,’ featuring acclaimed chef and restauranteur Marcus Samuelsson. In the episode, Mayor Adams and Samuelsson discuss his New York story — how he was born in Ethiopia, adopted by Swedish parents, and moved to New York City to open a restaurant and live his dreams. They also discuss one of Samuelsson’s restaurants, the famous Red Rooster Harlem, and how he’s preserved the iconic heritage of the original Red Rooster through his menus, as well as how Samuelsson has given back to New Yorkers throughout the years.

 

“No other country has ‘dream’ attached to its name — and Chef Marcus Samuelsson has truly lived the American Dream,” said Mayor Adams. “From having tuberculosis in an Ethiopian hospital at age three to serving as President Obama’s first guest chef for a state dinner — with a largely vegetarian menu, I might add — Marcus epitomizes everything that makes New York City great. He’s fought for everything in his life, never let anyone tell him he couldn’t accomplish his dreams, and he continues to give back and help other New Yorkers. I’m excited to share our conversation with you.”

 

“My family helped me get ready for New York City,” said Chef Marcus Samuelsson. “My aunt is Jewish. My cousins were Koreans. I had white parents. We were the little Black kids running around. Other cousins were French-Canadian, they spoke English and French. So, our tribe was basically like sitting on the 7 train, going to Queens. And they prepared me for everything in life. As New Yorkers, we love our city, and it means a lot to share our story."

 

Marcus Samuelsson is the chef behind the Red Rooster restaurant in Harlem. After becoming the youngest person to receive a three-star review from The New York Times, winning eight James Beard Foundation awards, and being the guest chef at the Obama Administration's first state dinner, he has become one of the most renowned chefs in New York City. Samuelsson — of Ethiopian and Swedish descent — moved to the city during Mayor Dinkins’ administration. He currently appears on the Netflix show Iron Chef and is also a committed philanthropist.

 

The podcast is available on Spotify and across other podcast platforms. New Yorkers can sign up online to get podcast updates and hear directly from Mayor Adams about exclusive updates, major policies and initiatives, and local events.

Former Lumentum Executive Pleads Guilty To Insider Trading

 

Amit Bhardwaj Misappropriated Information About Impending Corporate Transactions to Trade on that Information and Tip His Associates

 Damian Williams, the United States Attorney for the Southern District of New York, announced today that AMIT BHARDWAJ, the former Chief Information Security Officer (“CISO”) at Lumentum Holdings Inc. (“Lumentum”), pled guilty to 13 counts arising from his participation in a scheme to commit insider trading based on material, non-public information (“MNPI”) that BHARDWAJ misappropriated from his employer, Lumentum.  BHARDWAJ traded on the misappropriated MNPI himself and tipped his associates with this same information so that they could place profitable trades in Lumentum’s acquisition targets. BHARDWAJ was arrested and charged in July 2022 and pled guilty earlier today before U.S. District Judge Gregory H. Woods.

U.S. Attorney Damian Williams said: “Amit Bhardwaj, the former Chief Information Security Officer of Lumentum, ironically failed to keep the confidential information he was trusted with secure as he shared it with numerous friends and a family member in order to make a profit.  Not only did Bhardwaj betray his company and cheat the securities markets, but when confronted by the FBI, he also schemed to conceal his illicit behavior and obstruct the investigation.  Today’s guilty plea emphasizes this Office’s commitment to protecting the integrity of the financial markets.”

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

In approximately December 2020, BHARDWAJ learned that Lumentum was considering acquiring Coherent, Inc (“Coherent”).  Based on this information, BHARDWAJ himself purchased Coherent stock and call options, and BHARDWAJ tipped three associates –– his friend Dhirenkumar Patel, another friend, and one of BHARDWAJ’s close family relatives ––and these individuals all traded in Coherent securities as a result.  BHARDWAJ and Patel agreed that Patel would pay BHARDWAJ 50% of the profits that Patel earned by trading in Coherent based on the MNPI provided by BHARDWAJ.  When Coherent’s stock price increased substantially following the announcement of the Lumentum acquisition, BHARDWAJ, his close family member, his friend Patel, and another friend closed their positions in Coherent securities and collectively profited by nearly $900,000.

In or about October 2021, BHARDWAJ learned that Lumentum was engaged in confidential discussions with Neophotonics Corporation (“Neophotonics”) about a potential acquisition.  BHARDWAJ provided this information to SRINIVASA KAKKERA, ABBAS SAEEDI, and Ramesh Chitor, and these individuals all traded in Neophotonics securities as a result.  In connection with Chitor’s trading, BHARDWAJ and Chitor agreed that Chitor and BHARDWAJ would split the profits equally.  When Neophotonics’ stock price increased substantially following the announcement of the Lumentum acquisition in November 2021, KAKKERA, SAEEDI, and Chitor closed their positions in Neophotonics securities and made collectively approximately $4.3 million in realized and unrealized profits.

After they were interviewed by the Federal Bureau of Investigation (“FBI”) voluntarily and served with federal grand jury subpoenas on approximately March 29, 2022, BHARDWAJ took steps to obstruct the federal investigation of their conduct.  On the day of the March 29, 2022, FBI interviews, BHARDWAJ drove to the homes of certain of his co-conspirators to encourage them not to tell the federal authorities the truth about their insider trading scheme.  BHARDWAJ and his associates subsequently met in person on multiple occasions and discussed, among other things, potential false stories that would conceal their insider trading scheme as well as creating false documents to buttress lies regarding payments that were, in reality, related to the insider trading scheme.

BHARDWAJ, 49, of San Ramon, California, pled guilty to seven counts of securities fraud and two counts of wire fraud, each of which carries a maximum term of 20 years in prison, and four counts of conspiracy to commit securities fraud and wire fraud, each of which carries a maximum term of five years in prison. 

The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  BHARDWAJ is scheduled to be sentenced by Judge Woods on July 11, 2023, at 10 a.m.

Mr. Williams praised the investigative work of the FBI.  He also acknowledged the assistance of the Securities and Exchange Commission, which separately initiated civil proceedings against BHARDWAJ.

Governor Hochul Details Statewide Crime Data, Highlights Need for Public Safety Investments and Reforms in FY 2024 Budget

 

Budget Proposal Dedicates $491.9 Million to Address Gun Violence, Reduce Recidivism, and Support Criminal Justice System in Pandemic Recovery

Shooting Incidents with Injury Declined 17 Percent in New York City and 15 Percent in the 20 Communities Reporting Gun Violence Data to the State in 2022 Compared to 2021

Murders Declined 11 Percent Statewide, Reported Crime Increased

Common-Sense Bail Proposal to Eliminate Confusion in Conflicting Laws and Hold Repeat Offenders and Violent Criminals Accountable

 Governor Kathy Hochul today announced new statewide crime data and highlighted the need for public safety investments and reforms included in her Fiscal Year 2024 budget. During a speech at the Capitol, the Governor outlined her $491.9 million investment in proven strategies to address and prevent gun crime and violence, reduce recidivism, and help the criminal justice system continue to rebound from pandemic-era disruptions. Shooting incidents with injury declined 17 percent in New York City and 15 percent in the 20 communities that report gun violence data to the state when comparing last year to 2021, and those incidents continued to decline in early 2023. The number of reported murders declined 11 percent statewide in last year, with 94 fewer individuals killed, and while overall index crime increased 21 percent, those numbers are nowhere near those seen in three decades ago. Governor Hochul also made the case for her common-sense proposal to remove the "least restrictive" standard the state's bail law, which is key to restoring judicial discretion and holding accountable those who continually reoffend and commit violent crimes.     

"New Yorkers deserve a criminal justice system that prioritizes both safety and justice," Governor Hochul said. "Protecting New Yorkers is my number one priority, which is why my budget proposal includes record-level investments and proven strategies to ensure my administration can do just that. We are working overtime to fight crime across our state and are moving in the right direction but won't stop until every New Yorker can live in safety."   

Governor Hochul highlighted her comprehensive criminal justice platform, additional crime trends that show progress achieved to date and improvements that still need to occur to ensure the effectiveness and efficiency of the system. Shooting incidents with injury continue to decline this year, with 55 fewer people (-34 percent) shot in the 20 communities that report gun violence data to the state and participate in the Gun Involved Violence Elimination (GIVE) initiative and 44 fewer individuals (-21 percent) wounded by gunfire in New York City, as of March 12, 2023. Overall index crime increased 21 percent: violent crime (murder, rape, robbery, aggravated assault), 10 percent, and property crime (burglary, larceny, motor vehicle theft), 24 percent, during the same timeframe.      

Key criminal justice system metrics have not rebounded to pre-pandemic levels in 2019, when New York State experienced an all-time low in reported crime after seven consecutive years of declines. Misdemeanor and felony arrests increased in 2022 but are still tracking lower than numbers reported by police agencies from 2017 through 2019. At the same time, the state's courts resolved fewer cases last year: 118,378 dispositions reported when compared to dispositions that occurred annually from 2017 through 2019.      

New York State Division of Criminal Justice Services Commissioner Rossana Rosado said, "Equity and fairness are two pillars of the criminal justice system that are vital to ensure it is working effectively for all New Yorkers. Everyone who calls New York home should be able to rest assured that the system is continually improving to keep us safe. I am thankful for Governor Hochul's support and partnership in our commitment to true justice and safety for all."    

Governor Hochul's budget proposal doubles down on programs that have proven successful, investing $337 million: $110 million increase from FY 2023 budget, which contained the largest investment in public safety funding in a generation. The FY 2024 proposal includes:     

• $84.1 million for youth employment programs, of which $37 million is for programs in Gun Involved Violence Elimination (GIVE) jurisdictions.     
• $70 million for communities to respond to the aftermath of gun violence, of which $50 million is for community capital needs.       
• $36.4 million for the Gun Involved Elimination (GIVE) initiative.     
• $31.1 million for crime reduction, youth justice, and gang prevention programs.     
• $25.9 million for State Police Community Stabilization Units (CSUs), increasing the number of these units from 16 to 25.     
• $25 million for the SNUG Street Outreach program.     
• $18 million for the state-supported Crime Analysis Center network, including the establishment of a new center in New York City, bringing the number of centers statewide to 11.     

The Executive Budget proposal also includes significant funding to improve the effectiveness and efficiency of the criminal justice system:  

• $52 million in aid to prosecution funding for all 62 district attorneys' offices.     
• $40 million to funding to support discovery reform implementation.     
• $31.4 million for alternatives to incarceration programs.     
• $20 million for pretrial services. 
• $11.5 million for 20 County Re-entry Task Forces, which help individuals reintegrate to their communities after serving prison sentences.     

Taken together, these investments fund a comprehensive plan that address all facets of the system. Governor Hochul also reiterated the need for her common-sense bail proposal to eliminate any confusion in the law.  It would build upon other revisions made to the law since it took effect on January 1, 2020, which also focused on making sure that judges have discretion to set bail for those accused of serious crimes and repeat offenses.   

On one hand, the law limits judges to making pretrial determinations based solely on the "least restrictive means" necessary to ensure a defendant's return to court. On the other hand, the law also directs judges to consider a range of other factors when setting bail. This results in finger-pointing and confusion when defendants commit additional crimes of violence. Governor Hochul's proposal restores a judge's discretion to consider factors already included in the law and make the appropriate individualized determination.    

Since taking office, Governor Hochul has taken actions to strengthen New York State's gun violence prevention laws by banning ghost guns, large capacity magazines and body armor; expanding bail eligibility for gun crimes; raising the age to purchase semi-automatic weapons to 21; and launching the first-in-the-nation Interstate Task Force on Illegal Guns, which met again in mid-March, among other initiatives.

Consumer Alert: Attorney General James Reminds Veterans and Servicemembers to File Claims to Receive Refunds from Harris Jewelry Settlement

 

 New York Attorney General Letitia James today issued an alert reminding servicemembers and veterans to file claims to receive refunds from the Harris Jewelry settlement before the April 15^th deadline. In July 2022, Attorney General James and the Federal Trade Commission (FTC) recovered $34.2 million for servicemembers and veterans who were scammed by the jewelry retailer. The agreement required Harris Jewelry to provide more than $12 million in refunds for more than 46,000 servicemembers who paid for lifetime protection plans. Eligible servicemembers and veterans should file a claim online for a refund before April 15.

“I encourage active-duty servicemembers and veterans who were misled by Harris Jewelry to apply for a refund from our settlement,” said Attorney General James. “This is an opportunity for servicemembers and veterans to get the justice they deserve after being defrauded. Our military members put our protection above their own and my office will continue to protect them from predatory businesses.”

Harris Jewelry used deceptive marketing tactics to lure active-duty servicemembers to their financing program, falsely claiming that investing in this program would improve servicemembers’ credit scores. Instead, servicemembers were tricked into obtaining high-interest loans on overpriced, poor-quality jewelry that saddled them with thousands of dollars of debt and worsened their credit. Attorney General James and FTC co-led an 18-state agreement that requires Harris Jewelry to refund tens of thousands of servicemembers for warranties they were tricked into purchasing, stop collecting millions of dollars of debt, correct bad credit scores, and dissolve all its businesses.

Through the agreement, Harris Jewelry has stopped collecting $21,307,229 in outstanding debt held by 13,426 servicemembers. The agreement required the jewelry retailer to provide $12,872,493 in refunds to 46,204 servicemembers who paid for lifetime protection plans. Eligible individuals can file a claim online on Harris Jewelry’s website to obtain a refund.