Owner Of Real Estate Investment Firm Sentenced In Manhattan Federal Court To 10 Years In Prison For $17 Million Securities Fraud

   Preet Bharara, the United States Attorney for the Southern District of New York, announced that CARLTON P. CABOT, the former owner and chief executive officer of Cabot Investment Properties LLC (“CIP”), was sentenced today in Manhattan federal court to 10 years in prison for defrauding hundreds of elderly investors in numerous CIP-sponsored real estate investments.  As part of the fraud, CABOT and his co-defendant misappropriated approximately $17 million of investor funds to pay for personal and business expenses, and concealed the fraud from the investors with manipulated financial statements.  CABOT pled guilty to one count of securities fraud on May 31, 2016, before U.S. District Judge Jesse M. Furman who imposed today’s sentence.

U.S. Attorney Preet Bharara said:  “Carlton Cabot took $17 million from vulnerable investors and spent it lavishly on himself, and then lied to cover it up.  The victims, many of whom were in their 70s and 80s, were simply looking for a steady income stream to sustain them in their retirement.  Now, instead of economic safety and security, they are faced with financial ruin.  Cabot has rightfully been held to account for his selfish and criminal acts.”

According to the allegations contained in the criminal complaint against CABOT, the indictment to which CABOT pled guilty and Cabot’s admissions during his plea allocution, and the statements made by the victims of CABOT’s fraud:

From 2003 through 2012, CIP – which was controlled by CABOT – sponsored and oversaw approximately 18 so-called tenants-in-common (“TIC”) securities offerings to investors located all over the United States (collectively, the “TIC Investments” and the “TIC Investors”). A TIC investment is a real estate investment in which investors collectively own a piece of commercial real estate and are entitled to receive a portion of the rental income from the property.

From 2008 through 2012, CABOT engaged in a scheme to defraud the TIC Investors by misappropriating funds belonging to the TIC Investments and concealing his misappropriations by knowingly providing false and misleading financial reports and other information to the TIC Investors.

According to the representations in the offering prospectuses for the TIC Investments, CIP was allowed to collect only “excess” rental income from the TIC Investments – i.e., any additional money left over after the TIC Investments had paid the operating expenses for the properties and the disbursements due to the TIC Investors.  Despite these representations, CABOT repeatedly transferred money out of bank accounts belonging to the TIC Investments and into CIP bank accounts that he controlled (the “CIP Operating Accounts”) before these funds could be used to pay for operating expenses and disbursements to the TIC Investors.   

CABOT then used these funds to pay for unauthorized purposes without the knowledge or authorization of the TIC Investors, including: (1) to cover the operating expenses and investor distributions of other TIC Investments that had no available funds; (2) to pay for millions of dollars of personal expenses, including expensive cars, rental apartments, and private school tuition; and (3) to pay for CIP business expenses, including an approximately $1,125,651 civil settlement to certain TIC Investors who had sued CABOT and others.

To conceal the misappropriation of TIC Investment funds from the TIC Investors, CABOT and his co-defendant, Timothy J. Kroll, CIP’s chief operating officer, provided false and misleading financial reports to the TIC Investors that intentionally hid the fact that CIP owed large sums of money to the TIC Investments. 

By the end of 2012, when CIP ceased its day-to-day operations, CIP and its principals, CABOT and Kroll, owed approximately $17 million to the TIC Investments, which has never been repaid.

In addition to his prison sentence, CABOT, 54, of Stamford, Connecticut, was sentenced to three years of supervised release and ordered to pay $17 million in restitution and forfeiture. 

On October 7, 2015, Kroll pled guilty before Judge Furman for his role in the scheme.

Mr. Bharara praised the outstanding efforts of the U.S. Postal Inspection Service and Internal Revenue Service’s Criminal Investigation Division.  He also thanked the Office of the Secretary, William F. Galvin, Massachusetts Securities Division, for its assistance with the investigation of this case.

Two Charged In Manhattan Federal Court With Conspiring To Traffic In Counterfeit Goods

   Preet Bharara, the United States Attorney for the Southern District of New York, Angel M. Melendez, Special Agent in Charge of New York, U.S. Immigration and Customs Enforcement (“ICE”) Homeland Security Investigations (“HSI”), Robert E. Perez, Director, Field Operations New York, U.S. Customs and Border Protection (“CBP”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced charges today against two individuals for conspiring to traffic in counterfeit goods.  DAYE DONG and HONGYU CHEN are charged with importing counterfeit goods from China into the United States with the intent to distribute and sell the counterfeit products to retailers in New York City and elsewhere.  The defendants were arrested today and will be presented before U.S. Magistrate Judge Kevin Nathaniel Fox later this afternoon.

Manhattan U.S. Attorney Preet Bharara said:  “These defendants allegedly sold counterfeit goods, fueling consumers’ desire for low prices on high end products.  But the cheap prices come at a high price for legitimate businesses.  Protection of intellectual property remains an important priority for my office and for our partners at CBP, ICE, and the NYPD.”  

HSI Special Agent in Charge Angel M. Melendez said:  “People wrongly assume intellectual property theft is a victimless crime.  The reality is, individuals like those charged today are allegedly robbing from law abiding merchants and from the legitimate companies that manufacture these items.  Brand-name knockoffs are not a harmless way to beat the system.”

CBP Director Robert E. Perez said:  “U. S. Customs and Border Protection is proud of the expertise we provide in support of investigations that result in the takedown of criminal enterprises.  It is through interagency partnerships and collaborative efforts, like the one leading to today's arrests, that law enforcement successfully combats today's criminal organizations.”

NYPD Commissioner James P. O’Neill said:  “This sale of conterfeit merchandise is a scheme that is old as crime itself.  Today’s arrests led by Homeland Security and Immigration and Customs Enforcement ensures consumers have confidence in the products they purchase.”

According to the allegations in the Complaint[1]:

From March 2012 to October 2016, DONG and CHEN, who are married, imported counterfeit luxury and designer brand goods into the United States from China.  DONG and CHEN stored the imported counterfeit goods in two warehouses with the intent to transfer the goods to retailers in New York City, including a Manhattan retail store operated by CHEN, and elsewhere.  On October 27, 2016, federal and New York City law enforcement officers conducted a search of DONG and CHEN’s residence, warehouses, and retail store, and found more than 30,000 pieces of counterfeit goods, including handbags and wallets, for various luxury and designer brands. 

DONG, 49, and CHEN, 48, of Bayside, New York, are both charged with one count of conspiring to traffic in counterfeit goods, and one count of trafficking in counterfeit goods.  Each count carries a maximum sentence of 20 years in prison. 

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.

Mr. Bharara praised the outstanding investigative work of the U.S. Department of Homeland Security, Homeland Security Investigations.  He also thanked the New York Police Department for its assistance.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Jonathan E. Rebold is in charge of the prosecution.

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

Yonkers Man Sentenced In White Plains Federal Court To More Than 22 Years In Prison For Kidnapping And Sex Trafficking A 19-Year-Old Victim

   Preet Bharara, the United States Attorney for the Southern District of New York, announced today that CLYDEDORO GRAHAM was sentenced in White Plains federal court to 270 months in prison for kidnapping a 19-year-old victim (the “Victim”), conspiring to engage in sex trafficking of the Victim, and attempting to engage in sex trafficking of the Victim.  CLYDEDORO GRAHAM was convicted in November 2015 after a seven-day jury trial before United States District Judge Nelson S. Román, who imposed today’s sentence.

U.S. Attorney Preet Bharara stated:  “Clydedoro Graham orchestrated a horrifying plot to lure a 19-year-old woman to his apartment, hold her against her will, and coerce her—through repeated sexual assault and other physical and psychological pressure—to work as a prostitute for him.  A unanimous jury convicted him of kidnapping and sex trafficking, and today, the Court imposed a significant sentence that reflects the viciousness of the defendant’s crimes.”

According to the allegations in the Complaint and Superseding Indictment filed in federal court, and the evidence presented at trial:

On the evening of June 16, 2014, CLYDEDORO GRAHAM was at his apartment in Yonkers, New York, (the “Apartment”) with his girlfriend and accomplice, Alisa Papp.  His cousin, Kevin Graham, and his friend, Hector Garcia, were also present.  As Papp, Kevin Graham, and Garcia knew, CLYDEDORO GRAHAM was a “pimp.”  That night, the four co-conspirators agreed to lure a prostitute to the Apartment for the purpose of forcing her to work for them.

CLYDEDORO GRAHAM was the leader of this scheme.  Using his cellphone, he went to Backpage.com, a website where prostitutes post advertisements.  He trolled through the advertisements searching for a target, and eventually decided on the Victim.  Kevin Graham called the Victim and led her to believe, falsely, that he wanted to hire her for a prostitution “date.”

When the Victim arrived, the co-conspirators were lying in wait.  Papp served as the lookout, making sure the Victim did not arrive with anyone else.  Kevin Graham met her outside and led her into the Apartment, while CLYDEDORO GRAHAM and Garcia hid inside.  Once inside the Apartment – and at the direction of CLYDEDORO GRAHAM – the co-conspirators took away the Victim’s purse and phone, removed the battery from her phone, and told her that she was there to work as a prostitute for them.  The Victim asked repeatedly to leave, but CLYDEDORO GRAHAM and his accomplices refused.

The co-conspirators told the Victim that she had no choice but to have sex with each of the men.  She refused and asked again to go home.  CLYDEDORO GRAHAM said she could give it up or they would “take it.”  CLYDEDORO GRAHAM, Kevin Graham, and Hector Garcia took turns having sex with the Victim, against her will.

Later that night, Kevin Graham and Garcia left the Apartment.  For the next two days and two nights, CLYDEDORO GRAHAM and Papp held the Victim captive in the Apartment.  Among other coercive measures, CLYDEDORO GRAHAM removed the doorknob from the interior side of the Apartment’s front door to prevent the Victim from escaping.  He then made plans to bring the Victim out onto the streets of Yonkers to prostitute her for his own benefit.

CLYDEDORO GRAHAM’s scheme unraveled on June 18, 2014, when two Yonkers police officers arrived at the Apartment after receiving a tip from individuals who had been searching for the Victim.  The officers demanded to speak with the Victim, immediately determined that she was being held against her will, and brought her to safety.

In addition to the prison sentence, CLYDEDORO GRAHAM, 28, of Yonkers, New York, was sentenced to three years of supervised release.

Mr. Bharara praised the outstanding investigative work of the FBI’s Westchester Violent Crimes Task Force, which comprises agents and detectives of the FBI, United States Probation, the City of Yonkers Police Department, the City of Peekskill Police Department, the New York City Police Department, the Westchester County Police, and the Westchester County District Attorney’s Office.

Manhattan U.S. Attorney Announces Extradition Of International Arms Traffickers For Their Involvment In Conspiracy To Import Cocaine Into The United States

  Preet Bharara, the United States Attorney for the Southern District of New York, and Mark Hamlet, Special Agent in Charge of the Special Operations Division of the United States Drug Enforcement Administration (“DEA”), announced today the extradition of MEMET GEZER, a/k/a “Muhammad Altrky,” a/k/a “Wissam Abdel Rahman Younes,” a/k/a “Mohamed Subhe Al Gazar” (“GEZER”) and SABER KARIMCH, a/k/a “Abu Farouk” (“KARIMCH”), international arms traffickers charged with conspiring to sell large quantities of military-grade weaponry to individuals GEZER and KARIMCH believed were representatives of a Mexican drug trafficking organization (the “DTO”).  GEZER and KARIMCH, were arrested by Montenegrin authorities on April 14, 2016, extradited from Montenegro today, and will be arraigned in front of United States Magistrate Judge Kevin Nathaniel Fox later today.  The case is assigned to Chief United States District Judge Colleen McMahon.

U.S. Attorney Preet Bharara stated:  “Highlighting the global nature and impact of the drug trade, two men from the Middle East working with what they believed to be members of a Mexican drug trafficking organization, allegedly agreed to provide military-grade weapons, including machine guns and rocket-propelled grenades, to help protect cocaine shipments headed for the United States.  Thanks to the DEA’s relentless efforts, these alleged international arms traffickers are now on American soil facing criminal charges.”

Special Agent in Charge Mark Hamlet stated:  “This global conspiracy uncovered by DEA and its partners further highlights the dangerous and potentially deadly connection between arms dealers and drug trafficking networks worldwide.  DEA’s vast global presence allows us to pursue some of the world’s most dangerous criminals so they may face justice for their crimes in the United States.”

According to the Indictment and Complaints[1], which were unsealed in October 2016:

Between September 2015 and March 2016, GEZER and KARIMCH participated in a series of in-person meetings and telephone calls with individuals whom GEZER and KARIMCH understood to be representatives of a Mexican drug trafficking organization (the “DTO”).  However, those individuals were, in fact, two DEA confidential sources (the “CSes”).  During those meetings and telephone calls, which were recorded, GEZER and KARIMCH agreed to supply the DTO with high-powered weapons, including machine guns, grenades, and rocket-propelled grenades (“RPGs”), with the express understanding that those weapons would be used to protect large cocaine shipments as they traveled from and through Mexico for distribution in the United States. 

In early 2016, one of the CSes met with GEZER in a foreign country.  GEZER escorted the CS to a gated compound and showed the CS bulk quantities of weapons, including RPGs, grenades, sniper rifles, and machine guns.  In February 2016, GEZER sent the CS videos of some of the weapons that GEZER had shown the CS in the gated compound to confirm that GEZER was ready to proceed with the weapons deal. 

GEZER additionally offered to sell the CSes large sums of United States currency for a fraction of the currency’s face value, with the understanding that the money would help the CSes launder drug money for the DTO.  In early February 2016, GEZER showed one of the CSes what appeared to be approximately $2 million in U.S. currency, which GEZER indicated was a small fraction of what GEZER could make available to the CSes.

GEZER, 49, a citizen of Turkey, and KARIMCH, 50, a citizen of Syria, are each charged with one count of conspiracy to import cocaine into the United States, which carries a maximum sentence of life in prison and a mandatory sentence of 10 years in prison; two counts of attempting to import cocaine into the United States, each carrying a maximum sentence of life in prison and a mandatory sentence of 10 years in prison; and one count of conspiracy to aid and abet the possession of firearms in furtherance of drug trafficking offenses, which carries a maximum sentence of 20 years in prison.  In addition, GEZER is charged with conspiracy to launder money, which carries a maximum sentence of 20 years in prison. 

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

Mr. Bharara praised the outstanding investigative efforts of the DEA’s Special Operations Division, the DEA’s Rome Country Office, and the Montenegrin National Police.  The defendants’ arrests and subsequent extradition are also the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York and the Justice Department’s Office of International Affairs.

The case is being prosecuted by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Andrea Surratt and Ilan Graff are in charge of the prosecution.

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

Did Anthony Weiner Screw Up Clinton's Chance at the Presidency

  It has been reported that the computer used by Anthony Weiner to send photos of himself and his young child to an underage minor girl is going to cause problems for Hillary Clinton, and could possibly give Donald Trump the advantage to win the election for President. 

  The computer in question was a jointly used computer used not only by Anthony Weiner, but also Hillary Clinton Chief of Staff Huma Abin Weiner's wife at the time he was caught sending lewd photos to the underage girl. 

   The FBI is now in possession of said computer, and has released a letter stating that it will now be reopening the Hillary Clinton e-mail case due to the fact that many e-mails have been found on the computer which could have been of a very sensitive nature or could have been classified material. 

   The FBI will continue to investigate the matter in the statement by the Director of the FBI.

     More details in future posts.

Tax Attorney And CPA Indicted For Tax Evasion And Diversion Of Tax Shelter Fees From Major Manhattan Law Firm

Tax Attorney Also Charged with Making False Statements to IRS, and Causing Another Person to Lie to the IRS

   Preet Bharara, the United States Attorney for the Southern District of New York, and Shantelle P. Kitchen, Special Agent In Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that HAROLD LEVINE, a Manhattan tax attorney, and RONALD KATZ, a Florida certified public account, were charged today in Manhattan federal court in an eight-count Indictment with engaging in a multi-year tax evasion scheme involving the diversion of millions of dollars of fees from a Manhattan law firm and the failure to report that fee income to the Internal Revenue Service.   

Mr. Bharara said:  “As tax professionals and partners at professional firms, both Harold Levine and Ronald Katz knew better.  But as alleged, they engaged in a multi-year scheme to divert and evade taxes on millions of dollars of fee income.”

IRS-CI Special Agent in Charge Shantelle P. Kitchen said:  “Tax and accounting professionals who conceal their incomes, evade income taxes, and otherwise obstruct the Internal Revenue Service simply have no excuse for violating the very laws their professions are centered on.  IRS-Criminal Investigation works hard to ensure that everyone pays their fair sure and we take particular interest in allegations involving professionals who should simply know better.” 

According to the allegations in the Indictment[1] returned today in Manhattan federal court:

HAROLD LEVINE, a tax attorney and former head of the tax department at a major Manhattan Law Firm (the “Law Firm”), schemed with RONALD KATZ, a certified public accountant, to divert from the Law Firm over $3 million in fee income from tax shelter and related transactions that LEVINE worked on while serving as a partner of the New York Law Firm.  In addition, LEVINE failed to report that fee income to the IRS on his personal tax returns during the period 2005-2011.  For his involvement in this scheme, KATZ received and failed to report to the IRS over $1.2 million in fee income.     

As part of the fee diversion scheme, for example, LEVINE caused tax shelter fees paid by a Law Firm client to be routed to a partnership entity he co-owned with KATZ and thereafter used those fees – totaling approximately $500,000 – to be used to purchase a home in Levittown, New York.  LEVINE caused the home to be purchased as a residence for a Law Firm employee (the “Law Firm Employee”) with whom he carried on a close personal relationship.  Although LEVINE allowed the Law Firm Employee to reside in the Levittown house for over five years without paying rent, LEVINE and KATZ prepared tax returns for the entity through which the home was purchased to claim false deductions as a rental property.

In or about 2013, LEVINE was questioned by IRS agents concerning his involvement in certain tax shelter transactions and the fees received for those transactions.  During that questioning, LEVINE falsely represented that the Law Firm Employee paid him $1,000 per month in rent while living in the Levittown home.  In addition, when the Law Firm Employee was contacted by the IRS and summoned to appear for testimony, LEVINE urged the employee to represent falsely to the IRS that she had paid $1,000 per month in rent to LEVINE.

LEVINE, 58, of New York, New York, and KATZ, 59, of Boca Raton, Florida, are scheduled to be arraigned in magistrate’s court on Monday, October 31.  The case was assigned to United States District Judge Jed S. Rakoff, and a conference was set before Judge Rakoff for Tuesday, November 1, 2016, at 11:00 a.m.

LEVINE, who was charged with one count each of obstructing the IRS, conspiracy, tax evasion, and wire fraud, and two counts of making false statements, faces the following penalties, if convicted:

Statutes Violated	Number of Counts	Description	Maximum Sentence
26 U.S.C. ' 7212(a)	1	Corruptly endeavoring to   obstruct and impede the    due administration of the  Internal Revenue Laws		Three    years in  prison
26 U.S.C. ' 7201	1-	Tax Evasion		Five  years in  prison
18 U.S.C. ' 1343	1	Wire Fraud		20 years  in prison
18 U.S.C. ' 371	1-	Conspiracy		Five  years in  prison
18 U.S.C. ' 1001	2-	False Statements		Five  years in  prison

KATZ is charged with one count each of obstructing the IRS (maximum penalty three years in prison) and conspiracy (five years in prison), and two counts of tax evasion (five years).

The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the Court.

Mr. Bharara praised the outstanding investigative work of the IRS. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Special Assistant United States Attorneys Stanley J. Okula and Assistant United States Attorney Daniel Noble are in charge of the prosecution.

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

CONVICTED KILLER PLEADS GUILTY TO MANSLAUGHTER FOR 1998 RAPE AND KILLING OF RUNAWAY BRONX TEEN

Defendant Will Be Sentenced to 20 Years Consecutive to His PA Prison Term

Bronx District Attorney Darcel D. Clark today announced that a 44-year-old convicted murderer has pleaded guilty to Manslaughter for raping and strangling a14- year-old girl in the Bronx in 1998, and will get 20 years in prison to run consecutive to his sentence in Pennsylvania.

District Attorney Darcel Clark said, “This defendant brutally killed a young girl and was finally brought to justice 13 years later, when DNA tied him to the crime. He is currently in prison for murdering his wife, and now this sentence ensures that he will remain there for many more years.”

District Attorney Clark said the defendant, James Martin, 44, pleaded guilty on October 27, 2016, to first-degree Manslaughter before Chief Administrative Judge Robert Torres. Martin is expected to receive 20 years in prison when he is sentenced on November 10, 2016. The sentence will run consecutively to 22 to 40 year sentence he is serving in a Pennsylvania prison for the 2005 murder of his wife. 

According to the investigation, on Feb. 23, 1998, the body of Marleny Cruz, 14, who was from the Dominican Republic and was living in the Bronx, was found on Valentine Avenue in the University Heights section of the Bronx. Her body was bruised and she had been sexually assaulted and strangled. 

In 2011, the Bronx Homicide Task Force connected DNA recovered from Cruz’s fingernails to Martin, who lived in the Bronx at the time, and he was indicted in 2012.

The case was prosecuted by Senior Homicide Counsel Nancy Borko of the Homicide Bureau, under the supervision of Christine Scaccia, Deputy Chief of the Homicide Bureau and Chief of the Gangs/Major Case Bureau.   

Bronx Chamber of Commerce Salutes Six Veteran Heroes at our Veterans Recognition Luncheon and Bronx H.I.R.E. Veterans Jobs & Resource Fair