Two Sentenced in $10 Million Investment Fraud Scheme

The victims’ stories of losing their retirement savings in a $10 million investment fraud scheme were heartbreaking: some lost their homes, some had to declare bankruptcy, and many suffered—and continue to suffer—from physical and emotional ailments upon learning they had virtually nothing left to retire with.

The fraudsters responsible for this fallout—who lined their own pockets with the hard-earned money of working people trying to save for their golden years—were Merrill Robertson and Sherman Carl Vaughn, Jr., two Virginia businessmen. After a joint federal law enforcement investigation into the pair’s Ponzi-like scheme, the two were ultimately brought to justice for their crimes against more than 60 victims in multiple states. In light of Robertson’s earlier conviction at trial and Vaughn’s previous guilty plea, Robertson was recently sentenced to 40 years in prison, and Vaughn—who testified at Robertson’s trial—received 12 years. The men were also ordered to pay nearly $9 million in restitution to their victims.

Robertson is a former University of Virginia football star who had worked for a large broker-dealer and was licensed as a broker. Vaughn had a business degree from another Virginia college but has never been licensed as a broker. Together, in 2010, the pair formed Cavalier Union Investments, LLC, which claimed to be a “leading private investment firm” catering to IRA account holders and offering investment opportunities—with fixed annual returns of 10 to 20 percent—in restaurants, real estate, and alternative energy. Cavalier purportedly had a variety of divisions, investment funds, and investment advisers.

But in reality, Cavalier did not have any divisions, investment funds, or investment advisers—it was just Robertson and Vaughn. And what a pair they were—Robertson no longer had his broker’s license, and Vaughn had filed for personal bankruptcy four times, including the two times he did it while working at Cavalier. Shortly after the company was formed, Cavalier became insolvent and relied on cash from newer investors to stay afloat and pay back older investors who asked for their money back—the perfect Ponzi scheme, at least for a while.

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Feds bust twin brothers from the Bronx for trying to build bombs

Bronx NY Cops have busted twin brothers from the Bronx for allegedly stockpiling explosive materials and crafting bombs inside their home — with help from high school students.

Christian Toro, a former teacher at Harlem Prep, and his brother, Tyler Toro, were arrested by the FBI on Thursday as part of a joint investigation with the NYPD.

The two 27-year-olds had been forging explosive devices inside their Pelham Parkway apartment since last October — using gunpowder from fireworks as the base for their bomb-making, according to the complaint.

A search of the residence turned up a slew of dangerous chemicals, including 20 pounds of iron oxide and aluminum powder, which form thermite when combined.

A “diary” was also allegedly found — which contained disturbing, handwritten notes, such as “WE ARE TWIN TOROS STRIKE US NOW” and “WE WILL RETURN WITH NANO THERMITE.”

As if that wasn’t enough, federal agents then discovered “a yellow backpack in a living area of the apartment, which contained, among other things, a purple index card with handwriting that reads, ‘UNDER THE FULL MOON THE SMALL ONES WILL KNOW TERROR.”

The complaint, obtained by The Post on Thursday afternoon, outlines numerous allegations against the Toro brothers — including how they’d been researching the 2013 Boston Marathon bombings and paying teens to construct their makeshift weapons.

Christian allegedly met the youths through his job as a teacher and offered to pay them $50 per hour to “break apart fireworks and store the powder that came out of the fireworks in containers,” the complaint says.

Investigators spoke with “multiple students” who said that at least two people had agreed to work for the Toros in exchange for cash.

“Based on the interviews, it appears that the students visited the apartment between in or around October 2017 and in or around early January 2018,” the complaint says.

Authorities were tipped off earlier this year by officials from Harlem Prep after they found instructions on how to construct explosives on Christian’s laptop.

The FBI had launched an investigation back in December after the school received a bomb threat, but they didn’t start probing Christian until after the information was found on his computer.

“This case likely saved many, many lives,” NYPD Commissioner James O’Neill said at a press conference Thursday night.

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Pittsburgh Mortgage Broker Defrauded Banks, Borrowers to Enrich Himself

With hundreds of pages of paperwork and thousands of dollars on the line, getting a mortgage can be a complex and intimidating transaction for homebuyers, who often depend on experts to get them through the process.

Unfortunately for some mortgage applicants in Western Pennsylvania, dishonest real estate professionals took advantage of that trust with fraudulent practices.

As the real estate market boomed before the 2008 crash, Pittsburgh-based Century III Home Equity was a successful brokerage, closing an estimated $100 million in loans annually. As a broker, the company acted as a middleman between the mortgage applicant and the lender, but the company’s employees manipulated both sides to enrich themselves. The owner—James Nassida, IV—and his loan officers misleadingly sold customers mortgage products that were not always appropriate for their financial situation but racked up the most fees. The brokerage also fooled lenders by lying about applicants, doing things such as inflating income, misrepresenting home values, or not disclosing that down payments were actually borrowed money.

“There was massive fraud here. They were not looking out for their borrowers; they were looking out for themselves,” said Special Agent Neal Caldwell of the FBI’s Pittsburgh Division, who investigated the case with the U.S. Secret Service as part of the Western Pennsylvania Mortgage Fraud Task Force. The task force, which came together in 2008, looked holistically at the mortgage fraud threat throughout the Pittsburgh area as part of a multi-agency team involving the U.S. Attorney’s Office, FBI, IRS Criminal Investigations, U.S. Secret Service, U.S. Postal Inspection Service, and others, including state agencies. The task force’s work over a 10-year period led to 140 convictions, ranking the Western District of Pennsylvania as one of the most successful districts in the country in prosecuting mortgage fraud.

Nassida required his employees to do whatever it took to close a loan, even if it was dishonest or illegal. In many cases, the company would sell a borrower a loan with a temporary minimum payment option, designed for those with seasonal or fluctuating income, without fully disclosing the terms. In actuality, the temporary minimum payment didn’t even cover all of the interest each month, causing the loan to “negatively amortize,” or actually increase the balance of the loan. While some customers, such as house flippers, understood these products, others found them disastrous financially when they were not fully informed of the consequences of paying the lower amount over a longer period of time. This was especially difficult for borrowers once the housing market crashed in 2008—they could no longer rely on a consistent increase in their home values to keep them from going “underwater,” or owing more than their homes were worth.

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Wiretap investigation leads to seizure of more than 30 pounds of fentanyl

State and federal law enforcement officials announced Thursday they seized some 77 pounds of various illicit drugs in the Boston area — including more than 30 pounds of fentanyl — as the result of “Operation High Hopes,” according to a press release by the Suffolk County District Attorney’s office. They say it’s “one of the longest, most far-reaching, and most successful state wiretap investigations in Massachusetts history.”

Suffolk County District Attorney Daniel Conley says the investigation led to more than a dozen arrests and dismantled two Boston-area drug trafficking organizations. About $300,000 in alleged drug money was also seized. He added that fentanyl, heroin, cocaine and opiate tablets are believed to have originated from Mexico’s Sinaloa Cartel.

Fentanyl is so powerful, Conley says, that mere milligrams can be lethal.

“The number of overdoses it could have caused is truly staggering,” Conley wrote in the press release. “Individuals who buy and sell at this level aren’t users. They’re not small time dealers, either. They’re certainly not selling to support a habit. They’re trafficking in addictive substances that claim more lives in Massachusetts than all homicides, all suicides and all car crashes, statewide, combined.”

Boston Police Commissioner William B. Evans heralded the successful sting in the written statement: “These arrests and seizures will have a tremendous impact on the quality of life in Boston and many other Massachusetts cities and towns,” Evans said. “I commend the work of my detectives and all our law enforcement partners who worked tirelessly over the past six months of Operation High Hopes.”

The DEA Special Agent in Charge Michael J. Ferguson echoed that sentiment: “Those responsible for distributing lethal drugs like fentanyl to the citizens of Massachusetts need to be held accountable for their actions. DEA’s top priority is combating the opioid epidemic by working with our local, county and state law enforcement partners to bring to justice those that distribute this poison.”

Wiretap investigation

Edward Soto-Perez, 43, of Roxbury, Nelson Catala-Otero, 37, of Brockton and Julio Cuello, 52, of Dorchester were arraigned in November on multiple drug trafficking charges after the execution of wiretap-based search warrants, according to the press release. They were held on bails ranging from $100,000 to $250,000 and will return to court Feb. 13.

Robert Contreras, 42, of Roxbury, is their alleged supplier and was one of more than a dozen people arrested Thursday. He’s being held on $1 million bail and will return to court Feb. 28.

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Insider Sentenced for Economic Espionage

On July 7, 2016, three days after his fellow Americans had celebrated the nation’s Independence Day, engineer Gregory Allen Justice—who worked for a cleared government contractor in California—was arrested in a hotel room for selling sensitive satellite information to someone he believed was a Russian agent.

Unfortunately for Justice, that foreign agent turned out to be an undercover FBI employee. And this wasn’t the first time that Justice had passed satellite secrets to his “handler”—but it would be his last. He was immediately taken into custody by the FBI on charges of selling proprietary trade secrets and technical data that had been controlled for export from the United States.

Justice had been employed with the government contractor—under its satellite systems program—since 2000. He was assigned to a team working to build and test U.S. military satellites, including projects for the Air Force, Navy, and NASA that involved satellites with communication, navigational, and observational technology.

The trade secrets and other technical data he had access to as part of his job related to areas such as satellite operations testing, firmware installed on satellites, and anti-jamming technology.

After the FBI’s Los Angeles Division opened its investigation into Justice’s activities, a lawful search of his vehicle uncovered handwritten notes containing addresses for the Russian Embassy in Washington, D.C. and the Russian Consulate in San Francisco.

In February 2016, the Bureau’s undercover employee—in the guise of a Russian agent—was able to make contact with Justice, who was more than willing to talk and eventually meet with the employee a total of six times. They first met at a coffee shop and then in various hotel rooms—and each time, Justice turned over a thumb drive with information downloaded from his employer’s computer network. All told, Justice received $3,500 in cash from the undercover employee.

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Why Washington DC Police Are Cracking Down on Cannabis ‘Gifting’

Washington DC Feb 3 2018 For nearly seven hours on a muggy Saturday last August, hundreds of people paid $10 apiece to enter Uneeda Nichols’ Southeast D.C. home, where 10 vendors had set up inside with flowers, concentrates, ready-to-smoke bongs and more. Nichols says she wasn’t aware her address was circulating on social media, printed on a flyer advertising $5 “gas mask” and bong hits and “complimentary strain sampling”–but Metropolitan Police were.

Metro Police bought tickets, bought cannabis, then brought the hammer down.

“They stayed outside, they watched all the vendors bring their stuff in, they bought tickets at the side of the house, and they came,” Nichols said, referring to undercover officers who surveilled her home for six hours before entering with nearly $100 apiece to purchase marijuana.

Minutes after they left, police raided the house, confiscating $22,808 in cash, nearly eight pounds of marijuana and more than 34 pounds of edibles, along with Nichols’ grow of 43 plants, according to an arrest report. (Nichols says only 10 of them were harvest-ready, and all of them were for “educational” or personal use.) She was charged with marijuana cultivation, distribution and possession; seven others were hit with distribution and possession charges.

“They took everything,” Nichols, a medicinal patient in the District.

In the last few months, sources tell Leafly local authorities have raided a growing number of cannabis events at private homes and bars and restaurants around the city. On Jan. 20, cops arrested 22 people at XO Lounge downtown, seizing 17 pounds of flower, 10 pounds of edibles and two quarts of oils.

‘I chuckle when I think about people believing that the law can be so easily gotten around. Clearly it cannot.’

One week earlier, they busted an event at Vita Lounge in Shaw, arresting one person and seizing more than three pounds of cannabis, along with edibles, oils and $1,181 in cash, an arrest report confirmed. And on Dec. 22, 2017, police shut down an event at The Elroy on H Street, taking five containers with an unspecified amount of flower, the department confirmed.

In 2014, D.C. residents passed the Initiative 71 ballot measure, legalizing home grow of up to six plants, possession of up to two ounces and gifting of up to an ounce of marijuana. Congress blocked the city from spending any money to regulate sales of the plant, but allowed the ballot measure to become law. Days after it took effect, D.C. lawmakers enacted an amendment banning so-called cannabis clubs, prohibiting consumption at bars, restaurants and other public spaces.

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TSA confiscated nearly 11 guns a day at airports in 2017

Airport security screeners found nearly 4,000 guns in passengers’ carry-on bags last year, an average of nearly 11 guns a day.

The total marked a 16% increase from 2016, according the Transportation Security Administration’s Year in Review Report. The majority of those guns — 84% — were loaded at the time.

The amount of firearms discovered at airport checkpoints has consistently climbed in the last decade, the total more than quadrupling since 2007, according to the report.

Guns were discovered at 239 airports nationwide, with Hartsfield Jackson Atlanta International Airport taking the top spot for most firearms seized. A total of 245 guns were recovered at the Georgia airport, 222 of them loaded.

Dallas/Fort Worth International Airport and George Bush Intercontinental Airport in Houston round out the top three, with 211 and 142 guns seized at each location, respectively.

Federal law allows for passengers to transport unloaded guns in a locked, hard-sided container. It must be declared, and the gun cannot be packed in a carry-on.

In addition to firearms, the TSA in 2017 recovered “thousands upon thousands” of sharp items in carry-on bags as well as other hazardous items — including live grenades and large quantities of gun powder.

While properly packed ammunition is allowed in checked bags, gun powder is prohibited altogether.

Officers also recovered scores of “inert items,” including a replica suicide vest, a realistic looking land mine and dozens of fake grenades and explosive devices.

“When being viewed on the X-ray monitor, we don’t know if these are real or inert until TSA explosive experts are called to the scene,” the TSA said in a release. “Inert grenades can lead to closed terminals and checkpoints, which can often result in costly canceled or delayed flights.”

TSA agents urged travelers to double-check their belongings as many commuters claim they’ve only brought along the prohibited items by mistake.

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Stopping Human Trafficking

Jaboree Williams was a pimp and drug dealer who brutally abused and psychologically tortured his victims. And thanks to the joint efforts of the FBI and local law enforcement, he will spend the next 30 years in federal prison.

“He preyed on vulnerable women who were having difficult times in their lives,” said Special Agent Maria Miller, who investigated the case out of the FBI’s Milwaukee Division as part of the office’s Human Trafficking Task Force. “He started by being more of a ‘Romeo’ pimp—he would act like a boyfriend and make them think they were doing this for their future as a couple.”

However, shortly after the women began working for Williams, he would take all or nearly all of their earnings, beat them, and limit their access to food. Williams also took the women’s identification, cell phones, and money to make it difficult for them to escape. When one victim tried to leave, he severely beat her with a belt and threatened to kill her children. With another, he beat her beloved dog to keep her under his control.

The investigation began in 2015 when a woman contacted the Racine Police Department saying she could not find her sister, whose photo appeared on a prostitution website. The police department collaborated with the FBI’s Wisconsin Human Trafficking Task Force to begin an investigation.

Racine Police Department Investigator Neal Lofy, who works human trafficking cases for his department and also serves on the local FBI task force, explained the importance of taking a collaborative approach in human trafficking cases and using the FBI’s available resources, such as administrative subpoenas of prostitution websites.

“Trafficking is a very transient crime; there’s a lot of movement between jurisdictions,” Lofy said. “Partnering with the FBI and having access to FBI databases and records, as well as the ability to travel to other jurisdictions, has been very helpful in these cases. Also, the clarity and penalties of the federal laws, as opposed to individual state laws, ensure convicted human traffickers can receive the punishments they deserve.”

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Online Predator Used Familiar Tactics to Victimize 12-Year-Old Girl

A 32-year-old Georgia man who pretended to be someone else online is behind bars after using familiar predatory tactics to coerce a 12-year-old girl to produce child pornography and send it to him.

The victims of this type of crime—commonly referred to as sextortion—are almost always vulnerable teenagers who are tricked online and then find themselves in a nightmare situation: They are afraid to tell their parents or friends what is happening, and believe complying with their abuser is the only solution.

“The predators typically pretend to be teenagers online and lurk on popular social media sites,” said Special Agent Kevin Orkin, who investigated the case from the FBI’s Atlanta Division. “The victims—striving for attention, maybe having issues with their parents, as teens often do—are easily manipulated.”

The predators establish an online relationship, flirt, and in time convince the victims to send them a sexually provocative picture. “That initial image might not be too incriminating by today’s standards,” Orkin said, but the predators use the image to blackmail the victims. If they don’t send more explicit material, the victims are told, the image will be shared online with their friends and family to humiliate them.

“The victims are too scared to tell anyone what’s going on,” Orkin said, “and before they know it, they are in way over their heads.”

In the case of the Georgia man, Gerardo Uribe, he masqueraded online as a 13-year-old boy, and later as a 25-year-old man. After the young victim sent a partially nude image of herself at his request in 2014, Uribe was eventually able to take over one of her social media accounts by resetting her password and then locking her out.

With access to all her information, including the initial compromising image, Uribe coerced the girl into providing more sexually explicit material—four images that met the federal definition of child pornography.

The girl’s parents discovered the crime and reported it to the local sheriff’s office, which referred the matter to the FBI. Through various investigative methods, Uribe was located in Georgia and charged with child pornography offenses.

He pleaded guilty in August 2017, and in November 2017 was sentenced to 10 years in prison. A Mexican citizen who was living in the United States as a permanent resident, Uribe will be deported after he completes his prison term. Investigators said that Uribe had tried to victimize at least one other girl.

“Sextortion is a growing problem on social media sites,” Orkin said, and although it may be easy to blame the victims of sextortion for the predicament they find themselves in, he explained, “we are talking about children being manipulated by adults. It’s clear that these criminals are preying on their victims and taking advantage of them in the worst way.”

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Radford University freshman ran ‘mini-syndicate’ prosecutor says

RADFORD — The brief drug-dealing career of a Radford University freshman brought him his own apartment with $25,000 in a safe beneath the kitchen sink and a 9mm pistol in a drawer — but it also brought threats to his family in Northern Virginia and the possibility of decades in prison for the one-time business major, attorneys and relatives said Friday.

“This isn’t some sandal-wearing hippie we caught here,” Radford Commonwealth’s Attorney Chris Rehak said during a circuit court sentencing hearing for Gabriel Eduardo Yus-Baez, 18. “This is a major player in some kind of drug organization.”

Yus-Baez pleaded guilty in November to three counts of possessing drugs with the intent to distribute them — one each for cocaine, ecstasy and marijuana — and to possessing a gun while possessing drugs.

On Friday, Judge Joey Showalter sentenced Yus-Baez to 35 years in prison, then suspended the term after Yus-Baez serves five years and five months. The judge imposed a $4,000 fine, suspended Yus-Baez’s driver’s license for 18 months after his release, and ordered supervision by the probation office for five years.

Before the sentence was pronounced, Yus-Baez said that he knew he had earned punishment but after a year in jail, was more than ready to turn his life around.

“I still plan — even though this is going to get in the way for a moment — to move forward and start something better … Please find it in your heart to let me go out there and make a better life for myself,” Yus-Baez said.

He agreed with defense attorney Jimmy Turk of Radford that he had been “young, dumb and stupid,” but was enticed by the idea of fast money and a showy lifestyle.

Wanda Baez, Yus-Baez’s mother, took the witness stand to speak for the half-dozen or so relatives in the courtroom. “You have put us in the most difficult situation of our lives,” she said to her son.

To Showalter, Baez said that she hoped her son could emerge from whatever punishment was imposed and realize the potential he had shown in high school.

“I hope and pray he has the opportunity to prove he can do better,” she said.

Questioned by Turk, Baez said that the family has felt threatened by people apparently connected to Yus-Baez’s drug cases, which include the Radford charges and another case in Northern Virginia.

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