Source: United States Attorneys General

Headline: Federal Judge Sentences Three Men Involved In International Child Pornography Ring

ASHEVILLE, N.C. – Three men involved in an international online child pornography ring responsible for producing and sharing thousands of images and videos of child pornography were sentenced today by U.S. District Judge Max O. Cogburn, Jr., announced R. Andrew Murray, U.S. Attorney for the Western District of North Carolina. 

Gregory L. Wiest, Acting Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas and Sheriff Van Duncan of the Buncombe County Sheriff’s Office join U.S. Attorney Murray in making today’s announcement.

Dane William Anderson, 32, of Candler, N.C., was sentenced to 20 years in prison; Samuel Heineman, IV, 54, of Marietta, Pennsylvania, previously residing in Berlin, Germany, was sentenced to 21 years in prison; and Mark Christopher Klein, 38, of Hugo, Minnesota, was sentenced to 16 years in prison. All three defendants were also ordered to serve a lifetime of supervised release and to register as sex offenders after they are released from prison.

“The three men sentenced today were part of a sinister network of online child predators, responsible for producing and amassing child pornography on a scale rarely seen. It took law enforcement nearly a year to shift through and analyze Anderson’s massive collection of disturbing images and videos,” said U.S. Attorney Murray.  “While this sentence will never repair the trauma suffered by the victims in this case, it does, hopefully, send a message of deterrence to other would-be offenders.”

“This was a heinous child predator conspiracy, crossing international and state borders,” said acting HSI Special Agent Wiest.  “Our deepest concern is for the victims of these horrible crimes and we hope today’s sentencing can help them continue on the path of recovery.”

According to court documents and other court records, from 2002 through 2015, the three men were members of a child pornography ring referred to as the “Rippernet,” that produced child pornography through “capping.” Capping is a sophisticated method of producing child pornography by tricking victims, in this case teenage boys, into performing sexually explicit acts in front of webcams, and capturing the video to create new child pornography.  Court records show that the defendants induced their young victims by creating false online personas of adolescent girls, specifically developed to be sexually explicit and enticing.  

Court records show that law enforcement identified Anderson as an individual responsible for producing images and videos of child pornography, which he traded with others via a peer-to-peer file trading software.  According to court records, a forensic analysis of devices seized from Anderson’s home revealed that the defendant possessed more than 17,000 videos and 10,000 images of files depicting the abuse of children.  Court records also show that Anderson was the “archivist” of the ring, responsible for collecting and organizing the child pornography in files, and distributing the images and videos to his capper associates.

Court records show that Anderson learned the capping method from Heineman, who was the most prolific producer of child pornography using the capping method.  According to court records, Heineman taught Anderson “the art of capping.”  In turn, Anderson taught the method to other group members, including Klein.  Court records indicate that the combined number of known production victims among the three defendants is over 2,290.

Anderson pleaded guilty to one count of production and one count of possession of child pornography.  Heineman and Klein each pleaded guilty to one count of conspiracy to sexually exploit a child.  All three defendants are currently in the custody of the United States Marshal pending their designation to a federal Bureau of Prisons facility.  All federal sentences are served without the possibility of parole. 

In making today’s announcement U.S. Attorney Murray thanks HSI for leading the investigation. U.S. Attorney Murray also thanks the Buncombe County Sheriff’s Office for their assistance in this case. The U.S. Attorney’s Office in Asheville prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice, aimed at combating the growing online sexual exploitation of children.  By combining resources, federal, state and local agencies are better able to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue those victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov

Source: United States Attorneys General

Headline: Springfield Sex Offender Pleads Guilty to Child Pornography

SPRINGFIELD, Mo. – Timothy A. Garrison, United States Attorney for the Western District of Missouri, announced that a registered sex offender in Springfield, Mo., pleaded guilty in federal court today to receiving and distributing thousands of images of child pornography over the Internet.

Anthony Richard Salois, 51, of Springfield, pleaded guilty before U.S. Magistrate Judge David P. Rush to the charge contained in a July 22, 2014, federal indictment. Salois, who has a prior state conviction for sexual abuse involving a minor, has remained in federal custody since his arrest in July 2014.

By pleading guilty today, Salois admitted that he received and distributed child pornography over the Internet between Sept. 16 and 20, 2013. Salois utilized a peer-to-peer file-sharing network to download child pornography.

Law enforcement officers executed a search warrant at Salois’s residence on Oct. 13, 2013, and seized two desktop computers. Investigators found 3,973 images of child pornography, 50 multimedia files of child pornography, 641 images of child erotica and 39 multimedia files of child erotica on those computers.

Under federal statutes, Salois is subject to a mandatory minimum sentence of 15 years in federal prison without parole, up to 40 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendants will be determined by the court based on the advisory sentencing guidelines and other statutory factors. Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Abram McGull, II. It was investigated by the FBI and the Southwest Missouri Cyber Crime Task Force.

Project Safe Childhood

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”

Source: United States Attorneys General

Headline: Couple Pleads Guilty to $2.7 Million Bank Fraud Scheme

BOSTON – A Rockland couple pleaded guilty today in federal court in Boston to engaging in a scheme to embezzle more than $2.7 million from Bank of America using fraudulent donations to non-profit organizations. 

Palestine Ace, a/k/a Pam Ace, 45, a former Senior Vice President of Bank of America’s Global Wealth & Investment Management Division pleaded guilty to one count of conspiracy to commit bank fraud, five counts of wire fraud, and 12 counts of bank fraud. Her husband, Jonathan R. Ace, 46, pleaded guilty to one count of conspiracy to commit bank fraud, three counts of wire fraud, and one count of engaging in an unlawful monetary transaction. U.S. District Court Judge Allison D. Burroughs scheduled sentencing for Palestine Ace for May 16, 2018, and May 17, 2018, for Jonathan Ace. 

From approximately October 2010 to April 2015, the couple engaged in an embezzlement and kickback scheme to defraud Bank of America of approximately $2.7 million using fraudulent donations to non-profit organizations. As part of the scheme, Palestine Ace used her position as a Senior Vice President at Bank of America to misappropriate funds from a marketing budget and transfer the money to non-profit organizations. Specifically, Palestine Ace authorized 75 transactions, each under $50,000, to non-profit organizations in Boston and Atlanta. Then, the couple, either directly or indirectly, informed the non-profit organizations that a substantial portion of the donated funds had to be returned in order to ensure that Bank of America would continue to fund the organization. The non-profit organizations either wrote a check to Jonathan Ace or a co-conspirator, or they returned funds to a Bank of America account, to which the couple had access. On various occasions, Jonathan Ace pressured the recipients of the donated funds to return a higher percentage of the funds to him, by using intimidation and threats of public humiliation.

Palestine and Jonathan Ace used a portion of the funds they embezzled from Bank of America to support their lifestyle and pay for personal expenses, including lavish birthday parties and the purchase of a $17,000 Kawasaki motorcycle. 

The charges of wire fraud and bank fraud each provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000. The charge of unlawful monetary transaction provides for a sentence of no greater than 10 years in prison, two years of supervised release and a fine of $250,000.  Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Boston Police Commissioner William B. Evans; Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Raymond Moss, Acting Inspector in Charge of the U.S. Postal Inspection Service, made the announcement today.  Assistant U.S. Attorney Neil J. Gallagher of Lelling’s Economic Crimes Unit is prosecuting the case.

Source: United States Attorneys General

Headline: Wareham Man Sentenced for Cocaine Trafficking

BOSTON – A Wareham man was sentenced today in federal court in Boston in connection with trafficking cocaine.

Aaron Mott-Frye, 27, was sentenced by U.S. District Court Chief Judge Patti B. Saris to 18 months in prison and three years of supervised release. In May 2017, Mott-Frye pleaded guilty to conspiracy to distribute cocaine and possession of cocaine with the intent to distribute.

Mott-Frye was a cocaine supplier to Christopher Wilkins and Christian Chapman, members of the Nauti-Block gang that operated on Cape Cod. On June 14-15, 2016, Mott-Frye distributed cocaine to a cooperating witness.

Christian Chapman and Christopher Wilkins pleaded guilty to heroin trafficking charges, among other crimes, and were sentenced to eight years and nine years in prison, respectively. Denzel Chisholm, the alleged leader of the Nauti-Block gang, was convicted by a federal jury and sentenced in September 2017 to 28.5 years in prison.     

United States Attorney Andrew E. Lelling; Mickey D. Leadingham, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; Michael J. Ferguson, Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division; Cape and Islands District Attorney Michael O’Keefe; and Barnstable Police Chief Paul MacDonald, made the announcement today. Assistant U.S. Attorneys Eric S. Rosen and Miranda Hooker of Lelling’s Criminal Division prosecuted the case. 

Source: United States Attorneys General

Headline: Orleans Woman Pleads Guilty to Stealing Deceased Spouse’s Social Security Benefits

BOSTON – An Orleans woman pleaded guilty today in federal court in Boston to stealing her deceased husband’s Social Security benefits.   

Susan Condon, 65, pleaded guilty to one count of theft of public funds and one count of making false statements. U.S. District Court Judge Douglas P. Woodlock scheduled sentencing for May 7, 2018.

Condon served as the representative payee for her husband in his receipt of Social Security benefits. Her husband passed away in April 2004, but she continued to receive his Social Security benefits each month. In January 2015, Condon falsely reported to the Social Security Administration (SSA) that she used all of the funds she received as her husband’s representative payee for her husband’s benefit. She did not inform the SSA that her husband had died more than 10 years earlier. From the time of her husband’s death in April 2004 through February 2017, Condon received approximately $186,804 in Social Security benefits.

The charge of theft of public funds provides for a sentence of no greater than 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. The charge of making false statements provides for a sentence of no greater than 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. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling and Scott Antolik, Special Agent in Charge of the Social Security Administration, Office of Inspector General, Office of Investigations, Boston Field Division, made the announcement today. Special Assistant U.S. Attorney Karen Burzycki of Lelling’s Major Crimes Unit is prosecuting the case.

Source: United States Attorneys General

Headline: Berkeley County man admits to cocaine charge

MARTISNBURG, WEST VIRGINIA – A Martinsburg, West Virginia man has admitted to distributing cocaine, United States Attorney Bill Powell announced.

Michael Jacque Severe, age 33, pled guilty to one count of “Conspiracy to Distribute Cocaine Base.” Severe conspired with others to distribute crack cocaine in Berkeley County from April 2015 to February 2017. 

Severe faces up to 20 years incarceration and a fine of up to $1,000,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant. 

Assistant U.S. Attorney Lara K. Omps-Botteicher is prosecuting the case on behalf of the government. The Eastern Panhandle Drug & Violent Crimes Task Force, a HIDTA-funded initiative, investigated. 
 
U.S. Magistrate Judge Robert W. Trumble presided.

Source: United States Attorneys General

Headline: Manhattan United States Attorney Announces Superseding Indictment Charging Members Of Newburgh Street Gang With Additional Racketeering And Firearms Offenses

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, David M. Hoovler, the Orange County District Attorney, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Ashan M. Benedict, the New York Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), and Aaron Weaver, the Acting Chief of the City of Newburgh Police Department, today announced additional charges against 10 alleged members of a street gang known as “Southside,” in Newburgh, New York.  All 10 defendants are charged with racketeering conspiracy.  Three of the defendants are charged with conspiracy to distribute heroin and crack cocaine, and two of the defendants are charged with conspiracy to distribute heroin.  In connection with the racketeering conspiracy, SKYLAR DAVIS and DAVONTE HAWKINS are charged with the August 2015 murder of Sammy Stubbs, who was shot in Newburgh.  WILLIAM FENNELL and TROY YOUNG are charged with the February 2017 murder of Gevontay Owens-Grant, also shot in Newburgh.  DAVIS, YOUNG, MICHAEL SIMMONS, DEMETRICE MCLEAN, and CALVIN LEMBHARD are charged with the use and discharge of a firearm in connection with and in furtherance of the racketeering conspiracy.  HAWKINS, FENNELL, ARDAE HINES, and DONTE NUGENT are charged with the use and discharge of a firearm in connection with and in furtherance of the racketeering conspiracy and narcotics conspiracy.  DAVANTE NUGENT is charged with being a felon in possession of ammunition.

Nine of the defendants were already in custody in connection with charges contained in a previous indictment related to this prosecution, which led to the arrests of 21 individuals in June 2017.  YOUNG was arrested and presented in White Plains federal court before United States Magistrate Judge Judith C. McCarthy yesterday.  All of the defendants were arraigned this morning in White Plains federal court before United States District Judge Cathy Seibel.

As alleged in the Superseding Indictment filed today in White Plains federal court[1]:

From at least 2014 through June 2017, the Southside Gang was a criminal enterprise centered in and around the intersection of South Street and Chambers Street in an area of Newburgh known as the “Southside.”  In order to gain funds for the gang, protect the gang’s territory, and promote the gang’s standing, members of Southside engaged in, among other things, narcotics trafficking, robbery, and acts involving murder.  To that end, Southside members sold heroin, crack cocaine, and marijuana in the gang’s territory, promoted their gang affiliation on social media sites such as Facebook, possessed firearms, and engaged in shootings as part of their gang membership. 

As alleged in the Superseding Indictment, the violence perpetrated by the Southside gang turned deadly on two occasions in 2015 and 2017.  On or about August 13, 20015, SKYLAR DAVIS and DAVONTE HAWKINS, aided and abetted by others, murdered Sammy Stubbs during a botched robbery of a card game in Newburgh.  On or about February 12, 2017, TROY YOUNG and WILLIAM FENNELL, aided and abetted by others, murdered a rival from the other side of Newburgh, Gevontay Owens-Grant, after an altercation broke out at a Valentine’s Day-themed party in Newburgh.  YOUNG and others were also injured during the shooting.

Several members of the Southside gang also participated in conspiracies to distribute narcotics in and around Newburgh.  In particular, FENNELL, DONTE NUGENT, and DAVANTE NUGENT participated in a conspiracy with other individuals to distribute more than one kilogram of heroin and/or more than 280 grams of crack cocaine from at least in or about 2014 up to and including in or about June 2017.  HAWKINS and HINES participated in the same narcotics conspiracy to distribute more than one kilogram of heroin.  HINES also participated in separate a conspiracy to distribute more than 280 grams of crack cocaine from at least in or about 2014 up to and including in or about June 2017.           

Between in or about 2015 and in or about May 2017, DAVIS, HAWKINS, FENNELL, YOUNG, HINES, MCLEAN, SIMMONS, LEMBHARD, and DONTE NUGENT also possessed, used, brandished, and discharged firearms in furtherance of the Southside racketeering conspiracy in which they all participated, the narcotics conspiracy in which HAWKINS, FENNELL, HINES, and DONTE NUGENT participated, and the separate narcotics conspiracy in which HINES participated.  On or about June 14, 2017, after being convicted of a crime punishable by more than one year, DAVANTE NUGENT was found in possession of ammunition.

*                      *                     *

Charts containing the names of the defendants who were charged today, and the charges and maximum penalties they face, are attached.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the respective judges.

Mr. Berman praised the outstanding investigative work of the FBI, ATF, and the City of Newburgh Police Department.  Mr. Berman thanked the Orange County District Attorney’s Office for its invaluable ongoing assistance in the case.  Mr. Berman also thanked the Town of Newburgh Police Department, the New York State Police, the Orange County Sheriff’s Department, the Town of New Windsor Police Department, and the New York Department of Corrections and Community Supervision for their assistance in the case. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Maurene Comey, Jacqueline Kelly, and Allison Nichols 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.

United States v. Skylar Davis, et al., S1 17 Cr. 364

DEFENDANT	AGE	CHARGES	MAXIMUM PENALTIES
SKYLAR DAVIS	20	Racketeering Conspiracy; Assault with a Deadly Weapon and Attempted Murder in Aid of Racketeering; Murder in Aid of Racketeering; Use of a Firearm Resulting in Death; Discharge of a Firearm in Furtherance of Racketeering	Mandatory life in prison or the death penalty
DAVONTE HAWKINS	29	Racketeering Conspiracy; Murder in Aid of Racketeering; Narcotics Conspiracy; Use of a Firearm Resulting in Death; Discharge of a Firearm in Furtherance of Racketeering and Narcotics Conspiracy	Mandatory life in prison or the death penalty
WILLIAM FENNELL	26	Racketeering Conspiracy; Narcotics Conspiracy; Use of a Firearm Resulting in Death; Discharge of a Firearm in Furtherance of Racketeering and Narcotics Conspiracy	Life in prison or the death penalty
TROY YOUNG	23	Racketeering Conspiracy; Use of a Firearm Resulting in Death; Discharge of a Firearm in Furtherance of Racketeering	Life in prison or the death penalty
ARDAE HINES	29	Racketeering Conspiracy; Narcotics Conspiracy (2); Discharge of a Firearm in Furtherance of Racketeering and Narcotics Conspiracy	Life in prison; mandatory minimum 20 years in prison (10 years to run consecutive to any other sentence)
MICHAEL SIMMONS	26	Racketeering Conspiracy; Discharge of a Firearm in Furtherance of Racketeering	Life in prison; mandatory minimum 10 years in prison to run consecutive to any other sentence
DEMETRICE MCLEAN	23	Racketeering Conspiracy; Discharge of a Firearm in Furtherance of Racketeering	Life in prison; mandatory minimum 10 years in prison to run consecutive to any other sentence
CALVIN LEMBHARD	25	Racketeering Conspiracy; Discharge of a Firearm in Furtherance of Racketeering	Life in prison; mandatory minimum 10 years in prison to run consecutive to any other sentence
DONTE NUGENT	24	Racketeering Conspiracy; Narcotics Conspiracy; Discharge of a Firearm in Furtherance of Racketeering and Narcotics Conspiracy	Life in prison; mandatory minimum 20 years in prison (10 years to run consecutive to any other sentence)
DAVANTE NUGENT	25	Racketeering Conspiracy; Narcotics Conspiracy; Felon in Possession of Ammunition	Life in prison; mandatory minimum 10 years in prison

Source: United States Attorneys General

Headline: Two Defendants Charged With 1997 Double Murder For Hire In The Bronx

Geoffrey S. Berman, United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a federal indictment charging ROBERT ACOSTA and JOSE DIAZ, a/k/a “Cano,” with the December 22, 1997, murders of Alex Ventura, 25, and Aneudis Almonte, 20.

U.S. Attorney Geoffrey S. Berman said:  “Today’s indictment alleges that more than two decades ago, Robert Acosta orchestrated, and Jose Diaz carried out, the murders of Alex Ventura and Aneudis Almonte.  Now, thanks to the outstanding work of the NYPD and FBI, the long arm of the law has reached back over two decades to charge Acosta and Diaz with those terrible crimes.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “This case proves why there is no time limit on holding someone responsible for murder; taking a human life is the worst crime a person can commit. Our agents and law enforcement partners work daily, pursuing suspects in crimes that seem unsolvable.  The time and dedication make it worth the effort.”

NYPD Commissioner James P. O’Neill said:  “After more than twenty years on-the-run, NYPD detectives and FBI agents have arrested two defendants for a double homicide in the Bronx. The focus and precision this case embodies is what has enabled this city to become the safest city in America. We will continue rooting out crime and violence wherever we find it, until every neighborhood and block of this city is safe.”

According to the Indictment unsealed in Manhattan federal court:[1] 

In late 1997, ACOSTA agreed with DIAZ and others to pay DIAZ and others to kill persons who had stolen drug money from ACOSTA.  As a result of this agreement, Alex Ventura and Aneudis Almonte were murdered by DIAZ and others on December 22, 1997, in the vicinity of 2769 University Avenue in the Bronx, New York. 

*                      *                     *

ACOSTA, 46, of Yonkers, New York, and DIAZ, 52, of the Bronx, New York, were arrested this morning by the NYPD and the FBI.  The defendants will be presented later today before United States Magistrate Judge Kevin Nathaniel Fox.  The case has been assigned to United States District Judge P. Kevin Castel.

The Indictment charges each of the defendants in six counts: murder while engaged in a conspiracy to distribute five and more kilograms of cocaine and aiding and abetting the same (Counts One and Two); murder-for-hire conspiracy (Count Three); murder-for-hire and aiding and abetting the same (Counts Four and Five); and use of a firearm to commit murder in furtherance of a drug trafficking crime and aiding and abetting the same (Count Six).  ACOSTA and DIAZ each face a maximum sentence of life in prison or death.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Laurie A. Korenbaum, Michael Kim Krouse, and Nicholas Chiuchiolo 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.

Source: United States Attorneys General

Headline: Leader of Drug Trafficking Organization Sentenced in Brooklyn Federal Court to 20 Years’ Imprisonment

Earlier today, in federal court in Brooklyn, Luis Bello was sentenced by United States District Judge Nicholas G. Garaufis to 20 years’ imprisonment to be followed by five years of supervised release after his conviction for conspiring to distribute more than five kilograms of cocaine, conspiring to launder money and trafficking in firearms.  The defendant ran a cocaine distribution operation in the Bronx from 2011 until his arrest in September 2013.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Angel M. Melendez, Special Agent-in-Charge, United States Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) New York, announced the sentence.

“Luis Bello oversaw a drug trafficking organization in the Bronx that brought large quantities of cocaine from Puerto Rico to the streets of New York City,” stated United States Attorney Donoghue.  “Today he was held accountable, and his drug organization has been dismantled.  We will continue to work with our law enforcement partners to stem the flow of drugs into our neighborhoods and prosecute traffickers like the defendant.”  Mr. Donoghue also expressed his appreciation to the U.S. Drug Enforcement Administration, New York Field Office; Organized Crime Drug Enforcement Task Force, New York/New Jersey;  U.S. Postal Service, Office of Inspector General; U.S. Marshals Service, Investigative Operations Division; Port Authority of New York & New Jersey Police Department; New York City Police Department and the Queens County District Attorney’s Office for their assistance during the investigation.

“Today’s 20 year sentencing of Bello effectively rids our community of the convicted leader of a dangerous drug trafficking and money laundering organization with ties to the Caribbean, that flooded the streets of New York with large quantities of cocaine,”

stated HSI Special Agent-in-Charge Melendez. “Bello will now have a lot of time to sit in his cell and think of how his actions have negatively affected the lives of so many individuals.”

According to court filings, the defendant was the head of a Bronx-based drug trafficking organization that brought more than 1,000 kilograms of cocaine from Puerto Rico to New York through drug couriers and through the United States Postal Service, distributed the drugs throughout the New York area, and laundered the proceeds from the sale of those drugs. 

Members of Bello’s organization obtained drugs from the Dominican Republic to distribute in the New York area.  Co-conspirators based in Puerto Rico shipped the drugs to Bello in New York through the U.S. mails, using the assistance of a mail carrier stationed at the Highbridge Postal Station in the Bronx, as well as through Post Office boxes rented by other members of the drug trafficking organization in New York and New Jersey.  The postal carrier’s mail route included areas where Bello’s organization was based.  The mail carrier regularly intercepted drug-laden packages that were addressed to other addresses on his route, but which he segregated based on tracking numbers and addresses, and delivered to Bello or other members of his organization.

After selling the drugs, Bello and other members his organization laundered the proceeds from the sale of these drugs through the banking system by exchanging small dollar denominations for large dollar denominations, typically $100 bills, that could be more easily transported by members of the drug organization when they traveled to Puerto Rico and the Dominican Republic to purchase more drugs.  At least $620,000 in cash exchanges were made in accounts controlled by Bello’s organization.  In one month alone in 2011, cash exchanges totaling approximately $58,000 were made in an account held in Bello’s name.

Members of the drug organization then bulk-cash smuggled the drug proceeds from New York to Puerto Rico and the Dominican Republic, hiding money in the pockets of jeans packed in luggage and in soap bottles.

Nine other defendants have pleaded guilty to conspiring to distribute cocaine or launder money as part of Bello’s drug trafficking organization.  On February 13, 2017, Joel Aguilar was sentenced to 72 months’ imprisonment for his involvement in distributing at least 150 kilograms of cocaine.  On November 2, 2017, U.S. postal carrier Jermaine Sandifer was sentenced to 60 months’ imprisonment for his involvement in distributing at least 150 kilograms of cocaine.  On August 8, 2017, Bello’s cousin Carlos Bello Tirado was sentenced to 48 months’ imprisonment.  On November 20, 2017, Ernest Pena was sentenced to time served for his involvement in distributing 85 kilograms of cocaine.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorneys Douglas M. Pravda and Julia Nestor are in charge of the prosecution.

Defendant Sentenced Today:
LUIS BELLO
Age: 34
Residence: Bronx, New York

Defendants Previously Sentenced:

JOEL AGUILAR
Age: 39
Residence: New York, New York

CARLOS BELLO TIRADO
Age: 39
Residence: Leesburg, Florida

ERNEST PENA
Age: 34
Residence: Bronx, New York

JERMAINE SANDIFER
Age: 41
Residence: Perth Amboy, New Jersey

Defendants Awaiting Sentencing:

EMIL SANCHEZ
Age: 27
Residence: Bronx, New York

ANA ABREU
Age: 34
Residence: Bronx, New York

MARY ESTRELLA
Age: 27
Residence: Bronx, New York

KELVIN CISNERO SANTOS
Age: 42
Residence: Bronx, New York

SAUL OVALLES CORNIEL
Age: 36
Residence: Newark, New Jersey

E.D.N.Y. Docket Nos. 13-CR-559 (NGG) & 16-CR-309 (NGG)

Source: United States Attorneys General

Headline: Pleasantville Guidance Counselor Admits Health Care Fraud Conspiracy Targeting State Health Benefits Programs

CAMDEN, N.J. – A guidance counselor with the Pleasantville public school district today admitted defrauding New Jersey state health benefits programs and other insurers out of over $3 million by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito and New Jersey Attorney General Gurbir S. Grewal announced.

Michael Pilate, 39, of Williamstown, New Jersey, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to an information charging him with conspiracy to commit health care fraud.

“Pilate was part of a network of recruiters, doctors, and state and local government employees who abused their access to state benefits plans to rack up millions in reimbursements for medically unnecessary prescriptions, all while profiting off the backs of New Jersey tax payers,” U.S. Attorney Carpenito said. “His guilty plea, which marks the 13th conviction in the ongoing investigation, is a testament to the combined success of our federal law enforcement partners and the New Jersey Attorney General’s office to find those responsible for this brazen scheme and bring them to justice.”

“The health care fraud committed by this individual and his co-defendants costs us all, and cannot be tolerated,” said New Jersey Attorney General Grewal. “We appreciate the vigorous pursuit of this conspiracy by our partners at the U.S. Attorney’s Office, and we’re glad to collaborate in the effort. As Attorney General, I am committed to investigating health care fraud on behalf of New Jersey taxpayers, and to holding those engaged in such conduct accountable.”

“Today’s plea is a direct result of the commitment by federal, state and local law enforcement to aggressively pursue and charge those who willingly defraud our citizens,” stated Special Agent in Charge Timothy Gallagher of the Newark FBI Field Office. “Health Care fraud costs our country billions each year, which is not just absorbed, it is passed down to the consumer. We will remain vigilant to assure that unscrupulous individuals are brought to justice.”

“In today’s plea, the thirteenth in this case, Michael Pilate admitted to conspiring to cause the submission of fraudulent insurance claims for medically unnecessary compounded prescription medications. We will continue to work with our law enforcement partners to aggressively investigate illegal prescription drug schemes, particularly when they impact patients of programs administered by the Department,” said Peter Nozka, Acting Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General New York Region.

According to documents filed in this case and statements made in court:

From January 2015 through April 2016, Pilate and others recruited individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the informations as the “Compounding Pharmacy.”

Certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply. The conspirators knew that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular compound medications.

An entity referred to in the information as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.

Pilate agreed to personally receive compounded prescription creams that he did not need without being examined by a doctor and helped recruit other public employees and individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain medically unnecessary medications from the Compounding Pharmacy. Pilate secured insurance information from the individuals and passed it along to another conspirator, who had a doctor sign the prescriptions without examining the individuals. The prescriptions were faxed to the Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.

The pharmacy then paid one of Pilate’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Pilate and other members of the conspiracy. Pilate paid individuals with the insurance coverage $500 to reward them for obtaining the prescriptions.

According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy over $50 million for compounded medications mailed to individuals in New Jersey.

As part of the plea agreement, Pilate must forfeit $392,684.20 in criminal proceeds he received for his role in the scheme and pay restitution of at least $3,493,170.18.

Pilate faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for May 11, 2018.

Twelve other conspirators – Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, and Timothy Frazier – have pleaded guilty to their roles in the scheme and await sentencing.

U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark, IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and the U.S. Department of Labor, Office of Inspector General, under the direction of Acting Special Agent in Charge Peter Nozka in New York, with the investigation leading to the guilty plea. He also thanked the Pensions and Financial Transactions Section of the Division of Law, within the Attorney General’s Office, under the direction of Attorney General Grewal and Division Chief Eileen Schlindwein Den Bleyker, for its assistance in the investigation.

The government is represented by Assistant U.S. Attorneys R. David Walk, Jr. and Jacqueline M. Carle of the U.S. Attorney’s Office in Camden.

Defense counsel: Teri Lodge Esq., Marlton, New Jersey