Month: August 2024

Source: United States Department of Justice Criminal Division

The chief executive officer of Minerco Inc. (stock ticker MINE) was arrested last week on charges of securities fraud related to a scheme to defraud investors in Minerco.

According to court documents, between about October 2019 and June 2021, Julius Jenge, 54, allegedly defrauded investors in the publicly traded securities of Minerco by, among other things, working together with his co-schemer to take control of Minerco in late 2019; causing the issuance of one billion Minerco shares to a nominee shareholder; and causing positive press releases about Minerco to be issued to the public, at least some of which contained materially false and misleading information, in an effort to artificially increase the share price of Minerco. Beginning in or around January 2020, Minerco purported publicly to be in the business of developing, marketing, and distributing psilocybin mushrooms, also known as magic mushrooms or psychedelic mushrooms.

Jenge allegedly concealed the involvement in Minerco of a co-schemer who had a criminal history and who controlled all aspects of Minerco’s operations. Among other things, Jenge allegedly failed to disclose his co-schemer’s involvement with Minerco in public filings, although he was required to do so. In addition, as part of the securities fraud scheme, and during an investor video conference, Jenge allegedly falsely stated that he had earned an MBA in marketing and a BA in accounting. 

Minerco’s stock price and trading volume increased during the period of the alleged scheme, as investors purchased Minerco stock during this period.

Jenge was arrested on Aug. 22 at Ronald Reagan Washington National Airport, where he was booked on a flight to Tanzania. 

Jenge is charged with one count of securities fraud. If convicted, Jenge faces up to 20 years in prison.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, Inspector General Deborah Jeffrey of the U.S. Securities and Exchange Commission Office of Inspector General (SEC-OIG), and Inspector in Charge Eric Shen of the U.S. Postal Inspection Service (USPIS) Criminal Investigations Group made the announcement. 

The SEC-OIG and USPIS are investigating the case. 

Trial Attorney Kyle Crawford of the Criminal Division’s Fraud Section is prosecuting the case.

If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov. You are also encouraged to visit our webpage for this case at www.justice.gov/criminal/criminal-vns/case/united-states-v-julius-makiri-jenge.

A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: United States Department of Justice Criminal Division

A federal grand jury in Greensboro, North Carolina, returned an indictment yesterday charging a former Raleigh, North Carolina, man with 27 counts of preparing and filing false tax returns and obstructing the IRS.

According to the indictment, Jerome Osuamadi Nwabueze owned and operated Total Tax Services, located in High Point, North Carolina. Between 2018 and 2022, to secure higher refunds for his clients, Nwabueze allegedly prepared and filed with the IRS false tax returns that reported wages and withholdings, business income and expenses and education expenses that were fabricated or inflated. Nwabueze also allegedly prepared and filed false tax returns for himself that reported similar false items, and omitted income he earned from preparing tax returns. These false tax returns also generated refunds for Nwabueze to which he was not entitled.

The indictment further alleges that, when the IRS audited Nwabueze in 2020, he fabricated tax documents and provided them to the IRS.

If convicted, Nwabueze faces a maximum penalty of three years in prison for each false tax return charge and three years in prison for the obstruction charge. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Sandra J. Hairston for the Middle District of North Carolina made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorney Isaiah Boyd of the Tax Division and Assistant U.S. Attorney Ashley Waid for the Middle District of North Carolina are prosecuting the case.

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

Source: United States Department of Justice

A New York man was sentenced today to 20 months in prison for conspiring to defraud the United States by concealing income from the IRS.

According to court documents and statements made in court, Aniello Strocchia, of Maspeth, owned and operated an auto repair shop. From 2013 to 2017, Strocchia cashed, with the help of others, more than $1.3 million in checks made out to the shop at commercial check-cashing businesses, instead of depositing those funds into the shop’s bank account. Strocchia then hid the check-cashing activity from his return preparers, thereby causing his preparer to file false tax returns for himself and his business. The business returns underreported the shop’s gross receipts and ordinary business income; and his personal returns underreported his total income. In addition, Strocchia did not pay the full amount of the taxes he reported as due on his personal returns. Instead of reporting all his income and paying all the taxes he owed, Strocchia spent money on luxury items, including a luxury car collection, a second home and approximately $500,000 on extensive home renovations.

In total, Strocchia caused a loss to the IRS of $989,976.

In addition to his prison sentence, U.S. District Judge Hector Gonzalez for the Eastern District of New York ordered Strocchia to serve two years of supervised release and to pay approximately $989,976 in restitution to the United States.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Breon Peace for the Eastern District of New York made the announcement. 

IRS Criminal Investigation is investigating the case. 

Trial Attorney Matthew Cofer of the Tax Division prosecuted the case.  

Source: United States Department of Justice Criminal Division

The Justice Department unsealed a criminal complaint charging Hungarian national Bence Horvath with violations of U.S. export controls targeting Russia, including by conspiring with others to illegally export U.S.-origin radio communications technology to Russian government end users without a license. Horvath is charged by complaint with one count of conspiring to violate the Export Control Reform Act of 2018 (ECRA). He was arrested on arrival at San Francisco International Airport in San Francisco, California, on Aug. 23.

“As alleged, the defendant attempted to purchase military-grade radios for Russian entities using a multinational procurement chain to evade law enforcement,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Justice Department remains committed to disrupting and holding accountable criminal networks that continue to fuel Russian aggression abroad and threaten our collective security.”

“Targeting illicit global procurement networks that operate in the shadows to equip the Russian government is of the highest priority to BIS,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod of the Commerce Department’s Bureau of Industry and Security (BIS). “As Horvath’s arrest demonstrates, it doesn’t matter where in the world you operate – when the United States believes your conduct violates our export laws, we take action.”    

“This defendant allegedly sought to skirt U.S. export controls put in place to protect our national security and to address Russia’s unprovoked full-scale invasion of Ukraine,” said U.S. Attorney Matthew M. Graves for the District of Columbia. “We will continue to work with our partners to bring to justice the people who scheme to secure U.S. technology in violation of U.S. laws.”

According to the court documents, Horvath and others managed a multinational procurement network that contracted directly with various entities in the Russian government and worked on large scale projects such as the construction of operational radio communications systems in Russia’s Kursk region along the Russian/Ukrainian border. The complaint alleges that Horvath himself arranged to purchase U.S.-origin radio communications technology and smuggle such technology to Russian government end-users through a network of affiliates located in Spain, Serbia, Hungary, Latvia, and elsewhere.

Beginning at least around January 2023, Horvath and others in his network initiated discussions with a small U.S. radio distribution company about procuring and exporting to Russia U.S.-manufactured military-grade radios and related accessories. Over the next several months, Horvath continued his efforts to secure those items, which he intended to transship to Russia via a freight forwarder in Latvia.

As part of the conspiracy, Horvath purchased 200 of the military-grade radios and intended to export them to Russia, but he was not successful. U.S. Customs and Border Protection detained the shipment, preventing the radios from falling into the hands of prohibited Russian end users.

Homeland Security Investigation, Defense Criminal Investigative Service and Department of Commerce are investigating the case.

Assistant U.S. Attorneys Christopher Tortorice and Maeghan Mikorski for the District of Columbia and Trial Attorney Sean Heiden of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case. 

Today’s actions were coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force and the Justice Department’s Task Force KleptoCapture. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains and prevent critical technology from being acquired by authoritarian regimes and hostile nation states. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine.

A complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.