Month: July 2022

Source: United States Department of Justice News

The Department of Justice, together with federal law enforcement partners, today announced criminal charges against six defendants in four separate cases for their alleged involvement in cryptocurrency-related fraud, including the largest known Non-Fungible Token (NFT) scheme charged to date, a fraudulent investment fund that purportedly traded on cryptocurrency exchanges, a global Ponzi scheme involving the sale of unregistered crypto securities, and a fraudulent initial coin offering.  

“The Department of Justice and our partners are dedicated to using every available tool to protect consumers and investors from fraud and manipulation,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “These indictments reflect our deep commitment to prosecuting individuals involved in cryptocurrency fraud and market manipulation.”

“Our office is committed to protecting investors from sophisticated scammers seeking to capitalize on the relative novelty of digital currency,” said U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida. “As with any emerging technology, those who invest in cryptocurrency must beware of profit-making opportunities that appear too good to be true.”

“These cases serve as a crucial reminder that some con artists hide behind trendy buzzwords, but at the end of the day they are simply seeking to separate people from their money,” said U.S. Attorney Tracy L. Wilkison for the Central District of California. “We will continue to work with our law enforcement partners to educate and protect potential investors about both traditional and trendy investments.”

“As cryptocurrency marketplaces advance and offer new opportunities for consumers, criminals also seek ways to exploit them,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The FBI, alongside our law enforcement partners, will continue to investigate and bring those criminals to justice, and to protect the American people.” 

“This investigation and prosecution exemplifies the importance of public-private partnerships,” said Executive Associate Director Steve K. Francis of Homeland Security Investigations (HSI). “As a result of our strong relationships with industry partners, HSI received information leading to this investigation and ultimate indictment. HSI will continue to investigate criminal organizations operating in emerging technologies and are proud to have worked with the Department of Justice Fraud Section to put an end to this criminal activity.”

The following charges are announced today as a part of this national enforcement action.

Crypto NFT Scheme:

United States v. Le Ahn Tuan:

Le Anh Tuan, 26, a Vietnamese national, was charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit international money laundering in the Central District of California in connection with a scheme involving the “Baller Ape” NFT. As alleged in the indictment, Tuan was involved in the Baller Ape Club, an NFT investment project that purportedly sold NFTs in the form of various cartoon figures, often including the figure of an ape. According to the indictment, shortly after the first day Baller Ape Club NFTs were publicly sold, Tuan and his co-conspirators engaged in what is known as a “rug pull,” ending the purported investment project, deleting its website, and stealing the investors’ money. Based on blockchain analytics, shortly after the rug pull, Tuan and his co-conspirators laundered investors’ funds through “chain-hopping,” a form of money laundering in which one type of coin is converted to another type and funds are moved across multiple cryptocurrency blockchains, and used decentralized cryptocurrency swap services to obscure the trail of Baller Ape investors’ stolen funds. In total, Tuan and his co-conspirators obtained approximately $2.6 million from investors. If convicted of all counts, Tuan faces up to 40 years in prison. HSI is investigating the case. Fraud Section Trial Attorneys Kevin Lowell and Tian Huang are prosecuting the case. 

Crypto Ponzi and Unregistered Securities Scheme:

United States v. Emerson Pires, Flavio Goncalves, and Joshua David Nicholas:

Emerson Pires, 33, and Flavio Goncalves, 33, both of Brazil, and Joshua David Nicholas, 28, of Stuart, Florida, were each charged in the Southern District of Florida with one count of conspiracy to commit wire fraud and one count of conspiracy to commit securities fraud in connection with a global cryptocurrency-based Ponzi scheme that generated approximately $100 million from investors. Pires and Goncalves also were charged with conspiracy to commit international money laundering. The indictment alleges that Pires and Goncalves, both founders of EmpiresX, along with Nicholas, the so-called “Head Trader” for EmpiresX, fraudulently promoted EmpiresX, a cryptocurrency investment platform and unregistered securities offering, by making numerous misrepresentations regarding, among other things, a purported proprietary trading bot and fraudulently guaranteeing returns to investors and prospective investors in EmpiresX. As alleged in the indictment, blockchain analytics shows that Pires and Goncalves then laundered investors’ funds through a foreign-based cryptocurrency exchange and operated a Ponzi scheme by paying earlier investors with money obtained from later EmpiresX investors. If convicted of all counts, Pires and Goncalves face up to 45 years in prison and Nicholas faces up to 25 years in prison. FBI and HSI are investigating the case. Fraud Section Trial Attorneys Kevin Lowell and Sara Hallmark and Assistant U.S. Attorney Yisel Valdes of the U.S. Attorney’s Office for the Southern District of Florida are prosecuting the case.

Crypto Initial Coin Offering Scheme:

United States v. Michael Alan Stollery:

Michael Alan Stollery, 54, of Reseda, California, was the CEO and founder of Titanium Blockchain Infrastructure Services (TBIS), a purported cryptocurrency investment platform. Stollery was charged in an information filed in the Central District of California with one count of securities fraud for his role in a cryptocurrency fraud scheme involving TBIS’s initial coin offering, which raised approximately $21 million from investors in the United States and overseas. As alleged, in order to lure investors, Stollery falsified TBIS white papers (a document for prospective investors that typically explains how the technology underlying the cryptocurrency works and the purpose of the cryptocurrency project), planted fake testimonials on TBIS’s website, and fabricated purported business relationships with the U.S. Federal Reserve Board and dozens of prominent companies, including Apple Inc., Pfizer Inc., and The Walt Disney Company, to create the appearance of legitimacy. If convicted of all counts, Stollery faces up to 20 years in prison. The FBI and the Federal Reserve Board’s Western Region San Francisco Office are investigating the case. Fraud Section Trial Attorneys Kevin Lowell, Tian Huang, and Andrew Tyler are prosecuting the case.

“Those who fraudulently misrepresent their relationship with the Federal Reserve to deceive the public in cryptocurrency or other fraud schemes will be held accountable and brought to justice,” said Acting Special Agent in Charge Cory Nootnagel of the Office of Inspector General for the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection, Western Region. “I commend our agents, their federal law enforcement partners, and the Justice Department’s Criminal Division’s Fraud Section for their hard work and persistence.”

Crypto Commodities Scheme:  

United States v. David Saffron:

David Saffron, 49, of Las Vegas, Nevada, was the owner of Circle Society, a cryptocurrency investment platform. Saffron used Circle Society to solicit investors to participate in an unregistered commodity pool, which is a fund that combines investors’ contributions to trade on the futures and commodity markets. Saffron was charged in the Central District of California with one count of conspiracy to commit wire fraud, four counts of wire fraud, one count of conspiracy to commit commodities fraud, and one count of obstruction of justice. As alleged in the indictment, Saffron falsely represented to investors that he traded investors’ funds to earn profits using a trading bot that could execute over 17,000 transactions per hour on various cryptocurrency exchanges. Saffron falsely represented that his trading bot would generate between 500% to 600% returns on the amount invested. To entice investors to invest, Saffron allegedly led investor meetings at luxury homes in the Hollywood Hills and elsewhere, and traveled with a team of armed security guards in order to create the false appearance of wealth and success. In total, Saffron fraudulently raised approximately $12 million from investors. If convicted of all counts, Saffron faces up to 115 years in prison. IRS Criminal Investigation (IRS-CI) is investigating the case. Fraud Section Trial Attorneys Kevin Lowell and Theodore Kneller, and Assistant U.S. Attorney James Hughes of the U.S. Attorney’s Office for the Central District of California are prosecuting the case.

“Mr. Saffron preyed on investor interest in cryptocurrency by enticing victims with fake technology and false promises of guaranteed returns,” said Special Agent in Charge Ryan L. Korner of the IRS-CI’s Los Angeles Field Office. “In reality, Mr. Saffron was operating an illegal Ponzi scheme to defraud victim investors and used the funds for his own personal benefit. IRS-CI will pursue and root out these schemes to protect investors, preserve our commodity markets, and bring financial fraudsters to justice.”

Crypto Fraud Victims:

All investor victims of the Baller Ape Club, EmpiresX, TBIS, and Circle Society schemes are encouraged to visit the webpage https://www.justice.gov/criminal-vns/crypto-enforcement to identify themselves as potential victims and obtain more information on their rights as victims, including the ability to submit a victim impact statement.

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

Source: United States Department of Justice 2

Yesterday, a federal jury in San Antonio, Texas, convicted the owner of several companies in the construction industry for his role in a long-running scheme to defraud the United States.

According to court documents and evidence presented at trial, Michael Angelo Padron, along with co-conspirators Michael Wibracht and Ruben Villarreal, conspired to defraud the United States to obtain valuable government contracts under programs administered by the Small Business Administration (SBA). The evidence showed that Padron conspired to install Villarreal, a service-disabled veteran, as the ostensible owner of a general construction company held out as a Service-Disabled Veteran-Owned Small Business (SDVOSB). Padron, along with his co-conspirator and business partner Wibracht, exercised disqualifying financial and operational control over the construction company. According to court documents, the conspirators concealed that control in order to secure over $240 million in government contracts that were set aside for SDVOSBs in order to benefit their larger, nonqualifying businesses.

“Yesterday’s verdict is a victory for the rule of law,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “The Antitrust Division and its Procurement Collusion Strike Force welcome this decisive outcome, which protects service-disabled veterans from cheaters and schemers.”

“Using any SBA program fraudulently undermines the spirit and true intent of bolstering the backbone of the nation’s economy — small businesses,” said Special Agent in Charge Sharon Johnson of the SBA Office of Inspector General (SBA-OIG), Central Region. “OIG continues to relentlessly root out and protect the integrity of all SBA’s programs. I want to thank the Antitrust Division and our law enforcement partners for their dedication and pursuit of justice.”

“Yesterday’s verdict is a testament to the tenacity of Army CID’s special agents to detect and investigate those who attempt to defraud our military,” said Special Agent in Charge L. Scott Moreland of the U.S. Army Criminal Investigation Division’s (CID) Major Procurement Fraud Field Office.

“Federal agencies rely on the accuracy and validity of the information contained in GSA’s System for Award Management to make sound contracting decisions,” said Special Agent in Charge Jamie Willemin of the General Services Administration Office of Inspector General (GSA-OIG), Southwest and Rocky Mountain Division. “We will continue to work with our investigative partners to hold accountable those who fraudulently obtain government contracts by providing false information in the system.”

“Fraudulently obtaining multimillion-dollar government contracts from a program designed to benefit service-disabled veterans is reprehensible,” said Special Agent in Charge Jeffrey Breen of the Department of Veterans Affairs Office of Inspector General’s (VA-OIG) South Central Field Office. “Yesterday’s guilty verdict sends a clear message that the VA-OIG will work diligently to hold those who would do so accountable. The VA-OIG thanks the Department of Justice Antitrust Division and our law enforcement partners for their efforts in this case.”

“This case demonstrates the commitment of the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service (DCIS), along with our law enforcement partners, to aggressively pursue those who undermine the integrity of government-sponsored small business initiatives,” said Special Agent in Charge Michael Mentavlos of the DCIS Southwest Field Office. “Individuals who engage in activity that deprive legitimate program participants of valuable economic opportunities will be thoroughly investigated and held accountable.”

Padron was convicted of conspiracy to defraud the United States and six counts of wire fraud. He is scheduled to be sentenced on Oct. 19, and faces a maximum penalty of five years in prison and a $250,000 fine for the conspiracy count, and a maximum penalty of 20 years in prison and a $250,000 fine for each wire fraud count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The Antitrust Division’s Washington Criminal II Section prosecuted the case, which was investigated by SBA-OIG, U.S. Army CID Major Procurement Fraud Unit, VA-OIG, DCIS, and GSA-OIG. The U.S. Attorney’s Office for the Western District of Texas and the Army Audit Agency also assisted with the investigation.

Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal II Section at (202) 598-4000, or visit https://www.justice.gov/atr/contact/newcase.html.

In November 2019, the Department of Justice created the Procurement Collusion Strike Force (PCSF), a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant, and program funding at all levels of government – federal, state and local. To learn more about the PCSF, or to report information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to defense-related spending, go to https://www.justice.gov/procurement-collusion-strike-force.

Source: United States Department of Justice

The Department of Justice is pleased to announce the opening of the application period for federally recognized Tribes and intertribal consortia to participate in the Tribal Access Program (TAP) for National Crime Information, which provides federally recognized Tribes the ability to access and exchange data with national crime information databases for authorized criminal justice and non-criminal justice purposes.

“The Tribal Access Program (TAP) is a proven and powerful tool for Tribal police officers, government and court officials to investigate crimes, keep children safe and hold domestic violence offenders accountable, among other important uses,” said Deputy Attorney General Lisa Monaco. “As TAP continues to expand, more Tribes will be able to protect their communities by participating in this successful program.”

The program provides training as well as software and biometric/biographic kiosk workstations to process fingerprints, take mugshots and submit information to FBI Criminal Justice Information Services (CJIS) systems. There are currently 108 federally recognized Tribes participating in TAP. The department will accept TAP applications from July 1 – Aug. 31. Tribes selected to participate will be notified in September.

“The Tribal Access Program has allowed our Tribe to more effectively serve and protect its citizens by being able to prevent individuals from illegally purchasing firearms, and ensuring its personal protection orders are entered into federal databases, making their existence known, not only in Indian country, but across the nation,” said Court Administrator/Magistrate Traci L. Swan  of the Sault Ste. Marie Tribe of Chippewa Indians.  “Obtaining fingerprint-based checks… has allowed our Tribe to expedite placement of our children in safe foster care homes.”

For Tribes that are considering applying, TAP staff will be conducting informational webinars describing the program and its capabilities. Webinars will be offered throughout the month of July and August. For more information about TAP, including our webinar dates, times and access information, visit www.justice.gov/tribal/tribal-access-program-tap.

Using TAP, Tribes have shared information about missing persons; entered domestic violence orders of protection for nationwide enforcement; registered convicted sex offenders; run criminal histories; arrested fugitives; entered bookings and convictions; and completed fingerprint-based record checks for non-criminal justice purposes such as screening employees or volunteers who work with children.

“Prior to receiving the system our community had no direct access to the services the TAP program provides,” said Chief of Police Bruce R. Janes for The Metlakatla Indian Community. “Being the only reservation in Alaska and a remote community on an island the TAP program has provided independence for our community and Police Department giving us the ability [to] be self-sufficient with the vast programs available with TAP.”

The department offers TAP services through one of the following two methods:

• TAP-LIGHT: Provides software that enables full access (both query and entry capabilities) to national crime information databases including the National Crime Information Center (NCIC), the Interstate Identification Index (III), and the International Justice and Public Safety Network (Nlets) for criminal justice purposes.
• TAP-FULL: In addition to the basic access capabilities of TAP-LIGHT, provides a kiosk workstation that enables the ability to submit and query fingerprint-based transactions via FBI’s Next Generation Identification (NGI) system for both criminal justice and non-criminal justice purposes.

Because of the program’s funding sources, eligible Tribes must have — and agree to use TAP for — at least one of the following:

• A Tribal sex offender registry authorized by the Adam Walsh Child Protection and Safety Act;
• A Tribal law enforcement agency that has arrest powers;
• A Tribal court that issues orders of protection; or
• A Tribal government agency that screens individuals for foster care placement or that investigates allegations of child abuse/neglect.

TAP is funded by the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking (SMART); the Office of Community Oriented Policing Services (COPS); the Office for Victims of Crime (OVC); and the Office on Violence Against Women (OVW). TAP is co-managed by the department’s Office of the Chief Information Officer (OCIO) and Office of Tribal Justice (OTJ).

Source: United States Department of Justice Criminal Division

Funds Remitted Following Grant of Victim Petitions Up to a Total of More Than $201 Million in Losses

Source: United States Department of Justice News

BIRMINGHAM, Ala. – Dameon LaShawn Nix, 32, of Sylacauga, was convicted after a jury trial of attempted robbery and of using a firearm during a crime of violence announced U.S. Attorney Prim F. Escalona and Federal Bureau of Investigation Special Agent in Charge Johnnie Sharp, Jr.

Evidence presented at trial revealed that on May 28, 2019, Nix entered the Coosa Pines Federal Credit Union in Sylacauga and shot a pistol three times into the ceiling.  Twenty minutes after fleeing the credit union, Nix was caught by two Sylacauga police officers while attempting to escape through nearby woods. He was in possession of $195 belonging to a customer at the credit union and a gun holster.  The firearm was never found.  Nix had taken the cash from the customer when the tellers were unable to open their cash drawers.  A delivery driver observed Nix donning a mask as he entered the credit union, and later picked him out of a lineup. Experts from the FBI laboratory in Quantico, Virginia, identified Nix’s DNA on clothing he had discarded in the woods as he fled the bank. The clothes bearing Nix’s DNA matched the clothing worn by the robber as revealed by the credit union’s surveillance cameras. 

Nix faces imprisonment of approximately 40-50 months on the attempted credit union robbery and a 10-year consecutive term of imprisonment for discharging the firearm during the attempted robbery. 

“The FBI is committed to working with our state, local and federal partners to combat violent crime and bring individuals like Nix to justice,” said FBI SAC Johnnie Sharp. “I particularly want to express my appreciation to our partners with the Sylacauga Police Department for their outstanding work and assistance in this case.”

“We are grateful for the work of the Sylacauga Police Department in apprehending this offender,” said U.S. Attorney Escalona. “As this case confirms, working closely with our federal, state, and local law enforcement partners is the best way to combat violent crime and remove violent offenders from our communities.”

The Federal Bureau of Investigation investigated.  Assistant United States Attorneys John Camp and Bill Simpson prosecuted the case.