Category: MIL-OSI

BROOKLYN, NY – Today in federal court in Brooklyn, Manhattan resident Chen Jinping pleaded guilty to conspiring to act as an agent of the government of the People’s Republic of China (PRC), in connection with opening and operating an undeclared overseas police station in lower Manhattan for the PRC’s Ministry of Public Security (MPS).  Today’s proceeding was held before United States District Judge Nina R. Morrison. When sentenced, the defendant faces up to five years in prison.

Breon Peace, United States Attorney for the Eastern District of New York; Matthew G. Olsen, Assistant Attorney General of the Justice Department’s National Security Division; and James E. Dennehy, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty plea.

“A priority of my Office has been to counteract the malign activities of foreign governments that violate our nation’s sovereignty by targeting local diaspora communities in the United States,” stated United States Attorney Peace.  “Today, a participant in a transnational repression scheme who worked to establish a secret police station in the middle of New York City on behalf of the national police force of the People’s Republic of China has pleaded guilty to conspiracy to act as an illegal agent.  We will continue our efforts to protect the rights of vulnerable persons who come to this country to escape the repressive activities of authoritarian regimes.”

“Today’s guilty plea holds the defendant accountable for his brazen efforts to operate an undeclared overseas police station on behalf of the PRC’s national police force — a clear affront to American sovereignty and danger to our community that will not be tolerated,” stated Assistant Attorney General Olsen.  “The Department of Justice will continue to pursue anyone who attempts to aid the PRC’s efforts to extend their repressive reach into the United States.”

“Today, Chen Jinping admitted to his role in audaciously establishing an undeclared police station in the heart of New York City and attempting to conceal the effort when approached by FBI New York,” stated FBI Assistant Director in Charge Dennehy. “This illegal police station was not opened in the interest of public safety, but to further the nefarious and repressive aims of the PRC in direct violation of American sovereignty. The FBI is unwavering in our duty to protect both the freedoms enshrined in the Constitution and the security of our nation from oppressive hostile governments.”

As alleged in court filings and facts presented at the plea proceeding, Chen Jinping and co-defendant Lu Jianwang conspired to act as illegal agents of the PRC government and also obstructed justice by destroying evidence of their communications with an MPS official (the MPS Official).  While acting under the direction and control of the MPS Official, the defendants worked together to establish the first known overseas police station in the United States on behalf of the Fuzhou branch of the MPS.  The police station—which closed in the fall of 2022—occupied an entire floor in an office building in Manhattan’s Chinatown.  Chen and Lu  helped open and operate the clandestine police station.  None of the participants in the scheme informed the U.S. government that they were helping the PRC government open and operate an undeclared MPS police station on U.S. soil.

In October 2022, the FBI conducted a judicially authorized search of the illegal police station.  In connection with the search, FBI agents interviewed both defendants and seized their phones.  In reviewing the contents of these phones, FBI agents observed that communications between the defendants, on the one hand, and the MPS Official, on the other, appeared to have been deleted.

Lu Jianwang has pleaded not guilty to the charges and is awaiting trial.

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States  Attorneys Alexander A. Solomon and Antoinette N. Rangel are in charge of the prosecution, with assistance from Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section.

The FBI has created a website for victims to report efforts by foreign governments to stalk, intimidate, or assault people in the United States.  If you believe that you are or have been a victim of transnational repression, please visit https://www.fbi.gov/investigate/counterintelligence/transnational-repression.

The Defendant:

CHEN JINPING
Age: 60
Manhattan, New York

E.D.N.Y. Docket No. 23-CR-316 (NRM)

Edward Y. Kim, the Acting United States Attorney for the Southern District of New York, announced today that RUI-SIANG LIN, a/k/a “Ruisiang Lin,” a/k/a “林睿庠,” a/k/a “Pharoah,” a/k/a “faro,” pled guilty to narcotics conspiracy, money laundering, and conspiracy to sell adulterated and misbranded medication in connection with LIN’s operation and ownership of “Incognito Market,” an online dark web narcotics marketplace that enabled its users to buy and sell illegal narcotics anonymously around the world. LIN pled guilty today before U.S. District Judge Colleen McMahon and is scheduled to be sentenced on March 27, 2025.

Acting U.S. Attorney Edward Y. Kim said: “Rui-Siang Lin led a prolific online narcotics bazaar that sold more than $100 million of narcotics around the world.  While Lin profited millions of dollars from his sophisticated scheme, the community suffered.  Lin and his “Incognito Market” exacerbated the opioid and fentanyl crisis and put the community in danger.  Lin now faces a lengthy term in prison.”

According to the allegations contained in the Indictment, Complaint, and statements made in public filings and in public court proceedings:

Incognito Market was an online narcotics bazaar that existed on the dark web.  Incognito Market formed in October 2020.  Since that time, and through its closing in March 2024, Incognito Market sold more than $100 million of narcotics — including hundreds of kilograms of cocaine and methamphetamines.  Incognito Market was available globally to anyone with internet access and could be accessed using the Tor web browser on the “dark web” or “darknet.”  LIN operated the Incognito market under the online pseudonym “Pharoah” or “faro.”  As “Pharoah” — the leader of Incognito market — LIN supervised all of its operations, including its employees, vendors, and customers, and had ultimate decision-making authority over every aspect of the multimillion-dollar operation.

Incognito Market was designed to foster seamless narcotics transactions across the internet and across the world and incorporated many features of legitimate e-commerce sites such as branding, advertising, and customer service.  Upon visiting the site, users were met by a splash page and graphic interface, which is pictured below:

After logging in with a unique username and password, users were able to search thousands of listings for narcotics of their choice.  Incognito Market sold illegal narcotics and misbranded prescription medication, including heroin, cocaine, LSD, MDMA, oxycodone, methamphetamines, ketamine, and alprazolam. An example of listings on Incognito market is below:

Listings included offerings of prescription medication that was advertised as being authentic but was not.  For example, in November 2023, an undercover law enforcement agent received several tablets that purported to be oxycodone, which were purchased on Incognito Market.  Testing on those tablets revealed that they were not authentic oxycodone at all and were, in fact, fentanyl pills.

Each listing on Incognito Market was sold by a particular vendor.  To become an Incognito Market vendor, each vendor was required to register with the site and pay an admission fee.  In exchange for listing and selling narcotics as a vendor on Incognito Market, each vendor paid 5% of the purchase price of every narcotic sold to Incognito Market. That revenue funded Incognito Market’s operations, including paying “employee” salaries and for computer servers.  LIN collected millions of dollars of profits from Incognito.  To facilitate these financial transactions, Incognito Market had its own “bank,” which allowed its users to deposit cryptocurrency on the site into their own “bank accounts.” After a narcotics transaction was completed, cryptocurrency from the buyer’s “bank account” was transferred to the seller’s “bank account,” less the 5% fee that Incognito collected.  The bank enabled buyers and sellers to stay anonymous from each other.  The bank’s graphic interface is pictured below:

On March 12, 2020, before Incognito Market launched, LIN emailed himself a rough diagram of a darknet marketplace.  That diagram, which is pictured below, contains features consistent with the operation of Incognito Market.

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RUI-SIANG LIN, 23, of Taiwan, pled guilty to one count of narcotics conspiracy, which carries a mandatory minimum sentence of 10 years in prison and a maximum potential sentence of life in prison; one count of money laundering, which carries a maximum potential sentence of 20 years in prison; and one count of conspiracy to sell adulterated and misbranded medication, which carries a maximum potential sentence of five years in prison.

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

Mr. Kim praised the investigative work of the Federal Bureau of Investigation, Homeland Security Investigations, the Drug Enforcement Administration, the U.S. Food and Drug Administration Office of Criminal Investigations, and the New York City Police Department.  

This effort is part of an Organized Crime Drug Enforcement Task Forces (“OCDETF”) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the U.S. using a prosecutor-led, intelligence-drive, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Ryan B. Finkel and Nicholas Chiuchiolo are in charge of the prosecution.

Edward Y. Kim, the Acting United States Attorney for the Southern District of New York, announced today the guilty plea of RAFAEL ALVAREZ, a/k/a “the Magician,” to a two-count Superseding Information charging ALVAREZ with one count of conspiracy to defraud the U.S. and steal government funds and one count of aiding and assisting in the preparation of a false and fraudulent U.S. individual income tax return.  The charges arise from ALVAREZ’s orchestration of a decade-long, $145 million tax fraud scheme to file tens of thousands of federal individual income tax returns that included false information designed to fraudulently reduce the individuals’ tax burden.  As part of today’s guilty plea, Alvarez agreed to pay the Internal Revenue Service (“IRS”) $145 million in restitution and forfeit over $11.84 million in fraudulent proceeds he received from his criminal conduct.  ALVAREZ pled guilty today before U.S. District Judge J. Paul Oetken.

Acting U.S. Attorney Edward Y. Kim said: “Rafael Alvarez became known as ‘the Magician’ by his customers for his supposed ability to make their tax burden disappear.  But, as today’s guilty plea shows, there was no magic to what Alvarez was doing – he was committing a serious federal crime by falsifying tens of thousands of tax returns and, in the process, depriving the IRS of $145 million in tax revenue.  Today’s guilty plea, in one of the largest ever tax frauds by a return preparer, should serve as an important reminder to tax professionals that this Office will vigorously investigate and prosecute tax offenses.”

As alleged in the Indictment and Superseding Information and statements made in public filings and court proceedings:

From at least in or about 2010, up to and including in or about 2020, ALVAREZ was the CEO, owner, and manager of ATAX New York, LLC, also doing business as ATAX New York-Marble Hill, ATAX Marble Hill, ATAX Marble Hill NY, and ATAX Corporation (together, “ATAX”).  ATAX was a high-volume tax preparation company located in the Bronx, New York, which prepared approximately 90,000 federal income tax returns for its customers during this period.  ALVAREZ both prepared tax returns for ATAX customers and recruited, supervised, and directed other ATAX personnel who in turn prepared tax returns for customers.  During this period, ALVAREZ oversaw a sweeping fraudulent scheme, whereby he and his employees submitted false information to the IRS in ATAX customers’ tax returns. This false information, which included, among other things, bogus itemized tax deductions, made-up capital losses, phony business expenses, and fraudulent tax credits, served to fraudulently reduce the customers’ tax liability and increase the customers’ tax refunds from the IRS.

In total, ALVAREZ oversaw ATAX’s fraudulent submission of tax returns on behalf of customers that deprived the IRS of $145 million in tax revenue.  ALVAREZ was so consistent at falsifying ATAX customer tax returns that he became known to ATAX’s customers as “the Magician.”  Additionally, ALVAREZ agreed as part of his plea agreement that he was a leader of the scheme and attempted to obstruct or impede the administration of justice with respect to the investigation of the tax fraud scheme when he and an ATAX employee made false statements to an IRS Revenue Agent.  ALVAREZ’s operation of ATAX helped the company generate approximately $12 million in fraudulent proceeds over the duration of the fraud.

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ALVAREZ, 61, of Cortland Manor, New York, pled guilty to one count of conspiracy to defraud the U.S. and steal government funds, which carries a maximum sentence of five years in prison, and one count of aiding and assisting in the preparation of a false and fraudulent U.S. individual income tax return, which carries a maximum sentence of three years in prison.  ALVAREZ is scheduled to be sentenced by Judge Oetken on April 11, 2025.   

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

Mr. Kim praised the outstanding investigative work of the IRS, Criminal Investigation, the Federal Bureau of Investigation, and the Treasury Inspector General for Tax Administration in this case.

This case is being handled by the Office’s Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorney David R. Felton is in charge of the prosecution.