Archive for the tag 'fraud'

grimm

Congressman Michael Grimm has been barred from visiting the FBI’s New York field offices since he left the agency eight years ago, calling into question if the embattled representative left on good terms as he frequently claims.

The Grimm prohibition was discovered by DNAinfo, which reports:

Federal security personnel at the FBI’s headquarters in Lower Manhattan and a satellite office in Kew Gardens, Queens, posted Grimm’s photo inside their glass-enclosed stations in the event he showed up, sources said.

They were under orders to stop him and to immediately notify higher authorities on what further action to take, according to the sources.

“He is not permitted in our space,” one source told “On The Inside.”

“He is not welcome,” a former top FBI official said.

Grimm was hit with a 20-count indictment last Monday, alleging tax fraud and illegal hiring practices at an Upper East Side eatery he ran after his stint in the FBI, and before he ran for Congress. The U.S. Attorney’s office has suggested they’re also looking into potential campaign fundraising abuses.

The congressman often touts his military service record and his career at the FBI as qualifications on the campaign trail. In the law enforcement agency, he served as an undercover operative who penetrated the Gambino crime family, and also helped bring down a ring of white-collar criminals in 2003.

But his career was cut short in 2006, when he unexpectedly resigned. He has always said that he left on good terms to start a family.

The new revelations discovered by DNAinfo cast doubt onto those claims, though, with sources telling the outlet that Grimm was being investigated by the agency’s internal monitors for breach of protocol.

They report:

Sources said Grimm’s FBI identification picture was posted shortly after he resigned from the bureau in 2006 and it now hangs with about two dozen other ex-agents and federal employees.

“They are all employees who were fired, or they were under circumstances where they were forced out or felt they should leave, and all are no longer welcome back,” the former FBI official explained.

… Sources said Grimm, 44, was under internal scrutiny before he quit over allegations that he told a woman he met during a probe that he worked undercover — a violation of FBI protocol.

The FBI’s Office of Professional Responsibility was also questioning so-called “voucher” expenses he submitted in connection with his undercover roles.

The sources believe the pressure of the inquiry played a role in his decision to exit the FBI — an agency he often professed to love, his colleagues noted — without getting a pension because he didn’t serve 20 years.

A spokesperson for Grimm told DNAinfo that the congressman was “unaware” that he was not permitted in FBI offices, and had no idea why. The spokesperson also provided a 2012 letter on FBI letterhead stating that the former agent “resigned his post in good standing with the FBI.”

Source: Facebook

Congressman Michael Grimm continues to face fallout from the criminal charges levied against him on Monday, with New York Republican leadership seeking ways to kick him off the ballot, and the national party booting him from programs to aid his reelection bid.

Grimm turned himself in to authorities Monday morning to respond to a 20-count federal indictment alleging tax fraud, systematically hiring undocumented immigrants and hiding more than $1 million in revenue from the government during his time as a restaurant owner before he became congressman. Grimm pleaded not guilty, and is portraying the investigation as a “political witch hunt” to unseat New York City’s only Republican in Congress.

While the congressman vowed to continue his reelection campaign, where he faces an aggressive bid from former Councilman Domenic Recchia, it seems Republican leadership in both his home borough and in Washington are reconsidering their support.

The Wall Street Journal reports that Staten Island GOP leadership are looking for ways to boot Grimm from the ballot altogether:

The road to replacing the Staten Island congressman on the ballot is narrow and complicated because the deadline for a challenger to get on the ballot passed earlier in April. Election-law experts and Republican Party officials said the sole viable option under New York law appears to be to nominate the Staten Island congressman for another office, such as running for an open judge position.

… Potential GOP candidates to run in Mr. Grimm’s place include state Sen. Andrew Lanza and state Assemblywoman Nicole Malliotakis, a person familiar with the matter said.

The paper reports that a judgeship might be the only route available, but there are no open positions at the moment. Leadership told the paper that could change by September. A defense attorney who has worked on other federal tax evasion charges noted that it’s a tough rap to beat since the prosecution builds its case on documentation as opposed to witness testimony.

Meanwhile, in D.C., Grimm’s Republican colleagues are cooling on his prospects, according to the Daily News. He’s been removed from the National Republican Congressional Committee’s “Patriot Program,” which helps candidates in swing district raise money and receive other support from the national party. He’s also been dis-invited from a fundraiser, and House Speaker John Boehner declined to defend the Congressman when questioned about the case.

The change in fortune for one of the GOP’s more charismatic candidates has him speaking in the third person:

“There are people that don’t like Michael Grimm because Michael Grimm is outspoken,” Grimm said. “I’m a Marine. I don’t relent.”

The congressman also took his message straight to supporters, posting a somewhat lengthy update on Facebook yesterday thanking them for their continued support and claiming that the “trumped-up charges against me are false.”

grimm

After turning himself into authorities yesterday morning, Republican Congressman Michael Grimm, a former FBI agent, pleaded not guilty to a 20-count indictment alleging the local pol hid more than $1 million in sales at a business he owned to avoid paying taxes, as well as illegally employing undocumented immigrants.

The charges surround the operations of Upper East Side eatery Healthalicious, a venture he ran from 2007 to 2010. However, he’s also charged with perjury for lying to investigators about the business’ operations when he was questioned in 2013, while already serving in the House of Representatives.

“Grimm made the choice to go from upholding the law to breaking it. In so doing he turned his back on every oath he had ever taken. Even after his return to public service, when called to account for his actions and questioned under oath Grimm went for the cover up, and lied about his role in his own business,” said U.S. attorney Loretta E. Lynch, who is prosecuting the case.

Lynch accused Grimm of under-reporting workers’ wages, many of whom were illegally working in the U.S., and also underreported the amount of money earned through the business – dodging local and federal tax liabilities by hundreds of thousands of dollars.

When Grimm was questioned by authorities representing Healthalicious employees suing him in 2013 as part of a federal lawsuit, he allegedly lied under oath hide the company’s questionable practices, including denying that he paid workers cash.

The entire indictment can be read here [pdf]. He is charged with perjury, wire fraud, mail fraud, obstruction of justice, employment of illegal immigrants, obstructing and impeding tax laws, and conspiracy to defraud the United States – among others. He faces up to 257.5 years in prison.

The pol, who represents all of Staten Island as well as a large swath of Southern Brooklyn that includes Bay Ridge, Bensonhurst, Gravesend and Sheepshead Bay, was released on $400,000 bail after pleading not guilty yesterday.

The charges were somewhat surprising, as many believed that Grimm would eventually be the target of an indictment for campaign fundraising violations following an investigation that has been ongoing for at least two years. Although several associates of the pol have been busted in relation to that investigation, it appears the government seized on his business dealings after failing to connect fundraising improprieties directly to the elected official.

But Lynch said yesterday that the current charges could be expanded as the investigation continues.

The New York Times reports:

Loretta E. Lynch, the United States attorney for the Eastern District of New York, did not detail why the investigation had changed. “Whenever there’s an investigation into someone’s business activities, it is usually very broad-reaching,” she said, adding that a larger investigation was continuing.

But, she said, Mr. Grimm had a sophisticated understanding of the law and finance, thanks in part to his background as an F.B.I. agent, where he did undercover work on Wall Street.

Aside from his work at the FBI, Grimm was an accountant.

Grimm remained defiant after appearing in court, holding a press conference where he described the investigation as a “political witch hunt” and vowed to continue his campaign for reelection.

The congressman did forfeit his seat on the House Financial Services Committee as a result of yesterday’s indictment.

Lynch said that her office will now also begin reviewing the cases he worked while at the FBI for potential malfeasance.

grimm

Congressman Michael Grimm turned himself into authorities this morning and will face federal charges. While the Republican politician has been dogged by a federal probe into his campaign fundraising for several years, it appears the charges to be unveiled today are connected to a restaurant he operated before entering Congress, and is separate from the campaign investigation.

The Washington Post reports:

While the investigation has focused on Grimm’s fundraising, U.S. Attorney Loretta Lynch is expected to announce an indictment centered on his restaurant business, which Grimm launched after leaving the FBI in 2006, according to officials familiar with the investigation who spoke on the condition of anonymity to discuss the pending charges.

The state fined the Upper East Side restaurant, Healthalicious, $88,000 for not providing workers compensation. In a lawsuit against the company, workers accused the owners of not paying proper wages and sometimes giving out cash payments to skirt tax and business laws.

It is unclear whether federal prosecutors will eventually expand the charges to encompass Grimm’s campaign activities, but investigators have been moving on that side of the case against several key players, some with ties to the restaurant.

The company itself appears to have ties to persons involved in the fundraising probe. The operating company run by Grimm was connected to a company affiliated with Ofer Biton, the Israeli national who pleaded guilty to visa fraud. Biton not only helped raise hundreds of thousands of dollars for Grimm, he reportedly sought the politician’s help in obtaining a green card.

Biton also served as the middle man between Grimm and popular Rabbi Yoshiyahu Yosef Pinto, who helped raise money for Grimm’s 2010 campaign, and who is now facing allegations of bribing Israeli law enforcement officials and looting his charities.

The business’ accountant was also the accountant for Grimm’s campaign, and was a key witness before the federal grand jury in the case. While the indictment is expected to surround the business, the Daily News reports that the alleged financial irregularities are also linked to the campaign.

The Daily News reports:

Wayne Muratore answered questions about suspicious expense claims and tax documents just days before the panel opted to charge Grimm after a two-year federal probe, the sources said.

… The charges against Grimm are linked to alleged financial irregularities in the ex-FBI agent’s 2010 congressional run and to the eatery Healthalicious.

Muratore faces no criminal charges, but was visited several weeks ago by FBI officials and eventually grilled by prosecutors, the sources said.

He reportedly told the feds that certain expenses and tax documents linked to Grimm were not his work, the sources said.

Grimm, through an attorney, said that, ultimately, his name would be cleared, and he is expected to continue his campaign. New York Times reports:

Since word of his indictment emerged on Friday, Mr. Grimm has shown no sign of curbing his campaign. A lawyer for Mr. Grimm said he was the victim of a “politically driven vendetta.” And for now, party leaders are sticking with Mr. Grimm, whose district includes Staten Island and part of southern Brooklyn.

John Antoniello, the Staten Island Republican chairman, said he spoke to Mr. Grimm on Friday, and Mr. Grimm said he definitely planned to continue his campaign.

Meanwhile, on Friday, prosecutors indicted Grimm’s former girlfriend, Diana Durand, on charges of using straw donors to make illegal campaign contributions to Grimm and other Republican politicians.

Grimm represents Staten Island, Bay Ridge, Bensonhurst, Gravesend, Coney Island and parts of Sheepshead Bay.

Levitis (Source: Facebook)

Stories about crime and corruption featuring Eastern European perps are juicy material for members of the “Russian Insider – News, Reviews and Gossip” group on Facebook, but the page has gone silent on one of the juiciest of stories: the guilty plea of former Rasputin owner Michael Levitis, who admitted this week to masterminding a debt-relief scheme that leeched $2.2 million from those who turned to him for help.

That’s because the page is run by Levitis himself, as well as his wife, Marina, and mother, Eva. Sources told Sheepshead Bites that the crew has been removing any mention of the scandal and booting members of the nearly 7,000-strong closed group.

“So yesterday the story was out but no one was posting it, all you saw is people posting ’7/11′” – a reference to the seven-to-11 year sentence Levitis faces – “So I private messaged one of the people who told me anyone who posted the story was banned and the story removed. I posted a few comments saying … ‘I wonder it anyone is going to address this’. This morning I was banned from the group as well,” a source told Sheepshead Bites.

According the About section of the page, it serves as “A Group for Russian-Americans to post local news, issues, business reviews, or anything else that concerns us… Let’s try to stick to interesting, useful and buzzworthy posts….”

But while the news of Levitis’ bust last year and guilty plea this week has exploded on social media, it’s not viewed by the page’s moderator as “local news” or “buzzworthy” enough to share with the community, members say.

Meanwhile, screenshots sent to Sheepshead Bites by another source show that members commonly share news items about those in the community who’ve been busted for similar crimes:

insider2A former member of the group mused to Sheepshead Bites that it was an example of “Putin-style censorship.”

A handful of members told Sheepshead Bites that the group is often used to promote businesses they believe are connected to Levitis, including an online “Groupon”-style coupon site.

Apparently, Levitis is also using the group to prepare his reading list for his upcoming stint in the big house:

levitis

The 2713 Coney Island Avenue office of Mission Settlement (Source: Google Maps)

First he denied the charges. Then he claimed he was a victim. Now former Rasputin owner Michael Levitis has come clean, admitting to scamming nearly $2.2 million from more than 1,200 cash-strapped victims who turned to him for help.

Levitis (Source: Facebook)

Levitis and the debt-relief company he ran, Mission Settlement Agency, pleaded guilty in Manhattan federal court yesterday to fraud charges, admitting to his role as the scheme’s mastermind.

“Michael Levitis and his company, Mission Settlement Agency, preyed on the desperation of financially struggling people across the country. Today’s guilty pleas ensure that the defendants who falsely offer debt relief, telling their victims a pack of lies in order to line their own pockets, will be held to account,” said Manhattan U.S. Attorney Preet Bharara in a statement.

As part of the plea deal announced yesterday, Levitis agreed to forfeit $2.2 million to the government to pay back victims. He faces between seven and 11 years in prison when he’s sentenced this August.

Levitis and three others were cuffed in May 2013 for operating a debt settlement company that prosecutors said took millions of dollars in fees for services never rendered.

Mission Settlement claimed to help customers struggling with credit card and bank debt by helping them reach settlements that could cut the amount owed. But while Mission collected payments from their indebted clients, they never paid down their debts. From mid-2009 to March 2013, more than 2,200 customers paid nearly $14 million, of which only $4.4 million went to creditors, according to the criminal complaint.

Rasputin was padlocked in May 2013.

The company kept $6.6 million for itself as fees. As many as 1,200 of the clients paid $2.2 million in fees without “a single penny” reaching their creditors.

Prosecutors said Levitis took the money and used it to live a luxurious lifestyle, paying down his own debts on Raputin Restaurant (2670 Coney Island Avenue), lease two luxury cars, and paid off his mother’s credit card bills.

He also misled clients, with the company claiming in sales pitches that he was affiliated with the federal government and a leading credit bureau, none of which was true, according to prosecutors.

The others involved in the scheme all turned tail and pleaded guilty in August 2013, with at least one of them ratting out his former boss as the mastermind.

“I followed instructions from Michael,” Mission’s former vice president of sales, Denis Kurlyand, told the Daily News after the plea deal.

Levitis’ home at 1001 Oriental Boulevard. Prosecutors seized it to repay his victims. (Source: Google Maps)

Levitis stood fast, though, insisting on his innocence and said he was a victim of government neglect. He pleaded not guilty and claimed that he had attempted to tip off authorities to malfeasance by “rogue employees,” but that his warnings fell on deaf ears.

After his arrest, prosecutors filed papers to seize approximately 40 bank accounts connected to Levitis, as well as Rasputin Restaurant and two properties he owns in Manhattan Beach.

It’s the second time in four years that he’s been in hot water.

Back in 2010, Levitis was charged with lying to federal agents after he got caught up in a bribery case involving former State Senator Carl Kruger.

Levitis told a fellow nightclub owner, who was secretly recording the conversation for the FBI, that he had an inside line to the state pol, and could assist him with a liquor license issue if he steered thousands of dollars to Kruger – with a kickback for Levitis’ role in setting it up.

As the case moved forward, Levitis’ claim that he had influence in Kruger’s office began to unravel, and Levitis, who is also an attorney, later pleaded guilty to lying to federal agents, sentenced to three years probation and fined $15,000.

In April 2013, Levitis was also hit with a six month suspension of his license to practice law – retroactive to January 2012 – for his role in the case.

Levitis, who along with his wife Marina and mother Eva – who owned Mission Settlement on paper – were  co-stars of Russian Dolls, a failed Lifetime reality series canceled less than two months after its premiere.

The case against Levitis and Mission is being hailed as historic, as it’s the first criminal referral from the U.S. Consumer Financial Protection Bureau, an agency established after passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. The CFPB is also bringing civil charges against Mission, Levitis and others.

Levitis may still face criminal tax violations, according to the plea deal.

Source: Nathan James/Flickr

Legislation aimed at reducing auto insurance fraud in New York State passed the Senate on Monday, bringing the bill which allows insurance companies to retroactively cancel the policies of fraudsters one step closer to law.

The Senate bill was sponsored by State Senator Marty Golden, who describes it in this press release:

Today the New York State Senate passed S1959A, sponsored by Senator Martin J. Golden (R-C-I, Brooklyn), which allows insurance companies to retroactively cancel policies taken out by people who commit auto fraud. These criminals often take out policies and pay for them with bad checks or stolen credit cards just before they stage accidents. Under current law, insurance companies cannot cancel the policy and policyholders wind up paying for it through higher premiums. This bill would take that burden off honest consumers and therefore lower the insurance rates.

“Auto insurance fraud is costing New Yorkers millions of dollars, and it’s time that fair and honest members of our community stop paying for the crimes of others,” stated Senator Golden. “This legislation will give insurance companies the right to revoke insurance policies for those who try to game the system.”

This measure would bring New York in line with the other large no-fault states and remove any incentives for staged accidents. In fact, only seven other states (AZ, CO, KS, ME, MD, NC and SD) do not allow for retroactive cancellation. Innocent victims of uninsured drivers would be covered under their own policy or the Motor Vehicle Accident Indemnification Corporation.

The bill, which you can read here, now moves onto the Democratic-led Assembly, where it has support from a number of Democrats, including local Assembly members Steven Cymbrowitz and Dov Hikind.

Previous versions of this bill – and two others passed by the Senate to combat auto fraud – died in the Assembly.

Auto fraud continues to be an ongoing issue in Southern Brooklyn. The longest-running and largest auto insurance scam ring in history ended in April 2012, when authorities busted 36 individuals – many of them Southern Brooklyn residents – using anti-Mafia RICO laws. The individuals were accused of exploiting New York’s “no-fault” insurance law, which allows drives and passengers to obtain up to $50,000 for accidents injuries regardless of fault.

Prior to that, another ring was busted in Brooklyn, leading to the arrest of 16 people for allegedly ripping off companies for $400,000 between 2009 and 2011.

A smart chip-equipped credit card. (Source: DennisSylvesterHurd/Flickr)

State Senator Marty Golden, citing a rise in credit card fraud in his district and beyond, is touting legislation he co-sponsored last month that would require credit card companies to install smart chip technology in every card issued to a New York State resident.

Golden held a press conference in Bay Ridge on Friday to advocate for the legislation, saying that merchants in his district have reported a spate of credit and debit card fraud, as well as “hackers” who have stolen data from local businesses. He was joined by Third Avenue Merchants Association President Robert Howe as well as Dimitri Akhrin, president of the Bank Associates Merchant Services.

“This legislation would require smart chip technology to be incorporated in our debit and credit cards to help protect against identity theft. Over the past few weeks, my district has been targeted by hackers who have been able to break through the security walls of some local stores. The false charges reported to my office have been made in Brooklyn, Long Island, Connecticut and event [sic] Puerto Rico,” said Senator Golden in a press release.

The senator cited Bureau of Justice Statistics reports estimating that 16.6 million people have suffered from identity theft in 2012 to 2013, 15.3 million of whom had an incident involving a debit or credit card.

According to tech site NerdWallet, manufacturers and advocates say smart chips are a safer alternative to magnetic stripe cards. Smart chips store encrypted account information and cannot be read by swiping. Instead they’re scanned into a terminal that reads the chip and can require a pin number to decrypt the chip’s information. They are not susceptible to common data scamming techniques as are magnetic strips, such as swiping, which allows fraudsters doubling as waiters or cashiers to discreetly pass your card through a handheld device that stores the card’s data.

Smart chips do have their own vulnerabilities, but the website notes that implementation in Europe has seen dramatic decreases in fraud.

The bill, which can be read here, was introduced on February 14 by upstate Senator Joseph Griffo with Golden as a co-sponsor. The Assembly version was co-sponsored by Assemblyman Alec Brook-Krasny.

American companies have been slow to adopt the technology because of the cost of replacing existing systems, including in-store point-of-sale systems and ATMs. The legislation does not address who will foot the bill, suggesting the business-owners will have to invest in new hardware if the law passes.

Yehuda Sadok (Source: LinkedIn)

Yehuda Sadok (Source: LinkedIn)

Yehuda Sadok, the Brighton Beach man accused of posing as an Israeli secret spy to swindle an elderly widow in an international jewelry deal, has filed a counter-suit against the widow’s daughters in an effort to clear his name.

Going by the moniker Oody Geffen, Sadok was accused by the widow’s daughters of romancing their wealthy, jewelry-dealing mother in order to get her to fork over $20 million worth of inventory for a shady deal with a Saudi sheikh.

The daughters’ suit said he claimed to be a friend of Russian President Vladimir Putin, and dined with Robert DeNiro.

But now Sadok is saying it’s all hooey and the daughters are just bitter that they were written out of the will for being rotten to their mother.

The New York Post reports:

But Sadok denies to Page Six that he ever claimed to be a Mossad agent, and says he met Martin through a mutual friend and ex-FBI agent who asked him to track down an Israeli who’d stolen $1 million in jewels from her. They became friends when he recovered $850,000 of the gems.

“She was a lovely, simple . . . lady who was like my grandmother,” Sadok said. He added that Martin confided she had “two spoiled daughters” she’d lavished with “the best schools, the best clothes,” but they’d “become ‘two devils.’ They were very mean and rude to their mother.”

… Sadok also denied he ever said he was pals with Russian leader Putin (“I wish I was”), or that he claimed to know Robert De Niro, as the suit alleges. He contends that a friend who was a regular on “The Sopranos” was casting a film and trying to get De Niro for a role, and that he’d introduced that TV actor to Martin at her office. “That’s how they got this idea I was a producer,” Sadok said, “and came [up] with this nonsense about De Niro, [who] I never met in my life.”

Source: wmfawmfa/Flickr

Area resident Petr Murmylyuk was sentenced to 30 months in prison for conspiring to hack into retail brokerage accounts and execute sham trades, the U.S. Attorney announced on Friday.

Murmylyuk, who also went by the name Dmitry Tokar, pleaded guilty in July 2013 to charges of conspiracy to commit securities fraud. He had previously pleaded guilty to charges of identity theft and tax fraud for a separate but related scheme.

According to prosecutors, Murmylyuk admitted to his role in conspiring to steal from online trading accounts at Scottrade, E*Trade, Fidelity and others wit the aid of foreign nations visiting, studying and living in the United States.

Here’s how the scheme went down, according to prosecutors:

Members of the conspiracy first gained unauthorized access to the online accounts of brokerage firm customers. The conspirators then used stolen identities to open additional accounts – referred to in the Information as “Profit Accounts” – at other brokerage houses. They then caused the victims’ accounts to make unprofitable and illogical securities trades with the Profit Accounts, leading to losses in the victims’ accounts and gains in the Profit Accounts. One version of the fraud involved causing the victims’ accounts to sell options contracts to the Profit Accounts, then to purchase the same contracts back minutes later for many times the price.

The members of the conspiracy recruited foreign nationals visiting, studying, and living in the United States to open bank accounts into which illegal proceeds could be deposited. The conspirators then caused the proceeds of the sham trades to be transferred from the Profit Accounts into those accounts, where the stolen money could be withdrawn.

In addition to the prison term, Murmylyuk is ordered to serve three years of supervised release, and pay restitution of $505,357.79.

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