Month: March 2023

Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty pleas of PABLO RENATO RODRIGUEZ, GUTEMBERG DOS SANTOS, SCOTT HUGHES, CECILIA MILLAN, KARINA CHAIREZ, and JACKIE AGUILAR for their roles in an internationally coordinated fraud and money laundering ring that deceived individuals into investing in AirBit Club, a purported cryptocurrency mining and trading company.  AirBit Club co-founder DOS SANTOS pled guilty before United States District Judge George B. Daniels on October 21, 2021.  Senior AirBit Club promoters CHAIREZ, MILLAN, and AGUILAR pled guilty before Judge Daniels on January 31, February 8, and February 22, 2023, respectively, and are scheduled to be sentenced by Judge Daniels on June 28, July 25, and June 27, 2023, respectively.  SCOTT HUGHES, an attorney who laundered Airbit Club fraud proceeds for RODRIGUEZ and DOS SANTOS, pled guilty before Judge Daniels on March 2, 2023, and is scheduled to be sentenced on August 9, 2023.  Airbit Club co-founder RODRIGUEZ pled guilty before Judge Daniels earlier today and is scheduled to be sentenced on July 25, 2023.  As part of their guilty pleas, the defendants collectively have been ordered to forfeit their fraudulent proceeds of Airbit Club, which include seized or restrained assets consisting of U.S. currency, Bitcoin, and real estate currently valued at approximately $100 million.

U.S. Attorney Damian Williams said: “The defendants took advantage of the growing hype around cryptocurrency to con unsuspecting victims around the world out of millions of dollars with false promises that their money was being invested in cryptocurrency trading and mining.  Instead of doing any cryptocurrency trading or mining on behalf of investors, the defendants built a Ponzi scheme and took the victims’ money to line their own pockets.  These guilty pleas send a clear message that we are coming after all of those who seek to exploit cryptocurrency to commit fraud.”    

According to the Superseding Indictment, the defendants’ statements when pleading guilty, and statements made in related court filings and proceedings:

RODRIGUEZ, DOS SANTOS, HUGHES, MILLAN, CHAIREZ, and AGUILAR participated in a coordinated scheme in which victim-investors (the “Victims”) were induced to invest in AirBit Club based on the false promise of guaranteed profits in exchange for cash investments in club “memberships” (the “AirBit Club Scheme” or the “Scheme”).  Beginning in late 2015, AirBit Club, through its founders, RODRIGUEZ and DOS SANTOS, as well as its promoters (the “Promoters”), including MILLAN, CHAIREZ, and AGUILAR, marketed AirBit Club as a multilevel marketing club in the cryptocurrency industry.  Promoters falsely promised Victims that AirBit Club earned returns on cryptocurrency mining and trading and that Victims would earn passive, guaranteed daily returns on any membership purchased.

RODRIGUEZ, DOS SANTOS, HUGHES, MILLAN, CHAIREZ, and AGUILAR traveled throughout the United States and around the world to places in Latin America, Asia, and Eastern Europe, where they hosted lavish expos and small community presentations aimed at convincing Victims to purchase AirBit Club memberships.  In furtherance of the AirBit Club Scheme, the Victims were fraudulently induced to buy memberships in cash, including in the Southern District of New York.  Following a Victim’s investment, a Promoter provided the Victim with access to an online AirBit Club portal to view the purported returns on memberships (the “Online Portal”).  While Victims saw “profits” accumulate on their Online Portal, those representations were false; no Bitcoin mining or trading on behalf of Victims in fact took place.  Instead, RODRIGUEZ, DOS SANTOS, MILLAN, and AGUILAR enriched themselves and spent Victim money on cars, jewelry, and luxury homes, and financed more extravagant expos to recruit more Victims. 

HUGHES, an attorney licensed to practice law in California, had previously represented RODRIGUEZ and DOS SANTOS in a Securities and Exchange Commission investigation related to another investment scheme known as Vizinova.  He then aided RODRIGUEZ and DOS SANTOS in perpetrating the AirBit Club Scheme by, among other things, helping to remove negative information about AirBit Club and Vizinova from the internet. 

In many instances, as early as 2016, Victims who attempted to withdraw money from the AirBit Club Online Portal and complained to a Promoter were met with excuses, delays, and hidden fees amounting to more than 50% of the Victim’s requested withdrawal, if they were able to make any withdrawal at all.  In one instance, AGUILAR told one Victim of the AirBit Club Scheme who was complaining about her inability to withdraw AirBit Club returns that she should “bring new blood” into the AirBit Club Scheme in order to receive her returns.

In April 2020, another victim received a notice on the AirBit Club Online Portal that his account was closed – and principal investment lost – due to “execution of financial sustainability Reserve, policy #34 of the Airbit Club Terms and Conditions, due to the economic and financial crisis caused by (Covid-19).”

RODRIGUEZ, DOS SANTOS, HUGHES, CHAIREZ, and MILLAN sought to conceal the AirBit Club Scheme, as well as their respective control of the proceeds of that Scheme, by requesting that Victims purchase memberships in cash, using third-party cryptocurrency brokers, and by laundering the Scheme’s proceeds through several domestic and foreign bank accounts, including an attorney trust account managed by HUGHES (the “Hughes Trust Account”).  The Hughes Trust Account was ostensibly intended to maintain custody of HUGHES’s law practice’s client funds.  Instead, the Hughes Trust Account was used by RODRIGUEZ, DOS SANTOS, HUGHES, CHAIREZ, and MILLAN to conceal the nature and origin of the AirBit Club Scheme’s illicit proceeds.  Through that account, HUGHES directed Victim funds to the personal expenses of RODRIGUEZ, DOS SANTOS, CHAIREZ, MILLAN, and himself, and funded promotional events and sponsorships designed to further promote the AirBit Club Scheme. 

*                *                *

RODRIGUEZ, 40, of Irvine, California, DOS SANTOS, 48, of Panama City, Panama, MILLAN, 41, of Greensboro, North Carolina, CHAIREZ, 47, of Modesto, California, AGUILAR, 58, of Plano, Texas, and HUGHES, 47, of Newport Beach, California, have pled guilty to charges including wire fraud conspiracy, which carries a maximum potential sentence of 20 years in prison; money laundering conspiracy, which carries a maximum potential sentence of 20 years in prison; and bank fraud conspiracy, which carries a maximum potential sentence of 30 years in prison.  

The maximum potential penalties are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendants will be determined by the judge.

Mr. Williams praised the outstanding investigative work of Special Agents from Homeland Security Investigations’ (“HSI”) El Dorado Task Force, HSI Panama, the HSI Panama City Transnational Criminal Investigative Unit, and HSI New Orleans.  Mr. Williams further thanked the attorneys and investigators at the Securities and Exchange Commission whose expertise and diligence were integral to the development of this investigation.

If you believe you are a victim of the AirBit Club fraud, updated information regarding the case and victims’ rights as well as contact information for the victim witness coordinator is available here.

The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Kiersten A. Fletcher, Samuel L. Raymond, and Cecilia E. Vogel are in charge of the prosecution. 

Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced that HOWARD ADELGLASS was sentenced today by U.S. District Judge Jed S. Rakoff to 150 months in prison for his participation in a conspiracy to illegally prescribe oxycodone.  ADELGLASS was convicted in November 2022 following a two-week trial before Judge Rakoff. 

U.S. Attorney Damian Williams said: “For years, Howard Adelglass illegally prescribed enormous quantities of highly addictive and deadly opioids to people he knew were suffering from substance abuse disorders or were dealers.  By monetizing his prescription pad and distributing mammoth quantities of oxycodone pills for no legitimate medical purpose, Adelglass practiced as a drug dealer, not a doctor.  Adelglass did not simply betray his medical oath; he destroyed lives and families and helped fuel the opioid epidemic gripping the nation.  Today’s sentence makes clear that this Office and our law enforcement partners will work tirelessly to hold responsible those who have contributed to the national opioid crisis no matter their professional stature.”

According to the allegations contained in the Indictment, the evidence offered at trial, and matters included in public filings:

HOWARD ADELGLASS was a licensed physician.  Together with his office manager, MARCELLO SANSONE, he operated a pain-management clinic located in Midtown Manhattan (the “Clinic”).  The Clinic serviced purported patients seeking oxycodone and other pain-relief medications commonly diverted for illicit purposes.  In exchange for cash payments, sex acts, and cocaine, ADELGLASS wrote thousands of prescriptions for large quantities of oxycodone, many to individuals whom ADELGLASS knew did not need the pills for a legitimate medical purpose.  When they occurred, ADELGLASS’s examinations were perfunctory.  ADELGLASS’s purported patients included individuals addicted to opioids and, in some cases, individuals who sold the oxycodone on the street.  Even when faced with clear evidence of his purported patients’ drug abuse and diversion, ADELGLASS continued to prescribe large quantities of oxycodone without a legitimate medical purpose and outside the scope of professional practice.

Initially, ADELGLASS staffed the Clinic with inexperienced young women, some of whom he caused to be addicted to oxycodone through illegal prescriptions.  Around October 2018, after serving as a primary source of patient referrals, SANSONE took over as the Clinic’s office manager.  In that role, SANSONE helped to control access to ADELGLASS and the lucrative prescriptions he wrote for medically unnecessary oxycodone.  With particularly vulnerable patients, ADELGLASS and SANSONE solicited and, in some instances, received sex acts in exchange for illegal oxycodone prescriptions.

Between in or about November 2017 and in or about September 2020, ADELGLASS prescribed more than 1.3 million oxycodone pills. 

*                *                *

In addition to their prison terms, ADELGLASS, 67, of New York, New York, and SANSONE, 37, of Old Bridge, New Jersey, were each sentenced to three years of supervised release.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation, New York City Police Department, and the U.S. Department of Health and Human Services, Office of Inspector General.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Nicholas W. Chiuchiolo, Marguerite B. Colson, and Daniel G. Nessim are in charge of the prosecution.

Source: United States Department of Justice News

           Montgomery, Alabama – Today, United States Attorney Sandra J. Stewart announced that Gerald Dyron Little, 41, from Montgomery, Alabama, was found guilty of illegally possessing ammunition he used during a shooting at a funeral.

           According to court records and evidence presented at trial, on June 26, 2021, Little attended a memorial service for one of his relatives at the municipal complex in Fort Deposit, Alabama. During the gathering, Little caused a disruption and family members asked him to leave. Little complied and left the facility. After the memorial service, family members and attendees gathered in a nearby cemetery for a graveside service. Witnesses testified that Little was in the front passenger seat of a white SUV parked at the cemetery near the burial site. The windows of the SUV were down and loud music was coming from the vehicle, disturbing the service. Family members went to the vehicle and asked Little and the driver of the SUV to leave, as they were being disruptive. The two failed to do so. Instead, Little began arguing with the family members. The driver then grabbed a handgun. Little took the handgun from the driver and then fired the weapon from the open window of the SUV.  Officers from the Fort Deposit Police Department were nearby and rushed to the scene after hearing the shots. However, Little fled before they arrived. Four funeral attendees, including the brother of the deceased, were struck by bullets during the shooting.

           Investigators interviewed witnesses and soon identified Little as the shooter. Law enforcement also recovered four discharged shell casings from the scene. The State of Alabama issued an arrest warrant for Little and he was arrested in Montgomery by the United States Marshals Service during the early morning hours of July 1, 2021. That same day, federal agents obtained a complaint and arrest warrant charging Little with being a felon in possession of ammunition.

           In reaching its verdict on March 8, 2023, the jury found that the shell casings recovered from the scene came from ammunition possessed by Little during the shooting. Little had a previous felony conviction and is prohibited by federal law from possessing a firearm or ammunition.  Following this conviction, Little faces a sentence of up to 10 years in federal prison with no parole. State charges related to the shooting are pending.

           The Fort Deposit Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives investigated this case, with assistance from the Lowndes County Sheriff’s Office, the Alabama Department of Forensic Sciences, and the United States Marshals Service. Assistant United States Attorneys Stephen K. Moulton and Brandon W. Bates are prosecuting the case.

Source: United States Department of Justice News

The Department of Justice’s Office of Community Oriented Policing Services (COPS Office) announced today it will be undertaking two important reviews: one related to the Memphis Police Department (MPD) and one that will examine the use of specialized units within law enforcement. 

First, the COPS Office, through its Collaborative Reform Initiative Technical Assistance Center (CRI-TAC), will conduct a review of certain policies and practices of the Memphis Police Department. Memphis Mayor Jim Strickland and Memphis Police Chief Cerelyn J. Davis requested this review, which will cover policies, practices, training, data and processes related to MPD’s use of force, de-escalation and specialized units. At the conclusion of the review, the COPS Office will issue a public report outlining its findings and recommendations.

The COPS Office’s CRI-TAC initiative is led and supported by nine leading law enforcement stakeholder associations. CRI-TAC provides a wide array of technical assistance services using a “by the field, for the field” approach. Since its inception in 2017, the program has provided technical assistance for over 800 law enforcement engagements.

Separate from the Memphis review, the COPS Office will produce a guide for police chiefs and mayors across the country to help them assess the appropriateness of the use of specialized units as well as how to ensure necessary management and oversight of such units, including review of policies, tactics, training, supervision, accountability, and transparency.

“In the wake of Tyre Nichols’s tragic death, the Justice Department has heard from police chiefs across the country who are assessing the use of specialized units and, where used, appropriate management, oversight and accountability for such units. The COPS Office guide on specialized units will be a critical resource for law enforcement, mayors and community members committed to effective community policing that respects the dignity of community members and keeps people safe,” said Associate Attorney General Vanita Gupta. “The department is also pleased to be able to fulfill Memphis’s request for technical assistance on the police department’s use of force and de-escalation policies, as well as the use of specialized units.”

“Providing technical assistance to law enforcement agencies so they can continue to improve their practices, while they also develop and maintain healthy relationships with the community, is at the heart of what we do at the COPS Office,” said Director Hugh T. Clements Jr. of the COPS Office. “I know that this opportunity to work with MPD, as well as our examination of specialized units in law enforcement agencies across the country, will be important resources for both law enforcement and the communities they serve.”

The COPS Office is the federal component of the Department of Justice responsible for advancing community policing nationwide. The only Department of Justice agency with policing in its name, the COPS Office was established in 1994 and has been the cornerstone of the nation’s crime fighting strategy with grants, a variety of knowledge resource products, and training and technical assistance. Through the years, the COPS Office has become the go-to organization for law enforcement agencies across the country and continues to listen to the field and provide the resources that are needed to reduce crime and build trust between law enforcement and communities served. The COPS Office has been appropriated more than $20 billion to advance community policing, including grants awarded to over 13,000 state, local and Tribal law enforcement agencies to fund the hiring and redeployment of more than 136,000 officers.

Source: United States Department of Justice News

Following a comprehensive investigation, the Justice Department announced today that the Louisville Metro Police Department (LMPD) and the Louisville/Jefferson County Metro Government (Louisville Metro) engage in a pattern or practice of conduct that violates the U.S. Constitution and federal law. The Department also announced that it has entered into an agreement in principle with Louisville Metro and LMPD, which have committed to resolving the department’s findings through a court-enforceable consent decree with an independent monitor, rather than contested litigation. 

Specifically, the Justice Department finds that LMPD:

• Uses excessive force, including unjustified neck restraints and the unreasonable use of police dogs and tasers;

• Conducts searches based on invalid warrants;

• Unlawfully executes search warrants without knocking and announcing;

• Unlawfully stops, searches, detains, and arrests people during street enforcement activities, including traffic and pedestrian stops;

• Unlawfully discriminates against Black people in its enforcement activities;

• Violates the rights of people engaged in protected free speech critical of policing; and

• Along with Louisville Metro, discriminates against people with behavioral health disabilities when responding to them in crisis.

The Department also identified deficiencies in LMPD’s response to and investigation of domestic violence and sexual assault, including its responses to allegations that LMPD officers engaged in sexual misconduct or domestic violence. Deficiencies in policies, training, supervision, and accountability contribute to LMPD and Louisville Metro’s unlawful conduct.

“The Justice Department has concluded that there is reasonable cause to believe that Louisville Metro and LMPD engage in a pattern or practice of conduct that violates the constitutional rights of the residents of Louisville — including by using excessive force, unlawfully discriminating against Black people, conducting searches based on invalid warrants, and violating the rights of those engaged in protected speech critical of policing,” said Attorney General Merrick B. Garland. “This unacceptable and unconstitutional conduct erodes the community trust necessary for effective policing. It is also an affront to the vast majority of officers who put their lives on the line to serve Louisville with honor. And it is an affront to the people of Louisville who deserve better. The Justice Department will work closely with Louisville Metro and LMPD to negotiate toward a consent decree and durable reforms that protect both the safety and civil rights of Louisville’s residents.” 

“The findings are deeply troubling and sobering, and they compromise LMPD’s ability to serve and protect the people of Louisville,” said Associate Attorney General Vanita Gupta. “We are committed to working with Louisville on a path forward to constitutional policing and stronger police-community trust. Although police reform won’t happen overnight, focused effort and sustained commitment will bring us closer to transformed relationships, safe communities, and this nation’s promise of justice and equality under the law.”

“People in Louisville deserve policing that is constitutional, fair and non-discriminatory,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Our investigation found that the police department and city government failed to adequately protect and serve the people of Louisville, breached the public’s trust, and discriminated against Black people through unjustified stops, searches, and arrests.  The police used excessive force, subjecting people to unlawful strikes, tasings, and canine bites. The police sought search warrants without justification and carried out no-knock warrants unlawfully, evading the constitution, defying federal law, and putting ordinary citizens in harm’s way. Today marks a new day and a new chapter for the people of Louisville.”

LMPD and Louisville Metro cooperated fully with the department’s investigation. The Justice Department provided a comprehensive, written report of its investigative findings to Louisville Metro and LMPD. The report acknowledges the changes already made by Louisville Metro and LMPD, and it identifies additional remedial measures that the department believes are necessary to fully address its findings.

The Department of Justice opened this investigation on April 26, 2021. The investigation was conducted by career attorneys and staff in the Civil Rights Division and the U.S. Attorney’s Office for the Western District of Kentucky. The investigation included numerous onsite tours; interviews of LMPD officers, supervisors, and command staff; ride-alongs; review of thousands of documents; and review of thousands of hours of body-worn camera footage.  Department attorneys and staff also met with community members, advocates, service providers, and other stakeholders in the Louisville Metro area.

The department conducted this investigation pursuant to the 34 U.S.C. § 12601 (Section 12601), which prohibits law enforcement officers from engaging in a pattern or practice of conduct that deprives people of rights protected by the Constitution or federal law, the Safe Streets Act of 1968, Title VI of the Civil Rights Act of 1964, and Title II of the Americans with Disabilities Act. 

The findings announced today are the result of the department’s civil pattern or practice investigation and are separate from the department’s criminal cases against former LMPD officers for federal crimes related to the tragic death of Breonna Taylor. These findings are also separate from the department’s ongoing investigation into the Commonwealth of Kentucky under the Americans with Disabilities Act. Additional information can be found at: www.justice.gov/opa/pr/justice-department-launches-civil-rights-investigation-kentucky-s-mental-health-service-0.

The department will be conducting outreach to members of the Louisville community for their views on remedies to address the department’s findings. Individuals may also submit recommendations by email at Community.Louisville@usdoj.gov or by phone at 1-844-920-1460.

This is one of eight investigations into law enforcement agencies opened by the Justice Department’s Civil Rights Division under Section 12601 during this Administration. The department has ongoing investigations into the Minneapolis Police Department; the Phoenix Police Department; the Mount Vernon (NY) Police Department; the Louisiana State Police; the New York City Police Department’s Special Victims Division; the Worcester (MA) Police Department; and the Oklahoma City Police Department. 

Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt. Additional information about the U.S. Attorney’s Office for the Western District of Kentucky is available at www.justice.gov/usao-wdky.

Information specific to the Civil Rights Division’s police reform work can be found here: www.justice.gov/crt/file/922421/download.

The Justice Department will hold a virtual community meeting at 7:00 p.m. ET. Members of the public are encouraged to attend to learn more about the findings. Please join the meeting via this link www.zoomgov.com/webinar/register/WN_pmezYy52QZusNmr_nLPRAA.