“Prosecutors Expect More Arrests in Art-Fraud Scheme”

August 19, 2013

The New York Times on August 19, 2013 released the following:

By WILLIAM K. RASHBAUM

“Federal prosecutors handling the case against an obscure art dealer charged in one of the most audacious art frauds in recent memory told a judge on Monday that they expected more arrests in the continuing investigation. They also said they expected the case against the art dealer to be resolved soon.

The disclosures came at the arraignment of the dealer, Glafira Rosales, in United States District Court in Manhattan.

Ms. Rosales was arrested on money laundering and tax charges in connection with the scheme in May. She was arraigned Monday before Judge Katherine P. Failla on new charges contained in a superseding indictment that was handed up last week by a grand jury. She pleaded not guilty during the five-minute proceeding.

During the arraignment, Judge Failla asked one of the prosecutors, Jason P. Hernandez, an assistant United States attorney, if more arrests were expected.

“Yes,” he said.

Mr. Hernandez also said that the case against Ms. Rosales, which was the result of a lengthy F.B.I. investigation, was to be resolved in the coming weeks. He did not elaborate.

A lawyer for Ms. Rosales, Steven R. Kartagener, declined to comment on the new charges.

The charges issued last week revealed for the first time that all of the 63 phony art works at the heart of what prosecutors have described as a sweeping fraud scheme stretching over more than a decade were created by a single painter. The indictment identified him only as a painter who lives in Queens and said he had produced the canvases — purported to be by the hands of Modernist masters like Willem de Koonig, Jackson Pollock, Mark Rothko, Robert Motherwell and others — in his house and garage.

People briefed on the matter said he was Pei-Shen Qian, a struggling 73-year-old Chinese artist who came to the United States in 1981.

While he was paid a few thousand dollars for the canvases, they were later sold as works by Modernist masters for more than $80 million.

The indictment and other court papers said the painter who created the fake canvases was discovered selling his own art on the streets of Lower Manhattan in the early 1990s by Ms. Rosales’s boyfriend and business partner, an art dealer named Jose Carlos Bergantiños Diaz, who recruited him to make paintings in the style of celebrated Abstract Expressionists. The indictment does not name Mr. Bergantiños Diaz, but his identity is confirmed by other court records.

It is unclear whether Ms. Rosales has begun cooperating with the federal authorities since her arrest in May. But while the prosecutors handling her case initially argued then that she posed “a substantial flight risk” and that no bail conditions could assure her return to court, convincing a judge to detain her without bail, last week, after the new indictment was handed up, the prosecutors did not oppose her release on a $2.5 million bond.

Julie Bolcer, a spokeswoman for the office of Preet Bharara, the United States attorney in Manhattan, and an F.B.I. spokesman, James M. Margolin, declined to comment. Mr. Kartagener has refused to characterize his discussions with the prosecutors on the case, Mr. Hernandez and Daniel W. Levy.”

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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.


Hearing on Terror Suspect Explores Miranda Warning

December 13, 2011

The New York Times on December 12, 2011 released the following:

“By BENJAMIN WEISER

Almost two years ago, a Federal Bureau of Investigation agent was in Nigeria to question an Eritrean man who was in custody on suspicion of supporting terrorism. The suspect, Mohamed Ibrahim Ahmed, had already been interrogated by other American officials for intelligence-gathering purposes, without having been read his rights.

The F.B.I. agent was there for a different purpose: a “clean” interrogation. He would apprise Mr. Ahmed of his Miranda rights — including the right to remain silent and to have counsel — and then interview him, in hopes of winning a confession that could be used in a prosecution in civilian court.

But suppose the suspect, who was also known as Talha, refused to waive his rights and answer questions? The agent proposed an idea in an e-mail to his colleagues and to prosecutors.

“We’ve planned that in the event that T does not waive his rights, we could continue as another ‘dirty’ interview,” the agent wrote in an e-mail at 11:54 a.m. on Jan. 3, 2010.

In the debate over using civilian trials for terrorists, one of the key issues — the ability to first question a suspect to gain critical intelligence on terrorist cells or plots and still pursue a criminal prosecution — is getting an early test in Mr. Ahmed’s case in Federal District Court in Manhattan.

Lawyers for Mr. Ahmed have asked a judge to suppress statements that the United States government has said he made after waiving his Miranda rights and being interrogated by the F.B.I. in Nigeria. They claim that any such waiver was not voluntary and thus any statements he made are inadmissible.

The hearing on the defense motion, which began on Thursday, has provided an unusually revealing look at how American officials are carefully navigating through a kind of hybrid version of Miranda, first trying to get intelligence through “dirty,” or un-Mirandized, interviews and then having different “clean team” interrogators read the same suspects their rights in the hopes that they will waive them and continue to talk.

One issue is how much distance American officials kept between the “dirty” and “clean” interviews, and whether the line between the two was blurred, possibly tainting any waiver of his rights.

Mr. Ahmed, 37, who has been living in Sweden, has since been indicted in Manhattan on charges that include providing material support to Al Shabab, a terrorist group based in Somalia. The indictment says that Mr. Ahmed received jihad training and bomb-making instruction in Shabab military camps in Somalia in 2009, and that when he was taken into custody in Nigeria in November 2009 on an immigration violation, he was found with bomb-making documents.

His interrogations, first by the Nigerians, then by unspecified American officials for intelligence purposes, and finally by the F.B.I. “clean team” agents, took place over the next few months, according to court testimony and statements by a prosecutor.

He was finally sent to Manhattan for arraignment in March 2010.

The agent’s e-mail referring to a “dirty” interview is not public. But as the suppression hearing began last Thursday, the judge, P. Kevin Castel, directed that a prosecutor read parts of the e-mail into the record during a discussion about how much of it could be made available to Mr. Ahmed’s defense lawyers.

The prosecutor, Jocelyn E. Strauber, said that by “dirty,” the F.B.I. agent was simply referring to an un-Mirandized interview.

In describing the Jan. 3, 2010, e-mail, Ms. Strauber explained to the judge that its author, Special Agent Maged Sidaros, was engaging in an internal discussion with other F.B.I. personnel and federal prosecutors, presumably in Manhattan, about “the possibility of a different kind of interview should his interview not proceed as planned.”

She also read briefly from an earlier e-mail from the agent, in which there appear to be questions about whether he is to participate in a Mirandized or un-Mirandized interview.

“We discussed the fact that Jim and I were of the impression that we were the ‘dirty’ team,” he wrote, according to what Ms. Strauber read in court. Then subsequent clean team interviews “would be conducted by others,” the agent added.

Ms. Strauber noted that when Agent Sidaros arrived in Nigeria, he received a summary of the statements Mr. Ahmed had made to Nigerian officials, but was given only scant information about the un-Mirandized interview of Mr. Ahmed by the Americans, which occurred on Dec. 31, 2009.

“Just the fact that it occurred, that it took about three hours, and who participated in it, at least on the U.S. side,” Ms. Strauber said.

The agent would testify, she said, that he specifically requested that the Mirandized interviews be conducted “in a different place, involve different people, and be spaced apart in time from the Dec. 31 interview.”

The spacing had been about five days, she added, and Judge Castel indicated that he wanted an even more precise time. “I may need to know what time on Dec. 31 it ended,” he said.

Prosecutors declined to comment, as did Mr. Ahmed’s lawyers and the F.B.I.”

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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 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.


Manager Who Claimed to Own Facebook Shares Charged With Alleged Fraud

November 19, 2011

The New York Times on November 17, 2011 released the following:

“BY KEVIN ROOSE

It may be the new, new thing in fraud.

John A. Mattera, 50, a Florida-based investment manager, was arrested Thursday on charges of running an $11 million, two-year fraud that falsely promised investors access to coveted shares of Groupon, Facebook and other private companies.

Mr. Mattera, the head of the Praetorian Global Fund, claimed to own more than a million shares each of Facebook and Groupon, according to a complaint filed in Federal District Court in Manhattan. He represented to investors that those holdings, bought on the private markets, would surge in value after the companies went public, the complaint said. Prosecutors allege the fund didn’t have such investments.

Instead, Mr. Mattera used millions of dollars of investor money to finance his lavish lifestyle, the complaint alleges. Among Mr. Mattera’s expenses: more than $245,000 for home furnishings and interior design services, more than $11,000 for tailored clothing and more than $17,000 for “boat-related expenses.”

Prosecutors have charged Mr. Mattera with one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, one count of wire fraud and one count of money laundering. The Securities and Exchange Commission is also taking civil action against Mr. Mattera.

“As alleged, John Mattera duped investors into believing they had bought rights to shares of coveted stock in Facebook and other highly visible and attractive companies which had not yet gone public,” Preet S. Bharara, the United States attorney in Manhattan, said in a statement. “With today’s charges, his charade is exposed and he will be held to account for his alleged crimes.”

Carl F. Schoeppl, Mr. Mattera’s lawyer in the criminal case, declined to comment.

The charges against Mr. Mattera come as investors clamor for shares of newly public Internet companies, a frenzy that echoes the early days of the last dot-com boom in the 1990s. Getting into a company early can be lucrative. Groupon, the daily deals site, jumped more than 30 percent on its first day of trading.

To attract clients, Mr. Mattera allegedly enlisted the help of Joseph Almazon, an unregistered broker with Spartan Capital Partners on Long Island, who solicited investments for Mr. Mattera’s Praetorian funds using LinkedIn advertisements that offered customers “the opportunity to buy pre-I.P.O. shares” in Facebook, Groupon, Twitter, Zynga and other companies. Mr. Almazon promised that “unlike most of the other investment banking firms, we let you sell your shares right at the open” — referring to the first day the company goes public, according to the civil action.

After investors signed up, their money was transferred to an escrow service headed by John R. Arnold. Mr. Arnold, in turn, passed the money along to himself and to Mr. Mattera, as well as to accounts registered to Mr. Mattera’s mother and wife, the complaint said.

Mr. Mattera is no stranger to the law. In 2009, he was accused by the Securities and Exchange Commission of evading registration requirements by backdating certain promissory notes. He paid a penalty of $140,000 and was barred from trading penny stocks, shares of smaller public companies that are worth less than $1 apiece.

Three of the current criminal charges against Mr. Mattera, who was arrested at his home in Fort Lauderdale, Fla., on Thursday, carry a maximum sentence of 20 years in prison each. He faces a maximum sentence of five years on the conspiracy charge.

Mr. Mattera and his associates “exploited investors’ desire to get an inside track on a wave of hyped future I.P.O.s,” George S. Canellos, the S.E.C.’s New York regional director, said in a statement. “Even as investors believed their funds were sitting safely in escrow accounts, Mattera plundered those accounts to bankroll a lifestyle of private jets, luxury cars, and fine art.””

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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

————————————————————–

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.