Founder And CEO of Non-Profit and Two Others Charged With Fraud, Bribery and Money Laundering Offenses

Through Kickbacks and Bribes, Defendants Illegally Diverted Tens of Millions of Dollars from COVID-19 Emergency Housing Program to Enrich Themselves 

At the federal court in Brooklyn, an indictment was unsealed charging Julio Medina, Christopher Dantzler and Weihong Hu with conspiracy to commit wire fraud, honest-services wire fraud, money laundering conspiracy, conspiracy to violate the Travel Act and the use of a facility of interstate commerce in aid of commercial bribery. Dantzler was arrested on Long Island, Hu in Manhattan and Medina in the Bronx.  They were arraigned before United States Magistrate Judge James R. Cho.

John J. Durham, United States Attorney for the Eastern District of New York, Jocelyn E. Strauber, Commissioner, New York City Department of Investigation (DOI) and James E. Dennehy, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrests and charges.

“The defendants’ brazen and illegal kickback scheme stole money from the City of New York that was intended to provide emergency housing and support services during the pandemic,” stated United States Attorney Durham.  “Shamefully, the defendants saw the pandemic as an opportunity to line their pockets with stacks of cash, finance a luxury vehicle, purchase homes and pay off personal debts. While New York City was trying to curb the spread of COVID-19, the defendants exploited a nonprofit organization to enrich themselves.  My Office will relentlessly pursue those who steal public funds and deprive members of our community of crucial resources.”

DOI Commissioner Strauber stated: “As charged, these defendants, an Executive Director of a City-funded nonprofit and the principals of the nonprofit’s subcontractors, engaged in and concealed a bribery and kickback scheme, pocketing millions of dollars of funds intended to provide emergency housing and support services in New York City during the COVID-19 pandemic. I thank the Mayor’s Office of Risk Management and Compliance for the referral to DOI that prompted this investigation and the U.S. Attorney’s Office for the Eastern District of New York and the FBI for their partnership and commitment to protect critical public resources.”

“These three defendants allegedly pocketed millions of dollars from public funds allocated for emergency housing during the pandemic,” stated FBI Assistant Director in Charge Dennehy. “This alleged kickback scheme abused a program designed to provide a vulnerable population with healthier, unexposed lodging alternatives, to finance enhancements to the defendants’ lifestyles. The FBI will never tolerate any individual who twists public programs into a mechanism to sell services for personal profit.”

As alleged in the indictment, Medina founded and served as the Executive Director and Chief Executive Officer of a non-profit organization that, among other things, provided various reentry services to formerly incarcerated individuals (the “Organization”).  In June 2020, the New York City Mayor’s Office of Criminal Justice (MOCJ) contracted with the Organization to administer an emergency transitional housing program (the “Emergency Housing Program”), in partnership with local hotels and other businesses, to combat the spread of COVID-19 in New York City jails.  The Organization subsequently entered into agreements with various hotels to operate as reentry hotels under the Emergency Housing Program.  In total, between June 2020 and December 2023, the Organization received approximately $122 million in public funds from MOCJ to operate the Emergency Housing Program at these hotels.

Dantzler and Hu each operated or controlled businesses that received tens of millions of dollars in public funds from the Organization under the Emergency Housing Program.  Dantzler’s company purported to provide security services at the reentry hotels but was not a licensed security company and did not, in fact, provide security services.   Hu operated or controlled two hotels in Queens that operated as reentry hotels under the Emergency Housing Program and was a member of a repurposed catering company that provided food services to formerly incarcerated individuals residing at reentry hotels under the Emergency Housing Program.   

Medina solicited and accepted bribes and kickbacks from Dantzler and Hu in exchange for Medina providing business through the Organization to Dantzler’s and Hu’s respective businesses under the Emergency Housing Program.  Among other bribes and kickbacks, Dantzler and Hu purchased Medina an approximately $1.3 million townhouse; Hu, through one of her businesses, financed a luxury vehicle for Medina valued at approximately $107,000; and Dantzler paid to purchase and renovate a house for Medina for approximately $750,000.

As depicted in the following photograph, during an in-person meeting in September 2020, Hu also provided Medina with a stack of wrapped U.S. currency in exchange for two checks from the Organization made out to Hu’s catering company, totaling more than $187,000.   

In total, Dantzler and Hu provided Medina with at least $2.5 million in U.S. currency and in-kind benefits in exchange for Medina steering approximately $51 million in public funds from the Emergency Housing Program to Dantzler’s and Hu’s businesses.  In turn, Dantzler’s security company received approximately $21 million in public funds from the Organization under the Emergency Housing Program, of which Dantzler personally retained approximately $9 million in public funds.  Hu’s hotels received approximately $12 million in public funds from the Organization under the Emergency Housing Program, while her repurposed catering company received approximately $17 million in public funds.

The charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.

Real Estate Executive Charged In Thirty-Million-Dollar Bank Fraud Scheme

 

Danielle Sassoon, the United States Attorney for the Southern District of New York, and James E. Dennehy, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of KEVIN FENG GAO. The Indictment unsealed today charges GAO with committing bank fraud as part of a scheme to steal $30 million intended as an investment in Manhattan real estate. GAO will be presented today before U.S. Magistrate Judge Stewart D. Aaron.  

U.S. Attorney Danielle Sassoon said: “As alleged, Kevin Gao orchestrated a complex scheme to create a fraudulent, unauthorized bank account and use the account to steal $30 million from a real estate investor. Bank fraud schemes undermine the integrity of our financial system by corrupting it for criminal purposes, and I commend the FBI and our dedicated team of prosecutors for their outstanding work in uncovering this massive fraud.” 

FBI Assistant Director in Charge James E. Dennehy said: “Kevin Gao allegedly opened an unauthorized corporate bank account to intercept and steal a $30 million investment. This alleged establishment of an illicit bank account wrongfully diverted a significant sum from its intended use. The FBI remains dedicated to apprehending all individuals who implement deceitful measures to steal what is not owed to them.”

According to allegations in the Indictment:[1] 

GAO carried out a fraudulent scheme to open and use an unauthorized bank account in the name of a company (the “Management Company”) that managed a real estate development project in Manhattan (the “Real Estate Project”). GAO was an executive at another company that participated in a joint venture to develop the Real Estate Project, but GAO had no authorization from the Management Company to open the account in its name (the “Fraudulent Account”). 

When GAO applied to open the Fraudulent Account, GAO made false representations to employees of an FDIC-insured bank (the “Bank”), including falsely representing that GAO was opening the Fraudulent Account with the Management Company’s permission. Additionally, when a representative of the Bank asked GAO to provide a copy of the Management Company’s operating agreement, GAO provided a fraudulent document rather than the actual operating agreement. 

After GAO created the Fraudulent Account, an investment company agreed to invest $30 million in the Real Estate Development managed by the Management Company. But the investment company transferred its $30 million into the Fraudulent Account created by GAO rather than a legitimate account actually held and controlled by the Management Company. GAO then dispersed the $30 million to several accounts under the control of GAO and his co-conspirators.

GAO, 37, of Queens, New York is charged with one count of bank fraud, which carries a maximum sentence of 30 years in prison. 

The maximum potential sentence in this case is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.      

Ms. Sassoon praised the outstanding work of the FBI. 

The case is being handled by the Office’s Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorneys Christopher Brumwell and Maggie Lynaugh are in charge of the prosecution.

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

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

YONKERS WOMAN INDICTED FOR STEALING $275,000 FROM FORMER COWORKER DISABLED BY STROKES

 

Defendant, A DEP Employee, Allegedly Forged Will, Power of Attorney and Healthcare Proxy Documents for Elderly Man 

Bronx District Attorney Darcel D. Clark announced that a Yonkers woman has been indicted for stealing at least $275,000 from a 78-year-old Bronx man who was debilitated by strokes and other profound health issues. The defendant allegedly possessed forged documents that enabled her to access the victim’s bank account and withdraw a thousand dollars a day for about a year. 

District Attorney Clark said, “The defendant allegedly exploited her elderly former coworker, who was suffering from deteriorating physical and mental health. She allegedly used forged documents and depleted the man’s life savings. The alleged actions are callous bordering on inhumane.”

New York City Department of Investigation Commissioner Jocelyn E. Strauber said, “This defendant – a City worker - stole from a former colleague who was elderly and in poor health by forging documents, including powers of attorney, a living will and a healthcare proxy, to facilitate the theft of more than $275,000 from the victim, according to the charges. As is also alleged, the defendant, acting with others, deprived the vulnerable victim of necessary care. The charged conduct displays a shocking disregard for the victim and a lack of basic human decency, far below the high standards we have for City employees. I thank Adult Protective Services for referring this matter to DOI and the Bronx District Attorney’s Office for its partnership in this important investigation.”

District Attorney Clark said the defendant, Shameca W. Morrison, 40, of Yonkers, was arraigned today on second-degree Grand Larceny, four counts of second-degree Criminal Possession of a Forged Instrument, and first-degree Endangering the Welfare of an Incompetent or Physically Disabled Person before Bronx Supreme Court Justice Kim Parker. She is due back in court on April 17, 2025.

According to the investigation, between June 1, 2021, and August 2022, the defendant embezzled funds from her former co-worker at the NYC Department of Environmental Protection. The defendant started stealing money after the victim had had two strokes and was showing signs of cognitive decline. The victim suffered continued deteriorating health from the effects of cancer and dementia. The defendant allegedly made daily ATM withdrawals from the victim’s bank account, at the rate of approximately $1,000 a day. To justify and further her conduct, she showed bank employees and a social worker at Adult Protective Services two forged Powers of Attorney, a forged Living Will, and a forged Healthcare Proxy. 

According to the investigation, Morrison, without lawful authority to do so, took physical custody of the victim from the nursing home where he had been residing, and moved the victim into her uncle’s home. In doing so, the defendant allegedly deprived the victim of the financial security and physical and emotional care he required, given his disabilities and cognitive issues. 

District Attorney Clark thanked Monique T. Scott, Crisis Case Manager of BronxWorks Adult Protective Services, Deputy Inspector General Jordan Buff, of the NYC DOI’s Office of the Inspector General for DEP, supervised by Inspector General Kathryn Spota, Deputy Commissioner of Strategic Initiatives Christopher Ryan and Deputy Commissioner/Chief of Investigations Dominick Zarrella; and Secretary of State for the State of New York Walter T. Mosley, and the New York State Division of Licensing Services.

An indictment is an accusatory instrument and not proof of a defendant’s guilt. 

Governor Hochul Opens Applications for Empire State Summer Service Corps Program

SUNY Students Are Encouraged to Apply for One of 150 Paid Civic and Service Internships This Summer

Application Can Be Found on the SUNY Website; Students Can Apply Through March 20, 2025

Governor Hochul’s Initiative Connects Students with Community Service and Career Development

Governor Kathy Hochul announced the opening of applications for the Empire State Summer Service Corps Program, encouraging State University of New York students to apply for one of 150 paid civic and service internships this summer. The special program will take place from May through August 2025. SUNY students are encouraged to apply on the SUNY website between now and March 20, 2025.

“I have talked about putting money back in the pockets of taxpayers across New York, now it’s time to help put money into the pockets for the youth of New York,” Governor Hochul said. “By providing our youth with meaningful employment opportunities, we are not just giving them a job; we are investing in their future. This program will equip them with valuable skills, empower them to be leaders in their communities, and help them grow into responsible, hardworking individuals who will shape a brighter tomorrow for all of New York.”

The Empire State Service Corps is one of Governor Hochul’s 2024 State of the State priorities to expand service opportunities for college students. Students participating in the program dedicate at least 300 hours to paid community service – and convene regularly to share and learn from each other's experiences. During its first application cycle, almost 2,000 SUNY students submitted applications for 500 spots across 45 SUNY colleges and universities during the 2024-25 academic year. AmeriCorps funding will make it possible to expand the program to serve 150 students this summer.

SUNY Chancellor John B. King Jr. said, “College has the unique power to bring students together in service and learning. Thanks to Governor Hochul’s leadership and the support of the Legislature, SUNY is proud to make it possible for hundreds of our students to complete paid service internships in their communities through the Empire State Service Corps.”

The Empire State Service Corps provides paid civic and service internships in the following areas:

• K-12 Tutoring: Students will partner with local school districts for regular tutoring sessions to support recovery from pandemic-era interrupted learning.
• SNAP and basic need outreach: Students will support students with SNAP outreach on campus, as well as provide basic needs support, including shifts at the campus food pantry.
• Peer Mental Health: On select campuses, students will be trained to serve as peer mental health counselors.
• Sustainability: Students will serve in campus roles and with local nonprofits and State agencies on sustainability work, such as recycling campaigns, tree planting, pollinator gardens, and sustainability outreach.
• Anti-Hate and Bias Prevention: Students will serve with local nonprofits focused on ending hate and bias in the community.
• FAFSA Completion: Students will serve local communities, through visits to local high schools and work on-campus, to support students in completing the FAFSA so they can access financial aid.

Governor Hochul and the state legislature committed $2.75 million to continue to fund the Empire State Service Corps in the FY25 Enacted Budget.

Community-based organizations and local school districts interested in hosting Empire State Summer Service Corps members can submit their information at this link here.

About The State University of New York

The State University of New York is the largest comprehensive system of higher education in the United States, and more than 95 percent of all New Yorkers live within 30 miles of any one of SUNY’s 64 colleges and universities. Across the system, SUNY has four academic health centers, five hospitals, four medical schools, two dental schools, a law school, the country’s oldest school of maritime, the state’s only college of optometry, and manages one US Department of Energy National Laboratory. In total, SUNY serves about 1.4 million students amongst its entire portfolio of credit- and non-credit-bearing courses and programs, continuing education, and community outreach programs. SUNY oversees nearly a quarter of academic research in New York. Research expenditures system-wide are nearly $1.16 billion in fiscal year 2024, including significant contributions from students and faculty. There are more than three million SUNY alumni worldwide, and one in three New Yorkers with a college degree is a SUNY alum. To learn more about how SUNY creates opportunities, visit www.suny.edu.

 

Two Estonian Nationals Plead Guilty in $577M Cryptocurrency Fraud Scheme

 

Scheme Victimized Hundreds of Thousands of People in United States and Abroad 

Two Estonian nationals pleaded guilty for their operation of a massive, multi-faceted cryptocurrency Ponzi scheme that victimized hundreds of thousands of people from across the world, including in the United States. As part of the defendants’ guilty pleas, they agreed to forfeit assets valued over $400 million obtained during the conspiracy.

According to court documents, Sergei Potapenko and Ivan Turõgin, both 40, sold contracts to customers entitling them to a share of cryptocurrency mined by the defendants’ purported cryptocurrency mining service, HashFlare. Cryptocurrency mining is the process of using computers to generate cryptocurrency, such as Bitcoin, for profit.

Between 2015 and 2019, Hashflare’s sales totaled more than $577 million, but HashFlare did not possess the requisite computing capacity to perform the vast majority of the mining the defendants told HashFlare customers it performed. HashFlare’s web-based dashboard, which purported to show customers their mining profits, instead reflected falsified data. Potapenko and Turõgin used the proceeds of the fraud conspiracy to purchase real estate and luxury vehicles and maintained investment and cryptocurrency accounts. Potapenko and Turõgin have agreed to forfeit assets worth, as of the date of the plea, more than $400 million. The forfeited assets will be available for a remission process to compensate victims of the crime. Details about the remission process will be announced at a later date.

Potapenko and Turõgin each pleaded guilty to one count of conspiracy to commit wire fraud. They are scheduled to be sentenced on May 8 and each face a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The Justice Department thanks the Cybercrime Bureau of the Estonian Police and Border Guard for its support with this investigation. The Estonian Prosecutor General and Ministry of Justice and Digital Affairs provided substantial assistance with the extradition. The Justice Department’s Office of International Affairs provided extensive assistance to the investigation and the extradition of the defendants.

Supervisory Official Antoinette T. Bacon of the Justice Department’s Criminal Division, Acting U.S. Attorney Teal Luthy Miller for the Western District of Washington, Assistant Director Chad Yarbrough of the FBI’s Criminal Investigative Division, and Special Agent in Charge W. Mike Herrington of the FBI Seattle Field Office made the announcement.

The FBI Seattle Field Office investigated the case.

Trial Attorneys Adrienne E. Rosen and David Ginensky of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorneys Andrew Friedman and Sok Jiang for the Western District of Washington are prosecuting the case. Assistant U.S. Attorney Jehiel Baer for the Western District of Washington is handling asset forfeiture aspects of the case.

Individuals who believe they may have been a victim in this case should visit www.fbi.gov/hashflare.

Joint Statement from Speaker Adrienne Adams, Immigration Committee Chair Alexa Avilés, and Criminal Justice Committee Chair Sandy Nurse on Mayor Adams’ Cooperation with ICE to Subvert City Laws

 

Following Mayor Adams’ meeting with border czar Tom Homan, the mayor announced an incoming executive order to re-establish the ability for ICE agents to operate on Rikers Island for criminal enforcement. This meeting comes days after top Washington D.C. Department of Justice (DOJ) officials interfered in his criminal case and the same day several DOJ officials resigned in protest, including the Acting U.S. Attorney for the Southern District of New York. In response, Speaker Adrienne Adams, Council Member Alexa Avilés, Chair of the Committee on Immigration, and Council Member Sandy Nurse, Chair of the Committee on Criminal Justice,released the following statement.

“The mayor’s announcement of the intention to issue an executive order that allows the Trump administration access to Rikers is concerning, but we must see language of any purported executive order to evaluate its legality. Today’s statement by the mayor only further connects it to the resignations at DOJ over the apparent quid pro quo identified by the recently resigned U.S. Attorney for the Southern District. Local Law 58 of 2014 has clear guidelines that prohibit the use of office space on Rikers for the enforcement of civil immigration enforcement. We are prepared to defend against violations of the law, but this announcement only deepens the concern that the mayor is prioritizing the interests of the Trump Administration over those of New Yorkers. Current city laws are specific to how and when city resources can be used for federal immigration enforcement to protect the safety of our city and its communities. The Council will determine its formal response based on the executive order.” 

Attorney General James Releases Tips for New Yorkers to Protect Themselves from Predatory Debt Collectors

 

New York Attorney General Letitia James today released a guide to help New Yorkers use the state’s Exempt Income Protection Act (EIPA) to protect their money from debt collectors. The EIPA is a state law that prevents debt collectors from draining consumers’ bank accounts, leaving them unable to cover the costs of basic needs. The law automatically protects a certain amount of money in people’s bank accounts from being frozen or seized, and also protects vital government benefits like Social Security, disability benefits, and veteran’s benefits. The Office of the Attorney General’s (OAG) guide comes after Attorney General James recently secured $1 million from Netspend, a financial services company that illegally turned over its customers’ funds to debt collectors when those funds should have been protected under EIPA. The OAG’s guide will help New Yorkers use their rights under EIPA to protect their money and report debt collectors who are breaking the law to OAG.

“When banks allow debt collectors to wipe out New Yorkers’ bank accounts, they’re not only throwing vulnerable people into financial chaos, they’re breaking the law,” said Attorney General James. “New Yorkers should know how to protect their money from debt collectors so they can continue to pay their bills while they manage their debt. My office’s helpful guide provides valuable tips for New Yorkers to protect their funds and hold banks and debt collectors accountable when they break the law. I encourage anyone who has had their hard-earned money illegally seized or frozen to report it to my office.”

The EIPA automatically exempts a certain amount of money in people’s bank accounts from being frozen or seized. This protected amount is based on the minimum wage and is $3,960 for those in New York City, Long Island, or Westchester, and $3,720 for those anywhere else in New York as of January 2025. The EIPA also protects 90% of wages or salary earned in the 60 days before a debt collector attempts to seize funds. 

Crucially, EIPA also protects government benefits and retirement funds from being frozen or seized, ensuring New Yorkers have enough money to pay their bills. These funds include:

• Social Security;
• Supplemental security income;
• Disability benefits;
• Unemployment insurance;
• Workers compensation;
• Veterans benefits;
• Spousal support, alimony, or child support; and
• Payments from public or private pensions and retirement accounts, such as 401(k)s or individual retirement accounts (IRAs).

Attorney General James has successfully secured restitution for New Yorkers whose funds were illegally seized by debt collectors. In April 2024, Attorney General James secured more than $700,000 from Pathward Bank for unlawfully freezing customer accounts and illegally transferring money to debt collectors in violation of EIPA. In February 2024, Attorney General James secured more than $650,000 from a debt collection law firm for filing frivolous lawsuits against vulnerable New York City tenants. In May 2022, Attorney General James and the Consumer Financial Protection Bureau shut down a predatory debt collection operation that used deceptive and abusive tactics to illegally collect millions of dollars from hundreds of thousands of consumers.

The OAG’s guide includes the steps New Yorkers must take to use EIPA to protect their funds from being seized, as well as instructions on how to report violations to OAG. Any consumer who has had their money frozen or seized in violation of the law should report the violation to OAG’s Consumer Frauds Bureau online or by calling 1-800-771-7755.