Security News: Former Analyst Sentenced To 33 Months In Prison For Committing Insider Trading Through Front-Running

Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced today that SERGEI POLEVIKOV, a former quantitative analyst, was sentenced late yesterday to 33 months in prison by United States District Judge Lewis J. Liman.  POLEVIKOV pled guilty on December 15, 2021 for his role in a scheme to misappropriate confidential information about pending trades by his former employer, an investment adviser, on behalf of its investment company clients. 

According to the allegations in the Complaint, the Information to which POELVIKOV pled guilty, and statements made during court proceedings:

From at least in or about 2014 through in or about October 2019, SERGEI POLEVIKOV was employed as a quantitative analyst at an asset management firm with headquarters in New York, New York (the “Employer Firm”).  In his role at the Employer Firm, POLEVIKOV had regular access to information regarding contemplated securities trades on behalf of the Employer Firm’s clients, which included investment companies.  During the period charged in the Complaint, POLEVIKOV engaged in a front-running scheme to misappropriate confidential, material, nonpublic information about the securities trade orders of the Employer Firm on behalf of its clients in order to engage in short-term personal securities trading in a brokerage account opened in his wife’s name.  POLEVIKOV’s scheme was designed to profit by executing trades that take advantage of relatively small price movements in a company’s stock that follow from large securities orders executed by the Employer Firm on behalf of its clients.  In total, POLEVIKOV’s scheme yielded more than $8.5 million in illicit profits.     

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In addition to his prison sentence, POLEVIKOV, 48, of Port Washington, New York, was ordered to pay forfeiture in the amount of $8,564,977 and a fine of $10,000.

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.  Mr. Williams further thanked the U.S. Securities and Exchange Commission for its assistance and cooperation in this investigation. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorney Kiersten A. Fletcher is in charge of the prosecution.

Security News: Raytown Man Pleads Guilty to $10 Million Conspiracy to Distribute 1,000 Kilos of Meth

Source: United States Department of Justice News

KANSAS CITY, Mo. – A Raytown, Mo., man pleaded guilty in federal court today to his role in a nearly $10 million conspiracy to distribute almost 1,000 kilograms of methamphetamine.

Michael B. Becher, 40, pleaded guilty before U.S. District Judge Greg Kays to participating in a conspiracy to distribute methamphetamine from Sept. 1, 2018, to Nov. 5, 2019.

By pleading guilty today, Becher admitted he was responsible for the distribution of at least 185 kilograms of methamphetamine. Becher also admitted that he purchased multiple pounds of methamphetamine on a daily basis.

Becher was arrested on Nov. 5, 2019, after he met a co-conspirator who was planning to travel on a private plane the same day to purchase 40 to 50 kilograms of methamphetamine in California. Becher paid his co-conspirator $1,000 to purchase methamphetamine. Law enforcement officers were conducting surveillance of the residence when they heard noises that sounded like firearms and people screaming. Officers entered the residence and arrested Becher and others.

Becher admitted that he had purchased 11 kilograms of methamphetamine from his co-conspirator in the prior two weeks, and had purchased two kilograms from a second source a week before his arrest. Becher paid $5,000 per kilogram for the methamphetamine and sold it for $6,300 per kilogram. Becher also admitted that in the past he had purchased four to five pounds of methamphetamine daily from a third source, and had once stolen 23 to 27 pounds of methamphetamine from that source. On one occasion, Becher said, he had more than 80 pounds of illegal drugs in his car.

Officers searched Becher’s BMW 650i and found approximately a half-pound (205.01 grams) of pure methamphetamine inside a grey backpack between the front seats of the vehicle. Becher told investigators the methamphetamine came from a fourth source, co-defendant Jesus Banuelos, Jr., 23, of Kansas City, Mo. Becher purchased one pound of methamphetamine from Banuelos the night before his arrest. Officers also found two plastic bags that contained a total of 1,547.06 grams of “imitation” methamphetamine, used as a cutting agent. Banuelos also has pleaded guilty and awaits sentencing.

Officers searched a storage unit Becher rented and found two M20 Super Bazooka rockets, an Anderson Manufacturing AM-15 5.56mm semi-automatic rifle with a magazine that contained 21 rounds of ammunition, a zip-lock bag that contained .1 gram of methamphetamine, and various rounds of ammunition.

Becher is among 15 defendants who have pleaded guilty in two separate indictments that resulted from this investigation.

Under the terms of today’s plea agreement, the government and Becher agree to a sentence of 20 years in federal prison without parole. Becher must also pay a money judgment not to exceed $9,961,839, representing all of the proceeds obtained as a result of the drug-trafficking conspiracy. The forfeiture is based on a conservative street price of $2,300 for 226 grams (a half-pound) of methamphetamine and the total conspiracy distribution of nearly 979 kilograms (978,859 grams) of methamphetamine. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys Bradley K. Kavanaugh and Sean T. Foley. It was investigated by the Kansas City, Mo., Police Department, the FBI, the Missouri State Highway Patrol, and the Mid-Missouri Drug Task Force.

Project Safe Neighborhoods

The U.S. Attorney’s Office is partnering with federal, state, and local law enforcement to specifically identify criminals responsible for significant violent crime in the Western District of Missouri. A centerpiece of this effort is Project Safe Neighborhoods, a program that brings together all levels of law enforcement to reduce violent crime and make neighborhoods safer for everyone. Project Safe Neighborhoods is an evidence-based program that identifies the most pressing violent crime problems in the community and develops comprehensive solutions to address them. As part of this strategy, Project Safe Neighborhoods focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.

Security News: Member of Philadelphia ‘Hilltop’ Drug Gang Sentenced to Over Seven Years in Prison

Source: United States Department of Justice News

PHILADELPHIA – United States Attorney Jennifer Arbittier Williams announced that Hyneef Harvey, 30, of Philadelphia, PA, was sentenced to seven years and three months in prison, and six years of supervised release by United States District Judge Gene E.K. Pratter for distributing narcotics as part of the Hilltop Drug Trafficking Group (DTG), an organization responsible for putting large amounts heroin and other narcotics including crack cocaine, oxycodone and fentanyl on the streets of West, Southwest, and Northwest Philadelphia, and Upper Darby between 2013 and 2018.

In November 2021, the defendant pleaded guilty to multiple felony narcotics charges including distribution and intent to distribute controlled substances and distribution of controlled substances near a school, stemming from his role in the Hilltop organization. The DTG operated seven days a week from approximately 9:00 am until midnight as a phone order/delivery service, through which customers called a cell phone number belonging to the leaders of the organization to place orders for illegal narcotics. The customers were then redirected to “runners,” who would meet the customers on the street, often entering the customers’ vehicles, to deliver the narcotics in exchange for payment. Hilltop was a violent group that often defended its territory and narcotics with firearms, and through distribution of narcotics is responsible for multiple overdose deaths.

“This case is an excellent example of all levels of law enforcement collaborating to dismantle a dangerous drug trafficking operation putting deadly narcotics on streets all across Philadelphia and beyond,” said U.S. Attorney Williams. “This defendant directly threatened the safety of children by conducting the business of drug dealing adjacent to schools and playgrounds, actions for which he will now spend years behind bars.”

The case was investigated by Drug Enforcement Administration and the Philadelphia Police department, and is being prosecuted by Assistant United States Attorney Kelly Harrell and Everett Witherell.

Security News: Agreement Reached with City of Springfield Reforming its Police Department’s Unconstitutional Practices

Source: United States Department of Justice News

Settlement will resolve claims that the Springfield officers engaged in a pattern or practice of excessive force that deprived individuals of their rights

BOSTON – The U.S. Attorney’s Office for the District of Massachusetts and the Department of Justice’s Civil Rights Division today filed a complaint and a proposed consent decree with the City of Springfield, Massachusetts to resolve its investigation of the Springfield Police Department’s Narcotics Bureau. This is the first pattern or practice police investigation to be resolved through a settlement under the Biden Administration.

The Settlement Agreement, in the form of a proposed consent decree, which must be approved by a Federal District Court Judge, would resolve the United States’ claim that the City and the Narcotics Bureau of the Springfield Police Department engaged in a pattern or practice of excessive force that deprived individuals of their rights under the Fourth Amendment to the U.S. Constitution. 

Under the Agreement, the Springfield Police Department will improve policies and training related to officers’ use of force. These improvements will ensure that officers avoid force whenever possible through the use of de-escalation tactics; that officers know when force can and cannot be used; and that officers report all instances where force is used. In addition, the Springfield Police Department will provide better supervision to officers and improve internal investigations of complaints of officer misconduct. When officers violate use-of-force policies, the decree will ensure that the Springfield Police Department holds officers accountable. 

The Agreement also provides for the federal judge to appoint an independent monitor, with the title of Compliance Evaluator, based on the recommendation of the parties. The Compliance Evaluator will assess Springfield’s implementation of the decree’s requirements and file public reports with the court on Springfield’s progress. 

“When communities don’t trust or fear law enforcement, it undermines public safety. Some within the Springfield Police Department, through their sustained and documented constitutional violations, have tarnished the name of the many upstanding and decent police officers working in Springfield,” said U.S. Attorney Rachael Rollins for the District of Massachusetts. “Today is the first step in repairing the harm and mistrust their misconduct and violence caused. After lengthy negotiations, we are pleased to have reached an agreement that includes significant and sustainable reforms to ensure effective and constitutional policing going forward in the City of Springfield. This is the first police misconduct Settlement Agreement entered during the Biden Administration. Our U.S. Attorney’s Office will always protect the constitutional rights of Massachusetts residents.”

“The public’s trust in law enforcement is a critical component of promoting public safety. Excessive force erodes that trust and makes our communities less safe,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “This consent decree will rebuild the public’s trust by ensuring that Springfield officers who use excessive force in violation of the Fourth Amendment are held accountable. We look forward to working with city officials to ensure constitutional policing in every corner of the Springfield community and fostering better relationships between law enforcement and the community.”  

The Civil Rights Division and the U.S. Attorney’s Office for the District of Massachusetts initiated the investigation of the Springfield Police Department in April 2018 under the Violent Crime Control and Law Enforcement Act of 1994, 34 U.S.C. § 12601. This law authorizes the Attorney General to file a lawsuit to address a pattern or practice of conduct by law enforcement officers that deprives individuals of their rights under the Constitution or federal law. In July 2020, the department announced findings that officers in SPD’s Narcotics Bureau, which has since been renamed the Firearms Investigation Unit, engaged in a pattern or practice of excessive force. The department found that Narcotics Bureau officers often failed to report use of force incidents. At times officers’ reports were inconsistent with available evidence, including video and photographs. 

The investigation was conducted jointly by the Civil Rights Unit of the U.S. Attorney’s Office for the District of Massachusetts and the Civil Rights Division’s Special Litigation Section. This matter is being handled by Jennifer A. Serafyn, Chief of Rollins’s Civil Rights Unit.

For more information on the U.S. Attorney’s Office’s Civil Rights Unit, please visit www.justice.gov/usao-ma/civil-rights. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.

Security News: Assistant Attorney General Kristen Clarke Announces Consent Decree with City of Springfield, Massachusetts

Source: United States Department of Justice News

Remarks as Delivered

Good morning. I am joined by United States Attorney Rachael Rollins, Springfield Mayor Domenic Sarno and Springfield Police Superintendent Cheryl Clapprood.

One of the very highest priorities of the U.S. Department of Justice is to ensure that every person in this country benefits from policing that is lawful, effective, transparent and free from discrimination. All communities are safer when people trust that the justice system is transparent and constitutionally sound. And we at the department believe that one of the most effective and important ways we can build that trust is by investigating and addressing patterns or practices of misconduct by law enforcement agencies.

We know this to be true not just from our decades of experience doing this work, but because numerous independent studies have confirmed it. These studies have found that the Civil Rights Division’s police consent decrees bring about more effective constitutional policing practices and improved police-community relations. And these studies have also shown that police departments themselves benefit from this work, through better management and oversight practices, improved policies and training and more.

So far in this Administration, the Civil Rights Division has opened four pattern or practice investigations – in Louisville, Minneapolis, Phoenix and Mount Vernon, New York. We are actively enforcing 11 consent decrees, four other settlements and court orders resulting from contested litigation in two cases. We will continue pushing to ensure constitutional policing and to safeguard the civil rights of all people across the nation.

Today, I am proud to announce that, after thorough, good-faith negotiations, the Department of Justice and the City of Springfield have agreed to enter into a court-enforceable consent decree regarding the Springfield Police Department. This consent decree is the first police consent decree for this Administration, and I want to thank Mayor Sarno and Superintendent Clapprood for their cooperation and leadership throughout this process. They are committed to the reform of their police department. I want to thank the officers of the Springfield Police Department, who work hard every day to uphold public safety. And I want to thank the people of Springfield, who are ready to start a new chapter in their relationship with the police.

In July of 2020, the Civil Rights Division and the United States Attorney’s Office for the District of Massachusetts announced the findings of our investigation of the Springfield Police Department. We described systemic problems that led to a pattern or practice of excessive force by officers assigned to Springfield’s Narcotics Bureau. We found deficiencies in policies, training and accountability mechanisms. These deficiencies allowed for violent uses of force to go on unreported and unchecked. The pattern or practice of unlawful conduct eroded the public’s trust. It undermined the police department’s ability to fight crime.

We have worked collaboratively with the City of Springfield and the Springfield Police Department to craft reforms that will fix the problems that we identified. We met with members of Springfield’s many communities, including people impacted by police violence, as well as police officers and union officials. We heard many ideas for reform. We spent months negotiating the settlement that we’re announcing today. We and the City agreed that fixing the problems at the Springfield Police Department requires a court-enforceable consent decree and a court-appointed independent monitor.

This consent decree sets the Springfield Police Department on a pathway to restoring the public’s trust by ensuring that policing is lawful, effective and safer for members of the public and police officers. Among the reforms in the decree are requirements that officers will report all uses of force, including punches and kicks — something which was not previously required in the Springfield Police Department. In addition, officers have a duty to intervene to prevent excessive force. Supervisors will closely scrutinize uses of force to assess whether officers used force appropriately. And Springfield will create a new Force Investigation Team — specially trained investigators who will evaluate the most serious uses of force.

Restoring trust in law enforcement also means giving members of the public a say in how policing services are delivered and we are pleased that Springfield has already embraced community oversight through the creation of the Board of Police Commissioners. The consent decree buttresses and strengthens the work of the Board. The decree requires transparency in the selection process for Commissioners. It ensures that the Board will conduct thorough, timely and fair reviews of complaints from members of the public about Springfield officers. And it gives the Board the tools it needs — including subpoena power, training and a budget — to carry out its work effectively and efficiently.

Real and lasting change does not happen fast. Institutional reform is complex and requires unflagging diligence and persistence. Implementing the requirements of this decree in a way that is truly durable will take years, not months. Throughout this process, we are asking the people of Springfield not to waiver in their commitment to reform. Residents, police officers, union officials and city officials — we need all of you to work hard, and to work together to make this process successful. You all deserve a police department that is effective and that respects the rights of every person.

This reform process will be transparent and will not lose sight of the core goal of constitutional, effective policing. Just this morning, we have filed a civil lawsuit against the City of Springfield, which will put this matter before a federal court. We have filed the consent decree with the federal court and asked the judge to make the decree a court order. After the judge approves the decree, we and Springfield will jointly recommend an independent monitor. We will ask the court to appoint the monitor to serve as the court’s eyes and ears during the reform process. The monitor will assess Springfield’s efforts in implementing the decree’s requirements. The monitor will file public reports with the court every six months. These reports will give the court and the public a clear picture of how the reform process is going. The monitor will meet regularly with members of the public, as will the Springfield Police Department, the Board of Police Commissioners and the Department of Justice. We are interested in your ideas, and we are open to your criticisms. We know that this effort will only be successful if members of the public can see and feel that real change has happened. We are all committed to a transparent process that will build the public’s faith in reform.

We are pleased that Mayor Sarno and Superintendent Clapprood have pledged their support of the consent decree. We are hopeful about rebuilding trust between the Springfield Police Department and the communities it serves. We look forward to working with the City and the police department towards our shared goal of constitutional, effective policing.

At this time, I’d like to introduce United States Attorney Rachael Rollins of the District of Massachusetts, who will share further remarks regarding the process that’s underway in Springfield.