Month: April 2023

Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced that BRIAN KOLFAGE and ANDREW BADOLATO were sentenced today by United States District Judge Analisa Torres.  KOLFAGE was sentenced to 51 months in prison, and BADOLATO was sentenced to 36 months in prison, for their respective roles in carrying out a scheme to defraud hundreds of thousands of donors in connection with an online crowdfunding campaign known as “We Build The Wall” by soliciting donations using false statements and then stealing the resulting donations.

U.S. Attorney Damian Williams said: “Brian Kolfage and Andrew Badolato abused the trust of donors to We Build the Wall and stole hundreds of thousands of dollars in donations to line their own pockets.  The defendants have now been held accountable for their criminal conduct.”

According to court filings and evidence introduced during court proceedings:

Starting in approximately December 2018, BRIAN KOLFAGE, ANDREW BADOLATO, their co-defendant TIMOTHY SHEA, and others orchestrated a scheme to defraud hundreds of thousands of donors, including donors in the Southern District of New York, in connection with an online crowdfunding campaign ultimately known as “We Build The Wall” that raised more than $25,000,000 to build a wall along the southern border of the United States.  In particular, to induce donors to donate to the campaign, KOLFAGE repeatedly and falsely assured the public that he would “not take a penny in salary or compensation” and that “100% of the funds raised…will be used in the execution of our mission and purpose.”

Those representations were lies.  In truth, KOLFAGE, BADOLATO, SHEA, and others received hundreds of thousands of dollars in donor funds from We Build the Wall, which they each used in a manner inconsistent with the organization’s public representations.  For example, KOLFAGE covertly took for his personal use more than $350,000 in funds that donors had given to We Build the Wall.  To conceal the payments to KOLFAGE from We Build the Wall, KOLFAGE, BADOLATO, SHEA, and others devised a scheme to route those payments through entities and bank accounts that they controlled.  They took various steps to obscure or conceal these payments, including by using fake invoices and sham contracts — conduct for which SHEA was convicted at trial of obstruction of justice.

In imposing today’s sentences on KOLFAGE and BADOLATO, Judge Torres noted that “this was no ordinary financial fraud,” because when victims donated to We Build the Wall, “they were expressing their views about a political issue that was important to them.”  Noting that the offense cast doubt on the efficacy of political involvement and that the scheme would “undoubtedly have a chilling effect” on political donations, Judge Torres remarked that “the fraud perpetrated by Mr. Kolfage and Mr. Badolato went well beyond defrauding individual donors. They hurt us all.”

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KOLFAGE, 41, of Miramar Beach, Florida, and BADOLATO, 58, of Cocoa, Florida, each pled guilty to one count of conspiracy to commit wire fraud.  KOLFAGE also pled guilty to tax and wire fraud charges originally filed by the United States Attorney’s Office for the Northern District of Florida. 

SHEA, 52, of Castle Rock, Colorado, was convicted after trial of conspiracy to commit wire fraud, conspiracy to commit money laundering, and obstruction of justice, and is scheduled to be sentenced by Judge Torres on June 13, 2023.

In addition to the prison terms, KOLFAGE was sentenced to three years of supervised release and ordered to forfeit $17,872,106 and pay restitution in the amount of $2,877,414.  BADOLATO was sentenced to three years of supervised release and ordered to forfeit $1,414,368 and pay restitution in the amount of $1,414,368.  Judge Torres also separately ordered forfeiture of $1,376,597.39 of funds held by We Build the Wall and real property located in Sunland Park, New Mexico, on which We Build the Wall had constructed a portion of a wall.

Mr. Williams praised the outstanding investigative work of the United States Postal Inspection Service and the Special Agents of the United States Attorney’s Office for the Southern District of New York.

The case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Mollie E. Bracewell, Alison G. Moe, Nicolas Roos, Robert B. Sobelman, and Derek Wikstrom are in charge of the prosecution.

Source: United States Department of Justice News

PROVIDENCE – A Texas man who participated in a conspiracy that fraudulently used the identities and images of two United States military Generals, and others, to defraud seniors in at least eleven states, including Rhode Island, of at least $1.5 million through online romance scams, was sentenced today to more than three years in federal prison, announced United States Attorney Zachary A. Cunha.

Fola Alabi, 52, of Richmond, Texas, previously admitted to a federal judge that he created companies and opened bank accounts that were used to launder the proceeds realized from the romance scams. According to court filings, the funds laundered by Alabi were often wired overseas to China and India.

According to information presented to the court, a member of the conspiracy befriended unsuspecting seniors online, often fraudulently posing as a General in the U.S. military who was serving overseas. The conspirator feigned a personal, and sometimes romantic, interest in his victims, and convinced them to send substantial sums of money, usually in the form of bank checks or cash, to addresses and companies in Texas that were controlled by Alabi. Alabi received the money and either deposited it or directed that it be deposited into one of several bank accounts that he controlled. He quickly withdrew or transferred the funds to other accounts, including some that were overseas, and used the funds to pay the mortgage of his house.

Among Alabi’s victims is a Rhode Island widow who was contacted by a member of the conspiracy falsely claiming to be a “General Miller,” a four-star General, who convinced the victim to provide $60,000 to finance shipment of his personal belongings to the United States. At  the fraudster’s direction, a check was made payable a company created by Alabi and mailed to Alabi’s Texas residence. The victim was prepared to send an additional significant sum of money to the purported “General Miller,” when it was determined by her bank and the Westerly Police Department that she was likely the victim of fraud. 

In brief victim impact statements delivered to the court, the two actual U.S. military Generals whose identities were used as part of the scheme acknowledged that they continue to be victimized by online romance scams through the use of their likeness and identities. One of the Generals urged seniors to be diligent and to be aware of the significant potential of being scammed.

Alabi, arrested in May 2022, pleaded guilty on January 13, 2023, to conspiracy and money laundering. He was sentenced today by U.S. District Court Judge William E. Smith to thirty-seven months in federal prison to be followed by three years of federal supervised release; pay restitution to identified victims of the romance scams totaling $1,495,421; and to forfeit funds contained in a bank account that he controlled containing $31,773, and to forfeit his Texas residence which was valued at the time of his arrest at $560,000.

The case was prosecuted by Assistant United States Attorneys Ly T. Chin and Sara Miron Bloom.

The matter was investigated by the United States Postal Inspection Service, FBI, United States Secret Service, and Homeland Security Investigations.

United States Attorney Cunha thanks the Westerly, RI, and Prescott Valley, AZ, Police Departments; Texas Department of Public Safety; West Virginia State Police; the Santa Clara, CA, County District Attorney’s Office; and Defense Criminal Investigative Service for their assistance in the investigation of this matter.

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Source: United States Department of Justice News

A New York attorney pleaded guilty today to participating in a scheme to make approximately $3.8 million in U.S. dollar payments to maintain six real properties in the United States that were owned by Viktor Vekselberg, a sanctioned oligarch.

According to court documents, Robert Wise of Pelham, New York, pleaded guilty to one count of conspiring to commit international money laundering, which carries a maximum sentence of five years in prison. Wise also agreed to forfeit more than $3.7 million and to be satisfied by a payment of $210,441. Sentencing is scheduled for Nov. 6.

According to the allegations in the information filed in Manhattan federal court today and other public filings:

On April 6, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Vekselberg as a Specially Designated National (SDN) in connection with its finding that the actions of the Government of the Russian Federation in Ukraine constituted an unusual and extraordinary threat to the national security and foreign policy of the United States. On or about March 11, 2022, OFAC redesignated Vekselberg as an SDN and blocked Vekselberg’s yacht and private airplane.

Prior to his designation by OFAC, between approximately 2008 and 2017, Vekselberg, through a series of shell companies, acquired six real properties in the United States, specifically, (i) two apartments on Park Avenue in New York, New York, (ii) an estate in Southampton, New York, (iii) two apartments on Fisher Island, Florida, and (iv) a penthouse apartment also on Fisher Island, Florida (collectively, the Properties). As of the date of this information, the Properties were worth approximately $75 million. 

Voronchenko, Vekselberg’s longtime associate, retained Wise, an attorney who practiced in New York, New York, to assist in the acquisition of the Properties. Wise also managed the finances of the Properties, including by paying common charges, property taxes, insurance premiums, and other fees associated with the Properties in U.S. dollar transactions from Wise’s interest on lawyer’s trust account (IOLTA account).

In particular, prior to Vekselberg’s designation as an SDN, between approximately February 2009 and March 2018, shell companies owned by Vekselberg sent approximately 90 wire transfers totaling approximately $18.5 million to the IOLTA account. At the direction of Voronchenko and his family member who lived in Russia, Wise used these funds to make various U.S. dollar payments to maintain and service the Properties. 

Immediately after Vekselberg’s designation as an SDN, the source of the funds used to maintain and service the Properties changed. The IOLTA Account began to receive wires from a bank account in the Bahamas held in the name of a shell company controlled by Voronchenko, Smile Holding Ltd., and from a Russian bank account held in the name of a Russian national who was related to Voronchenko. Between approximately June 2018 and March 2022, approximately 25 wire transfers totaling approximately $3.8 million were sent to WISE’s IOLTA account. Although the source of the payments changed, the management of the payments remained the same as before: Wise used these funds to make various U.S. dollar payments to maintain and service the Properties, and he did so knowing that he was promoting sanctions violations. Additionally, after Vekselberg was sanctioned in 2018, Voronchenko, Wise, and others tried to sell both the Park Avenue apartment and the Southampton estate. No licenses from OFAC were applied for or issued for these payments or attempted transfers. 

An indictment charging co-conspirator Vladimir Voronchenko, aka Vladimir Vorontchenko, who is a fugitive, was unsealed on Feb. 7. A civil forfeiture complaint was filed against the Properties on Feb. 24.

The FBI and Homeland Security Investigations are investigating the case. The Justice Department’s National Security Division and Office of International Affairs, and OFAC provided valuable assistance.

Assistant U.S. Attorneys Jessica Greenwood, Joshua A. Naftalis, and Sheb Swett for the Southern District of New York are prosecuting the case.

The investigation was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls and economic countermeasures that 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.

Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced that attorneys GEORGE CONSTANTINE and MARC ELEFANT and orthopedic surgeon ANDREW DOWD were sentenced yesterday and today for their participation in a massive trip-and-fall fraud scheme between 2013 and 2018.  CONSTANTINE and DOWD, who were convicted at trial in December 2022 of mail fraud, wire fraud, and conspiracy to commit mail and wire fraud, were each sentenced to 102 months in prison.  ELEFANT, who pled guilty to one count of conspiracy to commit wire fraud, was sentenced to 24 months in prison.  U.S. District Judge Sidney H. Stein imposed all three sentences.    

U.S. Attorney Damian Williams said: “George Constantine, Andrew Dowd, and Marc Elefant abused their professional licenses and degrees and exploited some of the most vulnerable members of society – many of whom were poor, drug addicts, or homeless – in order to enrich themselves through this egregious trip-and-fall fraud scheme.  As officers of the court, Constantine and Elefant had a duty to honestly represent their clients and uphold the rule of law.  Instead, they filed hundreds of fraudulent lawsuits that were filled with lies and stole millions of dollars from small businesses and insurance companies.  Likewise, Dowd, as a medical doctor, took an oath to do no harm.  But motivated by pure greed, Dowd performed hundreds of medically unnecessary surgeries, earning thousands of dollars per surgery.  These sentences send a clear message to all who chose to engage in fraud – no matter their professional title or degree – that they will be held accountable.”

According to the Indictment, the evidence presented in court during trial, and other statements made during court proceedings:

Between 2013 and 2018, CONSTANTINE, ELEFANT, and DOWD, among others, engaged in an extensive fraud scheme (the “Fraud Scheme” or “Scheme”), through which Scheme participants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents.  CONSTANTINE and ELEFANT were personal injury lawyers involved in the Scheme, while DOWD was an orthopedic surgeon.

Fraud Scheme participants recruited individuals (the “Patients”) to stage or falsely claim to have suffered trip-and-fall accidents at particular locations throughout the New York City area (the “Accident Sites”).  In the course of the Fraud Scheme, Scheme participants recruited more than 400 Patients.  Members of the Fraud Scheme often recruited Patients who were extremely poor.  For example, it was common for Patients to ask for food when they would appear for their intake meetings with the lawyers.  Many of the Patients did not have sufficient clothing to keep them warm during the winter and had poor quality shoes.  Members of the Fraud Scheme also recruited Patients who were drug addicts, and it was common for Scheme participants to recruit Patients from homeless shelters in New York City.

In the beginning, Scheme participants would instruct Patients to claim they had tripped and fallen at a particular location, when in fact, the Patients had suffered no such accidents.  Eventually, at the direction of the lawyers who filed fraudulent lawsuits on behalf of the Patients, Scheme participants began to instruct Patients to stage trip-and-fall accidents, i.e., to go to a location and deliberately fall.  Common Accident Sites used during the Fraud Scheme included cellar doors, cracks in concrete sidewalks, and purported “potholes.”

After the staged trip-and-fall accidents, Patients were referred to specific attorneys, including CONSTANTINE and ELEFANT, who would file personal injury lawsuits (the “Fraudulent Lawsuits”) against the owners of the Accident Sites and/or insurance companies of the owners of the accident sites (the “Victims”).  The Fraudulent Lawsuits did not disclose that the Patients had deliberately fallen at the Accident Sites or, in some cases, had not fallen at all.  During the course of the Fraud Scheme, the defendants, together with others, attempted to defraud the Victims of more than $31,000,000.  CONSTANTINE personally filed nearly 200 Fraudulent Lawsuits and earned more than $5 million dollars in settlement fees from these fraudulent cases.  ELEFANT likewise filed nearly 200 Fraudulent Lawsuits and earned millions of dollars in settlement fees.

The Patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including DOWD.  The Fraud Scheme participants advised the Patients that if they intended to continue with their lawsuits, they were required to undergo surgery, which was critical to boosting the value of any potential settlement.  Patients generally were told to undergo two surgeries.  Fraud Scheme participants looked for doctors, like DOWD, who were willing to perform surgeries, even when others would not.  During the course of the Scheme, DOWD performed nearly 300 medically unnecessary surgeries and earned more than $3.2 million dollars.  DOWD received approximately $10,000 per surgery.  

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In addition to their prison terms, CONSTANTINE, 60, of Plainview, New York, DOWD, 67, of Miller Place, New York, and ELEFANT, 50, of Woodmere, New York, were each sentenced to three years of supervised release.  CONSTANTINE was further ordered to pay $4,774,709 in forfeiture.  DOWD was further ordered to pay $2,900,905 in forfeiture.  ELEFANT was further ordered to pay $955,281.54 in forfeiture.  Restitution will be decided by the Court within 90 days of today’s sentencings.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Williams also thanked the National Insurance Crime Bureau for their assistance in the investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Nicholas Chiuchiolo, Nicholas Folly, Danielle Kudla, and Alexandra Rothman are in charge of the prosecution.