Attorney General James Expands Lawsuit Against Cryptocurrency Company Digital Currency Group For Defrauding Investors

 

DCG and affiliate Genesis Defrauded Additional Investors Out of More Than $2 Billion

New York Attorney General Letitia James filed an amended complaint, expanding the Office of the Attorney General’s (OAG) lawsuit against Digital Currency Group, Inc. (DCG), DCG’s CEO, Barry Silbert, and Genesis Global Capital, LLC and its affiliates’ (Genesis) former CEO, Soichiro Moro, for defrauding additional individuals and institutions of an additional $2 billion. This amended complaint is the result of more investors coming forward following Attorney General James’ October 2023 suit against Gemini Trust Company (Gemini), Genesis and DCG for misleading representations to investors about an investment program called Gemini Earn and causing over $1 billion in losses. The OAG’s continued investigation revealed that these additional investors were similarly defrauded and provided with false assurances that their funds were safe when in fact they were not, leading to an additional $2 billion in assets that were lost. In total, OAG found that these companies defrauded more than 230,000 investors out of more than $3 billion.

“After months of false promises, we pulled the curtain back and revealed that DCG was lying to investors and defrauding them out of billions,” said Attorney General James. “The fraud and deceit were so expansive that many additional people have come forward to report similar harm. This illegal cryptocurrency scheme, and the horrific financial losses that real people have suffered, are yet another reminder of why stronger cryptocurrency regulations are needed to protect all investors.”

In October 2023, Attorney General James filed a sweeping lawsuit against cryptocurrency companies Gemini, Genesis, and DCG for defrauding investors out of more than $1 billion. This suit was the result of an OAG investigation that found that Gemini lied to investors about an investment program it ran with Genesis called Gemini Earn. Gemini repeatedly assured investors that investing with Genesis through their Gemini Earn program was a low-risk investment. However, the OAG investigation uncovered that Gemini’s internal analyses of Genesis showed that the company’s financials were risky. Additionally, OAG found that after losing more than $1.1 billion on loan defaults, Genesis, DCG, and their executives tried to conceal their losses by entering into a $1.1 billion promissory note, in which DCG agreed to pay Genesis $1.1 billion in a decade at only a one percent interest rate. The lawsuit states that DCG, through Genesis, used the promissory note as part of a scheme to defraud investors and the public about Genesis’ financial condition and its ability to operate its business.

Since that lawsuit was filed, additional investors have come forward to share their experiences and their losses due to the scam perpetrated by DCG through Genesis. While the initial suit focused largely on the losses of retail investors participating in the Gemini Earn investment program, as more complaints have been made, it became clear that the complicated nature of the fraud also swindled other investors who contributed their money directly to DCG’s affiliate Genesis. As a result of these complaints, OAG filed the amended complaint and is now seeking more than $3 billion in restitution for defrauded investors.  

Today’s amended lawsuit is the latest action taken by Attorney General James to rein in the cryptocurrency industry and protect investors. Attorney General James announced sweeping cryptocurrency legislation that will increase regulations of the cryptocurrency industry to protect New York investors. In October 2023, Attorney General James filed the initial complaint against Gemini, Genesis, and DCG for defrauding investors and perpetrating a scam. In June 2023, Attorney General James recovered more than $1.7 million from CoinEx for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange. In May 2023, Attorney General James secured $4.3 million from Coin Cafe for failing to register as a commodity broker-dealer and defrauding investors. In January 2023, Attorney General James and a multistate coalition recovered $24 million from the cryptocurrency platform Nexo for operating illegally. Attorney General James also sued the former CEO of Celsius for defrauding investors and concealing the company’s dire financial condition. In March 2022, Attorney General James issued a taxpayer notice to virtual currency investors and their tax advisors to accurately declare and pay taxes on their virtual investments.

In October 2021, Attorney General James directed unregistered crypto lending platforms to cease operations for not registering with the state. In September 2021, Attorney General James and the U.S. Securities and Exchange Commission recovered $479.9 million from GTV Media for failing to register cryptocurrency sales. Also in September 2021, Attorney General James secured a $3 million court judgment against Coinseed. In February 2021, Attorney General James required Bitfinex and Tether to end all trading activity in New York and required iFinex and Tether and their related companies to pay $18.5 million in penalties.

Attorney General James urges New Yorkers who have been affected by deceptive conduct in virtual asset markets to report these issues to OAG. Attorney General James also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to file an online whistleblower complaint with her office, which can be done anonymously.

International Cybercrime Malware Service Dismantled by Federal Authorities: Key Malware Sales and Support Actors in Malta and Nigeria Charged in Federal Indictments

 

RAT Malware Allowed Cybercriminals to Surreptitiously Connect to Victims’ Computers to Steal Data and Engage in Other Malicious Activities Without Victims’ Knowledge

The Justice Department announced today that, as part of an international law enforcement effort, federal authorities in Boston seized internet domains that were used to sell computer malware used by cybercriminals to secretly access and steal data from victims’ computers. Federal authorities in Atlanta and Boston also unsealed indictments charging individuals in Malta and Nigeria, respectively, for their alleged involvement in selling the malware and supporting cybercriminals seeking to use the malware for malicious purposes.

Federal authorities in Boston seized www.warzone.ws and three related domains, which together offered for sale the Warzone RAT malware — a sophisticated remote access trojan (RAT) capable of enabling cybercriminals to surreptitiously connect to victims’ computers for malicious purposes. According to court documents authorizing the seizures, the Warzone RAT provided cybercriminals the ability to browse victim file systems, take screenshots, record keystrokes, steal victim usernames and passwords, and watch victims through their web cameras, all without the victims’ knowledge or permission.

Investigations by the FBI Boston and Atlanta Field Offices also led to two indictments against individuals involved in selling and supporting the Warzone RAT and other malware.

Daniel Meli, 27, of Zabbar, Malta, was arrested on Feb. 7 at the request of the United States, following a coordinated operation by the Malta Police Force and the Office of the Attorney General of Malta, with the support of the FBI and Justice Department. Meli made his initial appearance before a Magistrate Judge in Valletta, Malta. Meli was indicted by a federal grand jury in the Northern District of Georgia on Dec. 12, 2023, for four offenses, including causing unauthorized damage to protected computers, illegally selling and advertising an electronic interception device, and participating in a conspiracy to commit several computer intrusion offenses. According to charging documents, since at least 2012, Meli offered malware products and services for sale to cybercriminals through online computer-hacking forums. Specifically, Meli allegedly assisted cybercriminals seeking to use RATs for malicious purposes and offered teaching tools for sale, including an eBook. Meli also allegedly sold both the Warzone RAT and, before that, malware known as the Pegasus RAT, which he sold through an online criminal organization called Skynet-Corporation. He also provided online customer support to purchasers of both RATs. The Northern District of Georgia is seeking Meli’s extradition to the United States.

Separately, Prince Onyeoziri Odinakachi, 31, of Nigeria, was indicted by a federal grand jury in the District of Massachusetts on Jan. 30 for conspiracy to commit multiple computer intrusion offenses, including obtaining authorized access to protected computers to obtain information and causing unauthorized damage to protected computers. According to charging documents, between June 2019 and no earlier than March 2023, Odinakachi provided online customer support to individuals who purchased and used the Warzone RAT malware. Law enforcement officers of the Port Harcourt Zonal Command of Nigeria’s Economic and Financial Crimes Commission arrested Odinakachi on Feb. 7. 

The disruption of the Warzone RAT infrastructure was the result of an international law enforcement effort led by FBI special agents in Boston and Atlanta and coordinated with international partners in large part through Europol. According to court documents, in addition to discovering instances of the Warzone RAT being used to attack victim computers in Massachusetts, the FBI covertly purchased and analyzed the Warzone RAT malware, confirming its multiple malicious functions. Separately, law enforcement partners in Canada, Croatia, Finland, Germany, the Netherlands, and Romania provided valuable assistance securing the servers hosting the Warzone RAT infrastructure.

“Today’s actions targeting the Warzone RAT infrastructure and personnel are another example of our tenacious and unwavering commitment to dismantling the malware tools used by cybercriminals,” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts.  “We will turn over every stone to prevent cybercriminals from attacking the integrity of our computer networks, and we will root out those who support such cybercriminals so they will be held accountable. Those who sell malware and support cybercriminals using it should know that they cannot hide behind their keyboards or international borders.”

“Daniel Meli will no longer escape accountability for his actions selling malware,” said U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia. “This alleged cybercriminal facilitated the takeover and infection of computers worldwide. Our office was proud to partner with our federal and international counterparts to find Meli and bring him to justice. We will continue to diligently investigate and prosecute cybercrime in the Northern District of Georgia, and in all parts of the globe where our district is impacted.”

“This action highlights the FBI’s commitment to disrupting cybercriminal actors and taking down their infrastructure,” said Assistant Director Brian Vorndran of the FBI’s Cyber Division. “The FBI is proud of the international coordination involved in this law enforcement effort, and we will continue to build global partnerships to go after cybercriminals who seek to harm the American people.”

The charges of conspiracy, obtaining authorized access to protected computers to obtain information, illegally selling an interception device, and illegally advertising an interception device each provide for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000, or twice the gross gain or loss, whichever is greater. The charge of causing unauthorized damage to protected computers provides for a sentence of up to 10 years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss, whichever is greater.

Assistant U.S. Attorneys James R. Drabick and Carol E. Head for the District of Massachusetts obtained the seizure warrants, and Drabick is prosecuting Odinakachi. Assistant U.S. Attorneys Bethany L. Rupert and Michael Herskowitz for the Northern District of Georgia are prosecuting Meli.

The Justice Department’s Office of International Affairs provided substantial assistance during the investigation. Federal authorities also wish to acknowledge the cooperation and assistance of the FBI Boston and Atlanta Field Offices; Malta Police Force; Office of the Attorney General of Malta; Malta Ministry for Justice; Australian Federal Police; Croatian Ministry of the Interior Criminal Police Directorate; Dutch National Police; Europol European Cybercrime Center; Finland’s National Bureau of Investigation; State Police Force of Saxony, Germany; Japan Ministry of Justice; Port Harcourt Zonal Command of Nigeria's Economic and Financial Crimes Commission (EFCC); Romanian National Police; and Royal Canadian Mounted Police for their valuable assistance. 

Anyone who is a victim of a Warzone RAT computer intrusion is urged to report it to the FBI at https://wzvictims.ic3.gov. 

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Warzone RAT splash page. 

Three Defendants Convicted At Trial In $7.9 Million COVID-19 Fraud Scheme

 

Jacob Carter, Quadri Salahuddin, and Anwar Salahuddin were convicted for submitting more than 1,000 fraudulent applications for U.S. Small Business Administration Economic Injury Disaster Loans

Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict against JACOB CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN for conspiracy to commit wire fraud, wire fraud, and aggravated identity theft in connection with a scheme to defraud the U.S. Small Business Administration (“SBA”) that resulted in a loss to the SBA of approximately $7.9 million.  The defendants were found guilty of all counts following a two-week trial before U.S. District Judge Nelson S. Román.  

U.S. Attorney Damian Williams said: “As the jury’s swift verdict shows, the proof at trial was overwhelming.  The defendants schemed to steal from a taxpayer-funded program that was intended to help small businesses that were in desperate need of assistance during the COVID-19 pandemic.  Let this be a lesson that my Office will continue to work to bring to justice against those who exploit and defraud government programs during a national emergency.  We thank the FBI for their partnership in investigating and prosecuting the alleged scheme.”    

According to the Indictment, statements made in public court proceedings and filings, and the evidence at trial:

The SBA is a federal agency of the Executive Branch that administers assistance to American small businesses.  This assistance includes making direct loans to applicants through the Economic Injury Disaster Loan (“EIDL”) Program.  In response to the COVID-19 pandemic, Congress expanded SBA’s EIDL Program to provide small businesses with low-interest loans of up to $2 million prior to in or about May 2020 and up to $150,000 beginning in or about May 2020 in order to provide vital economic support to help overcome the loss of revenue small businesses were experiencing due to COVID-19.  Applicants seeking a loan under the EIDL program were also permitted to request and receive an advance of approximately $1,000 per employee, for an amount up to $10,000, which the SBA generally provided while the loan application was pending.

From March through July 2020, CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN used the identities of more than 1,000 other individuals (the “Applicants”) to submit more than 1,000 online applications to the SBA, seeking over $10 million in funds through the SBA’s EIDL Program (the “EIDL Applications”).  In connection with the EIDL Applications, CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN falsely represented to the SBA that the Applicants were the owners of businesses with 10 or more employees.  However, that was a lie – the individuals did not own businesses or employ people.  Based on the fraudulent EIDL Applications, the SBA made advance payments of approximately $7.9 million to the Applicants, who then kicked back a portion of the advance payments to CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN.  After collecting hundreds of thousands of dollars in kickback payments, CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN took photographs of their stacks of cash, purchased expensive jewelry, and CARTER leased a Lamborghini.  

CARTER, 38, of Capitol Heights, Maryland, and QUADRI SALAHUDDIN, 28, and ANWAR SALAHUDDIN, 38, both of Mount Vernon, New York, were each convicted of one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory two-year consecutive sentence.   

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

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.

As New York City Faces Lowest Vacancy Rate in Six Decades, Governor Hochul Advances 18 Proposals to Build More Than 5,300 Units of Housing, Including Affordable Housing, in Gowanus

 

Projects Stalled by the Expiration of 421-A Set to Move Forward Following Governor’s Executive Action – Creating More Than 1,400 Affordable Units

Governor Also Announces Groundbreaking for 654-Unit Development at 320 and 340 Nevins Street – Renderings Available Here

Governor Launched Bold Executive Action To Address The Housing Crisis Last Year, Proposing Strong Legislative Solutions To Housing Crisis In This Year’s Executive Budget

Governor Kathy Hochul announced that 18 new housing developments will move forward under the Gowanus Neighborhood Mixed Income Housing Development Program, unlocking more than 5,300 units of housing, including more than 1,400 affordable units in the Gowanus section of Brooklyn. Governor Hochul launched the program last year to save thousands of units stalled by the expiration of 421-A as part of a package of Executive Actions to increase New York’s housing supply. The Governor also announced today the groundbreaking of 320 and 340 Nevins Street – a 654-unit project, including 154 affordable units, being developed by Charney Companies and Tavros Holdings and one of the first projects to move forward under the program.

“After years of stalled construction, we’re putting more than 5,300 new homes back on track and unlocking Gowanus’ housing potential,” Governor Hochul said. “New Yorkers are facing the lowest vacancy rates in six decades while costs continue to rise — they can’t afford to wait for solutions to the housing crisis. The only way to fix this crisis is to build our way out, and until we have a statewide solution, I will keep working to give Mayor Adams and leaders across our state the tools they need to let them build.”

Governor Hochul announced the Gowanus Neighborhood Mixed Income Housing Development Program last year to facilitate the development of housing, including affordable housing, in New York City. The program is aimed at targeting specific benefits and affordable housing obligations in line with the now-expired 421-a tax law for development proposals currently vested under 421-a and capitalize on a local 2021 rezoning covering 82 blocks to accommodate housing growth in Gowanus.

The program, which is being overseen by Empire State Development, is moving forward with 18 individual project sites, whose applications were received last fall. Each individual site’s participation in the program will be considered and voted on by the ESD Directors, followed by Public Authority Control Board review. A full list of projects is here.

320 and 340 Nevins Street is a combined 505,000 square foot mixed-use two tower development situated on 2.3 acres fronting the canal in Gowanus. The project includes ground floor retail space in addition to the more than 650 residential units. The site it is part of the Gowanus Public Access Area and within proximity of public transportation. The project was designed by Fogarty Finger Architects with design and landscape elements done by James Corner Field Operations. Many projects in the Gowanus area, including 320 and 340 Nevins Street, are being facilitated by the Department of Environmental Conservation’s successful Brownfield Cleanup Program, which incentivizes the revitalization of former brownfield sites to protect public health and the environment and support economic development, including construction of affordable housing and other productive reuse.

Governor Hochul’s Housing Agenda

These efforts build on Governor Hochul’s commitment to addressing New York’s housing crisis to make the state more affordable and more livable for all New Yorkers – including by making it easier to build housing in New York City. As part of her FY 2025 Executive Budget, the Governor proposed legislation to incentivize the construction of new housing, including affordable housing; encourage office conversion projects to include affordable housing; allow the City to exceed the floor area ratio cap where appropriate; and legalize existing basement and cellar apartments. The Governor also proposed a $500 million fund to create up to 15,000 units of housing on state-owned land, including SUNY properties and other sites.

Last year, Governor Hochul unveiled the Creedmoor Community Master Plan to redevelop 58 acres of underutilized land at the Creedmoor Psychiatric Center campus in Queens into a vibrant community with more than 2,800 new homes. The Governor also announced a proposal to transform the former Lincoln Correctional Facility in New York City into a mixed-use development with 105 units of affordable housing, as well as requests for proposals to redevelop the former Bayview Correctional Facility and Javits Center's Site K in Manhattan as potential housing.

Governor Hochul also signed legislation to build and preserve affordable housing in New York City by authorizing New York City to adopt a new affordable housing rehabilitation program to replace the former J-51 program; giving New York City more flexibility to provide loans and grants for affordable housing and other related investments; and increasing the New York City Housing Development Corporation's bonding capacity.

Van Cortlandt Park Alliance - Black History Month and beyond

 

Van Cortlandt Park Alliance was honored to have our Enslaved People’s Project Curriculum featured recently on ABC 7’s coverage for Black History Month. 

 

In 2020, the Enslaved People Project Curriculum was created in partnership with the 

Van Cortlandt House Museum and the Kingsbridge Historical Society with funding from Bronx Community Board 8. As a result, two curricula are available for free on our website– perfect for 4th grade and middle school... any month of the year!

 

In the spring of 2022, Van Cortlandt Park Alliance worked with a Bronx-based teaching artist, Ashley Hart Adams, to pilot a brand new curriculum in a local middle school.

The purpose of this multidisciplinary program was to educate middle school students about the history of enslaved people in New York, and what is now known as Van Cortlandt Park, by using theater arts, creative writing, and social-emotional learning practices.

 

Thanks to new funding from the Baldwin Foundation, VCPA will launch a new program called, “Unearthing the Past/Building the Future,” which will link the Enslaved People Project curriculum with local environmental justice issues, using Daylighting Tibbetts Brook as an object lesson. If you are a teacher interested in this program please contact us at info@vancortlandt.org.

Our Contact Information Van Cortlandt Park Alliance 80 Van Cortlandt Park South, Ste. E1 Bronx, NY 10463 718-601-1460 http://vancortlandt.org