MIL Security Engine-1

Earlier today, an indictment was filed in federal court in Brooklyn charging Sergei Zharnovnikov, an arms dealer and citizen of Kyrgyzstan, with conspiring to export firearms from the United States to Russia without the necessary licenses and with illegal smuggling.  Zharnovnikov traveled from Kyrgyzstan to the United States last month and was arrested on January 24, 2025 in Las Vegas, Nevada, where he was attending the Shooting, Hunting, and Outdoor Trade (SHOT) Show to meet with U.S. arms dealers.  Zharnovnikov has been detained pending trial and will be arraigned in the Eastern District of New York at a later date.

John J. Durham, United States Attorney for the Eastern District of New York, Devin DeBacker, head of the Justice Department’s National Security Division, James E. Dennehy, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI) and Jonathan Carson, Special Agent in Charge, U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office (BIS-OEE), announced the arrest and charges.

“As alleged, the defendant operated a sophisticated scheme to circumvent export controls and to export semi-automatic firearms and send them to Russia,” stated United States Attorney Durham.  “Today’s indictment sends a message to the world that we will vigorously enforce statutes that control and restrict the export of items that could be detrimental to the foreign policy or national security of the United States, in this case, preventing U.S.-made firearms from getting into the wrong hands.”

Mr. Durham thanked the U.S. Attorney’s Office for the District of Nevada for its assistance with the case.

“Violations of export control laws carry significant consequences for perpetrators in the U.S. and abroad,” said DeBacker, head of the Justice Department’s National Security Division.  “The Department of Justice is committed to working with our partners to hold accountable those who violate our laws to smuggle firearms to prohibited destinations such as Russia.”

“Attempting to illegally sell arms to Russia using multiple companies may seem like a method to evade United States sanctions, it is however a definite way to end up under arrest.  Sergei Zharnovnikov is alleged to have knowingly conspired with others to violate the export control laws of the United States to provide U.S made firearms to Russian companies.  The FBI will continue to enforce the export control laws enacted to safeguard our national security,” stated FBI Assistant Director in Charge Dennehy.

“The Bureau of Industry and Security is committed to aggressively investigating the illegal transshipment of US firearms to adversaries like Russia through third countries,” said BIS-OEE Special Agent in Charge Carson.  “Companies that provide false information to BIS to obtain export authorizations to circumvent our controls will be found out and held accountable.”

As alleged in the indictment and other court filings, since at least March 2020, the defendant, together with others, conspired to export firearms on the United States DOC Control List from the U.S. to Russia.  The defendant, the General Director and owner of an arms dealer located in Bishkek, Kyrgyzstan (Kyrgyzstan Company-1), entered into a five-year, $900,000 contract with a company located in Chesapeake, Virginia (U.S. Company‑1) to purchase and export U.S. Company-1 firearms to Kyrgyzstan.  DOC issued a license for U.S. Company-1 to export firearms to Kyrgyzstan Company-1, but the license prohibited the export or re-export of the firearms to Russia.  Nevertheless, the defendant exported and re-exported U.S. Company‑1 firearms to Russia via Kyrgyzstan.  These illegally exported firearms included semi‑automatic hybrid rifle-pistols from U.S. Company-1.

As alleged, after Kyrgyzstan Company-1 entered into a contract with U.S. Company-1, a second arms dealer company in Bishkek associated with the defendant (Kyrgyzstan Company-2) entered a contract with a Russian arms dealer (Russian Company-1) located in Moscow.  The contract between Russian Company-1 and Kyrgyzstan Company-2 provided that Kyrgyzstan Company‑2 would export “Goods” to Russian Company-1 in the amount of $10 million and noted that the “Goods” could be delivered in batches.  In correspondence in 2018, Russian Company-1 described the defendant’s company, Kyrgyzstan Company-1, as its “partner company.” 

On or about February 3, 2021, U.S. Company-1 received an export license from DOC to export over $800,000 worth of firearms and parts to Kyrgyzstan Company-1.  The license stated that items within the scope of the license “may not be reexported or transferred (in-country),” subject to certain exceptions not applicable here.

On or about July 2, 2022, the defendant emailed his banker: “Make payment according to the invoice attached to the letter,” and attached a commercial invoice from U.S. Company-1, which listed, among other things, 25 semi-automatic rifle-pistols with 25 unique serial numbers.  Two days later, on or about July 4, 2022, Kyrgyzstan Company‑2, sent $67,000 to Kyrgyzstan Company-1.  The next day, on or about July 5, 2022, Kyrgyzstan Company‑1 paid U.S. Company-1 $65,564—the full amount listed in the invoice from U.S. Company-1.

According to an Electronic Export Information (EEI) made on July 7, 2022, Company-1 exported semi-automatic rifles from John F. Kennedy International Airport to Kyrgyzstan Company-1 pursuant to its February 3, 2021 export license on or about July 10, 2022. According to the EEI filing, the value of the export from U.S. Company-1 to Kyrgyzstan Company-1 was over $59,000.  The EEI filing’s corresponding license application indicated that the firearms were for “commercial resale in Kyrgyzstan.”

On or about August 8, 2022, the defendant received a spreadsheet titled “Supply [U.S. Company-1] ([Russian Company-1]) weapon numbers.”  Russian Company-1 is a Russian company, and the DOC license did not authorize the export or re-export of the U.S. Company-1 firearms to Russia.  The spreadsheet listed the same semi-automatic rifle-pistol the defendant purchased from U.S. Company-1 and serial numbers matching the U.S. Company‑1 Invoice.

On or about November 14, 2022, the General Director of Russian Company‑1 executed a form used by tax authorities of the member states of the Eurasian Economic Union, which includes both Kyrgyzstan and Russia.  The form listed the seller as Kyrgyzstan Company‑2 and the buyer as Russian Company-1 with an address in Moscow, Russia, and identified the goods as the same semi‑automatic rifle‑pistols that U.S. Company-1 exported to Kyrgyzstan Company‑1, the defendant’s company.  The defendant did not apply for, obtain or possess a license to export or re-export the semi‑automatic pistol-rifles to Russia.

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted of the charges, the defendant faces up to 30 years’ imprisonment.

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States  Attorney Ellen H. Sise is in charge of the prosecution, along with Trial Attorney Leslie Esbrook of the National Security Division’s Counterintelligence and Export Control Section (CES), with assistance from Litigation Analyst Rebecca Roth and CES Trial Attorney Scott Claffee.

The case was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that, beginning in 2014, the United States, along with its foreign allies and partners, has imposed in response to Russia’s unprovoked military invasion of Ukraine.  Announced by the Attorney General on March 2, 2022, and under the leadership of the Office of the Deputy Attorney General, the task force will continue to leverage all of the Department’s tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression.

The Defendant:

SERGEI ZHARNOVNIKOV
Age:  46
Bishkek, Kyrgyzstan

E.D.N.Y. Docket No. 25-CR-45 (ENV)

Earlier today, at the federal court in Brooklyn, a superseding indictment was unsealed charging Robert Cassino, also known as “Bobby Cassino,” Joseph Passalaqua and Joseph Rivera with securities fraud conspiracy, wire fraud conspiracy and securities fraud.  The defendants were arrested today and are being arraigned this afternoon before United States Magistrate Judge James R. Cho.  Raymond John Pirrello, Jr., also known as “Ray John,” was previously indicted for his involvement in the scheme.

John J. Durham, United States Attorney for the Eastern District of New York and James E. Dennehy, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI) announced the charges.

“The defendants repeatedly lied to investors about the costs associated with their investments and diverted millions of dollars in undisclosed mark-up fees to their sales offices,” stated United States Attorney Durham.  “My Office will vigorously prosecute those who seek to take advantage of individual investors for their own greed.”

Mr. Durham expressed his appreciation to the Securities and Exchange Commission (SEC), New York Regional Office, for its significant cooperation and assistance during the investigation.

“At the behest of the company’s leadership, three defendants allegedly enticed investors with material misinformation to steal millions of their dollars through undisclosed upfront fees. This alleged scheme allowed the defendants’ respective sales offices to unlawfully profit at the expense of their clients’ trust and money. The FBI will never permit any individual to engage in hypocritical financial practices to covertly divert investments for personal enrichment,” stated FBI Assistant Director in Charge Dennehy.

As detailed in the superseding indictment, Pirrello, Cassino, Passalaqua and Rivera engaged in a scheme to defraud investors and prospective investors in securities offered by the company Late Stage Management, LLC (Late Stage). Late Stage was a New Jersey based manager of investment funds that offered investors “no fee” opportunities to invest in “Pre IPO” stocks, i.e., shares of stock in companies that anticipated an initial public offering (“IPO”) in the near term.  Late Stage worked with several sales offices throughout New Jersey, New York and Florida to promote the investments, including Pre IPO Marketing, Inc. (“Pre IPO Marketing”), Prior2IPO and B4IPO.

Pirrello worked as the partner to the leadership of Late Stage, and Cassino, Passalaqua and Rivera led operations at Pre IPO Marketing, Prior2IPO and B4IPO, respectively.  Pirrello and co-conspirators communicated with Cassino, Passalaqua, Rivera and others about how to market Late Stage to investors.  Cassino, Passalaqua and Rivera then made material misrepresentations and omissions to investors and potential investors in Late Stage relating to, among other things, the existence and amount of fees paid by investors in stock offered by Late Stage.  For example, they claimed that the only time Late Stage profited was on exit, when the company made its IPO or sold to a larger company, in which case it would be entitled to a 20% share of the investor’s profits.  In reality, however, Late Stage charged fees in the form of upfront markups ranging from 10-50% of each investment.  In total, between approximately March 2019 and July 2022, sales offices working on behalf of Late Stage raised approximately $528 million from investors and diverted approximately $88.6 million in undisclosed upfront markups to Pirrello, Cassino, Passalaqua, Rivera and their co-conspirators.   

The charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.

If you believe that you or someone you know was victimized by Pirrello, Cassino, Passalaqua, Rivera or their co-conspirators, please inform the FBI at the following website: www.fbi.gov/Pirrello or by calling 1-800-CALL-FBI.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States  Attorney Jessica K. Weigel is in charge of the prosecution with assistance from Special Agent Martin Sullivan and Paralegal Specialist Sarah Burn.

The Defendants:

ROBERT CASSINO (also known as “Bobby Cassino”)
Age: 62
Long Beach, New York

JOSEPH PASSALAQUA
Age:  36
Sparta, New Jersey

JOSEPH RIVERA
Age: 45
Elmont, New York

Previously Indicted Defendant:

RAYMOND JOHN PIRRELLO, JR. (also known as “Ray John”)
Age: 48
Sparta, New Jersey

E.D.N.Y. Docket No. 23-CR-499 (S-1) (KAM)

Earlier today, at the federal court in Brooklyn, an indictment was unsealed charging Julio Medina, Christopher Dantzler and Weihong Hu with conspiracy to commit wire fraud, honest-services wire fraud, money laundering conspiracy, conspiracy to violate the Travel Act and the use of a facility of interstate commerce in aid of commercial bribery.  This morning, Dantzler was arrested on Long Island, Hu in Manhattan and Medina in the Bronx.  They will be arraigned this afternoon before United States Magistrate Judge James R. Cho.

John J. Durham, United States Attorney for the Eastern District of New York, Jocelyn E. Strauber, Commissioner, New York City Department of Investigation (DOI) and James E. Dennehy, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrests and charges.

“The defendants’ brazen and illegal kickback scheme stole money from the City of New York that was intended to provide emergency housing and support services during the pandemic,” stated United States Attorney Durham.  “Shamefully, the defendants saw the pandemic as an opportunity to line their pockets with stacks of cash, finance a luxury vehicle, purchase homes and pay off personal debts. While New York City was trying to curb the spread of COVID-19, the defendants exploited a nonprofit organization to enrich themselves.  My Office will relentlessly pursue those who steal public funds and deprive members of our community of crucial resources.”

DOI Commissioner Strauber stated: “As charged, these defendants, an Executive Director of a City-funded nonprofit and the principals of the nonprofit’s subcontractors, engaged in and concealed a bribery and kickback scheme, pocketing millions of dollars of funds intended to provide emergency housing and support services in New York City during the COVID-19 pandemic. I thank the Mayor’s Office of Risk Management and Compliance for the referral to DOI that prompted this investigation and the U.S. Attorney’s Office for the Eastern District of New York and the FBI for their partnership and commitment to protect critical public resources.”

“These three defendants allegedly pocketed millions of dollars from public funds allocated for emergency housing during the pandemic,” stated FBI Assistant Director in Charge Dennehy. “This alleged kickback scheme abused a program designed to provide a vulnerable population with healthier, unexposed lodging alternatives, to finance enhancements to the defendants’ lifestyles. The FBI will never tolerate any individual who twists public programs into a mechanism to sell services for personal profit.”

As alleged in the indictment, Medina founded and served as the Executive Director and Chief Executive Officer of a non-profit organization that, among other things, provided various reentry services to formerly incarcerated individuals (the “Organization”).  In June 2020, the New York City Mayor’s Office of Criminal Justice (MOCJ) contracted with the Organization to administer an emergency transitional housing program (the “Emergency Housing Program”), in partnership with local hotels and other businesses, to combat the spread of COVID-19 in New York City jails.  The Organization subsequently entered into agreements with various hotels to operate as reentry hotels under the Emergency Housing Program.  In total, between June 2020 and December 2023, the Organization received approximately $122 million in public funds from MOCJ to operate the Emergency Housing Program at these hotels.

Dantzler and Hu each operated or controlled businesses that received tens of millions of dollars in public funds from the Organization under the Emergency Housing Program.  Dantzler’s company purported to provide security services at the reentry hotels but was not a licensed security company and did not, in fact, provide security services.   Hu operated or controlled two hotels in Queens that operated as reentry hotels under the Emergency Housing Program and was a member of a repurposed catering company that provided food services to formerly incarcerated individuals residing at reentry hotels under the Emergency Housing Program.   

Medina solicited and accepted bribes and kickbacks from Dantzler and Hu in exchange for Medina providing business through the Organization to Dantzler’s and Hu’s respective businesses under the Emergency Housing Program.  Among other bribes and kickbacks, Dantzler and Hu purchased Medina an approximately $1.3 million townhouse; Hu, through one of her businesses, financed a luxury vehicle for Medina valued at approximately $107,000; and Dantzler paid to purchase and renovate a house for Medina for approximately $750,000.

As depicted in the following photograph, during an in-person meeting in September 2020, Hu also provided Medina with a stack of wrapped U.S. currency in exchange for two checks from the Organization made out to Hu’s catering company, totaling more than $187,000.   

In total, Dantzler and Hu provided Medina with at least $2.5 million in U.S. currency and in-kind benefits in exchange for Medina steering approximately $51 million in public funds from the Emergency Housing Program to Dantzler’s and Hu’s businesses.  In turn, Dantzler’s security company received approximately $21 million in public funds from the Organization under the Emergency Housing Program, of which Dantzler personally retained approximately $9 million in public funds.  Hu’s hotels received approximately $12 million in public funds from the Organization under the Emergency Housing Program, while her repurposed catering company received approximately $17 million in public funds.

The charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States  Attorneys Meredith A. Arfa, Eric Silverberg and Sean M. Sherman are in charge of the prosecution, with assistance from Paralegal Specialists Kavya Kannan and Rebecca Roth.

The Defendants:

JULIO MEDINA
Age:  64
Clifton Park, New York

CHRISTOPHER DANTZLER
Age:  49
Baldwin, New York

WEIHONG HU
Age:  59
Manhattan, New York

E.D.N.Y. Docket No. 25-CR-54 (RPK)

Earlier today, Mina Tadrus pled guilty at the federal courthouse in Brooklyn, New York to committing investment adviser fraud in connection with a scheme to defraud investors in Tadrus Capital LLC, a hedge fund Tadrus founded and operated, of more than $5 million.  Today’s proceeding took place before United States District Judge Hector Gonzalez.  When sentenced, Tadrus faces up to five years in prison.    Tadrus was charged in September 2023.

John J. Durham, United States Attorney for the Eastern District of New York, James E. Dennehy, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI) and Harry T. Chavis, Jr., Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York Field Office (IRS-CI), announced the guilty plea.

“The defendant preyed on the Egyptian-American Coptic Christian community by falsely promising that his purported artificial intelligence-driven hedge fund would earn guaranteed annual returns of 30% or more, and taking advantage of their trust for his own personal gain,” stated United States Attorney Durham.  “This Office has prioritized protecting and seeking justice for individual investors in our District and beyond.”

Mr. Durham expressed his appreciation to the U.S. Securities and Exchange Commission’s New York Regional Office for its assistance in this matter.

“The only thing more artificial than Tadrus’ AI-driven hedge fund was his sincerity.  He sold a dream to trusting investors and instead of turning their money into profit, he swindled it for his own luxuries.  Today’s plea and forfeiture agreements are just a small step forward for his victims to receive genuine justice,” said Harry T. Chavis, Jr., Special Agent in Charge of IRS-CI New York.

According to court filings and facts presented during the plea proceeding, Tadrus marketed interests in Tadrus Capital LLC to investors based on false promises that he would employ artificial intelligence-driven trading strategies that would earn them guaranteed annual returns of 30% or more.

In reality, however, Tadrus did not use investor funds to engage in artificial intelligence-based trading as promised, nor did he engage in any trading activity. Instead, he used investor funds to pay employees, to purchase luxury gifts and expensive meals for himself, and to make Ponzi scheme-like payments to new victim investors.

If you were a Tadrus Capital LLC client and would like to file a complaint, please visit www.iC3.gov.  Please reference “Tadrus Capital” or “Mina Tadrus” in your complaint.

The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney John O. Enright and Special Agent Martin Sullivan are in charge of the prosecution with assistance from Paralegal Specialist Sarah Burn.

The Defendant:

MINA TADRUS
Age: 38
Tampa, Florida

E.D.N.Y. Docket No. 23-CR-393 (HG)