Department of Justice

U.S. Attorney’s Office

Southern District of New York

FOR IMMEDIATE RELEASE

Tuesday, April 12, 2022

New York Lieutenant Governor Brian Benjamin Charged With Bribery And Related Offenses

Benjamin Allegedly Used His Official Authority While a New York State Senator to Procure a State-Funded Grant in Exchange for Campaign Contributions

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Jocelyn E. Strauber, Commissioner of the New York City Department of Investigation (“DOI”), announced today that BRIAN BENJAMIN, the Lieutenant Governor of the State of New York, was charged with bribery and related offenses.  In particular, BENJAMIN is charged with bribery, honest services wire fraud, and conspiracy to commit those offenses, based on BENJAMIN’s use of his official authority while a New York state senator to direct a state-funded grant to an organization controlled by a real estate developer (“CC-1”) in exchange for campaign contributions made and procured by CC-1. BENJAMIN is also charged with two counts of falsifying records in connection with the preparation of contribution forms that falsely reported certain contributions made by CC-1 as being made by other individuals, and false statements BENJAMIN made in a questionnaire he submitted while seeking to become Lieutenant Governor.  BENJAMIN surrendered to the FBI in Manhattan this morning and was presented before United States Magistrate Judge Ona T. Wang.  The case has been assigned to United States District Judge J. Paul Oetken. 

U.S. Attorney Damian Williams said:  “As alleged, Brian Benjamin used his power as a New York state senator to secure a state-funded grant in exchange for contributions to his own political campaigns. By doing so, Benjamin abused his power and effectively used state funds to support his political campaigns. My Office and our partners at the FBI and DOI will continue to ensure that politicians who put themselves over the public interest will be prosecuted.”

FBI New York Assistant Director-in-Charge Michael J. Driscoll said:  “Exploiting one’s official authority by allocating state funds as part of a bribe to procure donations to a political campaign, and engaging in activity to cover up the bribe, is illegal. As we allege today, Benjamin’s conduct in this scheme directly circumvents those procedures put in place to keep our systems fair.”

DOI Commissioner Jocelyn E. Strauber said:  “As charged, Lieutenant Governor Benjamin, while a New York State senator, used his official position to obtain donations to his political campaigns.  He allegedly allocated public grant funds to a non-profit controlled by a co-conspirator in exchange for campaign contributions, and then lied to hide this illegal scheme.  In so doing, he served his own interests at the expense of his constituents, a betrayal of the public trust and a violation of federal law.  DOI stands with our law enforcement partners in the United States Attorney’s Office for the Southern District of New York and the FBI in the fight to expose and prevent corruption.”

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

Overview

From at least in or about 2019, up to and including at least in or about 2021, BENJAMIN participated in a scheme to obtain campaign contributions from CC-1 in exchange for BENJAMIN’s use of his official authority and influence as a New York State senator to obtain a $50,000 state-funded grant (the “Grant”) for a non-profit organization controlled by CC-1 (“Organization-1”). BENJAMIN and others acting on his behalf or at his direction then engaged in a series of lies and deceptions to cover up his scheme, including by falsifying campaign donor forms, misleading city regulators, and providing false information on vetting forms he completed while seeking to be the Lieutenant Governor of New York State.

The Bribery Scheme

In or about March 2019, BENJAMIN met with CC-1, told CC-1 that he was running for the office of New York City Comptroller, and asked that CC-1 procure a number of small-dollar contributions from different individuals for that campaign (the “Comptroller Campaign”). CC-1 told BENJAMIN that CC-1 did not have experience bundling political contributions in that manner; that CC-1 focused CC-1’s fundraising efforts on Organization-1; and that CC-1’s ability to procure numerous contributions for BENJAMIN’s Comptroller Campaign was limited, including because potential donors from whom CC-1 was likely to solicit contributions were the same donors from whom CC-1 had solicited and intended to further solicit contributions for Organization-1.  In response, BENJAMIN told CC-1, “Let me see what I can do.”

In or about February 2019, before the above-described meeting, BENJAMIN had formally requested funding from the Majority Leader of the New York State Senate for certain organizations and entities in his district, including another Harlem-based educational organization (“Organization-2”). Organization-1 was not on that list, even though BENJAMIN had been aware of Organization-1 and its educational work since at least 2018.

On or about May 30, 2019, the Senate Majority Leader and her staff informed certain senators, including BENJAMIN, that they had been awarded additional discretionary funding that each could allocate to organizations in their districts for specified purposes. That additional funding included, among other things, up to $50,000 that BENJAMIN could allocate to school districts, libraries, or non-profit organizations for educational purposes. BENJAMIN then called CC-1, told CC-1 he would be obtaining a $50,000 grant for Organization-1, and directed that the $50,000 be allocated to Organization-1. BENJAMIN chose not to allocate that funding to Organization-2, despite the fact that Organization-2 had not received the funding BENJAMIN requested in the February 2019 letter.

On or about June 19, 2019, the New York State senate approved a resolution that, among other things, allocated $50,000 to Organization-1. The following day, BENJAMIN sent a text message to CC-1 with a screenshot of the resolution and stated, among other things, “I will call to discuss!”

On or about July 8, 2019, BENJAMIN met with CC-1. CC-1 provided BENJAMIN with three checks totaling $25,000 made out to BENJAMIN’s New York State senate campaign (the “Senate Campaign”). Two of the checks were written in the names of relatives of CC-1 who did not share CC-1’s last name, and the third was written in the name of a limited liability corporation that CC-1 controlled (the “CC-1 LLC”). CC-1 made the contributions in the names of two other individuals and the CC-1 LLC to conceal any connection between CC-1 and the contributions. Because BENJAMIN had not yet filed a certification regarding his Comptroller Campaign with the New York City Campaign Finance Board (“CFB”), BENJAMIN could accept campaign contributions only to his senate campaign. As a state campaign, the senate campaign was not eligible for public matching funds available in New York City municipal races. BENJAMIN also gave CC-1 contributor forms to complete, and CC-1 completed them in BENJAMIN’s presence, signing the names of CC-1’s relatives.  BENJAMIN reviewed and accepted the forms and contributions, even though he knew that the listed relatives were not in fact funding the contributions.

During the same meeting, BENJAMIN reminded CC-1 of the State Grant for Organization-1 and that BENJAMIN still expected CC-1 to procure numerous small contributions for his Comptroller Campaign. BENJAMIN later reminded CC-1 of his expectations again, including by presenting CC-1 with a novelty check representing the $50,000 at a fundraiser for Organization-1 held just one week before BENJAMIN became eligible to receive contributions for his Comptroller Campaign, and by calling CC-1 shortly thereafter to specify the kinds of contributions he needed.

Between October 2019 and January 2021, CC-1 obtained numerous contributions for BENJAMIN’s Comptroller Campaign, many of which were fraudulent (the “CC-1 Contributions”). BENJAMIN communicated with CC-1 about CC-1’s fundraising efforts during that period. BENJAMIN also communicated with his staff and advisors about CC-1’s fundraising efforts, and specifically described certain contributions as having been procured by CC-1. And BENJAMIN personally met with CC-1 on more than one occasion to receive some of the contributions CC-1 had purportedly collected from others.

Alleged Lies and Deception

Between 2019 up through and including the period of his application for and service as Lieutenant Governor of New York, BENJAMIN and others acting at his direction or on his behalf, engaged in a series of lies and deceptions in order to conceal the bribery scheme and BENJAMIN’s connection to CC-1.

In or about November 2019, the New York State Board of Elections (“BOE”) notified BENJAMIN’s senate campaign that it had failed to file certain forms required to identify owners of certain limited liability companies (“LLCs”) that had made contributions to the Senate Campaign.  This included the LLC through which CC-1 had made a $5,000 contribution during the July 8, 2019, meeting. A member of BENJAMIN’s staff sent BENJAMIN an email listing LLCs requiring additional disclosures, specifically identifying the LLC used by CC-1 as being associated with CC-1, and asked BENJAMIN for help obtaining ownership information those LLCs. BENJAMIN responded to that email by asking, “What happens if someone refuses to provide the information?” Ultimately, BENJAMIN’s senate campaign provided the BOE with ownership information about certain LLCs, but not the LLC used by CC-1.

In or about February 2020, the CFB informed BENJAMIN’s Comptroller Campaign that certain of the CC-1 Contributions had been deemed ineligible for matching funds because, among other reasons, they were funded by sequentially-numbered money orders. In response, in or about July 2020, the Comptroller Campaign submitted to the CFB forms indicating that certain of the CC-1 Contributions had been procured by a particular individual (“Individual-1”), even though BENJAMIN knew the contributions had been procured by CC-1.

On or about January 4, 2021, a news outlet published an article raising questions about the legitimacy of certain contributions to BENJAMIN’s Comptroller Campaign, including certain of the CC-1 Contributions. The next day, BENJAMIN’s Comptroller Campaign submitted a misleading letter to the CFB stating there had been no reason to question the legitimacy of the contributions purportedly procured by Individual-1 in light of, among other things, Individual-1’s reputation in the community. At the time the letter was submitted, however, BENJAMIN knew that the CC-1 Contributions had in fact been procured by CC-1, not Individual-1.

On or about August 17, 2021, while being considered to be the next Lieutenant Governor of the State of New York, BENJAMIN submitted responses to an executive appointment questionnaire that contained questions addressing, among other things, BENJAMIN’s relationship with political contributors. Despite BENJAMIN’s efforts to procure $50,000 for Organization-1 and his solicitation of contributions from CC-1, BENJAMIN falsely stated, among other things, that he had never “directly exercised [his] governmental authority (either as a Legislator or Executive official) concerning a matter of a donor [he] directly solicited.” And approximately two hours after submitting his responses to that questionnaire, BENJAMIN called CC-1 for the first time in six months.

*                      *                     *

BENJAMIN, 45, of Harlem, New York, is charged with one count of federal program bribery, which carries a maximum sentence of 10 years in prison; one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit those offenses, which carries a maximum sentence of 5 years in prison; and two counts of falsification of records, each of which carries a maximum sentence of 20 years in prison.  

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

Mr. Williams praised the outstanding investigative work of the FBI and DOI, and thanked the CFB for their assistance in this investigation. 

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Jarrod L. Schaeffer, Alison Moe, Tara La Morte, and David Abramowicz are in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation. Where specific statements are described herein, they are described in substance and in part.

OFSI General Licence – GAC and Russia

OFSI has issued General Licence INT/2022/1679676 under Regulation 21 of the Global Anti-Corruption Sanctions Regulations 2021 and Regulation 64 of the Russia (Sanctions) (EU Exit) Regulations 2019. 

Under General Licence INT/2022/1679676, subject to the conditions set out in that licence, an officer of a Non-Crown Relevant Organisation is permitted to carry out their duties including through making use of powers available to them under UK legislation or common law for Asset Recovery Purposes.

This General Licence takes effect from 27 April 2022 and is of indefinite duration. It may be varied, revoked, or suspended by HM Treasury at any time.

Department of Justice

U.S. Attorney’s Office

Eastern District of California

FOR IMMEDIATE RELEASE

Monday, April 11, 2022

Former Caltrans Contract Manager Pleads Guilty to Bid Rigging and Bribery

First Guilty Plea in Ongoing Investigation at the California Department of Transportation (Caltrans)

A former contract manager for the California Department of Transportation (Caltrans) pleaded guilty today for his role in a bid-rigging and bribery scheme involving Caltrans improvement and repair contracts.

According to a plea agreement filed today in the U.S. District Court for the Eastern District of California in Sacramento, Choon Foo “Keith” Yong and his co-conspirators engaged in a conspiracy, from early 2015 through late 2019, to thwart the competitive bidding process for Caltrans contracts to ensure that companies controlled by Yong’s co-conspirators submitted the winning bid and would be awarded the contract. Yong is also charged with accepting bribes while working for Caltrans, a California state agency that receives significant federal funding. Yong received the bribes in the form of cash payments, wine, furniture and remodeling services on his home. The total value of the payments and benefits Yong received exceeded $800,000. In addition to his guilty plea, Yong agreed to pay restitution and cooperate with the ongoing investigation.

“Today’s guilty plea is the first in the Antitrust Division’s ongoing investigation into bribery and bid rigging at Caltrans,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Given the Infrastructure Investment and Jobs Act’s $1.2 trillion authorization and the critical role of transportation infrastructure in our nation, rooting out bid-rigging schemes that cheat the competitive bidding process remains a top priority for the division and its Procurement Collusion Strike Force partners.” 

Yong received more than $800,000 of bribes in the form of cash payments, wine, furniture, and remodeling services on his home. 

Yong is scheduled to be sentenced on Aug. 22 by U.S. District Judge Kimberly J. Mueller. For the bid-rigging conspiracy, Yong faces a maximum statutory penalty of 10 years of incarceration and a fine of up to $1 million or twice the gross pecuniary gain or twice the gross pecuniary loss resulting from the offense. For bribery concerning programs receiving federal funds, Yong faces a maximum statutory penalty of 10 years of incarceration and a fine of up to $250,000 or twice the gross pecuniary gain or twice the gross pecuniary loss resulting from the offense. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and U.S. Sentencing Guidelines.

Today’s guilty plea is the first to result from a joint investigation being conducted by the Antitrust Division’s San Francisco office, the U.S. Attorney’s Office for the Eastern District of California, and the FBI’s Sacramento Field Office as part of the Justice Department’s Procurement Collusion Strike Force (PCSF). 

In November 2019, the Department of Justice created the Procurement Collusion Strike Force (PCSF), a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government – federal, state and local. In fall 2020, the Strike Force expanded its footprint with the launch of PCSF: Global, designed to deter, detect, investigate and prosecute collusive schemes that target government spending outside of the United States. To learn more about the PCSF, or to report information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to defense-related spending.

Department of Justice

U.S. Attorney’s Office

Eastern District of California

FOR IMMEDIATE RELEASE

Thursday, April 28, 2022

Former DMV Employee Pleads Guilty to Conspiracy to Receive Bribes to Alter Records in DMV Database in Sacramento

SACRAMENTO, Calif. — Shawana Denise Harris, 52, of Rancho Cucamonga, pleaded guilty today to conspiracy to commit bribery, to commit unauthorized access of a computer, and to commit identity fraud, which resulted in unqualified drivers receiving their California commercial driver’s licenses (CDLs), U.S. Attorney Phillip A. Talbert announced.

According to court documents, on Nov. 16, 2017, Harris was charged with conspiring to receive bribes as a DMV employee in Rancho Cucamonga for accessing and altering records in the DMV’s database in Sacramento. During the scheme, Harris altered records to show that applicants for California CDLs had passed the required tests when, in truth, they had not done so, and in some cases had not even taken the tests. In so doing, this caused the DMV to issue permits and completed California CDLs despite the applicants not having taken or passed those tests.

This case is the product of an investigation by the California Department of Motor Vehicles, Office of Internal Affairs; the Federal Bureau of Investigation; Homeland Security Investigations; and the Department of Transportation, Office of Inspector General. Assistant U.S. Attorneys Rosanne L. Rust and Christopher S. Hales are prosecuting the case.

Harris is scheduled to be sentenced on July 28, 2022, by U.S. District Judge Troy L. Nunley. Harris faces a maximum statutory penalty of five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Department of Justice

U.S. Attorney’s Office

District of Puerto Rico

FOR IMMEDIATE RELEASE

Thursday, May 5, 2022

Two Puerto Rico Mayors Charged with Accepting Bribes

WASHINGTON – A federal grand jury in San Juan, Puerto Rico returned an indictment yesterday charging Javier García-Pérez, the Mayor of Aguas Buenas, with conspiracy, soliciting bribes, and extortion. In a separate indictment, Reinaldo Vargas-Rodriguez, the Mayor of Humacao was also charged with conspiracy, soliciting bribes, and extortion. 

According to court documents, Javier García-Pérez, 46, of Aguas Buenas, was involved in a bribery conspiracy in which, from 2017 through 2021, he received and accepted cash payments from two businessmen in exchange for awarding municipal contracts for waste disposal services, asphalt and paving services, and debris removal and paying outstanding invoices on the contracts. The indictment alleges that García-Pérez received at least $32,000 in cash payments from August 2020 through September 2021 from the two businessmen.

A second indictment returned yesterday alleges that Reinaldo Vargas-Rodriguez, 48, of Humacao, was involved in a bribery conspiracy in which, from January to July 2021, he received and accepted cash payments from two businessmen in exchange for awarding municipal contracts for waste disposal and asphalt and paving services, and for paying outstanding invoices on the contracts. The indictment alleges that Vargas-Rodriguez received at least $15,000 in cash payments from March 18, 2021 through April 15, 2021 from the two businessmen. 

If convicted of all counts, García-Pérez and Vargas-Rodriguez face a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney W. Stephen Muldrow for the District of Puerto Rico, and Assistant Director Luis M. Quesada of the FBI’s Criminal Investigative Division made the announcement. 

The investigation was conducted by the FBI’s San Juan Field Office. 

The cases are being prosecuted by Trial Attorney Nicholas W. Cannon of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Scott H. Anderson for the District of Puerto Rico.

The cases are part of the Justice Department’s ongoing efforts to combat public corruption by municipal officials in Puerto Rico. In addition to the above matters, the Public Integrity Section and the U.S. Attorney’s Office for the District of Puerto Rico have recently obtained convictions against other former public officials and contractors in the District of Puerto Rico for soliciting and accepting bribes related to municipal contracts. See United States v. Luis Arroyo-Chiques, 21-485 (SCC); United States v. Eduardo Cintron-Suarez, 22-151 (SCC); United States v. Felix Delgado-Montalvo, 21-463 (RAM); United States v. Oscar Santamaria-Torres, 21-464 (RAM); United States v. Raymond Rodriguez, 21-465 (RAM). 

Additionally, the department recently obtained indictments charging several former officials and contractors with bribery related to municipal contracts, and those cases are still pending.  See United States v. Mario Villegas-Vargas, 21-468 (FAB); United States v. Angel Perez-Otero, 21-474 (ADC); and United States v. Radames Benitez-Cardona, 21-475 (PAD).

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

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Wednesday, April 20, 2022

Stericycle Agrees to Pay Over $84 Million in Coordinated Foreign Bribery Resolution

Stericycle Inc. (Stericycle), an international waste management company headquartered in Lake Forest, Illinois, has agreed to pay more than $84 million to resolve parallel investigations by authorities in the United States and Brazil into the bribery of foreign officials in Brazil, Mexico, and Argentina.

According to court documents, Stericycle entered into a three-year deferred prosecution agreement (DPA) with the Department of Justice in connection with the filing of a criminal information charging the company with two counts of conspiracy to violate (1) the anti-bribery provision of the Foreign Corrupt Practices Act (FCPA), and (2) the FCPA’s books and records provision. Pursuant to the DPA, Stericycle’s criminal penalty is $52.5 million. The department has agreed to credit up to one-third of the criminal penalty against fines the company pays to authorities in Brazil in related proceedings, including an amount of approximately $9.3 million to resolve investigations by the Controladoria-Geral da União (CGU) and the Advocacia-Geral de União (Attorney General’s Office) in Brazil. In addition, Stericycle has agreed to pay approximately $28 million to resolve a parallel investigation by the U.S. Securities and Exchange Commission (SEC). 

“Stericycle today accepted responsibility for its corrupt business practices in paying millions of dollars in bribes to foreign officials in multiple countries,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “The company also maintained false books and records to conceal corrupt and improper payments made by its subsidiaries in Brazil, Mexico, and Argentina. Today’s resolution demonstrates the Department of Justice’s continuing commitment to combating corruption and protecting the international marketplace.”

“Today’s resolution with Stericycle shows that the FBI and our international law enforcement partners will not allow corruption to permeate domestic or international markets,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The consequences of violating the FCPA are clear: Companies that bribe foreign officials for business advantage will be held accountable.”

According to the company’s admissions and court documents, Stericycle conspired to corruptly offer and pay approximately $10.5 million in bribes to foreign officials in Brazil, Mexico, and Argentina in order to obtain and retain business and other advantages for Stericycle. The company earned at least $21.5 million in profits from the corrupt scheme.

Specifically, between 2011 and 2016, Stericycle caused hundreds of bribe payments to be made to officials at government agencies and instrumentalities in Brazil, Mexico, and Argentina to obtain and retain business and to secure improper advantages in connection with providing waste management services. In perpetrating the scheme, an executive at Stericycle’s Latin America division directed employees in the company’s offices in Brazil, Mexico, and Argentina who paid bribes, typically in cash, that were calculated as a percentage of the underlying contract payments owed to Stericycle from government customers. In all three countries, the co-conspirators tracked the bribe payments through spreadsheets and described the bribes through code words and euphemisms, such as “CP” or “commission payment” in Brazil; “IP” or “incentive payment” in Mexico; and “alfajores” (a popular cookie) or “IP” in Argentina. 

As part of the DPA, Stericycle has agreed to continue to cooperate with the department in any ongoing or future criminal investigations relating to this conduct. In addition, under the DPA, Stericycle agreed to continue to enhance its compliance program and to retain an independent compliance monitor for two years, followed by self-reporting to the department for the remainder of the term.

The government reached this resolution with Stericycle based on a number of factors, including, among others, the company’s failure to voluntarily and timely disclose the conduct that triggered the investigation and the nature, seriousness, and pervasiveness of the offense. Stericycle received full credit for its cooperation with the department’s investigation and engaged in extensive remedial measures. Although Stericycle has taken extensive remedial measures, it has not fully implemented or tested its enhanced compliance program, necessitating the imposition of an independent compliance monitor for a term of two years. Accordingly, the criminal penalty reflects a 25% reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range.

In a related civil matter in the United States, Stericycle has agreed to pay disgorgement and prejudgment interest totaling approximately $28 million to resolve an investigation by the SEC. In related proceedings in Brazil, the company has agreed to resolve investigations by the CGU and the Attorney General’s Office.

The FBI’s New York Field Office is investigating the case. Trial Attorneys Paul A. Hayden and Jil Simon of the Criminal Division’s Fraud Section are prosecuting the case. Authorities in Brazil and Mexico provided assistance in this matter, as did the Justice Department’s Office of International Affairs.

The Fraud Section is responsible for investigating and prosecuting FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Thursday, May 5, 2022

Justice Department Seeks Forfeiture of Los Angeles Mega-Mansion Purchased with Proceeds of Armenian Corruption Scheme

The United States is seeking the forfeiture of a more than 30,000-square-foot mega-mansion in the Holmby Hills neighborhood of Los Angeles, pursuant to a civil forfeiture complaint filed that alleges that the mansion was purchased with bribes paid by an Armenian businessman to the family of Gagik Khachatryan, a former high-ranking Armenian public official.

Gagik Khachatryan, 66, who was known as the “Super Minister,” because of his significant responsibilities, served as Chairman of the State Revenue Committee of the Republic of Armenia from 2008 to 2014 and as Minister of Finance for the Republic of Armenia from 2014 to 2016. In the complaint, which was filed Monday in U.S. District Court for the Central District of California, the United States alleges that businessman Sedrak Arustamyan paid Khachatryan and his family more than $20 million in bribes in exchange for favorable tax treatment of his businesses. The bribe payments allegedly were used to purchase the Holmby Hills property, which had been recently listed for sale for $63,500,000.

Gagik Khachatryan and his sons are charged in Armenia with receiving bribes in violation of the criminal code of the Republic of Armenia. Criminal charges are also pending in Armenia against Arustamyan for paying bribes.

This matter was investigated by the FBI’s Eurasian Organized Crime Task Force (EOCTF) and the U.S. Marshals Service. The Republic of Armenia’s Prosecutor General’s Office and National Security Service provided critical assistance.  The EOCTF is composed of multiple law enforcement agencies including the FBI, IRS-Criminal Investigation, the U.S. Postal Inspection Service, the Glendale Police Department, the Los Angeles Police Department, and the Los Angeles County Sheriff’s Department.

Trial Attorney D. Hunter Smith of the Kleptocracy Asset Recovery Initiative of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorney Maxwell Coll for the Central District of California are litigating the forfeiture.

The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorneys’ Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov or visit https://tips.fbi.gov/.

A civil complaint is merely an allegation, and the government has the burden of establishing the assets are subject to forfeiture by a preponderance of the evidence.

Department of Justice

U.S. Attorney’s Office

District of Maryland

FOR IMMEDIATE RELEASE

Wednesday, May 4, 2022

Longtime Employee of a Harford County, Maryland Manufacturer Pleads Guilty to Leading a $29 Million Kickback Scheme

The Defendant Also Evaded Over $1.375 Million in Federal Taxes

Baltimore, Maryland – Eugene Andrew DiNoto, age 51, of Bel Air, Maryland, pleaded guilty yesterday to conspiracy to commit wire fraud, engaging in an illegal monetary transaction, and filing a false tax return, in connection with a kickback scheme that defrauded his employer of more than $29 million.    

The guilty plea was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Field Office; and Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service – Criminal Investigation, Washington, D.C. Field Office.

According to his guilty plea, Eugene DiNoto was a longtime employee of Company 1, a family-owned global business headquartered in New York, but with manufacturing facilities in Belcamp and Abingdon, Maryland, both in Harford County.  Beginning in 2012, DiNoto and another employee, Elliott Kleinman, began to use their management positions at Company 1 to execute a fraudulent billing scheme whereby they would get illegal kickbacks from various drum vendors doing business with Company 1, which used drums to store and transport its products.  As the facility managers, DiNoto and Kleinman oversaw the purchasing and storing of drums for use at the Harford County manufacturing facilities.  They also had authority to review drum invoices and authorize payments to the drum vendors. 

Anthony P. Urcioli, Sr., is the owner and President of Tunnel, Barrel & Drum Co, Inc. (TBD), located in Carlstadt, New Jersey, and of another drum supply company called Hartford Fibre Drum, Inc. (Hartford), both of which did business with Company 1.  After TBD became a drum supplier to Company 1, DiNoto and Kleinman entered into arrangement with Urcioli whereby TBD could continue selling drums to Company 1 if Urcioli agreed to fraudulently invoice Company 1 for more drums than TBD actually sold and delivered to the company.  If Urcioli agreed to falsify its invoices in this way, DiNoto and Kleinman said that they and TBD could split the extra money Company 1 paid TBD for the made-up drum deliveries 50/50.  DiNoto told Urcioli that he would split his share of the kickbacks with Elliot Kleinman 75/25.  Urcioli agreed to participate in the false billing scheme.  

From approximately January 2012 to January 31, 2020, DiNoto contacted Urcioli at least once a week to discuss the number and type of drums that he actually wanted delivered to Company 1’s Maryland facilities.  During the same conversation, DiNoto told Urcioli how many additional drums to charge, but not deliver, to Company 1 from TBD, and later from Hartford, Urcioli’s other company.  After Urcioli created the invoices that fraudulently billed Company 1 for both delivered and undelivered drums, DiNoto approved the invoices and sent them to Company 1’s headquarters to be paid.  

Urcioli also created a handwritten purchase order ticket that summarized the breakdown of actual and bogus drum orders and how the kickback amounts were calculated.  Urcioli would put a copy of the purchase order ticket in an envelope along with DiNoto’s and Kleinman’s share of the kickback amount payable via checks from TBD and Hartford, and then send the envelope to their personal residences in Harford County, Maryland. 

Sometimes, the invoices were not written as DiNoto had instructed, and he would call Urcioli and tell him to send a corrected invoice of adjust the kickback amounts.  Occasionally, DiNoto would correct an arithmetic mistake on Urcioli’s purchase order ticket, take a photograph of the changes he made to the ticket, and then email the corrected ticket back to Urcioli.

Urcioli wanted to pay the kickbacks to DiNoto and Kleinman by check so the payments would look like payments to drum wholesalers and be deductible as a cost of goods sold on TBD’s tax returns.  DiNoto told Urcioli to make his kickback checks payable to a company linked to DiNoto, called “Sandpiper Enterprises.”  Kleinman advised that he wanted his kickback checks payable to a company he formed called “EDK Management, LTD.”  Urcioli agreed, and in addition to making the kickback checks drawn on TBD and Hartford accounts payable to those companies, Urcioli wrote the word “drums” on the checks to further the pretense of legitimate purchases.

DiNoto admitted that even though Sandpiper Enterprises was not engaged in any business, he maintained a commercial bank account for Sandpiper Enterprises at a local financial institution, where he deposited all the kickback checks he received.  Before accessing the criminal proceeds, DiNoto routinely transferred all or part of the money into one of the personal bank accounts he maintained at the same bank.  DiNoto would then withdraw the funds from his personal account or write a personal check against the balance.          

Between January 2012 and January 31, 2020, Urcioli falsely invoiced Company 1 a total of $20,300,757.  TBD and Hartford kept half that amount while the remaining funds were sent to DiNoto and Kleinman.  DiNoto’s share of the kickbacks was approximately $7,071,106.  Over the same eight-year period, DiNoto used other drum vendors besides TBD and Hartford to execute his scheme to defraud Company 1.  On behalf of those other vendors, DiNoto submitted and approved invoices totaling approximately $9,197,181, resulting in a total loss to Company 1 of approximately $29,497,938.

For the period of 2017 through 2019, none of the more than $7 million in kickbacks DiNoto received for his role in the fraudulent billing scheme appeared as income on the tax returns DiNoto filed with the IRS, resulting in a loss to the U.S. government of approximately $1,374,694.

DiNoto faces a maximum sentence of 20 years in prison for conspiracy to commit wire fraud; a maximum of 10 years in federal prison for engaging in an illegal monetary transaction; and a maximum of five years in federal prison for filing a false tax return.  U.S. District Judge Lydia Kay Griggsby scheduled sentencing for DiNoto on July 13, 2022 at 2:00 p.m.

Elliott Dennis Kleinman, age 68, of Bel Air, Maryland and Anthony P. Urcioli, Sr., age 78, of Park Ridge, New Jersey, previously pleaded guilty to their roles in the scheme and are awaiting sentencing.

United States Attorney Erek L. Barron commended the FBI and IRS-CI for their work in the investigation.  Mr. Barron thanked Assistant U.S. Attorneys Martin J. Clarke and Harry M. Gruber, who are prosecuting the case.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to report fraud, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/report-fraud.

Department of Justice

U.S. Attorney’s Office

Eastern District of Arkansas

FOR IMMEDIATE RELEASE

Wednesday, May 11, 2022

Former DEA Supervisory Agent Sentenced to 135 Months in Prison for Accepting Bribes from Drug Kingpin

      LITTLE ROCK—A former Drug Enforcement Administration (DEA) agent was sentenced today for accepting bribes from a drug trafficker. Nathan Koen, 45, now of Auburn, Illinois, was sentenced to 135 months in federal prison by United States District Judge Brian S. Miller.

      Koen was charged by a federal grand jury in November 2019 with one count of conspiracy to possess with intent to distribute and to distribute heroin, cocaine, and methamphetamine, and one count of bribery of a public official. In August 2021, he pleaded guilty to bribery in exchange for dismissal of the drug-related charge.

      During the sentencing hearing, which took place over two days and concluded today, Judge Miller found that Koen accepted bribes from a known, large-scale drug trafficker for the purpose of helping facilitate a drug conspiracy, and that the conspiracy involved at least 15 to 45 kilograms of methamphetamine. The drug trafficker testified during the hearing and explained that he believed Koen provided was providing sensitive, law-enforcement information, which helped the trafficker avoid detection by law enforcement and run his drug organization. The drug trafficker, who is in federal custody, stated that his organization was responsible for distributing kilogram quantities of methamphetamine cocaine, heroin, fentanyl, and marijuana.

      “This defendant’s actions are a disgrace to the thousands of dedicated law enforcement officers who work with integrity every day to protect and serve our communities,” stated United States Attorney Jonathan D. Ross. “His greed and deception have no place in law enforcement, and we are pleased to see this case come to its rightful conclusion.”

      In 2018, the FBI began investigating Koen, who had been working for DEA since 2002 and had transferred in 2016 to work as a Group Supervisor in the Little Rock DEA office from Jacksonville, Florida. FBI agents interviewed the drug trafficker who told law enforcement he had paid Koen cash for information and protection related to his drug-trafficking activities.

      The drug trafficker told FBI agents he had been in custody on federal drug charges in 2013-2014 when another inmate told him he should contact Koen and offer to work as an informant, which he did. After his case was resolved, the informant resumed distributing large amounts of heroin, methamphetamine, marijuana, and cocaine in Florida, California, Arkansas, and elsewhere, while making payments to Koen for protection. The informant paid approximately $31,500 to Koen before he began cooperating with the FBI.

      The informant began working with FBI, and he agreed to set up a controlled delivery of a bribe payment to Koen. Koen and the informant agreed to meet in Las Vegas on December 3, 2018. FBI agents equipped the informant with $9,000 cash and multiple audio recording devices. Koen and the informant met on the sidewalk across from the Bellagio hotel and walked together to the Paris Las Vegas hotel, where they went inside a bathroom away from casino cameras. Once inside, the informant placed the cash in Koen’s backpack, and they left the hotel, each going in different directions.

      Recordings of the encounter revealed that Koen asked the informant, “Did you make this worth it?” The informant responded, “Come on, man, you know I always make it worth it for you.” Koen responded, “I know.” Koen also advised the informant that he should get rid of all his phones and change his address because he expected a search warrant to be executed at his home soon. Koen was arrested when he returned to Arkansas later that day, and he admitted to accepting bribes from the informant.

      “By protecting a drug trafficking organization and accepting bribes from a drug kingpin, former Group Supervisor Nathan Koen deceived and betrayed his brothers and sisters in the DEA,” FBI Little Rock Special Agent in Charge James A. Dawson said. “His disgraceful and corrupt conduct only strengthens our resolve to continue attacking corruption at all levels. We’re grateful for the strong, ongoing partnerships we share with both the Drug Enforcement Administration and U.S. Attorney’s Office.”

      “Today’s sentencing reflects DEA’s commitment to hold accountable any DEA employee who abuses the trust of the American people by violating their oath as a federal law enforcement officer,” said DEA Administrator Anne Milgram. “Nathan Koen put himself ahead of the principles he swore to protect. I commend our federal law enforcement partners who investigated this case and the U.S. Attorneys who prosecuted it.”

      “Koen turned his back on his duty to protect the public. As a DEA Agent, Koen was tasked with investigating drug traffickers. Instead, he accepted a cash bribe and provided a known drug trafficker with sensitive law enforcement information. The Department of Justice Office of the Inspector General will continue to investigate those who engage in this kind of conduct,” said Cloey C. Pierce, Special Agent in Charge of the Department of Justice Office of the Inspector General Dallas Field Office.

      In addition to the term of imprisonment, Judge Miller also sentenced Koen to two years of supervised release following his term of imprisonment. The investigation was conducted by the FBI, and the case was prosecuted by Assistant United States Attorneys Benecia Moore and Chris Givens.

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This news release, as well as additional information about the office of the United States Attorney for the Eastern District of Arkansas, is available online at https://www.justice.gov/edar

Twitter:

@EDARNEWS

Department of Justice

U.S. Attorney’s Office

Eastern District of Virginia

FOR IMMEDIATE RELEASE

Friday, April 15, 2022

Government Contractor Pleads Guilty to Bribing a Government Official

NORFOLK, Va. – A Chesapeake woman pleaded guilty today to bribing a government official.

According to court documents, Jennifer A. Strickland 47, agreed to bribe a General Services Administration (GSA) Contracting Official in return for said official to award federal construction contacts to Strickland’s company, SDC Contracting LLC.

Jennifer Strickland is the President of SDC Contracting LLC, a company that contracted with the federal government to provide construction and renovation services at federal buildings throughout the Eastern District of Virginia, including the Lewis F. Powell, Jr. United States Courthouse in downtown Richmond. From July 2018 until December 2019, Strickland made cash payments to a GSA contracting official totaling $43,500, in return for the award of a contract valued at approximately $1,369,501.00.

Strickland is scheduled to be sentenced on August 12. She faces a maximum penalty of 15 years in prison. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia; Brian Dugan, Special Agent in Charge of the FBI’s Norfolk Field Office; Chris Dillard, Special Agent in Charge for the Department of Defense Office of Inspector General; Eric Maddox, Special Agent in Charge of the Naval Criminal Investigative Service (NCIS) Economic Crimes Field Office; and Eric Radwick, Special Agent in Charge for the General Services GSA Office of Inspector General Mid-Atlantic Division., made the announcement after United States Magistrate Judge Lawrence R. Leonard., accepted the plea.

Assistant U.S. Attorneys Matthew Heck and Randy Stoker are prosecuting the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:22-cr-33.

Department of Justice

U.S. Attorney’s Office

District of Arizona

FOR IMMEDIATE RELEASE

Monday, April 25, 2022

Former Santa Cruz County Assessor Pleads Guilty to Bribery Conspiracy

PHOENIX, Ariz. – Felipe Fuentes, 62, of Nogales, Arizona, pleaded guilty last week for his role in a long-running bribery conspiracy that spanned much of his tenure as the elected County Assessor for Santa Cruz County. Fuentes pleaded guilty to a felony charge of Conspiracy to Commit Honest Services Wire Fraud, which carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for August 2, 2022 before the Honorable Raner C. Collins, Senior United States District Judge.  

According to Fuentes’ admissions in connection with the plea hearing, Fuentes and other co-conspirators engaged in a multi-year bribery scheme in which Fuentes received cash payments from a large landowner in Santa Cruz County. Fuentes admitted that, in exchange for the cash payments, he took various official acts in his capacity as the County Assessor to benefit the landowner, including reducing assessed values for properties owned by him and his business entities. According to Fuentes’ plea agreement, in addition to the cash payments, the landowner also allowed Fuentes to use a 17-acre ranch owned by one of his business entities free of charge for multiple years during the course of the bribery conspiracy. 

“Property taxes pay for critical local government services that support our communities,” said United States Attorney Gary Restaino. “Fuentes abused the public trust when he reduced the assessed value of property, and by doing so diverted money away from Santa Cruz County in order to serve his own self-interest.”

“The citizens of Arizona deserve a government free of corruption. The FBI will not tolerate those who abuse their positions of authority and is committed to rooting out public corruption and civil rights violations at all levels,” said Sean Kaul, special agent in charge of the FBI Phoenix Field Office. “The FBI continues to investigate this case and encourages the public to come forward if they have any information.”

The Federal Bureau of Investigation’s Southern Arizona Corruption Task Force investigated the case. The Financial Crimes and Public Corruption section of the U.S. Attorney’s Office, District of Arizona, Tucson, handled the prosecution. 

CASE NUMBER:            CR-22-00824-TUC-RCC
RELEASE NUMBER:    2022-049_Fuentes

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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.

Department of Justice

U.S. Attorney’s Office

Northern District of Illinois

FOR IMMEDIATE RELEASE

Monday, April 25, 2022

Former Crestwood Mayor Sentenced to a Year in Federal Prison for Participating in Bribery Scheme Involving Red-Light Camera Services

CHICAGO — The former mayor of Crestwood, Ill., was sentenced today to a year in federal prison for improperly soliciting and receiving benefits from a representative of a red-light camera company that provided services to the Chicago suburb.

LOUIS PRESTA, 71, of Crestwood, pleaded guilty last year to one count of using a facility in interstate commerce in aid of bribery and official misconduct, and one count of filing a false income tax return.  U.S. District Judge Thomas M. Durkin imposed the year-and-a-day sentence after a hearing in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago Field Office of the FBI; and Justin Campbell, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago.

“Public corruption is an extremely serious offense that erodes the public’s trust in all levels of government,” Assistant U.S. Attorney James P. Durkin argued in the government’s sentencing memorandum.  “It tarnishes by association the honest public servants who view their jobs through the lens of what is in the public interest, not their own self-interest.”

According to Presta’s plea agreement with the government, the red-light camera company provided camera services to Crestwood that enabled the municipality to issue tickets to motorists for certain traffic violations.  While the company was attempting to provide additional such services to Crestwood, then-Mayor Presta asked for and accepted benefits from a representative of the company.  Presta told the company’s representative that the percentage of red-light traffic violations that Presta approved would remain high or increase – in exchange for a cash payment to Presta from the representative, the plea agreement states. 

The plea agreement describes a Feb. 27, 2018, phone call between Presta and the company’s representative in which Presta updated the representative on the higher percentage of red-light traffic violations that Crestwood approved the previous week.  During the call, Presta stated, “We’re starting to get the numbers again… you got a new sheriff in town.”  Shortly after that call, Presta on March 7, 2018, received a $5,000 cash bribe from the representative of the company.  When subsequently questioned by federal law enforcement about his receipt of the $5,000 bribe payment, Presta falsely stated that he neither asked for nor received the $5,000 bribe.

In addition to the bribery scheme, Presta admitted in the plea agreement that he willfully filed a false personal income tax return for the calendar year 2015.

Department of Justice

U.S. Attorney’s Office

Eastern District of California

FOR IMMEDIATE RELEASE

Thursday, April 28, 2022

Former DMV Employee Pleads Guilty to Conspiracy to Receive Bribes to Alter Records in DMV Database in Sacramento

SACRAMENTO, Calif. — Shawana Denise Harris, 52, of Rancho Cucamonga, pleaded guilty today to conspiracy to commit bribery, to commit unauthorized access of a computer, and to commit identity fraud, which resulted in unqualified drivers receiving their California commercial driver’s licenses (CDLs), U.S. Attorney Phillip A. Talbert announced.

According to court documents, on Nov. 16, 2017, Harris was charged with conspiring to receive bribes as a DMV employee in Rancho Cucamonga for accessing and altering records in the DMV’s database in Sacramento. During the scheme, Harris altered records to show that applicants for California CDLs had passed the required tests when, in truth, they had not done so, and in some cases had not even taken the tests. In so doing, this caused the DMV to issue permits and completed California CDLs despite the applicants not having taken or passed those tests.

This case is the product of an investigation by the California Department of Motor Vehicles, Office of Internal Affairs; the Federal Bureau of Investigation; Homeland Security Investigations; and the Department of Transportation, Office of Inspector General. Assistant U.S. Attorneys Rosanne L. Rust and Christopher S. Hales are prosecuting the case.

Harris is scheduled to be sentenced on July 28, 2022, by U.S. District Judge Troy L. Nunley. Harris faces a maximum statutory penalty of five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Department of Justice

U.S. Attorney’s Office

Eastern District of Michigan

FOR IMMEDIATE RELEASE

Wednesday, May 4, 2022

U.S. POSTAL SERVICE ENGINEER PLEADS GUILTY TO TAKING ILLEGAL GRATUITIES FROM POSTAL SERVICE CONTRACTOR

DETROIT – Thomas Berlucchi, a Facilities Engineer for the United States Postal Service (USPS), pleaded guilty today to accepting over $6,500 in illegal gratuities from a USPS contractor announced United States Attorney Dawn N. Ison.

Ison was joined in the announcement by Kenneth Cleevely, Special Agent in Charge of the Contract Fraud Investigations Division, United States Postal Service, Office of Inspector General (OIG).

Thomas Berlucchi, 61 years old, of Troy, Michigan, stands convicted of accepting illegal gratuities from Michael Rymar, who was the owner of a Rochester Hills company, Horizons Materials & Management LLC, which was awarded contracts to repair USPS buildings in Michigan and New York.  According to court records, from 2015 to 2018, Berlucchi and other USPS engineers awarded Rymar’s company over $5 million in contracts. As a USPS Facilities Engineer, Berlucchi had the power to award no-bid contracts to contractors like Rymar so long as the contract was worth less than $10,000. During the plea hearing, Berlucchi admitted that between 2013 and 2018, he had accepted over $6,500 in illegal gratuities from Rymar because Rymar sought to continue to receive USPS work from Berlucchi. Berlucchi had awarded hundreds of thousands of dollars in work to Rymar. Berlucchi admitted accepting free construction work on his cottage (including exterior stairs and a new roof), free hotel rooms, and donations by Rymar to Berlucchi’s preferred organization.

Separately, Rymar has been charged with and pleaded guilty to stealing government funds because he committed fraud in the USPS contracts which he had received. In that scheme, Rymar provided documentation to the USPS containing false and fraudulent statements, oftentimes dramatically and falsely overstating the amount he paid subcontractors to complete the repairs. Rymar also falsely inflated the amount he paid his own employees and the cost of materials on USPS jobs. Over the course of the three-plus year fraudulent scheme, Rymar stole over $1.2 million from USPS out of the $5 million in contracts he was awarded.

United States Attorney Ison stated, “Federal employees who corrupt the contracting process by accepting illegal gratuities from contractors will be caught and punished.”

“We are gratified to have contributed to this investigation and applaud the exceptional work by the United States Attorney’s Office for both protecting the contracting process and overall program costs,” said Kenneth Cleevely, Special Agent in Charge, USPS OIG. “Along with the Department of Justice, the USPS OIG will continue to aggressively investigate those who would engage in fraudulent activities designed to defraud the Postal Service.”

Upon conviction for a violation of Title 18, United States Code, Section 201(c)(1)(B), gratuity to a public official, Berlucchi faces a maximum sentence of two years in prison and a fine of up to $250,000. 

Under the United States Sentencing Commission Guidelines, Berlucchi is facing a sentence of between 8 to 14 months in prison.    

The investigation of this case was conducted by the of the United States Postal Service, Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorney Steven Cares.

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Tuesday, May 24, 2022

Glencore Entered Guilty Pleas to Foreign Bribery and Market Manipulation Schemes

Swiss-Based Firm Agrees to Pay Over $1.1 Billion

Glencore International A.G. (Glencore) and Glencore Ltd., both part of a multi-national commodity trading and mining firm headquartered in Switzerland, each pleaded guilty today and agreed to pay over $1.1 billion to resolve the government’s investigations into violations of the Foreign Corrupt Practices Act (FCPA) and a commodity price manipulation scheme.

These guilty pleas are part of coordinated resolutions with criminal and civil authorities in the United States, the United Kingdom, and Brazil.

“The rule of law requires that there not be one rule for the powerful and another for the powerless; one rule for the rich and another for the poor,” said Attorney General Merrick B. Garland. “The Justice Department will continue to bring to bear its resources on these types of cases, no matter the company and no matter the individual.”

The charges in the FCPA matter arise out of a decade-long scheme by Glencore and its subsidiaries to make and conceal corrupt payments and bribes through intermediaries for the benefit of foreign officials across multiple countries. Pursuant to a plea agreement, Glencore has agreed to a criminal fine of more than $428 million and to criminal forfeiture and disgorgement of more than $272 million. Glencore has also agreed to retain an independent compliance monitor for three years. The department has agreed to credit nearly $166 million in payments that Glencore makes to resolve related parallel investigations by other domestic and foreign authorities.

Separately, Glencore Ltd. admitted to engaging in a multi-year scheme to manipulate fuel oil prices at two of the busiest commercial shipping ports in the U.S. As part of the plea agreement, Glencore Ltd. agreed to pay a criminal fine of over $341 million, pay forfeiture of over $144 million, and retain an independent compliance monitor for three years. The department has agreed to credit up to one-half of the criminal fine and forfeiture against penalties Glencore Ltd. pays to the Commodity Futures Trading Commission (CFTC) in a related, parallel civil proceeding.

Sentencing has been scheduled in the market manipulation case for June 24, and a control date for sentencing in the FCPA case has been set for Oct. 3.

“Glencore’s guilty pleas demonstrate the Department’s commitment to holding accountable those who profit by manipulating our financial markets and engaging in corrupt schemes around the world,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “In the foreign bribery case, Glencore International A.G. and its subsidiaries bribed corrupt intermediaries and foreign officials in seven countries for over a decade. In the commodity price manipulation scheme, Glencore Ltd. undermined public confidence by creating the false appearance of supply and demand to manipulate oil prices.”

“The scope of this criminal bribery scheme is staggering,” said U.S. Attorney Damian Williams for the Southern District of New York. “Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore bribed judges to make lawsuits disappear. At bottom, Glencore paid bribes to make money – hundreds of millions of dollars. And it did so with the approval, and even encouragement, of its top executives. The criminal charges filed against Glencore in the Southern District of New York are another step in making clear that no one – not even multinational corporations – is above the law.”

“Glencore’s market price manipulation threatened not just financial harm, but undermined participants’ faith in the commodities markets’ fair and efficient function that we all rely on,” said U.S. Attorney Vanessa Roberts Avery of the District of Connecticut. “This guilty plea, and the substantial financial penalty incurred, is an appropriate consequence for Glencore’s criminal conduct, and we are pleased that Glencore has agreed to cooperate in any ongoing investigations and prosecutions relating to their misconduct, and to strengthen its compliance program company-wide.  I thank both our partners at the U.S. Postal Inspection Service for their hard work and dedication in investigating this sophisticated set of facts and unraveling this scheme, and the Fraud Section, with whom we look forward to continuing our fruitful partnership of prosecuting complex financial and corporate criminal cases.”

“Today’s guilty pleas by Glencore entities show that there is no place for corruption and fraud in international markets,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “Glencore engaged in long-running bribery and price manipulation conspiracies, ultimately costing the company over a billion dollars in fines. The FBI and our law enforcement partners will continue to investigate criminal financial activities and work to restore the public’s trust in the marketplace.”

“The idea of fair and honest trade is at the bedrock of American commerce. It is insult to our shared traditions and values when individuals and corporations use their power, wealth, and influence to stack the deck unfairly in their own favor,” said Chief Postal Inspector Gary Barksdale of the U.S. Postal Inspection Service. “The resulting guilty plea by Glencore Limited demonstrates the tenacity of the U.S. Postal Inspection Service and its law enforcement partners in holding criminals accountable who try to enrich themselves by undermining the forces of supply and demand.”

The FCPA Case

According to admissions and court documents filed in the Southern District of New York, Glencore, acting through its employees and agents, engaged in a scheme for over a decade to pay more than $100 million to third-party intermediaries, while intending that a significant portion of these payments would be used to pay bribes to officials in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, Brazil, Venezuela, and the Democratic Republic of the Congo (DRC).

Between approximately 2007 and 2018, Glencore and its subsidiaries caused approximately $79.6 million in payments to be made to intermediary companies in order to secure improper advantages to obtain and retain business with state-owned and state-controlled entities in the West African countries of Nigeria, Cameroon, Ivory Coast, and Equatorial Guinea. Glencore concealed the bribe payments by entering into sham consulting agreements, paying inflated invoices, and using intermediary companies to make corrupt payments to foreign officials. For example, in Nigeria, Glencore and Glencore’s U.K. subsidiaries entered into multiple agreements to purchase crude oil and refined petroleum products from Nigeria’s state-owned and state-controlled oil company. Glencore and its subsidiaries engaged two intermediaries to pursue business opportunities and other improper business advantages, including the award of crude oil contracts, while knowing that the intermediaries would make bribe payments to Nigerian government officials to obtain such business. In Nigeria alone, Glencore and its subsidiaries paid more than $52 million to the intermediaries, intending that those funds be used, at least in part, to pay bribes to Nigerian officials.

In the DRC, Glencore admitted that it conspired to and did corruptly offer and pay approximately $27.5 million to third parties, while intending for a portion of the payments to be used as bribes to DRC officials, in order to secure improper business advantages. Glencore also admitted to the bribery of officials in Brazil and Venezuela. In Brazil, the company caused approximately $147,202 to be used, at least in part, as corrupt payments for Brazilian officials. In Venezuela, Glencore admitted to conspiring to secure and securing improper business advantages by paying over $1.2 million to an intermediary company that made corrupt payments for the benefit of a Venezuelan official.

In July 2021, a former senior trader in charge of Glencore’s West Africa desk for the crude oil business pleaded guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering.

Under the terms of the plea agreement, which remains subject to court approval, Glencore pleaded guilty to one count of conspiracy to violate the FCPA, agreed to a criminal fine of $428,521,173, and agreed to criminal forfeiture and disgorgement in the amount of $272,185,792. Glencore also had charges brought against it by the U.K.’s Serious Fraud Office (SFO) and reached separate parallel resolutions with the Brazilian Ministério Público Federal (MPF) and the CFTC. Under the terms of the plea agreement, the department has agreed to credit nearly $256 million in payments that the company makes to the CFTC, to the court in the U.K., as well as to authorities in Switzerland, in the event that the company reaches a resolution with Swiss authorities within one year.

The department reached its agreement with Glencore based on a number of factors, including the nature, seriousness, and pervasiveness of the offense conduct, which spanned over a 10-year period, in numerous countries, and involved high-level employees and agents of the company; the company’s failure to voluntarily and timely disclose the conduct to the department; the state of Glencore’s compliance program and the progress of its remediation; the company’s resolutions with other domestic and foreign authorities; and the company’s continued cooperation with the department’s ongoing investigation. Glencore did not receive full credit for cooperation and remediation, because it did not consistently demonstrate a commitment to full cooperation, it was delayed in producing relevant evidence, and it did not timely and appropriately remediate with respect to disciplining certain employees involved in the misconduct. Although Glencore has taken remedial measures, some of the compliance enhancements are new and have not been fully implemented or tested to demonstrate that they would prevent and detect similar misconduct in the future, necessitating the imposition of an independent compliance monitor for a term of three years.

The Commodity Price Manipulation Case

According to admissions and court documents filed in the District of Connecticut, Glencore Ltd. operated a global commodity trading business, which included trading in fuel oil. Between approximately January 2011 and August 2019, Glencore Ltd. employees (including those who worked at Chemoil Corporation, which was majority-owned by Glencore Ltd.’s parent company and then fully-acquired in 2014) conspired to manipulate two benchmark price assessments published by S&P Global Platts (Platts) for fuel oil products, specifically, intermediate fuel oil 380 CST at the Port of Los Angeles (Los Angeles 380 CST Bunker Fuel) and RMG 380 fuel oil at the Port of Houston (U.S. Gulf Coast High-Sulfur Fuel Oil). The Port of Los Angeles is the busiest shipping port in the U.S. by container volume. The Port of Houston is the largest U.S. port on the Gulf Coast and the busiest port in the United States by foreign waterborne tonnage.

As part of the conspiracy, Glencore Ltd. employees sought to unlawfully enrich themselves and Glencore Ltd. itself, by increasing profits and reducing costs on contracts to buy and sell physical fuel oil, as well as certain derivative positions that Glencore Ltd. held. The price terms of the physical contracts and derivative positions were set by reference to daily benchmark price assessments published by Platts — either Los Angeles 380 CST Bunker Fuel or U.S. Gulf Coast High-Sulfur Fuel Oil — on a certain day or days plus or minus a fixed premium. On these pricing days, Glencore Ltd. employees submitted orders to buy and sell (bids and offers) to Platts during the daily trading “window” for the Platts price assessments with the intent to artificially push the price assessment up or down.

For example, if Glencore Ltd. had a contract to buy fuel oil, Glencore Ltd. employees submitted offers during the Platts “window” for the express purpose of pushing down the price assessment and hence the price of the fuel oil that Glencore Ltd. purchased. The bids and offers were not submitted to Platts for any legitimate economic reason by Glencore Ltd. employees, but rather for the purpose of artificially affecting the relevant Platts price assessment so that the benchmark price, and hence the price of fuel oil that Glencore Ltd. bought from, and sold to, another party, did not reflect legitimate forces of supply and demand.

Between approximately September 2012 and August 2016, Glencore Ltd. employees conspired to and did manipulate the price of fuel oil bought from, and sold to, a particular counterparty, Company A, through private, bilateral contracts, by manipulating the Platts price assessment for Los Angeles 380 CST Bunker Fuel. Between approximately January 2014 and February 2016, Glencore Ltd. employees also undertook a “joint venture” with Company A, which involved buying fuel oil from Company A at prices artificially depressed by Glencore Ltd.’s manipulation of the Platts Los Angeles 380 CST Bunker Fuel benchmark. Finally, between approximately January 2011 and August 2019, Glencore Ltd. employees conspired to and did manipulate the price of fuel oil bought and sold through private, bilateral contracts, as well as derivative positions, by manipulating the Platts price assessment for U.S. Gulf Coast High-Sulfur Fuel Oil.

A former Glencore Ltd. senior fuel oil trader, Emilio Jose Heredia Collado, of Lafayette, California, pleaded guilty in March 2021 to one count of conspiracy to engage in commodities price manipulation in connection with his trading activity related to the Platts Los Angeles 380 CST Bunker Fuel price assessment. Heredia’s sentencing is scheduled for June 17, 2022.

Glencore Ltd. pleaded guilty, pursuant to a plea agreement, to one count of conspiracy to engage in commodity price manipulation. Under the terms of Glencore Ltd.’s plea agreement regarding the commodity price manipulation conspiracy, which remains subject to court approval, Glencore Ltd. will pay a criminal fine of $341,221,682 and criminal forfeiture of $144,417,203. Under the terms of the plea agreement, the department will credit over $242 million in payments that the company makes to the CFTC. Glencore Ltd. also agreed to, among other things, continue to cooperate with the department in any ongoing investigations and prosecutions relating to the underlying misconduct, to modify its compliance program where necessary and appropriate, and to retain an independent compliance monitor for a period of three years.

A number of relevant considerations contributed to the department’s plea agreement with Glencore Ltd., including the nature and seriousness of the offense, Glencore Ltd.’s failure to fully and voluntarily self‑disclose the offense conduct to the department, Glencore Ltd.’s cooperation with the department’s investigation, and the state of Glencore Ltd.’s compliance program and the progress of its remediation.

Additionally, the CFTC today announced a separate settlement with Glencore and its affiliated companies in connection with its investigation into FCPA and market manipulation conduct in a related, parallel proceeding. Under the terms of the CFTC resolution, Glencore agreed to pay over $1.1 billion, which includes a civil monetary penalty of over $865 million, as well as disgorgement totaling over $320 million.

The FCPA case is being prosecuted by Trial Attorneys Leila Babaeva and James Mandolfo of the Justice Department’s Fraud Section, Trial Attorney Michael Khoo of the Justice Department’s Money Laundering and Asset Recovery Section, and Assistant U.S. Attorneys Michael McGinnis and Juliana Murray of the Southern District of New York. The case is being investigated by the FBI.

The Criminal Division’s Office of International Affairs provided significant assistance in this case. The department also expresses its appreciation for the assistance provided by law enforcement authorities in Switzerland, the United Kingdom, Brazil, Cyprus, and Luxembourg

The commodity price manipulation case is being prosecuted by Deputy Chief Avi Perry and Trial Attorneys Matthew F. Sullivan and John J. Liolos of the Justice Department’s Fraud Section, and Assistant U.S. Attorney Jonathan Francis of the District of Connecticut. The case is being investigated by the U.S. Postal Inspection Service.

The Fraud Section is responsible for investigating and prosecuting FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.

The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorneys’ Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office.

Department of Justice

U.S. Attorney’s Office

Central District of California

FOR IMMEDIATE RELEASE

Tuesday, May 3, 2022

Former Federal Agent Found Guilty of Participating in Bribery Scheme that Brought Him Approximately $100,000 in Ill-Gotten Gains

          LOS ANGELES – A former special agent with Homeland Security Investigations (HSI) was found guilty by a federal jury today of dozens of criminal charges for accepting cash payments and other benefits to help an organized crime-linked person, including taking official action designed to help two foreign nationals gain entry into the United States.

          Felix Cisneros Jr., 48, of Murrieta, was found guilty of 30 felonies: one count of conspiracy to commit bribery of a public official, one count of bribery, 26 counts of money laundering and two counts of subscribing to a false tax return. After today’s verdict was read, Cisneros was ordered immediately remanded into federal custody.

          According to evidence presented at his five-day trial, over an 18-month period that started in September 2015, Cisneros accepted cash, checks, private jet travel, luxury hotel stays, meals and other items of value from a person identified in court documents as “Individual 1,” who was associated with a criminal organization. Cisneros received approximately $100,000 in checks and gifts from Individual 1 in 2015 and 2016.

          Cisneros accepted the cash and other bribes while employed as a special agent with HSI, which is an agency within the United States Department of Homeland Security. In exchange for the bribes, Cisneros performed a series of official acts at the behest of Individual 1, including:

• Accessing a DHS database for information about a German national identified as W.R., and telling Individual 1 he removed a “hit” on W.R., “thus indicating derogatory information had been removed”;
• Placing an alert in a law enforcement database for an address associated with an illegal marijuana grow operation so Cisneros could learn of law enforcement interest and warn Individual 1;
• Obtaining an official DHS letter signed by an HSI assistant special agent in charge to allow the parole of Individual 1’s brother-in-law into the United States from Mexico, and later providing updates about the brother-in-law’s asylum application; and
• Collecting information on an associate of Individual 1 whose home had been searched by law enforcement and later providing Individual 1 with information about the investigation.

          Cisneros also underreported his total income on his federal income tax returns by at least $20,000 for the year 2015 and at least $73,404 for the year 2016.

          United States District Judge R. Gary Klausner has scheduled an August 1 sentencing hearing. The conspiracy charge carries a statutory maximum sentence of five years in federal prison, the bribery count carries a sentence of up to 15 years, each money laundering charge carries a statutory maximum sentence of 20 years’ imprisonment, and each tax count carries a statutory maximum sentence of three years in federal prison.

          The FBI, IRS Criminal Investigation and the Department of Homeland Security’s Office of Inspector General investigated this matter.

Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section and Assistant United States Attorneys Michael J. Morse and Juan M. Rodriguez of the General Crimes Section are prosecuting this case.

Department of Justice

U.S. Attorney’s Office

District of Maryland

FOR IMMEDIATE RELEASE

Friday, May 6, 2022

Dentist Pleads Guilty to Unlawfully Obtaining Medicaid Funds and Paying Recruiters to Refer Medicaid Beneficiaries to His Dental Office in Exchange for Kickbacks

Greenbelt, Maryland – Edward T. Buford III, age 70, of Silver Spring, Maryland, pleaded guilty on May 4, 2022, to conspiracy to commit mail fraud and healthcare fraud. As part of his guilty plea, Buford will be required to pay $1,267,630 in restitution.

The guilty plea was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Wayne Jacobs of the Federal Bureau of Investigation – Washington Field Office Criminal Division; Special Agent in Charge Maureen Dixon, Office of Investigations, Office of Inspector General of the Department of Health and Human Services; Special Agent in Charge Michael McGill of the Social Security Administration – Office of Inspector General, Philadelphia Field Division; and Daniel W. Lucas, Inspector General for the District of Columbia.

According to his guilty plea, from January 2013 to May 2018, Buford and others devised and executed a scheme to defraud Medicaid for the District of Columbia by filing fraudulent Medicaid claims for dental services to Medicaid beneficiaries, receiving the fraudulently obtained funds from Medicaid, and recruiting Medicaid beneficiaries to fuel the scheme through the payment of kickbacks and bribes. 

Buford was a licensed dentist in Washington, D.C. and the owner and Chief Executive Officer of International Dental Associates, Inc. (IDA), a dental clinic located in Washington, D.C.  Before 2015, Buford was enrolled as a Medicaid provider, however, in April 2015, Medicaid suspended payments to Buford under his provider number.  

After Buford’s provider number was suspended in 2015, Buford and his business partner/IDA manager (Co-conspirator 1) continued to submit claims to Medicaid through IDA’s provider number.  In April 2016, Buford and Co-conspirator 1 re-enrolled IDA as a provider in Medicaid.  Within IDA’s application, Buford and Co-conspirator 1 failed to disclose Buford’s suspension from Medicaid.  

Buford and his co-conspirators caused the submission of Medicaid claims by Buford and IDA for a variety of dental services, including dentures.  As part of the conspiracy, Buford and Co-conspirator 1 offered and paid kickbacks to Co-conspirator 2 and other patient recruiters in exchange for referring Medicaid beneficiaries to IDA for dental services, even though Medicaid would not pay claims had it known they were procured through kickbacks.  Medicaid paid substantially more for dentures than for many other dental services, including dental cleanings, and Buford and Co-conspirator 1 paid Co-conspirator 2 larger cash kickbacks for beneficiaries that agreed to be fitted for dentures—approximately $50 per beneficiary—than for beneficiaries who only agreed to receive dental cleanings.

At Buford and Co-conspirator 1’s direction, Co-conspirator 2 offered Medicaid beneficiaries cash bribes to induce them to visit and accept dental services from IDA.  Buford and his co-conspirators typically paid higher amounts to beneficiaries who agreed to be fitted for dentures than those who only agreed to receive cleanings.  Even though dentures required multiple visits to fit and deliver, Buford and his co-conspirators paid the beneficiaries only for the initial visit—after which Buford and his co-conspirators could bill Medicaid for the dentures—and numerous beneficiaries never returned to IDA after receiving the cash bribe.  Accordingly, Buford and his co-conspirators stored hundreds of undelivered dentures on IDA’s premises, many of which had been billed to and paid for by Medicaid.  

As part of the scheme to defraud, Buford maintained a Post Office box in Silver Spring, Maryland as IDA’s billing address and received the fraudulently obtained funds at that location.  For example, on September 21, 2017, Buford caused Medicaid to mail a check for $17,397 to the Maryland P.O. box for services purportedly provided to 11 Medicaid beneficiaries. 

Based on the amount that Medicaid paid to Buford and IDA for dentures that were not delivered, the actual loss to Medicaid was at least approximately $1,267,630. 

Buford faces a maximum sentence of 20 years in federal prison followed by 3 years of supervised release for conspiracy to commit mail fraud and healthcare fraud.  U.S. District Judge Theodore D. Chuang has scheduled sentencing for August 3, 2022, at 9:00 a.m.

United States Attorney Erek L. Barron commended the FBI, HHS-OIG, the D.C. Office of the Inspector General’s Medicaid Fraud Control Unit, SSA-OIG for their work in the investigation.  Mr. Barron thanked Assistant U.S. Attorneys Jessica C. Collins and Rajeev R. Raghavan, who are prosecuting the case.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.

Department of Justice

U.S. Attorney’s Office

Eastern District of New York

FOR IMMEDIATE RELEASE

Friday, May 6, 2022

Two Former Managers of National Grid Sentenced to Prison for Bribery and Kickback Scheme

Defendants Took Bribes and Kickbacks Worth Hundreds of Thousands of Dollars in Exchange for Steering Lucrative Contracts

Earlier today, in federal court in Brooklyn, Patrick McCrann and Richard Zavada, two former managers in the facilities department of the New York utility company National Grid, were sentenced by United States District Judge Carol Bagley Amon for their participation in a years-long bribery and kickback scheme.  Zavada was sentenced to a year and one day in prison, with a $10,000 fine and $330,735 forfeiture and McCrann was sentenced to a year and one day of prison, with a $10,000 fine and $200,000 forfeiture.  The defendants each pleaded guilty to a violation of the Travel Act in October 2021. 

Carolyn Pokorny, First Assistant United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentences.

“Today’s sentence metes out just punishment to these bid riggers who accepted hundreds of thousands of dollars in bribes and kickbacks, including cash, international vacations, home improvements, and recreational vehicles,” stated First Assistant United States Attorney Pokorny.  “This Office will continue to root out corruption that undermines the integrity of competitive bidding in the procurement process.”

McCrann and Zavada were National Grid managers employed in the facilities department, who steered contracts to certain contractors in exchange for hundreds of thousands of dollars in bribes and kickbacks.  One contractor (the “Contractor”) secured more than $50 million in facility maintenance contracts from National Grid during the time that the Contractor was paying bribes to the defendants.  As managers, the defendants had the authority to approve “no-bid” contracts valued at less than $50,000.  The Contractor understood that if it did not pay bribes, these defendants would award National Grid’s work to the Contractor’s competitors.  In exchange for the bribe payments, the defendants also took various steps to assist the Contractor in obtaining contracts from National Grid, including, among other things, offering favorable reviews of the Contractor’s work. The Contractor paid bribes to ensure that the defendants did not slow or stop disbursement of project funds to the Contractor, provide negative performance reviews regarding the Contractor’s work, or otherwise claim that the Contractor’s work did not meet contractual specifications. 

The illicit payments to the defendants took multiple forms, including cash, the purchase of recreational vehicles, home improvements, landscaping and overseas vacations.  As part of the investigation, agents recovered approximately $300,000 in cash from a safe deposit box held by Zavada. 

Three other former National Grid managers, Devraj Balbir, Ricardo Garcia and Jevan Seepaul, have previously entered pleas of guilty to accepting bribes from the Contractor and are awaiting sentence. 

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Turner Buford and Artie McConnell are in charge of the prosecution.

The Defendants: 

Patrick McCrann
Age:  57
Selden, New York

E.D.N.Y. Docket No. 21-CR-467 (CBA)

Richard Zavada
Age:  65
Hicksville, New York

E.D.N.Y. Docket No. 21-CR-468 (CBA)

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Friday, May 20, 2022

Panama Intermediaries Each Sentenced to 36 Months in Prison for International Bribery and Money Laundering Scheme

Two brothers, each a dual-citizen of Panama and Italy, were each sentenced to 36 months in prison for laundering $28 million in a bribery and money laundering scheme involving Odebrecht S.A. (Odebrecht), a Brazil-based global construction conglomerate. The defendants were also ordered to forfeit more than $18.8 million, pay a $250,000 fine and serve two years’ supervised release.

Luis Enrique Martinelli Linares, 40, and Ricardo Enrique Martinelli Linares, 42, each pleaded guilty to conspiracy to commit money laundering and admitted to agreeing with others to establish offshore bank accounts in the names of shell companies to receive and disguise over $28 million in bribe proceeds from Odebrecht for the benefit of a close relative, a high-ranking public official in Panama. According to court documents, approximately $19 million of the bribes were transferred through U.S. banks. Luis Martinelli Linares also used some of the proceeds of the scheme to purchase a $1.7 million yacht and a $1.3 million condominium in the United States, and Ricardo Martinelli Linares spent hundreds of thousands of dollars in proceeds to pay personal expenses.

On Dec. 21, 2016, Odebrecht pleaded guilty in the Eastern District of New York to a criminal information charging it with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) for its involvement in the bribery and money laundering scheme. According to court documents, the scheme involved the payment of more than $700 million in bribes to government officials, public servants, political parties, and others in Panama and other countries around the world to obtain and retain business for the company.

The defendants were initially charged by criminal complaint on June 27, 2020. Pursuant to a provisional arrest request from the United States, they were arrested at el Aeropuerto Internacional la Aurora in Guatemala on July 6, 2020, as they were attempting to depart Guatemala on a private plane, and later held on extradition requests from the United States. Both defendants filed multiple challenges and appeals opposing the extradition request in Guatemalan courts before ultimately being extradited to the United States, Luis Martinelli Linares on Nov. 15, 2021, and Ricardo Martinelli Linares on Dec. 10, 2021.

On Feb. 4, 2021, Luis Martinelli Linares and Ricardo Martinelli Linares were charged with conspiracy and money laundering charges by an indictment filed in federal court in Brooklyn.

“Ricardo and Luis Martinelli Linares directed millions of dollars in bribes through U.S. banks to their own Swiss accounts in order to help Odebrecht gain corrupt influence at the highest levels of the Panamanian government,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “Today’s sentences show that the Department of Justice remains committed to prosecuting individuals who enable and profit from laundering corrupt payments to foreign officials through the U.S. financial system, as well as those who attempt to spend the proceeds of corruption in the United States.”

“The Martinelli brothers used American banks to commit their selfish, greedy fraud – and now it is the American legal system serving justice with today’s sentencing, especially for the people of Panama,” said U.S. Attorney Peace. “Together, the Department of Justice, this office and our law enforcement partners stand firm against international corruption and will use all tools at our disposal to root it out.”

“The defendants laundered millions of dollars in bribes through the U.S. financial system to benefit a close relative and maintain their luxury lifestyles,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “Today’s sentencing shows that the FBI and our law enforcement partners are committed to bringing to justice anyone who enables the corruption of public officials for personal gain.”

The FBI’s International Corruption Unit in New York is investigating this case, with the support of FBI Legal Attaché Panama. The Justice Department’s Office of International Affairs provided significant assistance in securing their arrest and extradition from Guatemala.

Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section, Trial Attorneys Barbara Levy and Michael Redmann of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), and Assistant U.S. Attorney Alixandra E. Smith of the U.S. Attorney’s Office for the Eastern District of New York are prosecuting the case. Assistant U.S. Attorney Laura Mantell of U.S. Attorney’s Office for the Eastern District of New York’s Civil Division is handling forfeiture matters.

Additional information about the Justice Department’s FCPA enforcement efforts can be found at http://www.justice.gov/criminal/fraud/fcpa.

The Kleptocracy Asset Recovery Initiative in MLARS was formed to prosecute money launderers and forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by the corruption and abuse of office. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov.

Department of Justice

U.S. Attorney’s Office

Southern District of New York

FOR IMMEDIATE RELEASE

Friday, May 20, 2022

Current And Former DEA Agents Indicted For Bribery Scheme

DEA Agent John Costanzo Jr. Charged with Accepting Bribes from Former DEA Agent Manuel Recio in Exchange for Sharing of Sensitive Nonpublic DEA Information

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and James F. Boyersmith, Special Agent-in-Charge of the Department of Justice Office of the Inspector General Miami Field Office, announced today that JOHN COSTANZO JR., a Drug Enforcement Administration (“DEA”) Special Agent, and MANUEL RECIO, a former DEA Assistant Special Agent-in-Charge, were indicted in Manhattan federal court with conspiracy to bribe a public official, conspiracy to commit honest services wire fraud, and honest services wire fraud, for a scheme in which RECIO funneled tens of thousands of dollars to COSTANZO in exchange for COSTANZO providing sensitive law enforcement information to RECIO to assist RECIO in recruiting clients for defense lawyers. In addition, COSTANZO was charged with accepting a bribe from RECIO and RECIO was charged with giving a bribe to COSTANZO. COSTANZO and RECIO were arrested today and presented before Magistrate Judge Barbara Moses.  The case has been assigned to U.S. District Judge J. Paul Oetken.

U.S. Attorney Damian Williams said:  “The conduct alleged in the indictment violates the core duty of law enforcement officers to protect and serve the public, rather than to use their access to sensitive information to enrich themselves. As alleged, Manuel Recio provided substantial secret payments to John Costanzo Jr., and in exchange, received information about pending DEA investigations, sealed indictments, and impending arrests. It is critical for federal law enforcement officers to preserve the integrity of ongoing investigations and not divulge confidential information to the private sector in exchange for financial benefits.”

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

JOHN COSTANZO JR. is a DEA special agent currently assigned to DEA Headquarters and was a Group Supervisor in the DEA’s Miami Field Office until June 2019. MANUEL RECIO is a former DEA special agent who retired as the Assistant Special Agent-in-Charge for the Miami Field Office in November 2018. Upon his retirement, RECIO began operating his own business, which provided private investigative services to criminal defense attorneys and also helped defense attorneys to recruit clients. From around the time of RECIO’s retirement through around November 2019, RECIO agreed with COSTANZO to provide benefits to COSTANZO in exchange for COSTANZO providing RECIO with nonpublic information about DEA investigations. COSTANZO provided RECIO with information about forthcoming, sealed indictments and nonpublic investigations, such as the identities of individuals charged and the anticipated timing of arrests; and intelligence which COSTANZO obtained from the Narcotics and Dangerous Drugs Information System (“NADDIS”), a DEA database that contains information about individuals who are or have been under investigation by the DEA. RECIO paid COSTANZO for this information, which RECIO used to help recruit new clients for criminal defense attorneys.

As alleged in the Indictment, among the benefits paid to COSTANZO were a $2,500 payment made in November 2018, shortly after RECIO’s retirement from the DEA, which was funneled to COSTANZO through a company owned by a close family member of COSTANZO. At the same time that this payment was made, RECIO began asking COSTANZO to run searches in NADDIS to provide RECIO with nonpublic DEA information about DEA targets and investigations. Following that initial payment, RECIO and others continued to provide benefits to COSTANZO, including tens of thousands of dollars that were funneled from RECIO through a company created by a DEA task force officer, and $50,000 that was paid to COSTANZO through a close family member for COSTANZO’s purchase of a condominium in January and February 2019.

In return, COSTANZO continued to provide nonpublic DEA information to RECIO, including information about the timing of forthcoming indictments and information about DEA arrest plans of particular targets. COSTANZO also searched NADDIS for names of particular individuals requested by RECIO on dozens of occasions during the scheme, and provided RECIO with information and assistance with particular charged defendants represented by attorneys for whom REICO was working. During the scheme, COSTANZO and RECIO took steps to conceal the existence of the scheme, including by structuring the payments from RECIO to COSTANZO through third parties, and through COSTANZO’s use of a cellphone provided by RECIO for communications related to the scheme.

*                *                *

COSTANZO JR., 47, of Arlington, Virginia, and RECIO, 53, of Miami, Florida, are each charged with one count of conspiracy to commit bribery, which carries a maximum term of five years in prison, and one count of receiving or paying a bribe, respectively, which carries a maximum term of 15 years in prison. COSTANZO and RECIO are also charged with one count of conspiracy to commit honest services wire fraud and one count of honest services wire fraud, each of which counts carries a maximum term of 20 years in prison.

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

Mr. Williams praised the outstanding investigative work of the FBI and the Department of Justice Office of the Inspector General, and thanked the DEA’s Office of Professional Responsibility for its support in this matter.

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Thane Rehn and Sheb Swett are in charge of the prosecution. 

[1] The entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.