Month: June 2022

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Security News: Jury finds Canal Winchester man guilty on all counts in romance scam money laundering conspiracy

Source: United States Department of Justice News

COLUMBUS, Ohio – A federal jury has convicted a Canal Winchester man of 35 counts of money laundering crimes related to an online romance fraud scheme.

The verdict was announced yesterday following a trial that began on May 16 before Chief U.S. District Judge Algenon L. Marbley.

According to court documents and trial testimony, Seth Nyamekye, 39, laundered the proceeds of online romance scams that generated millions of dollars of loss.

The perpetrators of the romance scams created several profiles on online dating sites and then contacted men and women throughout the United States and elsewhere. The scammers cultivated a sense of affection and, often, romance, with the victims they met online before requesting money for investment or need-based reasons. The romance scam perpetrators then provided victims with bank account information where the money should be sent. Nyamekye controlled one of these accounts and received more than $1.3 million in romance fraud proceeds from victims.

The government proved beyond a reasonable doubt at trial that Nyamekye laundered the victims’ money on behalf of the conspiracy. The defendant conspired with others from at least June 2016 until February 2018 to commit money laundering in multiple transactions of more than $10,000 with the purpose of concealing the fraudulent nature of the proceeds.

At least eight victims sent their money directly to Nyamekye’s bank account, which was in the name of Gloseth Ventures LLC. For example, one victim was defrauded by a purported member of the military and sent a $170,000 wire transfer to Nyamekye’s bank account. Another victim fell in love with a man he met online who also claimed to be in the military overseas and sent two wire transfers to Nyamekye totaling $73,000. A separate victim believed she was engaged to the man who was scamming her and sent $50,000 to the defendant’s bank account.

After the funds were deposited into Nyamekye’s bank account, Nyamekye took a cut of the victims’ money and then conducted financial transactions to move the funds where the perpetrators of the romance fraud could enjoy the criminal proceeds.

Nyamekye was charged by a criminal complaint in October 2020 and was later indicted in May 2021. He faces up to 20 years in prison on each of 18 counts, and up to 10 years in prison on each of 17 other counts.

“If you believe you are the victim of an online romance scam, I urge you to file a complaint at ic3.gov,” said U.S. Attorney Kenneth L. Parker.

Kenneth L. Parker, United States Attorney for the Southern District of Ohio, and Bryant Jackson, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office, announced the verdict. Assistant United States Attorneys Peter K. Glenn-Applegate and David J. Twombly are representing the United States in this case.

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Security News: Former Employee Of NFT Marketplace Charged In First Ever Digital Asset Insider Trading Scheme

Source: United States Department of Justice News

Defendant Allegedly Traded on Inside Information About NFTs That Were Scheduled to be Featured on The Homepage of The Largest NFT Marketplace

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging NATHANIEL CHASTAIN, a former product manager at Ozone Networks, Inc. d/b/a OpenSea (“OpenSea”), with wire fraud and money laundering in connection with a scheme to commit insider trading in Non-Fungible Tokens, or “NFTs,” by using confidential information about what NFTs were going to be featured on OpenSea’s homepage for his personal financial gain.  CHASTAIN was arrested this morning in New York, New York and will be presented today in the United States District Court for the Southern District of New York.

U.S. Attorney Damian Williams said:  “NFTs might be new, but this type of criminal scheme is not.  As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself.  Today’s charges demonstrate the commitment of this Office to stamping out insider trading – whether it occurs on the stock market or the blockchain.”

FBI Assistant Director-in-Charge Michael J. Driscoll said:  “In this case, as alleged, Chastain launched an age-old scheme to commit insider trading by using his knowledge of confidential information to purchase dozens of NFTs in advance of them being featured on OpenSea’s homepage. With the emergence of any new investment tool, such as blockchain supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain. The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.”

As alleged in the Indictment unsealed today in Manhattan federal court:[1]

This case concerns insider trading in NFTs on OpenSea, the largest online marketplace for the purchase and sale of NFTs. In violation of the duties of trust and confidence he owed to his employer, OpenSea, CHASTAIN exploited his advanced knowledge of what NFTs would be featured on OpenSea’s homepage for his personal financial gain.

As part of his employment, CHASTAIN was responsible for selecting NFTs to be featured on OpenSea’s homepage. OpenSea kept confidential the identity of featured NFTs until they appeared on its homepage. After an NFT was featured on OpenSea’s homepage, the price buyers were willing to pay for that NFT, and for other NFTs made by the same NFT creator, typically increased substantially.

From at least in or about June 2021 to at least in or about September 2021, CHASTAIN used OpenSea’s confidential business information about what NFTs were going to be featured on its homepage to secretly purchase dozens of NFTs shortly before they were featured. After those NFTs were featured on OpenSea, CHASTAIN sold them at profits of two- to five-times his initial purchase price. To conceal the fraud, CHASTAIN conducted these purchases and sales using anonymous digital currency wallets and anonymous accounts on OpenSea.

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CHASTAIN, 31, of New York, New York is charged with one count of wire fraud and one count of money laundering, each of which carries a maximum sentence of 20 years in prison. 

The maximum potential 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. Williams praised the outstanding work of the FBI. Mr. Williams also thanked the National Cryptocurrency Enforcement Team for their assistance in the investigation. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Thomas S. Burnett and Nicolas Roos 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 in this release constitute only allegations, and every fact described should be treated as an allegation.

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Security News: GILLETTE MAN SENTENCED TO FEDERAL PRISON AND ORDERED TO PAY OVER $200,000 IN RESTITUTION FOR WIRE FRAUD AND TAX VIOLATIONS

Source: United States Department of Justice News

United States Attorney Bob Murray announced today that DAVID A. JACKSON, a/k/a GERALD DAVID JACKSON, a/k/a GERALD D. RODERICK-JACKSON, age 37 of Gillette, Wyoming, was sentenced for violations of wire fraud, willful failure to collect or pay over tax, and filing a false tax return. He appeared for a sentencing hearing before United States District Court Judge Nancy D. Freudenthal on May 24, 2022. Jackson received 46 months’ imprisonment for wire fraud and willful failure to collect or pay over tax to the IRS, respectively, with three years of supervised release. As to the offense of filing a false tax return, he received 36 months’ imprisonment with one year of supervised release. The sentences will be served concurrently.  Jackson was also ordered to pay $203,251 in restitution and a $300 special assessment.

From October 2017 to April 2019, Jackson worked as the officer manager for a Gillette-based company.  Part of Jackson’s duties included handling all financial aspects of his employer’s businesses, including collecting, accounting for and paying over trust fund taxes to the IRS on behalf of his employer. Jackson also owned and operated a taxi business in Gillette and Casper under the names: Need A Ride Transportation, All Star Transportation, and WYRide LLC. From February 2018 to April 2019, Jackson committed wire fraud by embezzling money from his employer, diverting money from the employer’s bank account and misusing a company credit card for his own personal expenditures, to include expenses associated with his taxi business.  As part of his scheme to defraud his employer, Jackson also failed to account for and pay over to the IRS the employer’s trust fund taxes, instead diverting those funds for his own personal use, to include paying expenses associated with his taxi business.  In January 2019, Jackson filed a 2018 individual income tax return with the IRS in which he failed to report $136,008 in income from several sources, namely, the monies he embezzled from his employer and other income he earned that year.

“Jackson took advantage of his position and the relationship he cultivated with his employer for his own purposes,” said United States Attorney Bob Murray. “Thanks to our partnership with IRS Criminal Investigations and the Gillette Police Department, he will have almost four years in federal prison to reflect on his actions. Let this sentence serve as a warning to others who might be tempted to abuse their position for personal gain.”

“Jackson was aware of his responsibilities and the duties he was trusted to perform, and instead he chose to embezzle funds from his employer and hide money from the IRS,” said Andy Tsui, Special Agent in Charge, IRS Criminal Investigation Denver Field Office. “Today’s sentencing sends a clear message that these crimes will not go unpunished. Our special agents along with our law enforcement partners will continue to track down individuals who act with a blatant disregard for the law and use the proceeds for their own personal benefit.” 

This case was investigated by the Internal Revenue Service – Criminal Investigation and the Gillette Police Department. Assistant United States Attorney Margaret M. Vierbuchen is prosecuting the case. 

Case No. 21-cr-00087-NDF

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Security News: Justice Department Concludes Oversight and Reform of Pennsylvania Alternative Education Programs

Source: United States Department of Justice News

Pennsylvania Department of Education Institutes DOJ-Mandated Reforms to Safeguard Civil Rights of Students with Disabilities and English Learner Students

The Department of Justice announced today that the Pennsylvania Department of Education (PDE) has fully implemented its settlement agreement with the United States to stop the unlawful placement of students with disabilities in PDE’s statewide system of alternative education programs, known as Alternative Education for Disruptive Youth (AEDY), and to ensure equal educational opportunities for English learner students in AEDY.

“No student should be excluded from the chance to learn because of a disability or language barrier,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Under this agreement, Pennsylvania has laid the groundwork for lasting change and advanced the crucial goal of educational equity for students with disabilities and English learner students. We commend state officials for working with the Department of Justice to ensure students with disabilities and English learners receive the legally required support they need to participate equally in schools.”

“Federal law does not allow schools to discipline students because of their disability, or to deprive them of an opportunity to learn English,” said U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania. “I commend PDE for abiding by the agreement and ensuring that students with disabilities and English learners are not prevented from learning opportunities afforded to other students.”

“Pennsylvania has taken substantial steps to ensure that children are not placed in an alternative disciplinary program simply because they have a disability,” said U.S. Attorney John Gurganus for the Middle District of Pennsylvania. “We congratulate the Commonwealth for implementing numerous changes to improve the education of children with disabilities and provide opportunities to English learners.”

“We recognize and appreciate that the Commonwealth of Pennsylvania has demonstrated a commitment to implement its settlement agreement by enacting reforms which ensure that all students have an equal opportunity to learn,” said U.S. Attorney Cindy Chung for the Western District of Pennsylvania. 

The settlement agreement resolved a Justice Department investigation under Title II of the Americans with Disabilities Act, which prohibits state and local government entities, including public schools, from discriminating based on disability. The agreement also addressed noncompliance with the Equal Educational Opportunities Act of 1974, which prohibits a state from denying equal educational opportunity based on national origin by failing to take appropriate action to overcome language barriers faced by students.

The investigation was initiated following a complaint by the Education Law Center, and was conducted jointly by the Justice Department’s Civil Rights Division and all three U.S.  Attorneys’ Offices in Pennsylvania.  

Under the settlement agreement, PDE implemented new monitoring systems to help ensure that students are not placed in AEDY in a manner that discriminates based on disability; that they are not denied equal educational opportunities; and that students with disabilities are transferred back to their home schools in a timely manner. Specifically, actions required by the settlement agreement included:

  • Investigating, and in some cases closing, AEDY programs based on complaints and other information about the mistreatment of students in those programs;
  • Providing technical assistance to AEDY programs to implement evidence-based approaches to improve school climate;
  • Developing new trainings for school district and AEDY program staff to ensure that students are not placed in AEDY for disability-related behaviors;
  • Implementing evidence-based interventions to keep students in general education settings;
  • Developing new data collection tools and analyses to monitor AEDY programs and school districts for disproportionate placement of students in AEDY based on disability; and
  • Creating corrective action plans when appropriate.

PDE coordinated with the Pennsylvania Training and Technical Assistance Network, which provided important assistance in effectively implementing the agreement and to supporting students across Pennsylvania. PDE also implemented measures to ensure English learner students receive appropriate language assistance services in AEDY. After monitoring PDE’s compliance with the agreement, the United States determined that PDE was in substantial compliance. As a result, monitoring ended on May 31, 2022.

Protecting the rights of students with disabilities and English learners to inclusion and equal educational opportunities is a top priority of the Justice Department. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.

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Security News: Gonzales Man Pleads Guilty to Federal Drug Charges

Source: United States Department of Justice News

NEW ORLEANS – U.S. Attorney Duane A. Evans announced that KEITH JENKINS, age 35, of Gonzales, pled guilty as charged on May 31, 2022 to a two count indictment, that  charged him with participating in a conspiracy to distribute five kilograms or more of cocaine hydrochloride, in violation of Title 21, United States Code Sections 841(a)(1), (b)(1)(A), and 846 and the possession with the intent to distribute 500 grams or more of cocaine hydrochloride, in violation of Title 21, United States Code Sections 841(a)(1) and (b)(1)(B). 

JENKINS will be sentenced on August 30, 2022 and will face a sentence of ten (10) years up  to life in prison, a fine of not more than $10,000,000.00, at least five (5) years of supervised release and a $100 mandatory special assessment fee on the conspiracy charge and from five (5) up to forty (40) years in prison, a fine of not more than $5,000,000.00, at least four (4) years of supervised release, and a $100 mandatory special assessment fee for the possession with the intent to distribute charge.  

This case was investigated by members of the United States Drug Enforcement Administration.  The prosecution is being handled by Assistant United States Attorney Maurice E. Landrieu, Jr.