Gupta to Urge Probation From Judge Who Once Defended Insiders

October 22, 2012

San Francisco Chronicle on October 22, 2012 released the following:

“Patricia Hurtado and David Glovin, ©2012 Bloomberg News

Oct. 22 (Bloomberg) — As a lawyer, Jed Rakoff once persuaded a judge to give probation to a client convicted at an insider-trading trial alongside former Wall Street Journal reporter R. Foster Winans. Now a federal judge himself, Rakoff must weigh Rajat Gupta’s similar request to stay out of prison.

Gupta, a former Goldman Sachs Group Inc. director, will come before Rakoff in Manhattan federal court on Oct. 24 to be sentenced for leaking stock tips to Galleon Group LLC co-founder Raj Rajaratnam. Prosecutors say Gupta, convicted by a jury in June, deserves as long as 10 years in prison. Gupta seeks probation.

Gary Naftalis, a lawyer for Gupta, argued his client’s crime was an “aberrational” event in a “lifetime of good works” that merited a punishment for a man who has suffered an extraordinary fall from grace. He asked Rakoff to impose a term of community service, suggesting Gupta work with troubled youth in New York or with the poor in Rwanda.

“Good works help, but on their own they are rarely a ‘Get out of jail free card,’” said Gordon Mehler, a former federal prosecutor who’s now in private practice in New York. “So, it seems as if probation, even in Rwanda, is unlikely.”

Gupta, 63, is the most prominent of 70 people convicted since a nationwide insider-trading crackdown by U.S. prosecutors began four years ago. Gupta also served as managing partner of McKinsey & Co. from 1994 to 2003 and on the board of Procter & Gamble Co. from 2007 to March 2011, when he also resigned from the boards of Goldman Sachs, AMR Corp. and two other companies.

Buffett’s Berkshire

After a four-week trial in June, jurors found Gupta guilty of tipping Rajaratnam about dealings at New York-based Goldman Sachs, including a $5 billion investment by Warren Buffett’s Berkshire Hathaway Inc. Rajaratnam, 55, is serving 11 years in prison for trading on tips from Gupta and others.

In his 17 years as a judge, Rakoff has sentenced at least nine defendants for insider trading, including seven who pleaded guilty and two whom he jailed after they were found guilty by juries. Rakoff has a track record of imposing a sentence that is half what the government recommends.

“If there is any judge who’s sensitive to the draconian impact of the sentencing guidelines with respect to white-collar offenders, it’s Judge Rakoff,” said J. Bruce Maffeo, a former federal prosecutor now in private practice. “That being said, he’s equally sensitive to the need to fashion a sentence that takes into account both the defendant’s personal background and the need to deter others in the financial world, where this kind of activity appears to be more prevalent than previously assumed.”

Winning Leniency

Rakoff, a former federal prosecutor in New York who headed the office’s securities-fraud unit, was a white-collar criminal- defense lawyer before taking the bench.

As a defense lawyer, Rakoff won leniency for a client convicted of insider trading who was also facing prison.

Rakofff’s client, David Carpenter, went on trial in 1985 with his lover, journalist R. Foster Winans, and broker Kenneth Felis. Prosecutors said Winans leaked tips to Felis about forthcoming market-moving articles in his “Heard on the Street” column, Felis traded on the news and Carpenter allowed Winans to place trades through his account. All were convicted. Carpenter died in 1991.

Wife, Husband

At the sentencing, Rakoff compared Carpenter’s relationship with Winans to that of wife-and-husband and said Carpenter merely acquiesced to Winans’ trades, according to Winans’s lawyer, Don Buchwald. Carpenter got probation while Winans was given an 18-month prison term.

“He was following Foster,” Buchwald said in a phone interview last week. “Carpenter was a very sympathetic figure.”

This week, Gupta will be seeking sympathy of a different sort from Rakoff. Gupta’s lawyer, Naftalis, said in a court filing that Gupta deserves probation because his crime was an aberration in a life “defined by helping others.”

Naftalis cited Gupta’s work as chairman of the Global Fund, an initiative to fight AIDS, tuberculosis and malaria, as well as his work with the United Nations to improve world health. Naftalis declined to comment on a comparison of the Gupta and Carpenter cases. The defense submitted more than 400 letters to the judge describing Gupta’s accomplishments.

In their pre-sentencing court filings, prosecutors gave a different portrait of Gupta and asked Rakoff to consider the personal relationship between Gupta and Rajaratnam.

‘Very Close Friend’

In asking for a term of 97 months to 121 months, which they say are called for by U.S. sentencing guidelines, prosecutors say Gupta violated confidences and breached his duty as a senior corporate official by leaking news to his “very close friend” and business partner.

“Gupta’s interests often were aligned with those of Rajaratnam and Galleon such that Gupta stood to benefit if Galleon was successful,” prosecutors wrote in a filing, citing Gupta’s investment in Galleon and their partnership in another investment fund.

Richard Holwell, the former federal judge who presided over Rajaratnam’s trial and sentenced the fund manager, said judges consider “general deterrence,” or whether the sentence they impose will deter others from committing similar crimes.

“The nature and circumstances of the crime weigh in the government’s favor, because insider trading is a serious white- collar crime that undermines the integrity of the markets” said Holwell, who is now in private practice.

Deterrence

“The government will lean on general deterrence because insider trading has to be eradicated and one way to do that is by taking highly visible cases and making examples of them,” Holwell said. “That will weigh heavily on Rakoff.”

Other criminal defense lawyers said Gupta’s fall from grace may work in his favor. Kevin O’Brien, a former federal prosecutor in New York, said the judge must weigh Gupta’s achievements against his crimes.

“There is human drama there,” O’Brien said. “You can make the argument that for a guy like this who was on top of the world to have fallen so low and to have been so humiliated and exposed by a lengthy public trial, that is punishment enough.”

“What is smart about the Rwanda option is that it makes vivid Gupta’s commitment to public service and brings out with some clarity his history of good deeds,” he said. “It’s a creative approach.”

‘Mirage’ Guidelines

Federal sentencing guidelines are advisory. Rakoff’s history has been one of imposing sentences well below the recommended federal guidelines, which he has called a “mirage of something that can be obtained with arithmetic certainty.”

Last year, he sentenced James Fleishman, a former executive at expert-networking firm Primary Global Research LLC, to 2 1/2 years in prison for passing tips to fund managers while the guidelines called for more than seven years. He also ordered Primary Global consultant Winifred Jiau to serve 48 months for selling information. Her guidelines suggested a term of 78 months to 97 months in prison.

Still, Rakoff has rarely been silent about the contempt he has for insider traders, often expressing his sentiments in open court. In Fleishman’s case, he said insider prosecutions over “the last 30 or 40 years” have not “done enough to deter this serious and sophisticated crime.”

With Jiau, whose scheme ran for two years, he said the leaks undermined “the integrity of the financial markets” and demanded a “meaningful sentence.”

Maffeo said he believes Rakoff will impose some term of incarceration upon Gupta.

Love Families

Rakoff has demanded prison in cases in which, unlike Gupta, the defendants have admitted trafficking in illicit information. He sentenced ex-SAC Capital Advisors LP manager Donald Longueuil to 30 months instead of the 46 months to 57 months urged by the guidelines. He ordered a former Taiwan Semiconductor Manufacturing Co. manager to spend 18 months behind bars.

“Why is it that defendants always remember how much they love their families after they’ve committed the crimes that place that relationship in jeopardy?” Rakoff said at the sentencing of former Galleon trader Adam Smith, who won probation largely because he cooperated with prosecutors and testified against Rajaratnam.

Rakoff imposed an 18-month prison term on Manosha Karunatilaka, a former Taiwan Semiconductor Manufacturing Co. manager who pleaded guilty to passing nonpublic information about his company’s orders to fund managers as part of an insider-trading scheme. Karunatilaka cooperated with the U.S. and accepted responsibility for his crimes.

Crying Infant

As Karunatilaka’s infant child cried in the courtroom, Rakoff rejected a bid by defense lawyer Brad Bailey to impose a term of six months’ in prison and six months of home confinement.

Gupta, after two days of deliberations by a jury, was found guilty of three counts of securities fraud and one count of conspiracy. The tips came in September and October 2008 and concerned Buffett’s $5 billion investment in Goldman Sachs and the bank’s losses in the fourth quarter of 2008.

Jurors acquitted Gupta of charges that he leaked information that Cincinnati-based P&G’s organic sales growth would fall below estimates and that he tipped Rajaratnam about Goldman Sachs’s earnings in the first quarter of 2007.

In his filing, Naftalis argued that Gupta deserves leniency because his crimes were limited to a two-month period in 2008.

Peter Henning, a professor at Wayne State University Law School in Detroit, said Rakoff will focus on the nature of the crime and Gupta’s background. Henning predicted that the former Goldman Sachs director will get a prison term of two years to three years.

“That’s not a deleterious prison term, but it is prison and it doesn’t mean he will get a free pass,” Henning said in a phone interview. “It has to be a term to get everyone’s attention, and by everyone, I mean Wall Street.”

The case is U.S. v. Gupta, 11-cr-00907, U.S. District Court, Southern District of New York (Manhattan).”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


U.S. Attorney for the Southern District of New York Charges 11 Members of Alleged Poughkeepsie-Based Heroin Distribution Ring

September 28, 2012

The Federal Bureau of Investigation (FBI) on September 27, 2012 released the following:

Twelfth Defendant Also Charged in Separate Indictment with Distributing Heroin

Preet Bharara, the United States Attorney for the Southern District of New York; Mary Galligan, the Acting Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI); Ronald J. Knapp, the Chief of the City of Poughkeepsie Police Department, and Adrian H. Anderson, the Dutchess County Sheriff, announced today the unsealing of an indictment charging 11 defendants with conspiracy to distribute heroin in and around Poughkeepsie, New York. In a separate indictment, a 12th defendant was also charged with distributing heroin in Poughkeepsie. In a coordinated takedown yesterday and this morning, federal, state, and local law enforcement officers arrested seven of the charged defendants. The remaining five defendants were already in custody on state charges. All 12 of the defendants in custody will be presented and arraigned in White Plains federal court before U.S. Magistrate Judge George A. Yanthis this afternoon.

Manhattan U.S. Attorney Preet Bharara stated, “At first glance, the cell phone store from which these defendants were allegedly operating looked like any other commercial establishment, but in fact, it was the epicenter of their dangerous, destructive, and potentially lethal heroin operation. Thanks to the vigilance and tenacity of federal and local law enforcement, this alleged narcotics ring is out of business, and the streets of Poughkeepsie will no longer be infected with their poison. We remain as committed as ever to ensuring that the residents of Hudson Valley are safe and that their neighborhoods are crime free.”

FBI Acting Assistant Director in Charge Mary Galligan stated, “The FBI and our partners in the Hudson Valley will continue the effort to protect the safety and security of our neighborhoods. One important way to do this is by ridding the streets of dangerous drugs and the dangerous people who peddle them.”

Poughkeepsie Police Chief Ronald J. Knapp stated, “The city of Poughkeepsie Police Department is fortunate to be a member of this task force and work with these agencies to combat the illegal drug activities that these criminals engaged in. Our community benefits greatly from these joint investigations and the federal prosecution these individuals now face. Our intent is to send a clear message to criminals who engage in such activity that we are not limited to local resources but have the advantages of the combined efforts of the U.S. Attorney’s Office, the FBI, and the Dutchess County Sheriff’s office. We thank these partners for their commitment to our community and this successful operation.”

Dutchess County Sheriff Adrian H. Anderson stated, “The Sheriff’s Office is committed to working with our partners in federal law enforcement to seek out, arrest, and prosecute those allegedly involved in violent crime and narcotics distribution in Dutchess County. The Sheriff’s Office is deeply committed to this goal and has made substantial arrangements to achieve it, including the assignment of personnel and the use of numerous resources in conjunction with federal law enforcement. Today’s events show that law enforcement in Dutchess County, both local and federal, will do what’s needed to put an end to violent crime and drug distribution in our county.”

The following allegations are based on the indictments unsealed today in White Plains federal court:

From January 2011 through September 2012, a drug trafficking organization (the “Fisher Organization” or “the organization”) distributed heroin in and around Poughkeepsie, New York. During the conspiracy, leaders and members of the organization coordinated drug dealing activity at a cell phone store on Main Street in Poughkeepsie, where they concealed heroin, sold heroin to customers, and met with heroin customers to direct them to other locations for heroin transactions. Specifically, Shabari Fisher and Shateek Parker, who were leaders of the organization, obtained supplies of heroin and provided it to other members—including Garen Fisher, Shannon Walker, Tyrell Rudolph, Steven Williams, Rasheed Harrell, Carlos Reyes, Christian Parker, Vaugh McKinney, and Gary Sessoms—for further distribution to other drug dealers and drug users. Shabari Fisher and Shateek Parker also steered heroin customers to other members of the organization to conduct heroin transactions.

The Fisher Organization distributed heroin using, among other things, a succession of cell phones that individuals seeking heroin regularly called (the “dispatch phones”). Different members of the organization held the dispatch phones at different times, receiving calls from heroin customers and arranging to meet with them to conduct heroin transactions at locations in Poughkeepsie. The bags of heroin distributed by the Fisher Organization were often stamped with brand-like names, such as “True Religion,” “Gucci,” “Rated R,” “Red Bull,” “Coors Light,” “Scarface,” and “Bomb.”

In addition to the Fisher Organization defendants charged in the first Indictment, another defendant, Tony Jarrett, who is not a member of the organization, is also charged in a separate Indictment with distributing heroin in Poughkeepsie from July through September 2011.

* * *

Mr. Bharara praised the outstanding work of the FBI, the Poughkeepsie Police Department, the Dutchess County Sheriff’s Office, the Drug Enforcement Administration, the Bureau of Immigration and Customs Enforcement, the United States Marshals Service Fugitive Unit, the New York State Police-CNET, the Orange County Sheriff’s Office, the Newburgh Police Department, the Middletown Police Department, the Beacon Police Department, the Dutchess County Probation Office, the Dutchess County Jail, and the New York Department of Correctional Services. Mr. Bharara added that the investigation is ongoing.

The case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Benjamin Allee, Jeffrey Alberts, and Michael Gerber are in charge of the prosecution.

The defendants’ ages, residences, the offenses for which they are charged, and the maximum penalties they face upon conviction are listed in the below chart.

The charges contained in the Indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Name Age Residence Charged Offense Maximum Penalty
SHABARI FISHER 33 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
SHATEEK PARKER 28 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
GAREN FISHER 29 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
SHANNON WALKER 23 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
TYRELL RUDOLPH 24 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
STEVEN WILLIAMS 23 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
RASHEED HARRELL 25 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
CARLOS REYES 20 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
CHRISTIAN PARKER 21 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
VAUGHN MCKINNEY 35 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
GARY SESSOMS 51 Poughkeepsie, New York Conspiracy to distribute controlled substances Life in prison
TONY JARRETT 28 Poughkeepsie, New York Distribution of Controlled Substances 80 years inprison

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Douglas McNabb – McNabb Associates, P.C.’s

Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Detention Provision Is Blocked

June 7, 2012

The New York Times on June 6, 2012 released the following:

“By CHARLIE SAVAGE

WASHINGTON — The government may not rely on a disputed law enacted last year to hold people in indefinite military detention on suspicion that they “substantially supported” Al Qaeda or its allies — at least if they had no connection to the Sept. 11 terrorist attacks, a federal judge said on Wednesday.

In an eight-page memorandum opinion and order, Judge Katherine B. Forrest of the Southern District of New York clarified a preliminary injunction she issued on May 16 in a lawsuit brought by journalists and activists who challenged the statute — a provision of the National Defense Authorization Act of 2011 — and expressed fear that they could be detained.

The Obama administration had asked Judge Forrest to reconsider her ruling, saying that the plaintiffs lacked legal standing to challenge the law and that it was “extraordinary” for her to have restrained future military operations that might be ordered by the commander in chief during wartime.

As part of that request, the government said in a footnote that it was interpreting her injunction narrowly as applying only to the handful of people specifically named as plaintiffs in the lawsuit, including Chris Hedges, a journalist who interacts with terrorists as part of his reporting work, and several prominent supporters of WikiLeaks.

But on Wednesday, Judge Forrest said that her order still stood — and that, contrary to the government’s narrow interpretation of it, her injunction applied broadly and not just to the named plaintiffs.

“Put more bluntly, the May 16 order enjoined enforcement of Section 1021(b)(2) against anyone until further action by this, or a higher, court — or by Congress,” she wrote. “This order should eliminate any doubt as to the May 16 order’s scope.”

Ellen Davis, a spokeswoman for the United States attorney’s office in the Southern District of New York, declined to comment on the new order.

In section 1021, Congress laid out its interpretation of the extent of the military’s authority to hold people without trial, as detailed in its approval — a decade earlier — of military force shortly after the Sept. 11 attacks.

One provision of the statute, which Judge Forrest’s order did not block, said that authorization covered the detention of the perpetrators of the Sept. 11 attacks and those who assisted in them.

But another provision, which she did block, said it also covered people who were part of or substantially supported Al Qaeda, the Taliban or associated forces engaged in hostilities against the United States or its allies.

Enactment of the statute was controversial, in part, because it did not lay out what conduct could lead to someone’s being detained, and because it was silent about whether it extended to American citizens and others arrested on United States soil.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

Federal Crimes – Appeal

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Edwards Verdict Shows Clemens Need Not Fear Taint Of Reputation

June 4, 2012

Bloomberg on June 3, 2012 released the following:

“By David Glovin

Jurors tend to look past a criminal defendant’s reputation, no matter how odious, to render verdicts based on fact and law, lawyers said after former presidential candidate John Edwards won an acquittal and mistrial last week.

Federal jurors in Greensboro, North Carolina, on May 31 acquitted Edwards of one charge of using illegal campaign contributions to hide an extramarital affair and couldn’t decide about five other counts. They did so after hearing evidence that Edwards cheated on his dying wife and lied to the public about fathering a child with his paramour.

The verdict sends an encouraging signal to Roger Clemens, the former Major League Baseball pitcher now on trial in Washington for lying to Congress about his use of steroids, said Douglas Godfrey, a professor who teaches criminal law at Chicago-Kent College of Law.

“While we would all acknowledge that Edwards and Clemens are not nice guys and they behaved in very bad ways, that’s not the same as violating the law,” Godfrey said in a telephone interview. “Just because you’re an arrogant SOB or philanderer, that’s not the same as committing a crime.”

Edwards’s acquittal and mistrial came 11 months after a Florida jury acquitted Casey Anthony, an Orlando mother accused of killing her 2-year-old daughter, and 22 years after a New York City jury rendered a not guilty verdict in the racketeering case of Imelda Marcos, the former Philippines first lady ridiculed for owning more than 1,000 pair of shoes. In those cases and others, public opinion had turned so harshly against the defendants that a conviction seemed almost an afterthought.

Then the jury weighed in.

Jury Speaks

“It’s a great affirmation of our jury system that people like Casey Anthony and John Edwards, who are personally unlikable and in many ways despicable, can still sit in front of a jury of 12 people and have those 12 people judge them based on the evidence,” said Marc Mukasey, a former federal prosecutor who is now in private practice at Bracewell & Giuliani LLP.

Edwards, a former Democratic U.S. senator from North Carolina and presidential contender in 2008, was accused of violating campaign finance laws by accepting almost $1 million from multimillionaire heiress Rachel “Bunny” Mellon and Fred Baron, a now-deceased trial attorney, to conceal an affair. The case marked the first time the government prosecuted someone for campaign violations when money was paid to a third party.

Jurors deliberated for nine days before reaching their partial verdict. They couldn’t agree on counts that included a claim that Edwards conspired to protect his candidacy by secretly soliciting and accepting the funds and causing his campaign to file false reports with the Federal Election Commission.

He’s unlikely to be retried, a person familiar with the matter said last week.

Adultery, Arrogance

Except for the defendants’ notoriety — Edwards for adultery and Clemens for arrogance — the two cases have few similarities, said Stefan Passantino, who heads the political law team at McKenna Long & Aldridge in Washington. Lying to Congress, which Clemens is accused of, is a far more established crime than the conduct for which Edwards was on trial, he said.

Still, both defendants have had to confront the prospect that jurors would convict because of their reputations. The Edwards jury didn’t, in part because defense lawyers shifted the focus to ex-campaign aide Andrew Young, who acted as a go- between on transactions involving Mellon and Baron and used some of their money to build his own $1.5 million home.

Defense attorney Abbe Lowell also addressed the character issue head-on.

‘Moral Wrongs’

“John Edwards may have committed many moral wrongs but he did not commit a legal one,” Lowell told jurors during his closing argument. “He was a bad husband and lied to his family but there is not a remote chance that he violated campaign finance laws or committed a felony.”

Marcellus McRae, a former federal prosecutor who is now at Gibson Dunn & Crutcher LLP in Los Angeles, said jurors were attentive enough to the case’s nuances to see past Edwards’s reputation.

“Perceptions about personalities don’t govern verdicts,” he said. “In Edwards, personality didn’t rule.”

While Clemens is a seven-time Cy Young Award winner as the best pitcher in his league, he also ranks 14th in Major League Baseball for hitting 159 batters with pitches during his career.

Hurled Bat

Lawyers for Clemens, whose reputation for abrasiveness grew after he hurled a bat at an opposing player and because of his performance before Congress, have been taking a page from Edwards’s book. The ex-pitcher’s defense has been focused on tearing down the credibility of the government’s only eyewitness, Brian McNamee, Clemens’s former trainer.

McNamee testified he gave Clemens injections of steroids and human-growth hormone.

Clemens’s lawyer, Rusty Hardin, got McNamee to admit he’d lied to federal investigators and accused him of alcohol abuse and engaging in a fraudulent scheme to obtain diet pills.

“The facts are very different, the personalities are different,” Robert Mintz, a former federal prosecutor who’s now a partner with McCarter & English LLP in Newark, New Jersey, said of the Clemens and Edwards cases.

‘Positive Message’

“But if there’s any positive message that Clemens can draw out of the Edwards verdict, it’s that jurors will look beyond whatever antipathy they may feel regarding their personal conduct and do their best to make a decision based solely on the facts and law presented to them at the trial,” Mintz said in a telephone interview.

Jacob Frenkel, a former Securities and Exchange Commission lawyer who is now with Shulman Rogers Gandal Pordy & Ecker PA in Potomac, Maryland, said it’s proven lying, and not reputation, that puts many celebrity defendants behind bars. He pointed to Martha Stewart, who was sentenced to six months in prison in 2004 for obstructing justice by lying to prosecutors, and baseball player Barry Bonds, the career home-run record-holder who was convicted last year of obstructing justice for deceiving a grand jury.

Clemens is accused of obstructing justice and perjury.

“It is the acts of lying or obstruction that often are the downfall,” Frankel said in a telephone interview.

It’s not only Clemens who may take comfort in the Edwards verdict, said Michael Kendall, a partner at McDermott Will & Emery in Boston and a former federal prosecutor. In New York, Rajat Gupta, who was once a director of Goldman Sachs Group Inc. (GS) and who ran McKinsey & Co. from 1994 to 2003, is defending against charges that he leaked inside information to hedge fund co-founder Raj Rajaratnam.

Public Hostility

If Edwards could win an acquittal, so might Gupta, even amid public hostility to bankers and Wall Street in the wake of the 2007 financial crisis, he said.

“There are a thousand ways to derail a prosecution,” Kendall said in a telephone interview. “There’s an incredible common sense in collective good judgment in the jury system.”

The Edwards case is U.S. v. Edwards, 11-cr-161, U.S. District Court, Middle District of North Carolina (Greensboro). The Clemens case is U.S. v. Clemens, 10-cr-223, U.S. District Court, District of Columbia (Washington). The Gupta case is U.S. v. Gupta, 11-cr-907, U.S. District Court, Southern District of New York (Manhattan).”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Bo Zhang Pleads Guilty in U.S. District Court in Manhattan to Stealing Software Code From the Federal Reserve Bank of New York

May 29, 2012

Reuters on May 29, 2012 released the following:

“Chinese man pleads guilty to NY Fed cyber theft

By Basil Katz

May 29 (Reuters) – A Chinese computer programmer on Tuesday pleaded guilty to stealing software code from the Federal Reserve Bank of New York.

Bo Zhang, 33, was accused of illegally copying the software code to an external hard drive, according to a criminal complaint filed in U.S. District Court in Manhattan. The charge was made public on Jan. 18.

Authorities said the software, owned by the U.S. Treasury Department, cost about $9.5 million to develop.

“I knowingly stole and converted to my use an item owned by the United States government valued at more than $1,000,” Zhang told U.S. Magistrate Judge Michael Dolinger on Tuesday.

“Specifically, while working at the Federal Reserve Bank of New York, I appropriated proprietary software owned by the United States Department of Treasury for my own personal use,” said Zhang, who is a U.S. permanent resident.

Zhang on Tuesday also pleaded guilty to one charge of immigration fraud. He is currently free on $200,000 bail and is due to be sentenced on Oct. 1.

The code, called the Government-wide Accounting and Reporting Program, was developed to help track the billions of dollars the U.S. government transfers daily. The program provides federal agencies with a statement of their account balance, the court documents said.

Zhang was hired as a contract employee in May 2011 by an unnamed technology consulting company used by the New York Fed to work on its computers, court documents said.

According to an April cooperation agreement with Zhang, Manhattan federal prosecutors recommended he be sentenced to one to 1-1/2 years in prison, much less than the potential 10-year maximum term the theft charge carries.

The case is USA v. Bo Zhang, U.S. District Court for the Southern District of New York, No. 12-0390.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Manhattan U.S. Attorney Announces Arrests of Two Individuals in Alleged Multi-Million-Dollar Scam Involving Elderly Woman

May 3, 2012

The Federal Bureau of Investigation (FBI) on May 2, 2012 released the following:

“Preet Bharara, the United States Attorney for the Southern District of New York; Eric T. Schneiderman, the New York State Attorney General; and Janice K. Fedarcyk, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced charges today against IFEANYICHUKWU ERIC ABAKPORO and LATANYA PIERCE for allegedly swindling an elderly woman out of her multi-million-dollar property in Harlem that she had owned for more than 40 years and then deceiving a bank into giving them a $1.8 million mortgage loan secured by the property. ABAKPORO was arrested Monday in Queens, New York, and PIERCE was arrested yesterday after voluntarily surrendering to the FBI.

Manhattan U.S. Attorney Preet Bharara stated: “As alleged, these two defendants preyed on an elderly woman, using false documents and fraudulent representations to essentially steal her property out from under her. They then allegedly took their brazen scheme one step further, using the property to deceive a bank into lending them more than a million dollars. Sadly, this type of mortgage fraud scheme and exploitation of vulnerable victims have become all too familiar, but as these charges make clear, we are committed to bringing those who perpetrate these types of harmful schemes to justice.”

New York State Attorney General Eric Schneiderman stated: “Through lies and deception, these individuals abused the trust of an elderly woman in order to perpetrate a multi-million-dollar fraud. Now that their despicable scheme has been exposed, they will face justice.”

Assistant Director in Charge Janice K. Fedarcyk stated: “These defendants are charged with spinning a web of lies to steal the victim’s property. Cases like this are rightly a priority for the FBI: fraudulent schemes that victimize the vulnerable and enrich the unscrupulous.”

As alleged in the indictment unsealed yesterday in Manhattan federal court:

Beginning in March 2006, ABAKPORO, a lawyer with an office in Brooklyn, New York, and PIERCE, who worked for ABAKPORO, cultivated a relationship with an elderly woman (“the Victim”) who owned a residential apartment building worth millions of dollars located at 1070 St. Nicholas Avenue in Harlem (the “Property”). As part of the fraud scheme, ABAKPORO and PIERCE earned the Victim’s trust by, among other things, offering to help her manage the Property. This included collecting rent from its tenants on her behalf. However, instead of providing the Victim with the renters’ money, ABAKPORO and PIERCE pocketed it.

ABAKPORO and PIERCE then convinced the Victim to sell her property to them for $3.1 million. While they contracted to buy the property for that amount, at the closing, they presented the Victim with multiple fake and fraudulent checks to make it appear as if they had paid the contracted sale amount, when in fact they had not. Moreover, after the Victim’s attorney had left the closing, ABAKPORO and PIERCE fraudulently induced her to return all of the checks to them by representing that they would safeguard her money and give her a “private mortgage” in the Property, which they explained would include monthly payments made to her based on the money she had effectively loaned them. As part of the scheme, ABAKPORO and PIERCE signed and provided the Victim with a written agreement representing that she had loaned them approximately $1.9 million and in return held a “private mortgage” in the Property. Unbeknownst to the Victim, ABAKPORO and PIERCE never recorded the private mortgage and subsequently submitted a fraudulent application to Washington Mutual Bank seeking a $1.8 mortgage loan secured by the Property. ABAKPORO and PIERCE never disclosed to the bank that the Victim already held a private mortgage on the Property. Instead, ABAKPORO and PIERCE falsely represented to the bank that they had purchased the Property for $3.1 million and owned it “free and clear.” Based on those, and other, fraudulent representations, ABAKPORO and PIERCE obtained a $1.8 million mortgage loan from the bank, which they failed to repay.

As a result of the alleged fraud, the defendants obtained substantially all of the Victim’s assets, and $1.8 million in fraudulently obtained mortgage proceeds. The Property went into default.

***

ABAKPORO, 52, a Nigerian citizen, is a resident of Queens, and PIERCE, 43, is a resident of Brooklyn. They are each charged with wire fraud, bank fraud, wire fraud conspiracy, and bank fraud conspiracy. The wire fraud and wire fraud conspiracy charges each carry a maximum prison term of 20 years. The bank fraud and bank fraud conspiracy charges each carry a maximum prison term of 30 years.

ABAKPORO is currently detained pending his satisfaction of court-ordered bail conditions: a $1 million bond secured by an interest in property and co-signed by three individuals. PIERCE was released on a $500,000 bond to be co-signed by three individuals and secured by two properties.

Mr. Bharara praised the New York State Attorney General’s Office investigative staff and the FBI for their excellent work on the investigation of this matter. He also thanked the New York State Department of Financial Services for its assistance.

The case is being handled by the Office’s Complex Frauds Unit. Southern District of New York Assistant U.S. Attorneys Ryan Poscablo and Michael Lockard, along with Assistant Attorney General Meryl Lutsky, who has been designated a Special Assistant U.S. Attorney, and Assistant Attorney General Rhonda Greenstein, are in charge of the prosecution.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Appeals Court Limits Scope of Corporate Espionage Laws in Goldman Programmer Case

April 11, 2012

The New York Times on April 11, 2012 released the following:

“BY MICHAEL J. DE LA MERCED AND PETER LATTMAN

A federal appeals court has restricted the use of a federal law cited in federal prosecutors’ efforts to prosecute a former Goldman Sachs programmer accused of illegally downloading computer code from his onetime employer.

In an opinion released on Wednesday, the United States Court of Appeals for the Second Circuit ruled that the former employee, Sergey Aleynikov, did not violate the Electronic Espionage Act of 1996 or federal stolen property laws.

The opinion elaborates on the decision by a three-judge panel of the appeals court to overturn Mr. Aleynikov’s conviction in February. That move set the programmer free, dealing a blow to one of the most prominent federal prosecutions of corporate espionage in recent years.

Mr. Aleynikov was arrested nearly three years ago, after Goldman accused him of downloading programming code for its high-speed computerized trading operations.

The act was almost literally on Mr. Aleynikov’s way out the door, shortly before a going-away party. He had accepted a job at a software company catering to other trading firms.

Mr. Aleynikov’s lawyers had argued that while their client had violated Goldman’s confidentiality policy, he had not broken the law.

Writing for the appeals court, Chief Judge Dennis Jacobs, who presided over the February hearing, agreed. While conceding that Goldman’s code was “highly valuable,” the investment bank’s trading program was never intended to be sold. That fell short of the interstate commerce requirements of the Electronic Espionage Act, according to the appeals court’s reading of the statute.

Because the high-frequency trading “system was not designed to enter or pass in commerce, or to make something that does, Aleynikov’s theft of source code relating to that system was not an offense under the EEA,” Judge Jacobs wrote in the opinion.

The judge also found that while Mr. Aleynikov had taken code and uploaded it to his own computers, he had not actually taken a physical object — and therefore did not violate the letter of federal law. That he later transferred the code to a thumb drive still did not make his actions a federal crime.

“We decline to stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age,” Judge Jacobs wrote.

In a separate opinion, Judge Guido Calabresi said that while he agreed with the court’s analysis, it was hard for him “to conclude that Congress, in this law, actually meant to exempt the kind of behavior in which Aleynikov engaged.”

Judge Calabresi said he hoped Congress would return to the issue and clarify what it meant to make criminal under the Electronic Espionage Act.

A spokeswoman for the United States attorney’s office for the Southern District of New York, which prosecuted the case, declined to comment.”

US v Sergey Aleynikov – 2nd Circuit Opinion

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Appeal

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


EXCLUSIVE: Infamous international hacking group LulzSec brought down by own leader

March 6, 2012

Fox News on March 6, 2012 released the following:

“By Jana Winter

EXCLUSIVE: Law enforcement agents on two continents swooped in on top members of the infamous computer hacking group LulzSec early this morning, and acting largely on evidence gathered by the organization’s brazen leader — who sources say has been secretly working for the government for months — arrested three and charged two more with conspiracy.

Charges against four of the five were based on a conspiracy case filed in New York federal court, FoxNews.com has learned. An indictment charging the suspects, who include two men from Great Britain, two from Ireland and an American in Chicago, is expected to be unsealed Tuesday morning in the Southern District of New York.

“This is devastating to the organization,” said an FBI official involved with the investigation. “We’re chopping off the head of LulzSec.”

The offshoot of the loose network of hackers, Anonymous, believed to have caused billions of dollars in damage to governments, international banks and corporations, was allegedly led by a shadowy figure FoxNews.com has identified as Hector Xavier Monsegur. Working under the Internet alias “Sabu,” the unemployed, 28-year-old father of two allegedly commanded a loosely organized, international team of perhaps thousands of hackers from his nerve center in a public housing project on New York’s Lower East Side. After the FBI unmasked Monsegur last June, he became a cooperating witness, sources told FoxNews.com.

“They caught him and he was secretly arrested and now works for the FBI,” a source close to Sabu told FoxNews.com.

Monsegur pleaded guilty Aug. 15 to 12 hacking-related charges and information documenting his admissions is expected to be unsealed in Southern District Court on Tuesday.

As a result of Monsegur’s cooperation, which was confirmed by numerous senior-level officials, the remaining top-ranking members of LulzSec were arrested or hit with additional charges Tuesday morning. The five charged in the LulzSec conspiracy indictment expected to be unsealed were identified by sources as: Ryan Ackroyd, aka “Kayla” and Jake Davis, aka “Topiary,” both of London; Darren Martyn, aka “pwnsauce” and Donncha O’Cearrbhail, aka “palladium,” both of Ireland; and Jeremy Hammond aka “Anarchaos,” of Chicago.

Hammond was arrested on access device fraud and hacking charges and is believed to have been the main person behind the devastating December hack on U.S. security company Stratfor. Millions of emails were stolen and then published on Wikileaks; credit card numbers and other confidential information were also stolen, law enforcement sources told FoxNews.com.

The sources said Hammond will be charged in a separate indictment, and they described him as a member of Anonymous.

The others are all suspected members of LulzSec, the group that has wreaked havoc on U.S. and foreign government agencies, including the CIA and FBI, numerous defense contractors, financial and governmental entities and corporations including Fox and Sony.

Ackroyd, who is suspected of using the online handle “Kayla,” is alleged to be Monsegur’s top deputy. Among other things, Kayla identified vulnerabilities in the U.S. Senate’s computer systems and passed the information on to Sabu. Kayla was expected to be taken into custody on Tuesday.

A spokeswoman for the Southern District and U.S. Attorney Preet Bharara declined comment.
Monsegur’s attorney did not return FoxNews.com’s repeated requests for comment.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Manhattan U.S. Attorney Announces Charges Against 36 Individuals for Allegedly Participating in $279 Million Health Care Fraud Scheme

February 29, 2012

The Federal Bureau of Investigation (FBI) on February 29, 2012 released the following:

“Preet Bharara, the United States Attorney for the Southern District of New York; Janice K. Fedarcyk, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”); and Raymond W. Kelly, the Police Commissioner of the City of New York (“NYPD”), announced today the unsealing of charges against 36 defendants involved in a systematic scheme to defraud private insurance companies of more than $279 million under New York’s no-fault automobile insurance law. The indictment includes racketeering charges against eight members and associates of a criminal organization consisting primarily of individuals of Russian descent who were the owners and controllers of fraudulent medical clinics (the “No Fault Organization”), as well as 10 licensed doctors and three attorneys. The alleged scheme identified today is the largest single no-fault automobile insurance fraud ever charged, and the first case of its kind to allege violations of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act.

All of the defendants were arrested this morning in connection with today’s charges. Thirty-five were taken into custody in New York and New Jersey and will be presented and arraigned in Manhattan federal court before U.S. Magistrate Judge Theodore H. Katz later this afternoon. One defendant was arrested in Duluth, Minnesota and will be presented tomorrow in federal court in the District of Minnesota.

Manhattan U.S. Attorney Preet Bharara said: “Today’s charges expose a colossal criminal trifecta, as the fraud’s tentacles simultaneously reached into the medical system, the legal system, and the insurance system, pulling out cash to fund the defendants’ lavish lifestyles. As alleged, the scheme relied on a cadre of corrupt doctors who essentially peddled their medical licenses like a corner fraudster might sell fake IDs, except those medical licenses allowed unlawful entry, not to a club or a bar, but to a multi-billion-dollar pool of insurance proceeds.”

FBI Assistant Director in Charge Janice K. Fedarcyk said: “Our investigation uncovered a pattern of lucrative fraud exploiting New York’s no-fault auto insurance system to the tune of more than a quarter-of-a-billion dollars. The criminal enterprise, while it lasted, was obscenely profitable. The scheme not only unjustly enriched the defendants and defrauded insurance companies. Auto insurance fraud is also a crime that indirectly victimizes every driver in New York.”

NYPD Commissioner Raymond W. Kelly said: “Our undercover officers were treated like thousands of other ‘patients’ receiving therapy, tests, and medical equipment they didn’t need. I want to congratulate the U.S. Attorney’s Office and the agents and detectives assigned to the joint FBI-NYPD Organized Crime Task Force for bringing this investigation to a successful conclusion.”

The following allegations are based on the unsealed indictment and other documents filed today in Manhattan federal court:

Under New York state law, every vehicle registered in the state is required to have no-fault automobile insurance, which enables the driver and passengers of a registered and insured vehicle to obtain benefits of up to $50,000 per person for injuries sustained in an automobile accident, regardless of fault (the “No-Fault Law”). The No-Fault Law requires prompt payment for medical treatment, thereby obviating the need for claimants to file personal injury lawsuits in order to be reimbursed. Under the No-Fault Law, patients can assign their right to reimbursement from an insurance company to others, including medical clinics that provide treatment for their injuries. New York state law also requires that all medical clinics in the state be incorporated, owned, operated, and/or controlled by a licensed medical practitioner in order to be eligible for reimbursement under the No-Fault Law. Insurance companies will not honor claims for medical treatments from a medical clinic that is not actually owned, operated, and/or controlled by a licensed medical practitioner.

From at least 2007 through 2012, the No-Fault Organization has engaged in a massive and sophisticated scheme to defraud automobile insurance companies of hundreds of millions of dollars by, among other things, creating and operating medical clinics that provided unnecessary and excessive medical treatments in order to take advantage of the No-Fault Law. In order to mislead New York authorities and private insurers, the true owners of these medical clinics (“Clinic Controllers”), almost all of whom were also members and associates of a criminal organization consisting primarily of individuals of Russian descent, paid licensed medical practitioners, including doctors, to use their licenses to incorporate the professional corporations, through which the medical clinics billed the private insurers for the bogus medical treatments. These doctors effectively operated as “straw owners” of the clinics.

The Clinic Controllers paid thousands of dollars in kickbacks to runners who recruited automobile accident passengers to receive medically unnecessary treatments from the no-fault clinics. They also instructed the clinic doctors/straw owners to prescribe excessive and unwarranted referrals for various “modality treatments” for every patient they saw. The treatments included physical therapy, acupuncture, and chiropractic treatments—as many as five times per week for each—and treatments for psychology, neurology, orthopedics, and audiology. Clinic doctors also prescribed unnecessary MRI’s, x-rays, orthopedics, and medical supplies. The Clinic Controllers received thousands of dollars in kickbacks for patient referrals from the owners of the modality clinics (“Modality Controllers”), who were members and associates of the same criminal organization to which the members of the No-Fault Organization and Clinic Controllers belonged.

The Clinic Controllers also referred patients to personal injury lawyers who filed bogus lawsuits on behalf of the patients and coached them on what injuries to claim in order to get as many treatments as possible. The personal injury lawyers also paid the Clinic Controllers thousands of dollars in kickbacks for these referrals.

In order to conceal and disguise the millions of dollars in claims paid by the automobile insurance companies, the members of the No-Fault Organization laundered the money through shell companies and corrupt check-cashing services. Often, checks would be written from the No-Fault or Modality Clinics with the payee line left blank, and in amounts less than $10,000 in order to avoid potential financial institution reporting requirements and other scrutiny. The checks were then cashed through check-cashers who made the checks payable to shell companies they controlled in order to conceal the true nature and purpose of the checks. The cash was then returned to members of the No-Fault Organization to fund kickbacks and for their personal use. At other times, the members and associates of the No-Fault Organization paid themselves through their own shell companies and then used the criminal proceeds to fund expensive vacations and to purchase luxury goods.

***

A chart identifying each defendant, the charges, and the maximum penalties, is below. The case is assigned to U.S. District Judge J. Paul Oetken.

U.S. Attorney Preet Bharara thanked the FBI and the NYPD for their work in the 18-month investigation, which he noted is ongoing. Mr. Bharara also thanked the National Insurance Crime Bureau and the investigative units of the insurance companies that provided invaluable assistance with the investigation, as well as the Manhattan District Attorney’s Office.

The case is being prosecuted by the office’s Organized Crime Unit. Assistant U.S. Attorneys Daniel S. Goldman, Nicholas L. McQuaid and Carolina Fornos are in charge of the prosecution. Assistant U.S. Attorney Jason L. Cowley of the office’s Asset Forfeiture Unit is responsible for the forfeiture of assets.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Count Charge Maximum Penalty
Count one RICO conspiracy (mail fraud and money laundering) 20 years
Count two Conspiracy to commit health care fraud 10 years
Count three Conspiracy to commit mail fraud 20 years
Count four Conspiracy to commit money laundering 20 years
Defendant Age/Residence Alleged Role in the Scheme Charges Maximum Penalty
Mikhail Zemlyansky 35/Hewlett, NY Clinic/modality controller Counts one, two, three, four 70 years
Michael Danilovich 38/Brooklyn, NY Clinic/modality controller Counts one, two, three, four 70 years
Yuriy Zayonts 40/Staten Island, NY Clinic/modality controller Counts one, two, three, four 70 years
Mikhail Kremerman 41/Staten Island, NY Clinic/modality controller Counts one, two, three, four 70 years
Matthew Conroy 42/Melville, NY Attorney Counts one, two, three, four 70 years
Michael Barukhin 32/Brooklyn, NY Clinic/modality controller Counts one, two, three, four 70 years
Mikhail Ostrumsky 42/Brooklyn/NY Clinic controller Counts one, two, three, four 70 years
Boris Treysler 42/Brooklyn/NY Clinic controller Counts one, two, three, four 70 years
Andrey Anikeyev 37/Fort Lee, NJ Modality controller Counts two, three, four 50 years
Vladimir Grinberg 35/Staten Island, NY Modality controller Counts two, three, four 50 years
Vladislav Zaretskiy 40/Staten Island, NY Clinic/modality controller Counts two, three, four 50 years
Yevgeniy Shuman 33/Brooklyn, NY Clinic manager Counts two, three, four 50 years
Dmitry Slobodyansky 41/Brooklyn, NY Modality controller Counts two, three, four 50 years
Alexander Sandler 57/East Brunswick, NJ Clinic controller Counts two, three 30 years
Gregory Mikhalov 56/Brooklyn, NY Modality controller Counts two, three 30 years
Michael Morgan 33/Port Washington, NY Modality controller Counts two, three 30 years
Mark Danilovich 60/Brooklyn, NY Modality controller Counts two, three 30 years
Jeffrey Lereah 56/Suffern, NY Modality manager Counts two, three 30 years
Dmitry Lipis 44/Brooklyn, NY Clinic manager Counts two, three 30 years
Lynda Tadder 34/Brooklyn, NY Clinic manager Counts two, three 30 years
Maria Diglio 47/Garden City, NY Attorney Counts two, three 30 years
Sol Naimark 53/Flushing, NY Attorney Counts two, three 30 years
Sergey Gabinsky 54/Brooklyn, NY Doctor Counts two, three 30 years
Tatyana Gabinskaya 57/Brooklyn, NY Doctor Counts two, three 30 years
Joseph Vitoulis 42/Valley Stream, NY Doctor Counts two, three 30 years
Lauretta Grzegorczyk 64/Staten Island, NY Doctor Counts two, three 30 years
Eva Gateva 48/Bronx, NY Doctor Counts two, three 30 years
Zuheir Said 64/Bronx, NY Doctor Counts two, three 30 years
David Thomas 42/Hopewell Junction/NY Doctor Counts two, three 30 years
Billy Geris 53/Morganville, NJ Doctor Counts two, three 30 years
Mark Shapiro 46/Brooklyn, NY Doctor Counts two, three 30 years
Robert Della Badia 72/South Salem, NY Doctor Counts two, three 30 years
Michelle Glick 33/Duluth, MN Acupuncture practitioner Counts two, three 30 years
Pavel Poznansky 52/Brooklyn, NY Acupuncture practitioner Counts two, three 30 years
Chad Greenshner 45/Flushing, NY Chiropractic practitioner Counts two, three 30 years
Constantine Voytenko 40/Brooklyn, NY Chiropractic practitioner Counts two, three 30 years

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Douglas McNabb – McNabb Associates, P.C.’s

Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Court Overturns Conviction of Ex-Goldman Programmer

February 17, 2012

The New York Times on February 17, 2012 released the following:

“BY PETER LATTMAN

A federal appeals court reversed the conviction late Thursday of Sergey Aleynikov, a former Goldman Sachs programmer found guilty of stealing proprietary code from the bank’s high-frequency trading platform.

The United States Court of Appeals for the Second Circuit overturned the conviction and ordered the trial court to enter a judgment of acquittal. A judgment of acquittal generally bars the government from retrying a defendant.

The reversal was without explanation; it said an opinion would follow “in due course.”

The appeals court ruling came just hours after a three-judge panel heard oral arguments on Mr. Aleynikov’s appeal. Mr. Aleynikov, who was convicted in December 2010, is serving an eight-year sentence at a federal prison in Fort Dix, N.J.

“We are pleased and gratified that the court of appeals has roundly rejected the government’s attempt to rewrite the federal criminal laws,” said Kevin Marino, Mr. Aleynikov’s lawyer. “Mr. Aleynikov spent a year in prison and suffered many other losses as a result of these unjust charges, but he never lost faith in his ability to win an acquittal. This is a wonderful day in his life.”

Ellen Davis, a spokeswoman for the United States attorney’s office in Manhattan, declined to comment.

The reversal deals a major blow to the Justice Department, which has made the prosecution of high-tech crime and intellectual property theft a top priority. This case tested the boundaries of the Economic Espionage Act, a 15-year-old law that makes it a crime to steal trade secrets. Federal prosecutors held up the arrest of Mr. Aleynikov as an example of the government’s crackdown on employees who steal valuable and proprietary information from their employers.

The decision is also a loss for Goldman Sachs, which reported Mr. Aleynikov to federal authorities after it accused him of stealing computer code. The bank had portrayed itself as the victim of a brazen crime.

A crucial issue in the appeal — and a main focus of Thursday’s oral argument — was whether Mr. Aleynikov’s actions constituted a crime under the statutory language of the Economic Espionage Act. The debate centered on whether Goldman’s high frequency trading system was a “product produced for interstate commerce” within the meaning of the law.

Lawyers for Mr. Aleynikov argued that the bank’s trading platform was built for internal use and never placed in the stream of commerce. The government countered that the high-frequency trading system, which Goldman used to trade in markets around the globe, was clearly produced for interstate and foreign commerce.

Mr. Aleynikov’s arrest in 2009 drew attention to a new and lucrative corner of Wall Street. High-frequency trading uses complex computer algorithms to make rapid trades that exploit tiny price discrepancies. The trading became a substantial source of revenue at banks and hedge funds, and these companies vigilantly guard the code underpinning their trading strategies.

Armed with a degree in computer programming, Mr. Aleynikov came to the United States from Russia in 1990. His services were in demand at Goldman, which paid him $400,000 a year to write code for its high-frequency trading business, making him one of the bank’s highest-paid programmers.

He was lured away from Goldman by Teza Technologies, a new firm run by an executive from the Citadel Investment Group, a giant Chicago hedge fund. Teza offered to pay about triple what he made at Goldman.

During his last final days at Goldman, Mr. Aleynikov uploaded source code to a server in Germany that allowed him to do an end run around the company’s security systems. He was arrested shortly thereafter.

At trial, Mr. Marino, the lawyer for Mr. Aleynikov, acknowledge that his client breached Goldman’s confidentiality agreements, but insisted that he did not commit a crime.

Federal prosecutors portrayed Mr. Aleynikov as a thief who stole Goldman’s closely guarded code to help his new employer. After a two-week trial, the jury deliberated for just three hours before reaching a unanimous guilty verdict.

The ruling is the second time in as many months that the Federal Appeals Court in Manhattan has overturned a conviction secured by the United States attorney for the Southern District of New York. In January, the appeals court reversed the conviction of Joseph P. Collins, a former outside lawyer to Refco, the collapsed brokerage firm, citing judicial error.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Appeal

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


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