Feds Use Spyware & Hacking Tools Including Remote Activation Recordings Via Cell Phone Microphones to Target Suspects

Law-enforcement officials in the U.S. are expanding the use of tools routinely used by computer hackers to gather information on suspects, bringing the criminal wiretap into the cyber age.

Federal agencies have largely kept quiet about these capabilities, but court documents and interviews with people involved in the programs provide new details about the hacking tools, including spyware delivered to computers and phones through email or Web links—techniques more commonly associated with attacks by criminals.

People familiar with the Federal Bureau of Investigation's programs say that the use of hacking tools under court orders has grown as agents seek to keep up with suspects who use new communications technology, including some types of online chat and encryption tools. The use of such communications, which can't be wiretapped like a phone, is called "going dark" among law enforcement.

A spokeswoman for the FBI declined to comment.

The FBI develops some hacking tools internally and purchases others from the private sector. With such technology, the bureau can remotely activate the microphones in phones running Google Inc.'s GOOG +0.26% Android software to record conversations, one former U.S. official said. It can do the same to microphones in laptops without the user knowing, the person said. Google declined to comment.

The bureau typically uses hacking in cases involving organized crime, child pornography or counterterrorism, a former U.S. official said. It is loath to use these tools when investigating hackers, out of fear the suspect will discover and publicize the technique, the person said.

The FBI has been developing hacking tools for more than a decade, but rarely discloses its techniques publicly in legal cases.

Earlier this year, a federal warrant application in a Texas identity-theft case sought to use software to extract files and covertly take photos using a computer's camera, according to court documents. The judge denied the application, saying, among other things, that he wanted more information on how data collected from the computer would be minimized to remove information on innocent people.

Since at least 2005, the FBI has been using "web bugs" that can gather a computer's Internet address, lists of programs running and other data, according to documents disclosed in 2011. The FBI used that type of tool in 2007 to trace a person who was eventually convicted of emailing bomb threats in Washington state, for example.

The FBI "hires people who have hacking skill, and they purchase tools that are capable of doing these things," said a former official in the agency's cyber division. The tools are used when other surveillance methods won't work: "When you do, it's because you don't have any other choice," the official said.

Surveillance technologies are coming under increased scrutiny after disclosures about data collection by the National Security Agency. The NSA gathers bulk data on millions of Americans, but former U.S. officials say law-enforcement hacking is targeted at very specific cases and used sparingly.

Still, civil-liberties advocates say there should be clear legal guidelines to ensure hacking tools aren't misused. "People should understand that local cops are going to be hacking into surveillance targets," said Christopher Soghoian, principal technologist at the American Civil Liberties Union. "We should have a debate about that."

Mr. Soghoian, who is presenting on the topic Friday at the DefCon hacking conference in Las Vegas, said information about the practice is slipping out as a small industry has emerged to sell hacking tools to law enforcement. He has found posts and resumes on social networks in which people discuss their work at private companies helping the FBI with surveillance.

A search warrant would be required to get content such as files from a suspect's computer, said Mark Eckenwiler, a senior counsel at Perkins Coie LLP who until December was the Justice Department's primary authority on federal criminal surveillance law. Continuing surveillance would necessitate an even stricter standard, the kind used to grant wiretaps. But if the software gathers only communications-routing "metadata"—like Internet protocol addresses or the "to" and "from" lines in emails—a court order under a lower standard might suffice if the program is delivered remotely, such as through an Internet link, he said. That is because nobody is physically touching the suspect's property, he added.

An official at the Justice Department said it determines what legal authority to seek for such surveillance "on a case-by-case basis." But the official added that the department's approach is exemplified by the 2007 Washington bomb-threat case, in which the government sought a warrant even though no agents touched the computer and the spyware gathered only metadata.

In 2001, the FBI faced criticism from civil-liberties advocates for declining to disclose how it installed a program to record the keystrokes on the computer of mobster Nicodemo Scarfo Jr. to capture a password he was using to encrypt a document. He was eventually convicted.

A group at the FBI called the Remote Operations Unit takes a leading role in the bureau's hacking efforts, according to former officials.

Officers often install surveillance tools on computers remotely, using a document or link that loads software when the person clicks or views it. In some cases, the government has secretly gained physical access to suspects' machines and installed malicious software using a thumb drive, a former U.S. official said.

The bureau has controls to ensure only "relevant data" are scooped up, the person said. A screening team goes through all of the data pulled from the hack to determine what is relevant, then hands off that material to the case team and stops working on the case.

The FBI employs a number of hackers who write custom surveillance software, and also buys software from the private sector, former U.S. officials said.

Italian company HackingTeam SRL opened a sales office in Annapolis, Md., more than a year ago to target North and South America. HackingTeam provides software that can extract information from phones and computers and send it back to a monitoring system. The company declined to disclose its clients or say whether any are in the U.S.

U.K.-based Gamma International offers computer exploits, which take advantage of holes in software to deliver spying tools, according to people familiar with the company. Gamma has marketed "0 day exploits"—meaning that the software maker doesn't yet know about the security hole—for software including Microsoft Corp.'s Internet Explorer, those people said. Gamma, which has marketed its products in the U.S., didn't respond to requests for comment, nor did Microsoft.

Thanks to JENNIFER VALENTINO-DEVRIES and DANNY YADRON.

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John Whitehead Discusses "A Government of Wolves: The Emerging American Police State" on #CrimeBeatRadio

On August 8th, Mr. John Whitehead discusses his book "A Government of Wolves: The Emerging American Police State" on Crime Beat Radio.

Crime Beat is a weekly hour-long radio program that airs every Thursday at 8 p.m. EST. Crime Beat presents fascinating topics that bring listeners closer to the dynamic underbelly of the world of crime. Guests have included ex-mobsters, undercover law enforcement agents, sports officials, informants, prisoners, drug dealers and investigative journalists, who have provided insights and fresh information about the world’s most fascinating subject: crime.

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Three Somali Pirates Sentenced to Life in Prison for Murders of Four Americans Aboard SV Quest

Somali nationals Ahmed Muse Salad, a/k/a “Afmagalo,” 25; Abukar Osman Beyle, 20; and Shani Nurani Shiekh Abrar, 29, who were previously found guilty by jury of all 26 counts charged, to include piracy, conspiracy to commit kidnapping, hostage taking resulting in death, kidnapping resulting in death, and multiple firearms offenses, were sentenced by a federal jury. The three defendants were sentenced to life in prison for their roles in the February 22, 2011 murders of four Americans aboard the sailing vessel Quest. The victims included Scott Underwood Adam, Jean Savage Adam, Phyllis Patricia Macay, and Robert Campbell Riggle.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; George Venizelos, Assistant Director in Charge (ADIC) of the FBI’s New York Field Office; Royce E. Curtin, Special Agent in Charge (SAC) of the FBI’s Norfolk Field Office; and Michael Monroe, Special Agent in Charge of the Naval Criminal Investigative Service (NCIS), made the announcement after the sentence was accepted by Chief United States District Court Judge Rebecca Beach Smith.

“Four Americans were taken hostage, terrorized, and then murdered. Life in prison is reserved for those who commit heinous crimes—and the jury today decided the execution of four innocent Americans on the high seas meets that high bar,” said United States Attorney Neil H. MacBride. “Scott Adam, Jean Adam, Phyllis Macay, and Robert Riggle lost their lives, and their families lost their loved ones. Nothing can make this right; nothing can make their families whole again—but we hope today’s verdict and sentences will bring some closure to their nightmare that began two years ago on the Indian Ocean.”

“This case exemplifies the ongoing, outstanding cooperation between federal law enforcement and federal prosecutors,” said Norfolk SAC Royce Curtin. “Today’s sentencings should send a clear message to anyone committing acts of criminal violence against American citizens at sea that they will be prosecuted to the fullest extent of the law.”

Assistant Director in Charge Venizelos stated, “Pirates armed with AK-47s and rocket-propelled grenades took four innocent Americans hostage aboard their own vessel. When negotiations reached an impasse, one pirate launched a grenade at a nearby U.S. Navy ship while others murdered four Americans aboard the Quest. Today’s life sentences provide a vigorous deterrent for armed bandits roaming our seas. The FBI’s commitment to stopping this scourge of violence is unwavering.”

The defendants were previously indicted on July 8, 2011, by a federal grand jury on 26 counts, which included conspiracy to commit hostage taking, conspiracy to commit kidnapping, kidnapping resulting in death, conspiracy to commit violence against maritime navigation resulting in death, piracy, and firearms offenses. The defendants were convicted on all 26 counts on July 8, 2013. According to court records and evidence at trial, Salad, Beyle, Abrar, and others—armed with firearms and a rocket-propelled grenade (RPG)—boarded the Quest while the four Americans slept on February 18, 2011. They gained control of the vessel and took the four American citizens as hostages. Their plan was to take the hostages to Somalia, where they and their additional co-conspirators in Somalia could commence ransom negotiations. While they sailed toward Somalia, the three defendants and their co-conspirators were taking turns standing armed guard over the hostages; at the same time, United States Navy ships headed towards the Quest to aid the hostages and prevent the Quest from proceeding to Somalia.

Beginning on February 19, 2011, communications had been established, and the United States Navy and the FBI began negotiating with the pirates to secure the safe release of the hostages. On February 21, 2011, two co-conspirators representing the pirates onboard the Q, were transferred to the USS Sterett to negotiate. The negotiations reached an impasse when the co-conspirators were told that they were not going to be allowed to take the hostages ashore in Somalia. The decision was made to detain the co-conspirators after they refused to release the hostages and threatened to kill them if they were not allowed to return to Somalia.

Testimony revealed that Abrar fired a shot over the head of Scott Adam and instructed Adam to tell the U.S. Navy that if the military came any closer, the conspirators would kill the hostages.

On February 22, 2011, without provocation and before the hostages could be rescued by members of the military, a co-conspirator fired an RPG in the general direction of the USS Sterett. Witnesses testified that sustained firing came from the Quest and that glass could be seen breaking on the starboard side of the Quest. Witnesses also testified that Salad, Beyle, and Abrar were the shooters and responsible for the deaths of Scott Adam, Jean Adam, Phyllis Macay, and Robert Riggle. After the gun fire died down, the navy dispatched SEALS to the Quest. The pirates aboard the Quest began surrendering, and some were seen throwing AK-47 rifles into the water.

This case was investigated by the FBI and the Naval Criminal Investigative Service. Assistant United States Attorneys Joseph DePadilla, Brian J. Samuels, and Benjamin L. Hatch prosecuted the case on behalf of the United States.

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Tomorrow, @PeterLance to Discuss #DealwiththeDevil at @TheMobMuseum, Details Greg Scarpa Sr.'s Relationship with the #FBI

On Saturday, Aug. 3, award-winning author Peter Lance will deliver a presentation and sign his book, “Deal with the Devil” at The Mob Museum, the National Museum of Organized Crime and Law Enforcement. His presentation, to be aired as part of C-SPAN-Book-TV regular programming, will take place at 1 p.m. with the book signing scheduled to follow at 2:30 p.m.

Since 2001, Lance has been writing investigative books regarding the FBI’s counter-terrorism and organized crime track records. He is a five-time winner of the News & Documentary Emmy award and recipient of the Robert F. Kennedy Journalism award. In addition to “Deal with the Devil,” Lance has written three books for HarperCollins regarding international terrorism and the Green Berets.

Lance’s book details how the government’s relationships with organized crime went all the way to the Kennedy presidency. In more than four decades as a violent gangster, Gregory Scarpa, Sr., served only 30 days in jail during the years when he was "closed" as an FBI source. For more than 30 of those years, a series of FBI agents intervened to keep the so-called Mad Hatter on the street. But that was not the most disturbing aspect of Scarpa's relationship with the government. In light of the 1,150-plus pages of the recently accessed FBI files on Scarpa, Sr., Lance argues the FBI's very playbook against La Cosa Nostra was defined and shaped by what the elder Scarpa fed them-particularly in the years from 1961 to 1972, when J. Edgar Hoover himself was on the receiving end of 34's Airtels. Drawing on secret FBI Airtels never before seen outside the Bureau, it is revealed how Gregory Scarpa, Sr., then a young capo for the Profaci crime family, led J. Edgar Hoover himself into the inner sanctum of the underworld. Once that alliance began, there seemed to be no turning back for the Bureau.

"They enlisted a hyper-violent killer to stop much less capable murderers," says Ellen Resnick, defense attorney, whose work helped expose this unholy alliance. "It was the ultimate ends-justify-the-means relationship."

The event is free with Museum admission but reservations are encouraged and may be made by calling (702) 229-2734 or via www.TheMobMuseum.org.

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Northwestern University Does Not Admit Liability, Yet will Pay Nearly $3 Million to the United States to Settle Cancer Research Grant Fraud Claims

Northwestern University will pay the United States $2.93 million to settle claims of cancer research grant fraud by a former researcher and physician at the university’s Robert H. Lurie Comprehensive Center for Cancer in Chicago. Northwestern agreed to the settlement in a federal False Claims Act lawsuit that was unsealed after the government investigated the claims made by a former employee and whistleblower who will receive a portion of the settlement.

Northwestern allegedly allowed one of its researchers, Dr. Charles L. Bennett, to submit false claims under research grants from the National Institutes of Health. The settlement covers improper claims that Dr. Bennett submitted for reimbursement from the federal grants for professional and consulting services, subcontracts, food, hotels, travel, and other expenses that benefited Dr. Bennett, his friends, and family from January 1, 2003, through August 31, 2010.

The allegations were made in a civil lawsuit filed under seal in 2009 by Melissa Theis, a former employee of the Lurie Cancer Center, who will receive $498,100 in settlement proceeds. Her allegations were investigated by the U.S. Department of Health and Human Services Officeof Inspector General, the Federal Bureau of Investigation, the National Institutes of Health, and the U.S. Attorney’s Office, resulting in the settlement announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois. At the same time, the whistleblower lawsuit that initiated the case was unsealed. United States, et al., ex rel. Melissa Theis v. Northwestern University, Dr. Charles L. Bennett, et al., No. 09 C 1943 (N.D. Ill.).

Northwestern, which fully cooperated during the investigation, did not admit liability as part of the settlement.

“Allowing researchers to use federal grant money to pay for personal travel, hotels, and meals and to hire unqualified friends and relatives as ‘consultants’ violates the public trust and federal law,” Mr. Shapiro said. “This settlement, combined with the willingness of insiders to report fraud, should help deter such misconduct, but when it doesn’t, federal grant recipients who allow the system to be manipulated should know that we will aggressively pursue all available legal remedies,” he added.

“The mismanagement or improper expenditure of grant funds is unacceptable and will not be tolerated,” said Lamont Pugh, III, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General-Chicago Region. “The OIG will continue to diligently investigate allegations of this nature to ensure that taxpayer dollars are being properly utilized.”

Cory B. Nelson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation, said, “The FBI takes allegations of fraud seriously, especially those allegations from insiders who are often in the best position to detect wrongdoing long before it would otherwise come to the attention of law enforcement.”

Northwestern agreed to pay the settlement within 14 business days. The agreement covers allegations that the university submitted false claims to NIH for costs that Dr. Bennett incurred on his grant-funded research projects involving adverse drug-events, multiple myeloma drugs, a blood disorder known as thrombotic thrombocytopenic purpura, and quality of care for cancer patients. Dr. Bennett allegedly billed those federal grants for family trips, meals and hotels for himself and friends, and “consulting fees” for unqualified friends and family members, including his brother and cousin. At Dr. Bennett’s request, Northwestern also allegedly improperly subcontracted with various universities for services that were paid for by the NIH grants.

The United States was represented by Assistant U.S. Attorney Kurt N. Lindland.

Under the federal False Claims Act, defendants may be liable for triple the amount of actual damages and civil penalties between $5,500 and $11,000 for each violation. Individual whistleblowers may be eligible to receive between 15 and 30 percent of the amount of any recovery.

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Great Reviews for "The Sound of Things Falling" by Juan Gabriel Vasquez #MedellinCartel

From a global literary star comes a prize-winning tour de force – an intimate portrayal of the drug wars in Colombia.

Juan Gabriel Vásquez has been hailed not only as one of South America’s greatest literary stars, but also as one of the most acclaimed writers of his generation. In this gorgeously wrought, award-winning novel, Vásquez confronts the history of his home country, Colombia.

In the city of Bogotá, Antonio Yammara reads an article about a hippo that had escaped from a derelict zoo once owned by legendary Colombian drug kingpin Pablo Escobar. The article transports Antonio back to when the war between Escobar’s Medellín cartel and government forces played out violently in Colombia’s streets and in the skies above. Back then, Antonio witnessed a friend’s murder, an event that haunts him still. As he investigates, he discovers the many ways in which his own life and his friend’s family have been shaped by his country’s recent violent past. His journey leads him all the way back to the 1960s and a world on the brink of change: a time before narco-trafficking trapped a whole generation in a living nightmare.

Vásquez is “one of the most original new voices of Latin American literature,” according to Nobel Prize winner Mario Vargas Llosa, and The Sound of Things Falling is his most personal, most contemporary novel to date, a masterpiece that takes his writing—and will take his literary star—even higher

* One of NPR’s 6 Best Books of the Summer
* Esquire recommends The Sound of Things Falling “if you read only one book this month”
* Starred early reviews from Publishers Weekly, Booklist, Library Journal, and Kirkus
* Lauded by Jonathan Franzen, E. L. Doctorow and many others

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George Willis @NYPost_Willis Discusses "The Bite Fight: Tyson, Holyfield and the Night that Changed Boxing Forever" on #CrimeBeatRadio

On August 1st, George Willis, author of The Bite Fight: Tyson, Holyfield and the Night that Changed Boxing Forever to appear on Crime Beat Radio.

Crime Beat is a weekly hour-long radio program that airs every Thursday at 8 p.m. EST. Crime Beat presents fascinating topics that bring listeners closer to the dynamic underbelly of the world of crime. Guests have included ex-mobsters, undercover law enforcement agents, sports officials, informants, prisoners, drug dealers and investigative journalists, who have provided insights and fresh information about the world’s most fascinating subject: crime.

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An Offer That Can't Be Refused: Experience @TheMobMuseum and @NeonMuseum for Just One Great Price

For the first time, The Mob Museum, the National Museum of Organized Crime and Law Enforcement, and The Neon Museum are partnering to offer guests one ticket to two great museums for $30, an average savings of 30 percent. Guests now have the chance to book one daytime tour for the Neon Museum and then visit the Mob Museum with this special same-day offer. Both attractions are located in downtown Las Vegas, approximately 10 minutes apart from one another.

The Mob Museum presents an exciting and authentic view of organized crime’s impact on Las Vegas history and its unique imprint on the world while the Neon Museum is the world’s largest collection of neon signage displayed in a two-acre Neon Boneyard featuring 150 rescued architectural landmarks from iconic Las Vegas properties ranging from the 1930s to present day.

“We have worked hard to make this collaboration a reality,” says Jonathan Ullman, executive director and chief executive officer, The Mob Museum. “In doing so, our guests will encounter two unique and entertaining perspectives on the incredible events and iconic signage that made this city famous.”

With engaging exhibits, high-tech theater presentations and more than 600 artifacts, The Mob Museum houses the largest collection of Mob and related law enforcement memorabilia under one roof. During the guided Neon Museum tour, guests will learn about the unique stories regarding the personalities who created the signs, their inspirations, where and when the signs were made and the role they played in Las Vegas’ colorful history.

“We know our Museums offer distinct yet complementary versions of Las Vegas history, so it’s a thrill to offer guests one ticket that enables them to experience both sides in one day,” concludes Danielle Kelly, executive director, The Neon Museum.

Currently, The Neon Museum offers day-time guided tours seven days a week at 9 a.m., 9:30 a.m. and 10 a.m. The Mob Museum is also open seven days per week, 10 a.m. to 7 p.m. Sunday through Thursday and 10 a.m. to 8 p.m. Friday and Saturday.

To purchase tickets, go to www.TheMobMuseum.org or call (702) 229-2734.

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Nancy and Lisa Smith of the Big Blend Tour @BigBlendMag to Appear on #CrimeBeatRadio

On July 25th, Nancy and Lisa Smith of the Big Blend Tour appear on Crime Beat Radio.

Crime Beat is a weekly hour-long radio program that airs every Thursday at 8 p.m. EST. Crime Beat presents fascinating topics that bring listeners closer to the dynamic underbelly of the world of crime. Guests have included ex-mobsters, undercover law enforcement agents, sports officials, informants, prisoners, drug dealers and investigative journalists, who have provided insights and fresh information about the world’s most fascinating subject: crime.

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Stephen "Stippo" Rakes, Possible Witness at Whitey Bulger Mob Murder Trial, Found Dead of Disputed Suicide

Stephen "Stippo" Rakes, a possible witness in the murder trial of alleged crime boss James "Whitey" Bulger, has been found dead, authorities said.

The body of Rakes, 59, had "no obvious signs of trauma" and an autopsy is being performed to determine the cause of death, Middlesex District Attorney Marian Ryan and Lincoln, Mass., Police Chief Kevin Mooney announced today. The corpse was found on Mill Street in Lincoln yesterday at 1:30 p.m., police said.

Rakes had been on the witness list and had been eager to testify that Bulger threatened his family at gunpoint and forced him to turn his liquor store into a front for the Winter Hill Gang. But earlier this week prosecutors informed Rakes he would not be called to testify, a decision that left Rakes "despondent," a source close to his family told ABC News.

The judge overseeing the Bulger case hunkered down with lawyers in a confidential conference at the South Boston courthouse today where the trial is being held. Bulger, alleged to be a notorious and murderous crime boss and federal informant, is standing trial after being found on the lam in California two years ago.

Federal prosecutors said Rakes was supposed to testify that Bulger and associate Stephen Flemmi threatened his daughter at gunpoint, and took over his South Boston liquor store for Bulger's headquarters. Bulger sidekick Kevin Weeks testified last week Rakes' contention that Bulger's gang put a gun to his daughter's head was bogus.

Rakes comes from a storied South Boston family. His brother Joseph Rakes was photographed in Stanley Forman's Pulitzer Prize winning photograph charging at an African-American man on Boston's City Hall with the sharp end of the American flag – which became the symbol of the racial unrest during the city's anti-busing crisis.

News of his death investigation came on the same day that Stephen "The Rifleman" Flemmi was slated to take the stand against Bulger. The two men ran the Winter Hill Gang for decades while also working as informants for the FBI, according to prosecutors and courtroom testimony.

Police told the Rakes family the death appeared to be a suicide. But a source close to the Rakes family told ABC News that "he had no phone, no wallet, and police are still looking for his car." The body of the man found in Lincoln was positively identified as Rakes this morning after a fingerprint match, sources said.

Rakes' longtime friend Steve Davis, whose sister Debbie was allegedly murdered by Bulger, had met him for breakfast daily before court. Davis said he last saw Rakes Tuesday in court but then couldn't reach him all night Tuesday and yesterday he did not meet him in the courthouse cafeteria for breakfast.

"Stippo would not kill himself. Absolutely not,'' Davis told ABC News this morning. "He was looking forward to taking the stand. He told me over and over he had a big bombshell to drop. He had everything to live for and was looking forward to his day in court."

Davis - who lost his sister, brother and father to homicide, and whose daughter was killed in a drunk driver accident - was devastated by the news.

"It doesn't make sense,'' Davis said.

Thanks to GMA.

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In the Godfather's Garden: The long Life and Times of Richie 'The Boot" Boiardo on #CrimeBeatRadio

On July 18th, Richard Linnett discusses this book, In the Godfather's Garden: The long Life and Times of Richie 'The Boot" Boiardo, on Crime Beat Radio.

Crime Beat is a weekly hour-long radio program that airs every Thursday at 8 p.m. EST. Crime Beat presents fascinating topics that bring listeners closer to the dynamic underbelly of the world of crime. Guests have included ex-mobsters, undercover law enforcement agents, sports officials, informants, prisoners, drug dealers and investigative journalists, who have provided insights and fresh information about the world’s most fascinating subject: crime.

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Modesto Cruz Sentenced to Prison Drug & Firearm Charges, Plot to Kill a Police Officer Revealed During Investigation

A Lynn, MA man who discussed murdering a Lynn Police officer was sentenced to 188 months in prison.

U.S. District Judge Denise J. Casper sentenced Modesto Cruz, 37, to 188 months in prison, followed by four years of supervised release. In March, Cruz pleaded guilty to conspiracy to distribute more than 100 grams of heroin, distribution of heroin, and being a felon in possession of a firearm.

In 2012, while Cruz was on pretrial release from a 2010 Lynn gun arrest, a cooperating witness working with the FBI’s North Shore Gang Task Force made four controlled buys of over 100 grams of heroin from Cruz. During the course of those recorded buys, Cruz and the cooperating witness talked about Cruz’s plan to kill one of the Lynn Police officers that had arrested him on the gun charge. An undercover law enforcement officer, posing as a hitman, was ultimately introduced to Cruz by the cooperating witness. Cruz and the undercover talked about the price and logistics of the hit on the police officer. Cruz was arrested the next day.

United States Attorney Carmen M. Ortiz; Jeffrey S. Sallet, Acting Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Essex County District Attorney Jonathan Blodgett; Colonel Timothy Alben, Superintendent of the Massachusetts State Police; Lynn Police Chief Kevin Coppinger; and Essex County Sheriff Frank G. Cousins, Jr. made the announcement today.

The case was investigated by the FBI’s North Shore Gang Task Force, which consists of the FBI; the ATF; the Massachusetts State Police; the Lynn, Chelsea and Revere Police Departments; and the Essex County Sheriff’s Department. It was prosecuted by Assistant U.S. Attorneys in Ortiz’s Organized Crime and Gang Strike Force Unit.

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Book Signing and Presentation by Authors of “The Boston Mob Guide: Hit Men, Hoodlums & Hideouts”

On Fri., Aug. 16, and Sat., Aug. 17, Beverly Ford and Stephanie Schorow, veteran journalists and co-authors of “The Boston Mob Guide: Hit Men, Hoodlums and Hideouts” will sign copies of their book and present at The Mob Museum, the National Museum of Organized Crime and Law Enforcement. The book signing will take place at the Museum from 12 to 4 p.m. on Fri., Aug. 16 and their presentation will take place on Sat., Aug. 17, from 1 to 2 p.m.

They will discuss the stories behind their books: “The Boston Mob Guide: Hit Men, Hoodlums & Hideouts,” released by The History Press, Inc., is a primer about the wiles of Whitey Bulger, the murderous rages of Joe “The Animal” Barboza and the double dealings of Stephen “The Rifleman” Flemmi. Ford and Schorow profile Boston’s gangsters in crisp clear prose, with helpful cross-references. The Boston Mob Guide travels back to Prohibition with the story of bootlegger Charles “King” Solomon and the murderous standoff between the Irish Gustin Gang and the emerging North End Mafia. The guide unravels the complicated hits of the Winter Hill Gang and the Irish mob wars of the ‘60s and ‘70s.

Beverly Ford is the Boston-based journalist and author who has spent more than 20 years as a reporter and freelance writer for the Boston Herald, the New York Daily News, the London Times, the London Mirror, Access Magazine, Bloomberg News and other publications. She is currently following Bulger’s trial for the New York Daily News.

Stephanie Schorow is the author of “The Crime of the Century: How the Brink’s Robbers Stole Millions” and “The Hearts of Boston; East of Boston: Notes from the Harbor Islands” (The History Press, 2008); “Boston on Fire: A History of Fires and Firefighting in Boston” and “The Cocoanut Grove Fire.” She was the editor of “Boston’s Fire Trail: A Walk Through the City’s Fire and Firefighting History” (The History Press, 2007).

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"Vinny Gorgeous: The Ugly Rise and Fall of a New York Mobster" on Crime Beat Radio

On July 11th, journalist Robert Destafano discusses his new book, Vinny Gorgeous: The Ugly Rise and Fall of a New York Mobster. Also Margaret McClain, Special Correspondent, reports on the Bulger Trial.

Crime Beat is a weekly hour-long radio program that airs every Thursday at 8 p.m. EST. Crime Beat presents fascinating topics that bring listeners closer to the dynamic underbelly of the world of crime. Guests have included ex-mobsters, undercover law enforcement agents, sports officials, informants, prisoners, drug dealers and investigative journalists, who have provided insights and fresh information about the world’s most fascinating subject: crime.

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The Money Noose: The Collapse Of MF Global Was No Accident

Jon Corzine and other leaders at MF Global walked into a disastrous situation with their eyes wide open. Now, respected Wall Street veteran Scott Skyrm offers a detailed account of what really happened, and why. The Money Noose: Jon Corzine and the Collapse of MF Global (Bricktower Press) is like a car wreck: it’s hard to look at, and at the same time, hard to look away.

“MF Global had the wrong business model and the wrong people, at precisely the wrong time….
We did not deal with our central problem of unprofitable core business operations and out-of-control overheads….” A senior member of the MF Fixed Income management team is just one of many sources insider Skyrm has uncovered to explain the self-inflicted collapse of MF Global.

The demise of MF Global is a chaotic story, one in which individual actions taken in and of themselves are relatively minor. But the sum of those individual actions equal the same end result. Skyrm goes further, exploring the question of how investors can protect themselves from this outcome in the future. The best answer, he says, is education. Concise and informed, The Money Noose is a must-read for anyone who takes investing seriously.

Scott E.D. Skyrm is a leading figure in the repo and securities finance markets today, and regularly quoted in The Wall Street Journal, The Financial Times, Bloomberg News Service, Reuters, Market News, and Dow Jones. He is highly regarded as a former salesman, trader, trading desk manager, and global business head in fixed-income, securities finance, and securities clearing and settlement.

He recently left Newedge, where he was their Global Head of Repo, Money Markets, and Fixed Income Clearing. He is now writing commentaries on the repo market, the short-end of the Treasury market, Federal Reserve policy and general Wall Street topics. He has worked on Wall Street for over 22 years and has taken billion dollar risks on the trading floor, managed a multi-billion dollar balance sheet, and consistently ran one of the most profitable trading groups at every firm where he worked. Prior to Newedge, he managed the repo desk at ING Barings, worked summers at Shearson Lehman/American Express and started his full-time career at The Bank of Tokyo.

For more, please visit the website: www.scottskyrm.com.

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Abdul Walji and Reniero Francisco, CEO and President of Investment Fund, Plead Guilty in Federal Court to Orchestrating Nearly $10 Million Fraud Scheme

Abdul Walji and Reniero Francisco, the chief executive officer and president, respectively, of Arista LLC (Arista), a California investment fund, pleaded guilty in New York federal court to defrauding and misappropriating nearly $10 million from more than 35 investors by misrepresenting the nature and performance of the fund and issuing fraudulent account statements to investors to cover up massive losses, announced Preet Bharara, the U.S. Attorney for the Southern District of New York. Walji also pleaded guilty to perpetrating a multi-million-dollar fraudulent scheme with pension plan funds that he managed through three California-based trusts: Allied Benefits Inc., Allied Benefits Trust, and Stone Lamm Trust (collectively, the Trusts). Both defendants were charged in December 2012 and pleaded guilty today before U.S. District Judge Denise Cote.

“Abdul Walji and Reniero Francisco told one lie after another in order to squeeze millions of dollars out of their investors, even as they misappropriated nearly $10 million, including at least $2.7 million solely for their own personal benefit,” said U.S. Attorney Bharara. “Walji even went a step further and orchestrated a second scheme that ultimately cost his victims another approximately $9.5 million. With today’s guilty pleas, they will begin to be held responsible for their actions and repay those wronged by their unlawful conduct.”

According to the three-count superseding information to which Walji pleaded guilty, the indictment to which Francisco pleaded guilty, the defendants’ plea agreements, and other documents in the public record:

The Arista Fraudulent Scheme

Arista began operations as an investment firm in February 2010, with its principal place of business in Newport Coast, California. In April 2011, Arista became a registered commodity pool operator with the U.S. Commodity Futures Trading Commission and a National Futures Association member.

In early 2010, Walji and Francisco began to solicit individuals to invest in Arista. From 2010 through 2011, the defendants carried out their fraudulent scheme through three methods. First, Walji and Francisco misrepresented to several Arista investors the nature of the company’s investments and the returns that investors would receive from investing in Arista. For example, Walji and Francisco falsely told investors that their money would be invested in safe, risk-free securities, when in fact, much of the money was invested in options and futures. Second, Walji and Francisco sent fraudulent account performance statements to Arista investors that misrepresented the value of their investments. In an effort to secure additional contributions, the defendants also concealed Arista’s trading losses and told investors that they were profiting from their investments when they were actually losing money. Finally, Walji and Francisco misappropriated at least $2.7 million from Arista’s investors through fees to which they were not entitled and which Walji and Francisco diverted for their own personal benefit. Based on their false representations, Walji and Francisco collected nearly $10 million from over 35 investors, and they ultimately misappropriated a large portion of the money.

From early 2008 through June 2013, Walji also perpetrated a separate fraudulent scheme using pension plan funds that he administered. Similar to the scheme set forth above, Walji executed his fraudulent scheme through three principal methods. First, Walji made oral misrepresentations to existing and potential clients of the Trusts concerning: (i) the nature of the Trusts’ pension plan investments; (ii) the investment value and past performance of the pension plans; and (iii) the source of funds distributed to plan participants who had reached retirement and/or who had requested distributions. Second, Walji distributed fraudulent statements to clients concerning the value of their accounts and the prior performance of their pension plans in order to forestall redemption requests, induce new clients to contribute to the plans, and induce existing clients to make additional contributions. As selected clients reached retirement age or requested disbursements, Walji sent those clients money that he represented to be proceeds of their individual pensions, when in fact, he knew that the purported disbursements were often funds contributed by other clients. Third, Walji misappropriated approximately $300,000 of client funds for his personal use. In total, this scheme caused losses to approximately 35 additional victims in an aggregate amount of approximately $9.5 million.

Walji, 60, of San Juan Capistrano, California, pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud, one count of commodities fraud, and one count of securities fraud. The securities fraud charge carries a maximum sentence of 20 years in prison; the commodities fraud charge carries a maximum sentencing of 10 years in prison; and the conspiracy charge carries a maximum sentence of five years in prison. Francisco, 57, of Newport Coast, California, pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud and one count of securities fraud.

In connection with their guilty pleas, Walji consented to forfeit $13.6 million and Francisco consented to forfeit $4.1 million. The defendants also agreed to forfeit the proceeds of several bank and trading accounts.

U.S. Attorney Bharara praised the investigative work of the FBI and also thanked the U.S. Commodities Futures Trading Commission for its assistance.

This case is being handled by the U.S. Attorney’s Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys David I. Miller and Christopher D. Frey are in charge of the prosecution. Assistant U.S. Attorney Paul Monteleoni is in charge of the asset forfeiture related to the prosecution.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which U.S. Attorney Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

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Ingrid Lederhaas-Okun, Former Vice President of High-End Jewelry Company, Arrested and Charged with Stealing More Than $1 Million in Jewelry

Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI), announced the arrest of Ingrid Lederhaas-Okun, a former vice president of Product Development at a high-end jewelry company, for stealing more than $1.3 million worth of jewelry from her former employer. Lederhaas-Okun was arrested this morning at her residence in Darien, Connecticut, and will be presented in Manhattan federal court later today before U.S. Magistrate Judge James C. Francis.

Manhattan U.S. Attorney Preet Bharara said, “As alleged, Ingrid Lederhaas-Okun went from a vice president at a high-end jewelry company to jewel thief. She abused her access to valuable jewelry in order to steal and then resell over one million dollars’ worth of items that she falsely represented as her own, as the complaint describes. Her arrest shows that no matter how privileged their position in a company, employees who steal will face the full consequences of the law.”

FBI Assistant Director in Charge George Venizelos said, “As alleged, Ingrid Lederhaas-Okun took advantage of the access her employment afforded her to expensive jewelry. She allegedly stole numerous items, sold them for over a million dollars, then engaged in a series of lies in an attempt to cover up the theft. A privileged position in a prestigious company does not insulate a thief from arrest and prosecution.”

According to the allegations in the complaint unsealed in Manhattan federal court:

From at least January 2011 until February 2013, Lederhaas-Okun worked as a vice president of Product Development at the midtown Manhattan headquarters of one of the world’s premier high-end jewelers (the “jewelry company”). Her duties and responsibilities included ensuring that product designs could be manufactured and, to that end, she had authority to check out jewelry belonging to the jewelry company for work-related reasons, such as to provide the jewelry to potential manufacturers to determine the cost of production.

Between November 2012 and February 2013, Lederhaas-Okun abused her position and authority at the jewelry company to check out more than 165 pieces of jewelry with a retail value of over $1.2 million, including numerous diamond bracelets, platinum or gold diamond drop and hoop earrings, platinum diamond rings, and platinum and diamond pendants. She then sold some, if not all, of this jewelry for $1.3 million to another company, a leading international buyer and reseller of jewelry with an office in midtown Manhattan (the “jewelry reseller”). The jewelry reseller paid for the merchandise that Lederhaas-Okun had stolen either by paying her or her husband in transactions arranged either by Lederhaas-Okun or a friend working on her behalf.

In addition to this jewelry, in November 2012, following an announcement by the jewelry company that it was going to undertake a full physical inventory review, Lederhaas-Okun also reported that approximately $1.5 million worth of jewelry that she had checked out would have to be written off. However, none of that jewelry was ever returned to the jewelry company, contrary to the usual practice of accounting for inventory, such as damaged jewelry, that would have to be written off because it had been rendered unusable in some way.

To conceal her theft, Lederhaas-Okun made repeated false statements to the jewelry company. For example, after her termination in February 2013, she told the jewelry company that she had only recently checked out the missing jewelry in anticipation of creating a PowerPoint presentation for her supervisor and that a draft of the presentation could be found on her office computer. However, the missing pieces of jewelry had been checked out months earlier, her supervisor was unaware of any such presentation being worked on by Lederhaas-Okun, and there was no draft presentation on her computer. In addition, Lederhaas-Okun claimed the jewelry in question could be found in a white envelope in her office, but a search of her office shortly after her departure did not yield any white envelope.

Lederhaas-Okun, 46, of Darien, Connecticut, is charged with one count of wire fraud, which carries a maximum penalty of 20 years in prison; and one count of interstate transportation of stolen property, which carries a maximum penalty of 10 years in prison.

Mr. Bharara praised the investigative work of the FBI. Mr. Bharara also noted the investigation is ongoing.

The prosecution of this case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney Rosemary Nidiry is in charge of the prosecution.

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

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Jeffrey Liskov Charged in Fraud Scheme That Caused More Than $3 Million in Losses

A Plymouth man was charged yesterday in connection with an investment fraud that caused retired clients more than $3 million in losses.

Jeffrey A. Liskov, 42, was charged in an information with investment adviser fraud.

It is alleged that from November 2008 through August 2010, Liskov defrauded retired advisory clients. In 2008, despite sustaining large personal losses in risky, highly volatile foreign currency exchange trading, Liskov is alleged to have begun advising retired clients with conservative investment goals to allow him to engage in such trading with a portion of their retirement money. Liskov received significant performance fees for conducting this volatile trading on behalf of clients based on short-term gains, without regard to the long-term performance of his trading in the clients’ accounts.

In late 2009, after sustaining large trading losses for long-time clients, Liskov started liquidating securities in the brokerage accounts of these clients and investing the proceeds in foreign currency exchange trading without the clients’ knowledge or authorization. In order to fund these investments behind his clients’ backs, Liskov used white-out correction fluid and other methods to create fraudulent documents that allowed him to open new foreign currency exchange trading accounts and/or to transfer funds from client brokerage accounts to foreign currency exchange trading accounts. This allowed Liskov to secretly engage in additional foreign currency exchange trading on behalf of long-time clients for whom he had already lost significant amounts of money—additional trading from which, in some instances, Liskov was able to pocket large performance fees. The trading Liskov engaged in with the funds from this fraud caused over $3 million in losses to the long-time clients but garnered Liskov over $200,000 in performance fees.

The statutory maximum offense for investment adviser fraud is five years in prison, followed by three years of supervised release, a $250,000 fine, and restitution.

United States Attorney Carmen M. Ortiz and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. U.S. Attorney Ortiz expressed appreciation for the significant assistance her office received from the U.S. Securities and Exchange Commission and also acknowledged the cooperation of the United States Commodity Futures Trading Commission. The case is being prosecuted by Assistant U.S. Attorney Ryan M. DiSantis of Ortiz’s Economic Crimes Unit.

The details contained in the information are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

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Muhammad (M.J.) Shaheed Sentenced to 21 Months in Prison for Participation in Securities Kickback Scheme

A Cleveland man was sentenced in federal court yesterday for using kickbacks in order to trigger investments in a thinly-traded stock.

Muhammad (M.J.) Shaheed, 45, was sentenced by U.S. District Judge Douglas P. Woodlock to 21 months in prison, to be followed by two years of supervised release and forfeiture of $30,000. In February 2013, Shaheed pleaded guilty to mail and wire fraud arising out his participation in an undercover FBI operation. Shaheed admitted to paying secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in a publicly traded company, Augrid Global Holdings Corporation, of which Shaheed was chief executive officer. The kickbacks were concealed through the use of sham consulting agreements and other fraudulent documents. What Shaheed did not know was that the purported investment fund representative was actually an undercover agent.

The conviction and sentence followed a year-long investigation focusing on preventing fraud in the micro-cap stock markets. Microcap companies are small, publicly traded companies whose stock often trades at pennies a share. Fraud in the microcap markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse. This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the SEC.

Shaheed is one of 15 defendants charged criminally with having participated in the undercover operation. Nine of those charged have now pleaded guilty, and two were convicted after a jury trial.

The Securities and Exchange Commission, which conducted a parallel civil investigation alongside the FBI undercover operation, cooperated with criminal authorities throughout the course of the investigation and prosecution.

U.S. Attorney Carmen M. Ortiz and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Sarah E. Walters and Vassili Thomadakis of Ortiz’s Economic Crimes Unit.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes; ensure just and effective punishment for those who perpetrate financial crimes; combat discrimination in the lending and financial markets; and recover proceeds for victims of financial crimes. For more information about the task force visit www.stopfraud.gov.

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David Albright of the Institute of Science and International Security Provides an Update on Iran's Nuclear Weapons Program on Crime Beat Radio

On July 4th, in a command appearance, David Albright of the Institute of Science and International Security discusses Iran’s suspected nuclear weapons program.

Crime Beat is a weekly hour-long radio program that airs every Thursday at 8 p.m. EST. Crime Beat presents fascinating topics that bring listeners closer to the dynamic underbelly of the world of crime. Guests have included ex-mobsters, undercover law enforcement agents, sports officials, informants, prisoners, drug dealers and investigative journalists, who have provided insights and fresh information about the world’s most fascinating subject: crime.

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Jose Gustavo Orellana-Torres, AKA “Diablito,” Former Leader of MS-13 Street Gang, Sentenced to Prison

On Friday, United States District Judge Joseph F. Bianco sentenced Jose Gustavo Orellana-Torres, also known as “Diablito,” the former leader of the Coronados clique of La Mara Salvatrucha, also known as the MS-13 street gang, to 365 months’ imprisonment following his September 25, 2012 guilty plea to racketeering, including predicate acts relating to the May 26, 2009 murder of Dexter Acheampong in Central Islip, New York, and the July 5, 2009 attempted murder of a suspected rival gang member in Roosevelt, New York.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office; and Thomas V. Dale, Commissioner of the Nassau County Police Department.

According to his plea allocution and documents previously filed in the case, on May 26, 2009, Orellana-Torres attended a Coronados clique meeting in Brentwood, New York, and the MS-13 members agreed to “put in work” for the gang by killing rival gang members. Orellana-Torres and several other MS-13 members drove around Brentwood and Central Islip looking for rival gang members, and Orellana-Torres was armed with a .38 caliber revolver. While in the vicinity of East Maple Street in Central Islip, the MS-13 members observed Dexter Acheampong, whom they did not know but believed, based on the color of his skin and the neighborhood he was walking in, to be a member of the Bloods street gang. In fact, Mr. Acheampong did not belong to any street gang. Orellana-Torres stepped out of the car and fired four shots at Mr. Acheampong with the .38 caliber revolver, striking the victim twice in the back as he tried to escape. Mr. Acheampong was found dead in the driveway of a home on East Maple Street the next morning.

Just over a month later, on July 4-5, 2009, Orellana-Torres attended another MS-13 meeting, this time in Roosevelt, New York. The MS-13 members again discussed killing rival gang members. Orellana-Torres, who possessed the same .38 caliber revolver that night, and other MS-13 members drove around Roosevelt, New York, looking for rival gang members. The MS-13 members observed a man, whose identity is known to the government but is not being disclosed in order to protect his safety, whom they believed to be a rival gang member. One of the other MS-13 members fired several shots at the man, striking him once in the hand.

“The MS-13 street gang has become infamous for its senseless and depraved acts of violence, but even for the MS-13, these vicious crimes demonstrated exceptional depravity. Orellana-Torres and his co-conspirators targeted Dexter Acheampong and another young man, whom they did not even know, because they believed them to be rival gang members,” stated United States Attorney Lynch. “This sentence should make clear that gang members will pay a heavy price for such cold, calculated acts of violence.”

FBI Assistant Director in Charge Venizelos stated, “We cannot overstate our commitment to investigating MS-13 and other gangs on Long Island. As the case of Orellana-Torres shows, MS-13 is not about ethnic pride, it is a violent, murderous horde. It is hard to imagine a more wanton disregard for human life than shooting a person in the back because the color of his skin makes you think he may be a rival gang member.”

Orellana-Torres’s conviction is the latest in a series of federal prosecutions by this office targeting New York members of the MS-13, a violent international street gang comprised primarily of immigrants from El Salvador, Honduras, and Guatemala. With numerous branches, or “cliques,” the MS-13 is the largest street gang on Long Island. Since 2002, more than 200 MS-13 members, including more than two dozen clique leaders, have been convicted on federal felony charges in the Eastern District of New York. More than 100 of those MS-13 members have been convicted on federal racketeering charges. Since 2010 alone, this office has convicted more than 30 members of the MS-13 on charges relating to their participation in one or more murders. These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, and the Rockville Centre Police Department.

The government’s case was prosecuted by Assistant United States Attorneys John J. Durham, Raymond A. Tierney, and Carrie N. Capwell.

Defendant:
Jose Gustavo Orellana-Torres, aka Diablito
Age: 28

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History's First African American Drug Kingpin, Frank Matthews, is Uncovered in "Black Caesar: The Rise and Disappearance of Frank Matthews" by Crime Expert and Author Ron Chepesiuk

On July 2, 1973, Frank Matthews, history's first African American drug kingpin, jumped bail in New York City with $15 to $20 million - the equivalent of $80 million to $90 million in today's money.  It is believed he took his beautiful mistress, Cheryl Brown with him.  Though Matthews is undisputedly the longest missing fugitive in DEA history, another figure from the '70's, Assata Shakur, was just recently placed on the FBI's Most Wanted Terrorists list.  A 66-year old Black woman, Shakur's reward is set for two million dollars. The reward for 69-year old Frank Matthews, the target of one of the largest manhunts in U.S. law enforcement history, is a mere $20,000.  He remains at large and his disappearance is a complete mystery.  He has never made any "Most Wanted" list.

Many believe Shakur was erroneously convicted for the murder of a state trooper. But there is no mistaking the fact that the narcotics Matthews helped funnel into Black communities across America continues to leave a trail of devastation, betrayal, death and despair. In each case it has been forty years.  And so goes the continued urban legend of Frank Matthews, perhaps the most authentic American Gangster of them all.

Award-winning crime author Ron Chepesiuk goes into depth to investigate the unsolved disappearance of Matthews with his new book, "Black Caesar: The Rise and Disappearance of Frank Matthews, Kingpin" from Strategic Media Books.  With an undercover reporting style that leaves no stone unturned, Chepesiuk's determined crack at unraveling one of the crime world's biggest unsolved mysteries makes for a fascinating and intriguing read.

Matthews' literally dominated the heroin market in the '70's.  A country boy from North Carolina, Matthew operated out of New York with a drug empire that spanned 21 states with overseas contacts for heroin and cocaine. A boss of bosses, the DEA ranks him as one of the Top Ten drug traffickers in United States history.  A young man in his twenties at the time, Matthews was one of the first major independents who challenged the La Cosa Nostra for supremacy in the criminal underworld.  The streets deemed him, "Black Caesar" as he was the first black man bold, astute and confident enough to control an interstate organization of its size, independent of the Mob that ruled all.

Chepesiuk follows the trail left cold, retracing Matthew's criminal path with the nose of a bloodhound.  His interviews with DEA agents, Federal Marshals, aging ex-drug kingpins, friends, families and associates are perhaps the most in-depth gathering of details about this nefariously historic figure ever compiled.  The book explores a host of nagging questions.  How was Matthews able to operate for several years without being detected? What was his relationship with La Cosa Nostra? Why did the CIA get involved in the Matthews investigation? What happened to Cheryl Brown? Why has the mystery of his disappearance been so difficult to solve? And while the questions are explored and answered, "Black Caesar: The Rise and Disappearance of Frank Matthews, Kingpin" colorfully captures the vivid imagery, drama and intrigue of the era, entangling the reader in a real life thriller.

"Ron Chepesiuk is to true crime books what Nas is to the hip-hop world," offers Seth Ferranti author of "Gorilla Convict: The Prison Writings of Seth Ferranti," who provides the gripping foreword for the book. "He writes like a lyrical poet examining issues in popular culture in both a historical and scholastic context."

A two-time Fulbright Scholar, film producer and author of several true crime books, including "Drug Lords," "Sergeant Smack" and "Queenpins," Ron Chepesiuk is also a consultant to the History Channel's "Gangland" documentary series and the executive producer and co-host of popular radio show "Crime  Beat".  An authoritative crime historian, Chepesiuk is  a native of Thunder Bay, Canada currently based in South Carolina.   He brings a wealth of insight and observation to the account of the missing Frank Matthews. He has also written a screenplay based on the Frank Matthews story.

Dead or alive, we may never know the ultimate truth about Matthews, but thanks to Chepesiuk, every speculation in between is resolved in "Black Caesar: The Rise and Disappearance of Frank Matthews, Kingpin."  The FBI may be targeting Assata Shakur, but Frank Matthews is the true gangster Most Wanted!

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Billy Panzera and Bobby Fiorello Enter Not Guilty Pleas to Federal Loan-Sharking Charges

A Passaic County man, reputed to be an associate of the Genovese organized crime family, entered a not guilty plea Thursday at his arraignment on federal loan-sharking charges.

Lawyers for William “Billy” Panzera, 40, of North Haledon, and a co-defendant, Robert “Bobby” Fiorello, 63, of Jackson, formally denied the charges during a hearing before U.S. District Judge Jose L. Linares in Newark.

Panzera and Fiorello were among 11 defendants, including a reputed captain, two alleged soldiers and several alleged associates of the Genovese family, who were indicted in Brooklyn in April 2012 on 18 counts ranging from racketeering conspiracy to extortion, illegal gambling, union embezzlement and obstruction of justice.

Because the crimes that Panzera and Fiorello are alleged to have committed occurred in New Jersey and they declined to waive their right to be tried here, prosecutors from the Eastern District of New York re-indicted them in Newark last week on the same charges, setting the stage for a trial that Linares scheduled for Aug. 28.

The three-count indictment identifies Panzera as a Genovese crime family associate and alleges that from February to May of 2008 he, Fiorello and others conspired “to participate in the use of extortionate means” to collect one or more loans from an unnamed victim.

Panzera was also charged with conspiring to collect an unlawful debt under New Jersey law, defined as a loan given at a usurious interest rate of greater than 50 percent per year.

During the hearing, Linares set bail for Panzera, who was dressed in a dark suit, at $500,000, secured by property. Bail of $700,000 was set for Fiorello, who wore a black short-sleeve shirt and slacks.

As a condition of bail, both men were directed not to have any contact with witnesses or members and associates of organized crime.

After the hearing, veteran Hackensack attorney Frank P. Luciana, who is representing Panzera, declined to discuss the case, other than to say, “I’m very, very convinced that in this case justice is going to prevail.”

Thanks to Peter J. Sampson.

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Get All 3 Seasons Mob Wives on DVD! #MobWives

Get all 3 Seasons of Mob Wives on DVD

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Top Ten Signs You Have A Bad Summer Job

Top Ten Signs You Have A Bad Summer Job by David Letterman

10. Each day begins with the North Korean pledge of allegiance

9. You spend ten hours a day digging for Jimmy Hoffa

8. They make you share a whistle

7. Sign in restroom reads "Employees Must Wash Each Other"

6. Your parents lie and tell people you're a stripper

5. A big part of your day involves dodging Federales

4. Even the interns address you with "Out of the way, loser!"

3. To go home at the end of the day you have to escape

2. You work alongside this guy (VT: Chinese baggage handler)

1. You greet people with, "Welcome aboard Carnival Cruise Lines"

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Deal with the Devil, FBI's Secret Relationship with Mafia Killer Gregory Scarpa Sr on Crime Beat Radio

On June 27th, Peter Lance discusses his book, Deal with the Devil: The FBI’s Secret 30-year Relationship with a Mafia Killer. Margaret McClain, Special Correspondent, reports on the Bulger trial.

Crime Beat is a weekly hour-long radio program that airs every Thursday at 8 p.m. EST. Crime Beat presents fascinating topics that bring listeners closer to the dynamic underbelly of the world of crime. Guests have included ex-mobsters, undercover law enforcement agents, sports officials, informants, prisoners, drug dealers and investigative journalists, who have provided insights and fresh information about the world’s most fascinating subject: crime.

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Impeccable Connections: The Rise And Fall Of Richard Whitney – Stealing From Clients To Cover Debts. Sound Familiar?

“Not Dick Whitney. Not Dick Whitney!” President Franklin D. Roosevelt exclaimed upon being told Richard Whitney, the long-time president of the New York Stock Exchange, was a criminal. Almost ten years earlier, on October 24, 1929, Black Thursday, as one newspaper’s headline put it the next day, “Richard Whitney Halts Stock Panic.” In 1934, he appeared on the cover of Time magazine, hailed as the leader of the securities industry in its fight against New Deal regulation. Whitney’s message was clear: the securities industry could regulate itself, and the federal government should stay out.

Impeccable Connections, The Rise and Fall of Richard Whitney, tells in rich detail the remarkable account of a well-connected gentleman’s extraordinary life and gives details of the banking and investment structure that precipitated the stock market collapse of 1929. As president of the NYSE, the story depicts how Whitney played his role even as he manipulated powerful and trusted friends. While Whitney’s name might be less common than Bernie Madoff, Ivan Boesky or Charles Keating, his rise to the top of Wall Street and fall to Sing Sing was all the more dramatic because he started at the top of the old-guard establishment.

Impeccable Connections by Malcolm MacKay, tells the fascinating story of one of the biggest scandals and scoundrels in American finance that resulted in the securities regulations that are in today’s headlines. Richard Whitney, a man whose family was ‘old Massachusetts’ but not wealthy or particularly distinguished, and whose father had risen from a clerk to a successful importer and banker. Richard followed his older brother George to Groton, Harvard, the college’s socially elite Porcellian Club, and Wall Street.

Known as ‘the voice of Wall Street,’ Whitney became the leading opponent of federal regulation of the securities industry, testifying in Washington, and speaking around the country (often broadcast on national radio). Power, money and social position were all his. A successful bond broker whose largest client was the Morgan bank, he lived in a grand manner. Imagine the nation’s shock when, in 1938, he was sent to Sing Sing for embezzling clients’ securities! Addressed by both guards and fellow prisoners as “Mr. Whitney,” befitting his social position, Whitney was released early in 1941 for good behavior, having served only 3 years and 4 months out of a 5 – 10 year sentence. After Whitney’s fall, the New Deal reforms of the securities industry became secure.

Whitney would live for more than three decades, surviving his loyal wife and supportive brother George, who made good on all Richard’s failed loans and fraud. After a few false starts in various businesses, he spent the remainder of his life as the treasurer of a local dairy owned by a Far Hills neighbor, living in a cottage on a local estate.

Malcolm MacKay skillfully recounts the life story of Whitney, a man who was known to be an insufferable snob and a scoundrel, and also offers remarkable insight into the psyche of the man himself. As a young man, Malcolm MacKay, who knew the much older Whitney personally, thought a great deal about Whitney’s actions, always wondering, ‘Why did he do what he did?’

Malcolm MacKay has written several local histories and articles published in leading newspapers and magazines. He is a graduate of Princeton University and Harvard Law School.

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James Comey Nominated to Serve as Next FBI Director

President Barack Obama today nominated James B. Comey, Jr. to serve as the next Director of the FBI. Comey must be confirmed by the U.S. Senate before taking office.

“Jim is exceptionally qualified to handle the full range of challenges faced by today’s FBI,” the president said during a ceremony held at the White House. “I am confident that Jim will be a leader who understands how to keep America safe and to stay true to our founding ideals no matter what the future may bring.”

“I want to commend the president for the choice of Jim Comey as the next director of the FBI,” said current Director Robert S. Mueller. “I have had the opportunity to work with Jim for a number of years at the Department of Justice, and I have found him to be a man of honesty, dedication, and integrity. His experience, his judgment, and his strong sense of duty will benefit not only the Bureau, but the country as a whole.”

Comey served as deputy attorney general under the George W. Bush administration from December 2003 until August 2005, running the day-to-day operations of the Department of Justice. Prior to that, he was U.S. Attorney for the Southern District of New York, where he prosecuted a number of major terrorism and criminal cases. From 1996 to 2001, Comey worked in the U.S. Attorney’s Office for the Eastern District of Virginia. He has extensive industry experience as well, serving as general counsel and senior vice president for Lockheed Martin and general counsel for the investment firm Bridgewater Associates.

“Just as important as Jim’s extraordinary experience is his character,” President Obama said. “Jim understands that in times of crisis, we aren’t judged solely by how many plots we disrupt or how many criminals we bring to justice—we are also judged by our commitment to the Constitution that we’ve sworn to defend and to the values and civil liberties that we’ve pledged to protect.”

Mueller steps down September 4 after serving 12 years—his original 10-year term plus a two-year extension proposed by the White House and approved by Congress in 2011. “I want to take this opportunity to thank the men and women of the FBI,” Mueller said. “Through their hard work, their dedication, and their adaptability, the FBI is better able to predict and prevent terrorism and crime.”

If his nomination is confirmed, Comey will be the 11th Director in the FBI’s 105-year history—the 7th since the J. Edgar Hoover era. When it began in 1908, the Bureau’s leader was called “Chief.” Since 1919, the organization’s top administrator has been called “Director.” The Director has answered directly to the attorney general since the 1920s, and by law is appointed by the president and confirmed by the Senate. In 1976, in reaction to the extraordinary 48-year term of Hoover, Congress passed a law limiting the FBI Director to a single term of no longer than 10 years.

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Theodore Sweeten Pleads Guilty in $5 Million Fraud Scheme

Theodore Sweeten, the president of Symtech International Inc. (Symtech), pleaded guilty to a charge of wire fraud before United States District Judge Nicholas G. Garaufis at the federal courthouse in Brooklyn, New York. When sentenced, Sweeten faces a maximum sentence of 20 years’ imprisonment.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office.

Sweeten, who claimed he developed and patented the “Clean Air Valve,” among other environmental products, admitted at his guilty plea that he defrauded an investor of $5 million by lying to him about his expertise in their joint venture agreement. The indictment charged Sweeten and two others with inducing the victim to make the investment in order to “lease” a credit line of $100 million, which in turn would enable him to generate millions of dollars in profit through special investment programs. In furtherance of that scheme, the indictment alleges that the defendants falsely represented that the victim’s funds would be held in an attorney escrow account pending confirmation of the posting of $100 million in the leased-funds account. In fact, they simply distributed the victim’s $5 million among themselves and falsely represented that a $100 million account had been created at HSBC by sending the victim fabricated bank documents on HSBC letterhead.

“Theodore Sweeten defrauded an investor of his hard-earned savings through fanciful tales about his investment and environmental expertise, but the only expertise Sweeten truly had was being a con man,” stated United States Attorney Lynch. “This office, together with our law enforcement colleagues, will vigorously pursue those who prey on unsuspecting investors.” Ms. Lynch expressed her appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.

The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes and Marcia M. Henry.

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Luis Adorno Sentenced to 18 Months’ Imprisonment for Accepting $100,000 Bribe

Luis Adorno, formerly the supervisory construction project manager of the Department of Architecture and Construction Engineering at the New York City Department of Housing Preservation and Development (HPD), was sentenced to a term of imprisonment of 18 months, followed by 300 hours of community service, for his corruption conviction for taking bribes. As part of his sentence, Adorno also was ordered to forfeit $100,000 in bribery money to the government, representing the proceeds of his crime, and fined $10,000. The sentence was imposed by United States District Judge Nina Gershon at the U.S. Courthouse in Brooklyn, New York.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); Daniel R. Petrole, Deputy Inspector General, United States Department of Labor (DOL) Office of Inspector General; and Rose Gill Hearn, Commissioner, New York City Department of Investigation (DOI).

Until his arrest in June 2012, Adorno was employed by HPD, the largest municipal developer of affordable housing in the nation. Adorno was responsible for personally conducting inspections of HPD construction projects and also supervising other inspectors. During 2008 and 2009, a contractor who worked on several HPD construction projects paid Adorno what amounted to a $100,000 bribe for Adorno’s assistance in getting the contractor additional work with HPD. The bribe was structured in a sophisticated manner to ensure that actual cash did not pass through Adorno’s hands. Rather, the contractor paid $100,000 to a real estate developer who was developing several HPD projects, and in return for the $100,000, the real estate developer agreed to give Adorno a 30 percent equity stake in the developer’s company.

Today’s sentencing proceeding is the latest stemming from the government’s wide-ranging investigation into corruption involving the affordable housing industry in New York City. Four real estate developers and two other former HPD officials have pleaded guilty in this district to various charges, including racketeering conspiracy, fraud, and bribery, related to the development of affordable housing in the city. Three additional defendants await trial.

“Luis Adorno admitted that he agreed to put his finger on the scale in favor of a contractor who paid him $100,000 in bribes. By receiving payment in the form of an equity stake in a real estate development company, Adorno sought to create the bribe that would keep on giving. Today’s sentence sends a clear message that any public servant, whether an elected legislator or an appointed official, who betrays the public trust will be prosecuted to the fullest extent of the law,” stated United States Attorney Lynch. Ms. Lynch thanked the Internal Revenue Service, Criminal Investigation, New York; the United States Department of Housing and Urban Development, Office of Inspector General; and the New York City Police Department for their cooperation in this case.

DOI Commissioner Gill Hearn stated, “This ex-city employee lost his job and his bribe money and will soon take up residence in a prison cell. That was not the nest egg he bargained for when he sold his office for a hidden stake in a real estate deal. DOI thanks our federal partners for their shared determination to unearth the facts and demonstrate again that corruption is a losing strategy.”

The government’s case is being prosecuted by Assistant United States Attorneys Cristina M. Posa, Anthony M. Capozzolo, and Claire Kedeshian.

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James Gandolfini, #TonySoprano, Dies from Heart Attack

James Gandolfini -- who famously played Tony Soprano on "The Sopranos" -- died earlier today in Italy ... TMZ has learned.

Gandolfini is believed to have suffered a heart attack. He was 51.

Gandolfini was in Italy to attend the 59th Taormina Film Festival in Sicily -- and he was scheduled to participate in a festival event this weekend with Italian director Gabriele Muccino.

Gandolfini shot to fame playing a hitman in the 1993 hit "True Romance" ... and quickly became a Hollywood legend when he was cast as Tony Soprano in 1999.  He won 3 Emmy awards for the role during the show's 6 season run.

Gandolfini also appeared in a ton of huge movies including "Get Shorty," "The Mexican" and "Zero Dark Thirty."

Gandolfini is survived by his wife Deborah Lin, who gave birth to the couple's daughter in October 2012. He also has a teenage son from a previous marriage. R.I.P.

Thanks to TMZ.

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William Belfair, Licensed Psychiartrist, Charged with Illegally Distributing Oxycodone

Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI), announced the arrest of William S. Belfar, a licensed psychiatrist in New York, on charges that he distributed oxycodone, a prescription painkiller, for cash and without a medical purpose. Belfar was presented in Manhattan federal court before U.S. Magistrate Judge Andrew J. Peck.

Manhattan U.S. Attorney Preet Bharara said, “As alleged, William Belfar, a licensed psychiatrist, contributed to the growing epidemic of prescription drug abuse and addiction by writing prescriptions in exchange for cash—conduct which he had described as illegal when discussing other doctors. This office will not tolerate medical professionals who exploit their licenses to fuel the prescription drug problem.”

FBI Assistant Director in Charge George Venizelos said, “William Belfar, a licensed physician and mental health professional, allegedly exploited the addictive nature of oxycodone—the very thing he warned of on television—to make money. He violated the oath of his profession and broke the law in peddling oxycodone prescriptions. The Health Care Fraud Task Force was formed in part to protect the public from unscrupulous doctors who put profiteering ahead of professional responsibility.”

According to the complaint unsealed in Manhattan federal court:

Belfar operated a medical office in Manhattan, New York, from which he sold prescriptions for oxycodone and other medications for cash. On three occasions from May 2011 to April 2013, he sold prescriptions of oxycodone pills and other medications to an FBI confidential informant and two undercover FBI officers. Belfar sold the prescriptions for up to $1,000 per prescription. On one occasion when Belfar sold an oxycodone prescription, he stated to the informant, “[I]t is a very easy way to make money, but it’s an easy way for me to go to jail, too.” Belfar prescribed the oxycodone to the confidential informant even though he said he believed the informant was a “dealer.”

In February and March 2013, around the same time that Belfar was selling oxycodone prescriptions, he appeared on two television shows as an interview guest on the subject of oxycodone addiction. During those interviews, Belfar discussed cases of celebrities becoming addicted to oxycodone, including one situation where the “doctor essentially became [a] drug dealer.” Belfar also stated during one interview that “This is a big business....On the street...each [oxycodone] pill is $30....Patients will pay a lot of money just to get these pills....The doctors prescribe it. Yes, some do it for money. Some do it because they just don’t know what they are doing....[T]hey just shouldn’t be doing it.”

Oxycodone, a Schedule II controlled substance, is a powerful painkiller with a high potential for addiction and abuse. It is sold on the street as a substitute for heroin and other illegal drugs.

Belfar, 49, of Huntington, New York, is charged with three counts of distributing oxycodone. Each count carries a maximum sentence of 20 years in prison.

Mr. Bharara praised the investigative work of the FBI, the FBI’s Boston Field Office, the FBI Boston-Lakeville RA, the New York City Police Department, and the FBI’s New York Health Care Fraud Task Force. The FBI’s New York Health Care Fraud Task Force was formed in 2007 in an effort to combat health care fraud in the greater New York City area. The task force is composed of agents, officers, and investigators of the FBI, NYPD, New York State Insurance Fraud Bureau, U.S. Department of Labor, U.S. Office of Personnel Management Inspector General, U.S. Food and Drug Administration, NYS Attorney General’s Office, NYS-Office of Medicaid Inspector General, NYC Health and Hospitals Inspector General, and the National Insurance Crime Bureau.

The case is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Rahul Mukhi and Ian McGinley are in charge of the prosecution.

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

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Evan Hall Charged in Connection with String of Suburban Bank Robberies

A Cary, Illinois man has been charged in a three-count criminal complaint for robberies that occurred over a 10-day period earlier this month. The charges were announced yesterday by Cory B. Nelson, Special Agent  in Charge of the Chicago Field Office of the FBI, and Gary S. Shapiro, United States Attorney for the Northern District of Illinois.

Evan L. Hall, 26, of the 100 block of River Drive in Cary, was charged in a criminal complaint filed last Friday in U.S. District Court with three counts of bank robbery, a felony offense. He appeared before U.S. Magistrate Judge Mary M. Rowland Monday, at which time he was formally charged. Hall remains in federal custody pending his next scheduled court appearance, which is scheduled for July 1, 2013, at 10:00 a.m.

According to the complaint, Hall’s first robbery occurred on June 2, 2013, at a TCF Bank branch located at 1157 North Eola Road in Aurora. On that date, Hall allegedly made a verbal demand for money, and, when offered an entire drawer of cash by the teller, Hall directed the teller to hand him the money instead. A witness reported seeing the robber leave the bank and enter a gray-colored Audi.

The second of the charged robberies took place at a Lombard TCF Bank branch located at 1177 South Main Street just four days later. The complaint alleges that on June 6, Hall entered the bank and again made a verbal demand for money. The complaint further alleges that Hall threatened the teller and gestured to a firearm he carried in a sweatshirt pocket.

The third robbery charged in the complaint occurred on June 12. The complaint states that Hall entered a TCF Bank branch located at 1952 West Galena Boulevard in Aurora on that day and once more verbally demanded money from the teller. A short time later, police stopped a blue Audi near the location of the robbery and took Hall, the passenger in that car, into custody.

Mr. Nelson expressed his thanks to the Aurora and Lombard Police Departments for their participation in the investigation of the robberies and the quick apprehension of Hall following the third robbery.

If convicted of the charge filed against him, Hall faces a possible maximum sentence of 20 years in prison.

The public is reminded that a criminal complaint is not evidence of guilt and that all defendants in a criminal case are presumed innocent until proven guilty in a court of law.

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Pedro Gautier Espada, Former Councilman, Sentenced to Six Months’ Imprisonment

Yesterday, Pedro Gautier Espada was sentenced before Judge Frederic Block in U.S. District Court in Brooklyn, New York, to six months’ imprisonment, to be followed by six months’ home confinement and one year of supervised release, for theft of federal funds from Bronx-based non-profit healthcare clinics, Soundview Healthcare Network (“Soundview”) and for failing to file a tax return for tax year 2009. As part of that sentence, Judge Block ordered Gautier Espada to serve 100 hours of community service, restitution to the Internal Revenue Service in the amount of $15,628, and additional restitution to the victims of his thefts in an amount to be determined by the court. Gautier Espada served the South Bronx as a New York City Councilman from 1997 to 2001 and as a New York State Assemblyman in 1996.

On June 14, 2013, Judge Block sentenced Gautier Espada’s father, former New York State Senate Majority Leader Pedro Espada, Jr. to five years’ imprisonment, to be followed by three years of supervised release, for theft of federal funds from Soundview and lying on his 2005 personal tax return. As part of that sentence, Judge Block ordered Espada to serve 100 hours of community service, restitution to the Internal Revenue Service in the amount of $118,531, restitution to the victims of his thefts in an amount to be determined, and forfeiture of $368,088. The court remanded Espada to the custody of the Bureau of Prisons.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Toni Weirauch, Special Agent in Charge, Internal Revenue Service-Criminal Investigation, New York (IRS).

On October 12, 2012, Gautier Espada pled guilty to one count of stealing federal funding from Soundview and one count of failing to file a tax return for 2009. Gautier Espada was Soundview’s Director of Environmental Care and headed Soundview’s Compliance Committee.

The government’s case was prosecuted by Assistant United States Attorneys Todd Kaminsky, Carolyn Pokorny, and Claire Kedeshian.

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Carl Fiorentin, Former President of TigerDirect, Indicted for Executing Fraud and Money Laundering Scheme Involving More Than $230 Million in Purchases

An indictment was unsealed this morning in federal court in the Eastern District of New York charging Carl Fiorentino, the former president of computer and electronics seller TigerDirect, with mail fraud, wire fraud, and money laundering in connection with a scheme to defraud TigerDirect and its parent company, Systemax Inc. (“Systemax”). Systemax is a publicly traded company with headquarters in Port Washington, New York. According to the indictment, the defendant personally took more than $7 million in commercial bribes and kickbacks in return for steering more than $230 million in business to the Taiwanese and California companies that paid the bribes and kickbacks.

The defendant was arrested by federal agents earlier today in Coral Gables, Florida, and a search warrant was executed at his $8 million residence, purchased with fraud proceeds. Later today, the defendant will appear for arraignment before United States Magistrate Judge Edwin Torres in the Southern District of Florida. The criminal case has been assigned to the Honorable Sandra J. Feuerstein, United States District Judge for the Eastern District of New York, in Central Islip, New York.

The arrest and charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office; and Michael DePalma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation, Miami, Florida.

“As alleged in the indictment and court papers, Carl Fiorentino abused his position of trust, employing fraud and deceit to line his own pockets at the expense of his employer and its public shareholders. Fiorentino had it all—a lucrative job and a high-flying lifestyle. But as alleged in the indictment and court papers, his loyalties were neither to his employer nor its public shareholders but solely to himself. Fiorentino’s greed spanned the Pacific Ocean to pull companies from California to Taiwan into his bribery and kickback scheme,” stated United States Attorney Lynch. “We and our law enforcement partners will vigorously pursue and prosecute to the fullest extent of the law those who seek to profit by such fraud.” Ms. Lynch expressed her grateful appreciation to the FBI and IRS for their work on the investigation.

“As alleged, Fiorentino exploited his position to engage in blatant self-dealing. He accepted bribes to abuse his purchasing power and direct company business to specific suppliers. The suppliers’ lavish kickbacks helped finance Fiorentino’s multi-million-dollar home. The FBI will continue to police the kind of insider fraud that victimizes companies and their shareholders,” stated FBI Assistant Director in Charge Venizelos.

“IRS-Criminal Investigation is committed to unraveling elaborate and complex money laundering schemes leaving no financial stones unturned,” stated Michael J. De Palma, Acting Special Agent in Charge of IRS-Criminal Investigation, Miami Field Office. “Those who abuse their position of trust to illegally enrich themselves will be held accountable for their actions.”

Beginning in January 2003 and continuing until April 2011, Fiorentino was the president of TigerDirect, a subsidiary of Systemax Inc. that sold brand-name computers and its own line of Ultra computers in its retail stores and via mail-order catalogs and the Internet. In 2010 Systemax reported $3.5 billion in net sales according to its 2010 SEC 10K filing. Among his duties as company president, Fiorentino was responsible for selecting suppliers to provide computer components, peripherals, and other products to TigerDirect. As alleged in the indictment, beginning in 2003, Fiorentino entered into an illegal agreement with the owner of a Taiwanese company to steer TigerDirect business to his company by directing TigerDirect to purchase the Taiwanese company’s computer components in exchange for bribes and kickbacks that totaled $6.5 million dollars over the course of the conspiracy. In addition, between 2003 and 2007, Fiorentino received another $570,000 in bribes and kickbacks from a California-based company that sold computer memory modules and flash memory products. Fiorentino received the bribes and kickbacks through checks and wire transfers payable to third party individuals and entities that he controlled. Fiorentino used the proceeds of the fraud scheme to buy, among other things, an $8 million home in Coral Gables, Florida.

As a result of the scheme, TigerDirect is alleged to have paid over $157,000,000 for the Taiwanese company’s products and $80,000,000 for the California company’s products. Fiorentino concealed the scheme and kickback payments by submitting false conflict of interest forms to Systemax and using a complex web of wire transfers and shell companies.

The charges announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty. The indictment charges Fiorentino with mail fraud, wire fraud, conspiracy to commit mail and wire fraud, and money laundering conspiracy. If convicted, he faces a maximum sentence of 20 years’ imprisonment on each of those charges, forfeiture of the $8 million Coral Gables residence and over $7 million dollars, and a $250,000 fine.

The government’s case is being prosecuted by Assistant United States Attorney Demetri Jones.

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