Category: Security

Source: US FBI

TRENTON, N.J. – A former broker and investment advisor today admitted stealing more than $3 million from five clients, U.S. Attorney Philip R. Sellinger announced.

Kenneth A. Welsh, 42, of River Edge, New Jersey, pleaded guilty before U.S. District Judge Robert Kirsch in Trenton federal court to and indictment charging him with four counts of wire fraud and one count of investment advisor fraud.

According to documents filed in this case:

From July 2017 through March 2021, Welsh, while serving in his capacity as an investment advisor employed by a large brokerage firm, misappropriated at least $3 million from five clients. Welsh, who had been entrusted to manage client funds responsibly, instead perpetrated a scheme to defraud the five clients by diverting money from their brokerage accounts to accounts under his control. Welsh then used the unlawfully obtained money to fund his gambling and to purchase high-end, luxury items for himself.

Each of the wire fraud counts carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest. The investment advisor fraud count carries a maximum potential penalty of five years in prison and a $10,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for March 26, 2025.

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Acting Special Agent in Charge Nelson I. Delgado, with the investigation leading to the guilty plea.

The government is represented by Assistant U.S. Attorney Shontae D. Gray of the Economic Crimes Unit in Newark.

Source: US FBI

CAMDEN, N.J. – A West New York financial advisor was sentenced today to 41 months in prison for 11 counts of defrauding public health insurance plans out of more than $4 million and transacting in the criminal proceeds, U.S. Attorney Philip R. Sellinger announced.

Kaival Patel, 55, of West New York, New Jersey, was convicted on Dec. 7, 2023, of one count of conspiracy to commit wire fraud and health care fraud, four counts of health care fraud, one count of conspiracy to commit money laundering by transacting in criminal proceeds, and five counts of money laundering by transacting in criminal proceeds following an 11-day trial before U.S. District Judge Robert B. Kugler. U.S. District Judge Edward S. Kiel imposed the sentence today in Camden federal court.

“This defendant lined his own pockets by taking advantage of health insurance plans for New Jersey state and local government employees, defrauding them of millions of dollars by conspiring to obtain reimbursements for medically unnecessary compound prescription medications. Together with our law enforcement partners, we will continue to investigate and prosecute those who abuse and defraud the health care system.”

U.S. Attorney Philip R. Sellinger

According to documents filed in this case and the evidence at trial:

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Compounded medications require a prescription from a physician.

Patel created and operated a company called ABC Healthy Living LLC to market compound prescription medications. Patel and his conspirators learned that certain state and local government employees had insurance that would reimburse up to thousands of dollars for a one-month supply of certain compound medications such as vitamins, scar creams, pain creams, libido creams, and acid reflux medications. Patel and a conspirator approached Patel’s family member, a medical doctor who owns and operates a clinic in Newark, New Jersey, and convinced him to authorize prescriptions for the compound medications for patients who had no medical need for the prescriptions. Patel received commissions for the compound medication prescriptions.

Patel and his conspirators paid a group of corrections officers to go to Patel’s family member’s medical practice for the purpose of receiving fraudulent prescriptions. Patel conspired with a compounding pharmacist to add unnecessary ingredients to the compound medications to further increase their cost and augment his illicit profits. Patel engaged in a series of financial transactions to receive proceeds from the health care fraud and wire fraud conspiracy.

To date, approximately 48 people have been convicted or pleaded guilty in the overarching conspiracy.

In addition to the prison term, Judge Kiel sentenced Patel to three years of supervised release and ordered him to pay restitution of $4.72 million.

U.S. Attorney Sellinger credited special agents of the FBI’s Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Nelson I. Delgado in Newark; special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jenifer L. Piovesan in Newark; and the U.S. Department of Labor, Office of Inspector General, Northeast Region, under the direction of Special Agent in Charge Jonathan Mellone, with the investigation leading to the sentencing.

The government is represented by Assistant U.S. Attorneys Daniel A. Friedman of the Criminal Division and R. David Walk Jr., Deputy Chief of the Criminal Division.

Source: US FBI

NEWARK, N.J. – A New York man today admitted his role in a $38 million employment tax fraud scheme involving nursing homes he owned across the country, U.S. Attorney Philip R. Sellinger announced.

Joseph Schwartz, 64, of Suffern, New York, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to two counts of an indictment charging him with willfully failing to pay over employment taxes withheld from employees of his company, and willfully failing to file an annual financial report (Form 5500) with the Department of Labor for the employee 401K Benefit Plan Schwartz sponsored.

“Schwartz ran a vast, multistate nursing home empire, but cheated taxpayers out of more than $38 million so he could line his own pockets. Having admitted his crime, he will now be held accountable. My office will continue to work with our law enforcement partners to prosecute those who willfully participate in tax fraud schemes.”

U.S. Attorney Philip R. Sellinger

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

Schwartz, an insurance broker and operator of Skyline Management Group LLC (Skyline), with headquarters in New Jersey, willfully failed to pay employment taxes relating to numerous health care and rehabilitation facilities that Skyline operated in 11 states.

According to the indictment, Schwartz was required to collect, truthfully account for, and pay over to the IRS trust fund taxes withheld from the pay of employees of Skyline and related companies. From October 2017 through May 2018, Schwartz caused taxes to be withheld from employees’ pay but failed to then pay over more than $38 million in employment taxes to the IRS. As an administrator of the Skyline 401K plan, Schwartz further had an obligation to file an annual Form 5500 financial report with the Secretary of Labor for calendar year 2018, but knowingly and willfully failed to file the report.

The employment tax fraud count is punishable by a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest. The failure to file a Form 5500 related to the retirement plan count carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for April 10, 2025.

U.S. Attorney Sellinger credited special agents of the IRS-Criminal Investigation, under the direction of Special Agent in Charge Jenifer L. Piovesan in Newark; and investigators with the Department of Labor-Employee Benefits Security Administration, under the direction of Regional Director Thomas Licetti in the New York Regional Office; and special agents of the FBI, under the direction of Acting Special Agent in Charge Nelson I. Delgado, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Kendall Randolph and Daniel H. Rosenblum of the Criminal Division in Newark and Trial Attorney Shawn Noud of the Justice Department’s Tax Division.

Source: US FBI

LAS VEGAS – A Nevada woman pleaded guilty Monday to fraudulently seeking over $1 million in COVID-19 Paycheck Protection Program (PPP) loans.

According to court documents, Karen Chapon, aka Karen Hannafious, 53, submitted six fraudulent PPP loan applications to three financial institutions for her companies. From April 2020 to July 2020, Chapon made multiple false statements about her companies’ respective business operations and payroll expenses, and submitted false documents to support the loan applications, including false federal tax filings. As part of the loan applications, Chapon falsely stated that she had not been convicted of a felony in the past five years, but in fact, she pleaded guilty to felony fraud offenses in 2016. She received four loans totaling approximately $596,931. Chapon used fraudulently obtained funds for her own benefit, including the purchase of a Mercedes Benz SUV.    

Chapon pleaded guilty to one count of bank fraud. U.S. District Judge James C. Mahan scheduled sentencing for November 29, 2023. She faces a maximum statutory penalty of 30 years in prison, a five-year term of supervised release, restitution, and a fine. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 29, 2020. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division; U.S. Attorney Jason M. Frierson for the District of Nevada; Special Agent in Charge Spencer L. Evans for the FBI; Inspector General J. Russell George for the Treasury Inspector General for Tax Administration (TIGTA); and Special Agent in Charge Weston King for the U.S. Small Business Administration Office of Inspector General (SBA-OIG), Western Region, made the announcement.

This case was investigated by the FBI, TIGTA, and SBA-OIG. Trial Attorneys Lucy Jennings and Jennifer Bilinkas of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jessica Oliva of the District of Nevada are prosecuting the case.

In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

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Source: US FBI

LAS VEGAS – Captain David E. Boruchowitz (42), a deputy Sheriff with the Nye County Sheriff’s Office, appeared in federal court today following his arrest on federal wire fraud, perjury and civil rights violations, arising from the February 2019 false arrest of the former CEO of Valley Electric Association (VEA), a Pahrump-based utility cooperative.

United States Magistrate Judge Brenda Weksler arraigned Boruchowitz on the charges contained in a federal indictment and set the date for trial to begin on October 16, 2023, before United States District Judge Andrew P. Gordon.

According to the indictment, Boruchowitz falsely arrested the former CEO without probable cause on charges that she embezzled services from VEA. The indictment further alleges that the false arrest was part of a larger scheme to defraud the former CEO of her job by falsely alleging in various court documents that the CEO embezzled services from the VEA. According to the indictment, Boruchowitz made false statements and omitted material facts in order to obtain the court documents under false pretenses as part of a broader plan to get the CEO fired from her job at VEA. The indictment alleges that Boruchowitz committed federal wire fraud when he caused press releases to be issued from the Nye County Sheriff’s Office that falsely alleged that the investigation and arrest of the CEO was the result of court authorized process when, in truth and in fact, he obtained the process under false and fraudulent pretenses and without probable cause.

Lastly, the indictment charges that Boruchowitz perjured himself when he falsely testified during a federal civil deposition about his knowledge and level of involvement in the circumstances surrounding the arrest.

A conviction on the civil rights charge carries a maximum term of imprisonment of one year. The wire fraud and perjury violations each carry a 20-year and five-year term of imprisonment, respectively, for each count.  

United States Attorney Jason M. Frierson for the District of Nevada and Special Agent in Charge Spencer L. Evans for the FBI made the announcement.

The FBI investigated the case. Assistant United States Attorneys Steven Myhre and Bianca Pucci are prosecuting the case.

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

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Source: US FBI

DETROIT – A Las Vegas man who sex trafficked children in metro-Detroit while visiting the area in December 2020 was sentenced to 12 years and 6 months in prison, United States Attorney Dawn N. Ison announced today.

Ison was joined in the announcement by Acting Special Agent in Charge Devin J. Kowalski, of the Federal Bureau of Investigation, Detroit Field Division.

Jquon Wroten, 31, pled guilty to two counts of sex trafficking of a minor in April 2023. Wroten was sentenced today by United States District Judge Bernard A. Friedman.

Law enforcement first began investigating Wroten while attempting to locate two minor females who had run away from the Lansing area in late 2020. A relative of one of the minors contacted law enforcement with information and expressed fears that the minors were being trafficked in the Detroit area. Law enforcement recovered the minors from a motel room in Southfield, Michigan in December 2020 and learned that Wroten had recruited the minors to work for him after meeting them in a local motel while he was in town. Wroten and an adult female associate took the minors to a local beauty supply store and bought items in an effort to make them look older. Wroten then set up a commercial sex date for the minors at a residence in metro-Detroit and drove the minors to the date, where they engaged in commercial sex with multiple men. Wroten took proceeds from the sex trafficking for his own use.

“The sex trafficking of children is a hideous crime that preys on some of our district’s most vulnerable citizens,” said U.S. Attorney Ison. “The court’s sentence today is a just punishment and will prevent the defendant from further victimizing children here or anywhere else.”

“Protecting young people from dangerous predators is a top priority for the FBI in Michigan and across the country,” said Devin J. Kowalski, Acting Special Agent in Charge of the FBI in Michigan. “Mr. Wroten in an example of how manipulative these criminals can be. I commend the work of the special agents, deputies, police officers, and prosecutors who worked to make our children safer by ensuring he remains behind bars for a significant period of time.”

This case was investigated by the FBI Detroit Division, FBI Las Vegas Division, FBI San Francisco Division, SEMTEC (Southwest Michigan Trafficking and Exploitation Crimes), and State of Michigan Children’s Protective Services.

The case was prosecuted by Assistant U.S. Attorneys Meghan Sweeney Bean and Eaton Brown.

Source: US FBI

LAS VEGAS – A Las Vegas man was sentenced today by U.S. District Judge Richard F. Boulware II to 10 years in prison followed by 20 years of supervised release for attempted child sex trafficking and possession of child sexual abuse material.

James Allen Wynhoff (41) pleaded guilty in September 2022 to attempted sex trafficking and possession of child pornography. In addition to the prison term, under the Sex Offender Registration and Notification Act, Wynhoff is required to register as a sex offender.

According to court documents, on March 31, 2022, Wynhoff contacted a person he believed to be a 15-year-old child on the messaging application Kik. Through Kik messages, he solicited and agreed to pay $100 to the child to have sex with him. Furthermore, Wynhoff admitted to possessing 11 videos of child sexual abuse material depicting children as young as toddlers. He has a federal felony conviction in Utah for Interstate Travel with Intent to Engage in Illicit Sexual Contact.

United States Attorney Jason M. Frierson for the District of Nevada and Special Agent in Charge Spencer L. Evans for the FBI made the announcement.

The FBI and Las Vegas Metropolitan Police Department investigated the case. Assistant United States Attorney Supriya Prasad prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

If you suspect that you have information about possible child sexual exploitation, you are encouraged to contact the National Center for Missing and Exploited Children’s CyberTipline at 1-800-THE-LOST (1-800-843-5678).

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Source: US FBI

LAS VEGAS – A Pahrump, Nye County, resident was sentenced today by United States District Judge James C. Mahan to 108 months in prison followed by a lifetime term of supervised release for distributing and receiving more than 250,000 images depicting the sexual abuse of children as young as infants on an online peer-to-peer file sharing network.

David Michael Burak (41) pleaded guilty on February 24, 2023, to distribution or receipt of child pornography.

According to court documents, investigators with the Internet Crimes Against Children Task Force were investigating the sharing of child sexual abuse material on a peer-to-peer file sharing network. During the investigation, it was observed that a device was distributing files depicting child sexual abuse material. On July 19, 2022, investigators executed a search warrant on Burak’s residence. Part of the residence was used for a daycare business catering to pre-school age children. Investigators seized multiple digital devices that were later found to contain more than 250,000 files of child sexual abuse material. Forensics also showed that Burak used these devices to receive and make available for download files of child sexual abuse material on the internet.

United States Attorney Jason M. Frierson for the District of Nevada and Special Agent in Charge Spencer L. Evans for the FBI made the announcement.

The FBI and the Las Vegas Metropolitan Police Department investigated the case. United States Attorney Supriya Prasad prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

Anyone with information on suspected child sexual exploitation can contact the National Center for Missing and Exploited Children at 1-800-THE-LOST (1-800-843-5678) or online at www.cybertipline.org.

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Source: US FBI

NEW ORLEANS – Acting U.S. Attorney Michael M. Simpson announced that JONATHAN SUAREZ (“SUAREZ”), age 29, a resident of Slidell, Louisiana, with was indicted today for receiving child sexual abuse material (CSAM), in violation of Title 18, United States Code, Section 2252(a)(2).

Source: US FBI

SAN FRANCISCO – A federal jury today convicted Ramesh Kris Nathan on six counts of wire fraud and two counts of money laundering in connection with fraudulently obtaining investors’ money for a company that had no legitimate business activities.  The guilty verdict followed an eight-day jury trial before U.S. District Judge Vince Chhabria.

According to court documents and evidence presented at trial, Nathan, 43, a U.S. national, promised investors that their money would fund Relativity Research Fund, Inc., a company for which Nathan set up a bank account in San Francisco.  He promoted Relativity as being involved in the research and development of advanced technologies, including prototype spacecraft and space-related propulsion systems.  He also made false promises of future trading of the company’s shares on the Nasdaq Private Market.

“Ramesh Nathan spun fantastic tales about space travel technology and advanced robotics to entice investors into funding his company, but all he had to offer was science fiction.  He deceived his investors, many of whom were veterans, about a nonexistent business.  Then he used the ill-gotten funds to line his own pockets,”  said Acting United States Attorney Patrick D. Robbins.  “Thanks to the jury’s verdict, Mr. Nathan is being held accountable for the harms he caused to multiple victims.”

“Ramesh Nathan orchestrated a scheme rooted in deception, betraying the trust of investors for his own gain,” said FBI Special Agent in Charge Sanjay Virmani. “Today’s guilty verdict reflects the seriousness of his crimes and brings justice to the victims he defrauded. The FBI remains committed to holding financial criminals accountable and protecting the public from fraud.”

The evidence presented at trial showed that Nathan induced potential investors to provide funds by making false and misleading statements on his company’s website, in promotional materials, and in emails to potential investors.  For example, Nathan claimed that the company was developing numerous technology-related enterprises, including advanced robotics and space travel technology.  Nathan also represented that the company had significant capital investments, worldwide offices with over 15,000 employees, and tens of billions of dollars in profits and revenue.

The jury also found that Nathan laundered investor funds through various bank accounts, and then used the funds for his personal expenses and transfers to his mother and his then-girlfriend.  Nathan carried out his fraudulent scheme by recruiting an intermediary to share his lies with investors, many of whom were veterans of the United States military and friends and family of veterans.

The defendant will next appear in court on June 13, 2025, for further proceedings.  Nathan faces a maximum penalty of 20 years in prison for each count of wire fraud and 10 years in prison for each count of money laundering, and forfeiture of all property that is traceable to his wire fraud and money laundering violations.  Any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Assistant U.S. Attorneys Roland Chang and Sara Henderson are prosecuting the case, with the assistance of Tina Rosenbaum.  The prosecution is the result of an investigation by the FBI.