Three former Manhattan federal prosecutors will lead a panel to examine how the New York City Police Department compiles data on crimes, police Commissioner Raymond W. Kelly announced Wednesday.
David Kelley, who served as U.S. Attorney from 2003 to 2005; Sharon McCarthy, who served as an Assistant U.S. Attorney from 1994 to 2006, and Robert Morvillo, who served as an Assistant U.S. Attorney in the 1970s, will lead the panel.
Kelley currently is a partner Cahill Gordon & Reindel LLP. McCarthy, who is a partner at Kostelanetz & Fink LLP, worked in the office as the chief of the violent crimes unit and deputy chief of the criminal division. Morvillo, now a principal at Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer P.C., served as chief trial assistant in charge of the frauds unit and chief of the criminal division.
Recently, the NYPD has come under fire from critics who say the department has downgraded higher-level offenses, listing what should be felonies as misdemeanors instead. According to Kelly, the NYPD Quality Assurance Division has identified an annual misclassification rate of approximatley1.5 percent.
The Crime Reporting Review Committee over the next three to six months will examine the NYPD crime-reporting system and auditing functions, read documents about trends in crime misclassification, and assess the public dissemination of the data.
A former federal prosecutor in the Southern District of New York has joined Sills Cummis & Gross P.C. as a member of the firm’s litigation practice group.
Hervé Gouraige (Sills Cummis & Gross P.C)
Hervé Gouraige worked as an Assistant U.S. Attorney from 1984 to 1991, mostly under then-U.S. Attorney Rudy Giuliani. While in the office he prosecuted business fraud, tax fraud, health care fraud and national security cases. He was the first Assistant U.S. Attorney designated to handle health care fraud cases in SDNY.
Gouraige received recognition from the U.S. Department of Health and Human Services for his significant contributions in fighting fraud in Medicare and Medicaid.
In addition, he has worked in private practice in New York City, focusing on antitrust litigation.
Marc O. Litt, who was one of the lead prosecutors in the Bernard Madoff case, is leaving the Manhattan U.S. Attorney’s office.
Litt, an Assistant U.S. Attorney who worked in the office for eight years, will join Baker & McKenzie LLP, the Wall Street Journal reported. He had stopped working on the Madoff probe in May to avoid conflicts during his job search, the Journal reported.
Marc Litt (Getty)
Litt and fellow Madoff prosecutor Lisa Baroni were often out-gunned in the sprawling probe of Madoff’s massive Ponzi scheme. They labored to sift through what the Associated Press called a “massive blob of amorphous evidence,” and went up against lawyers from seemingly every high-priced law firm in New York. Their offices were shabby, and they didn’t have an army of assistants.
While Madoff is behind bars and several employees of Bernard L. Madoff Investment Securities LLC are under indictment or have pleaded guilty, prosecutors haven’t succeeded yet in bringing criminal charges against any of the allegedly most culpable big fish.
Instead, attention has been on the court-appointed bankruptcy trustee Irving Picard of Baker & Hostetler LLP, who has filed a blizzard of civil lawsuits to recover funds for the victims.
He’s made allegations against the banks (UBS, HSBC, J.P. Morgan Chase and other institutions) that he says helped funnel investors into the scheme or turned a blind eye.
He’s all but accused other wealthy individuals of being partners in the Madoff crime. (“In Sonja Kohn, Madoff found a criminal soul mate, whose greed and dishonest inventiveness equaled his own,” says a complaint against the Austrian banker whom Picard said received at least $62 million, and probably “far more,” from the Ponzi scheme.)
And Picard has been trying for more than a year to settle with the estate of Madoff pal Jeffry Picower, who died last year while swimming in his Palm Beach pool after allegedly taking $7 billion from the scheme. (Picower’s long-time personal lawyer is William Zabel, father of SDNY Criminal Chief Richard Zabel, who recused himself from the case).
Criminal cases, with their higher standards of proof, are harder to bring than civil allegations. But none of the alleged major beneficiaries of the scheme as outlined in Picard’s civil lawsuits have been charged.
Assistant U.S. Attorney Julian Moore is now assisting Baroni as lead prosecutor on the case.
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Southern District of New York U.S. Attorney Preet Bharara on Friday announced four changes in his White Plains office, Mid-Hudson News reported.
Diana Gujarati will serve as chief of the White Plains division. She joined the office in 1999 and has worked as deputy chief of the White Plains division and deputy chief of the appeals unit in the criminal division.
Michael English will serve as deputy chief of the White Plains division. He joined the office in 2005 and served in the violent crimes unit in Manhattan.
Margery Feinzig and Cynthia Dunne will serve as senior trial counsel of the White Plains division. Feinzig previously served as chief of the White Plains division from 2004 until earlier this year, and supervised the prosecution of former New York City Police Commissioner Bernard Kerik on tax fraud and other charges. Dunne has worked in the office’s civil division and has handled high-priority criminal cases in the White Plains division.
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Prosecutors in the U.S. Attorney’s Office for the Southern District of New York would have been remiss had they not opened a criminal investigation into possible secruties fraud in mortgage trading at Goldman Sachs, two of their former colleagues said today.
Word of the SDNY criminal probe leaked out on Thursday, nearly two weeks after the Securities and Exchange Commission filed a suit against the firm alleging the company defrauded customers who bought investments tied to risky mortgages.
The fact that criminal charges have not already been filed by SDNY’s Securities and Commodities Task Force is a clear sign that there was no smoking gun in the case, one former prosecutor said.
“If there was a real immediate threat, SDNY prosecutors would have issued a criminal charges the same day the SEC filed its civil securities fraud case against Goldman,” said a longtime former SDNY prosecutor. “My guess is there was tenion between the SEC and the DOJ and the SEC said, ‘F–k it, let’s go ahead.’”
The FBI opened its own probe of the Goldman transactions weeks ago, according to law enforcement sources cited in a Washington Post story today. A separate investigation is being conducted by SDNY’s 20-lawyer securities task force headed by Assistant U.S. Attorney Christopher Garcia and his deputy, Marc Berger. Janice Oh, deputy public information officer for the SDNY, declined to comment on which line attorneys had been assigned to the probe.
The SDNY’s Goldman probe is playing out no differently than any other similar securities case, two former prosecutors said. Criminal Division Chief Richard Zabel or task force chief Garcia assigned the probe to a relatively unburdened line lawyer who in turn issued one or more subpoenas.
“They would be remiss not to cut a subpoena,” the former prosecutor said. “The press is overreacting to all this. Everyone needs to take a step back.”
Another former SDNY prosecutor, who headed a task force in the office, agreed.
“You can’t read much into anything so far,” said the former task force chief who spoke on condition of anonymity. “In a case with this kind of profile, there’s likely to be an inquiry of a criminal nature. A responsible prosecutor is going to kick the tires. We have yet to see if there will be any significance attached to it.”
Among the SDNY prosecutors best-suited to handle the Goldman probe, one former prosecutor said, are Assistant U.S. Attorneys Maria Douvas and Nick Goldin. Other candidates include special counsel Bonnie Jonas or Assistant U.S. Attorneys Julian Moore and William Stellmach. Other task force prosecutors including Jonathan Streeter, Marc Litt and Lisa Baroni are busy working on the Galleon and Madoff cases.
SEC Enforcement Chief Robert Khuzami, himself a former SDNY prosecutor, most likely referred the SEC suit to Garcia before filing it on April 16, according to former SDNY prosecutor Douglas Jensen of Park & Jensen LLP in New York.
“The way it usually works is the SEC makes a phone call to the task force chief — in this case Chris Garcia — and says, ‘We’ve got a probe on x, are you interested?”’ said Jensen, whose tenure as a SDNY prosecutor overlapped Khuzami’s. “It’s not a formal process where members of the task force meet with higher-ups.”
Goldman spokesman Lucas Van Praag told Bloomberg Friday that the firm was “not surprised by the report of an inquiry,” and plans to “cooperate fully with any request for information.”
Pamela Chepiga (Allen & Overy)
Players on all sides of the Securities and Exchange Commission’s civil fraud case against Goldman Sachs & Co. and one of its employees are alumni of the U.S. Attorney’s office for the Southern District of New York.
The lawyer for Fabrice Tourre, the 31-year-old Goldman banker at the center of the charges involving a derivatives deal, is Pamela Chepiga, a partner at Allen & Overy LLP in New York. Chepiga headed the SDNY’s Securities and Commodities Task Force from 1982 until 1984.
At that time Barbara S. Jones – who is now the federal judge assigned to the Goldman case — was prosecuting the SDNY’s RICO case against four members of La Cosa Nostra’s Bonnano family. Also in the 1980s, the man who would later become Goldman’s global compliance chief, Alan Cohen, had just joined the SDNY office as a budding prosecutor. Cohen would eventually succeed Chepiga in 1987 as securities and commodities task force chief.
Alan Cohen (Goldman Sachs)
By the time now-SEC Enforcement chief Robert Khuzami came on the SDNY scene as a prosecutor in 1992, Cohen had defected to O’Melveny & Myers, Jones was a judge and Chepiga was a securities lawyer in private practice.
Khuzami, 53, who made a name for himself prosecuting the 1993 World Trade Center bombing, brought a new, aggressive, prosecutorial approach to civil enforcement at the SEC that is best epitomized by the Goldman suit. He installed another SDNY veteran, George Canellos, at the helm of the SEC’s regional office in New York to help turn the agency around.
Not since former SDNY Chief Judge Michael B. Mukasey was nominated in 2007 to serve as U.S. Attorney General has there been as much buzz about SDNY alumni, former prosecutors say. But given SEC Chairman Mary Shapiro’s decision to infuse the agency with SDNY alumni, it’s not surprising to find so many of them on all sides of a case like SEC-Goldman.
“What you have are highly motivated, very accomplished people who start out as prosecutors for the Southern District of New York and go on to take prominent roles in government, at companies and in private practice,” said former prosecutor Marcus Asner, a partner in Arnold & Porter’s New York office, who left the SDNY office in 2008.
Robert Khuzami (org)
Before joining the SEC, Khuzami was general counsel at Deutsche Bank Americas, where he advised bankers structuring the same kind of synthetic collateral debt obligations tied to subprime mortgages that are at issue in the SEC suit. He has recused himself from all the agency’s dealings with Deutsche Bank.
In case against Goldman, the agency has accused Tourre of creating and selling the synthetic CDOs without disclosing that hedge fund Paulson & Co. helped pick them and was betting against them.
George Canellos (Milbank)
Khuzami, a registered Republican who in the past has said he twice voted for President George W. Bush, has also adopted a tool he used as a SDNY prosecutor: He did not alert Goldman before filing suit April 16. The agency had warned Goldman in the form of a Wells notice last year that it was probing the CDOs and might eventually file suit. At a hearing in May before the Senate Banking Committee, Khuzami said, “We must convey to all defendants in SEC actions that not only do we assemble winning cases against them, but also we are prepared to go to trial and we will win.”
A former SDNY prosecutor in private practice said the SEC chose not to warn Goldman because the agency is now “using tougher prosecutorial tactics and it must really have some good stuff.”
Khuzami’s SEC tenure ultimately may be judged on whether the agency wins the Goldman case. The firm denies the charges. The day he announced the case, Khuzami said: “The product was new and complex but the deception and conflicts are old and simple.”
Goldman’s lead lawyer Richard Klapper of Sullivan & Cromwell in New York, will be defending the firm with the assistance of former White House Counsel Greg Craig of Skadden Arps Slate Meager & Flom in Washington.
Samuel W. Seymour (Sullivan & Cromwell)
Although neither Klapper nor Craig were SDNY prosecutors, SullCrom partners Sam Seymour, an appeals maven, and Steven Peikin, a white collar criminal defense star are SDNY alumni waiting in the wings for the case to play out, two former colleagues said.
“It should be fascinating,” said Alan Kaufman of Kelly Drye & Warren in New York, who previously served as chief of the Criminal Division in the U.S. Attorney’s Office for the Southern District of New York from 1999 to 2002. He was also a SDNY AUSA from 1973 to 1980, including stints at the helm of the Official Corruption, Special Prosecutions Unit and the Organized Crime Strike Force.
Steven Peikin (Sullivan & Cromwell)
Last week, Goldman told reporters that the SEC’s case hinges on the actions of Tourre, who was charged with misleading investors about a mortgage-linked investment in 2007. Goldman placed London-based Tourre on paid leave, as he was also meant to be de-registered from the Financial Services Authority.
Goldman General Counsel Greg Palm told Bloomberg: “If we had evidence that someone here was trying to mislead someone, that’s not something we’d condone at all and we’d be the first one to take action.”
The U.S. Attorney for the Southern District of New York is taking on the Gambino family.
On Tuesday, SDNY prosecutors charged 14 members of the notorious organized crime network with racketeering, murder, sex trafficking and other crimes. The defendants include Daniel Marino, the current head of the Gambino family.
SDNY U.S. Attorney Preet Bharara and George Venizelos, the Special Agent-in-Charge of the New York Office of the FBI, announced the charges Tuesday afternoon and unsealed a 61-page indictment. One member was arrested April 16. Twelve others were arrested Tuesday morning; one of the defendants remains at large.
“Modern mobsters may be less colorful, less flamboyant, and less glamorous than some of their predecessors, but they are still terrorizing businesses, using baseball bats, and putting people in the hospital,” Bharara said. “Today, the Gambino Family has lost one of its leaders, and many of its rising stars have now fallen.”
Venizelos said the Gambino family is not the same as it was under legendary mob boss John J. Gotti, and that the leadership maintains a lower profile. “No crime seemed too depraved to be exploited if it was a money-maker, including the sexual exploitation of a 15-year-old,” Venizelos said. “In truth, despite the popular fascination, it was never really about the thousand-dollar suits. It was — and is — about murder, mayhem and money.”
Assistant U.S. Attorneys Elie Honig, Steve Kwok and Jason Hernandez are in charge of the prosecution, according to a news release, and the case is being handled by the SDNY Organized Crime Unit.
A summary of the information in the indictment, as prepared by the Justice Department, is below, followed by an embedded version of the full indictment.
Daniel Marino is a longtime member and is currently a boss of the Gambino Family. In that capacity, Marino has over 200 fully-inducted or “made” mafia members under his command, as well as hundreds of associates who commit crimes with and for the mafia. Thomas Orefice and Onofrio Modica are currently soldiers of the Gambino Family acting under Marino’s supervision. Orefice and Modica each supervise crews that include Dominick Difiore, Anthony Manzella, Michael Scotto, Michael Scarpaci, Thomas Scarpaci, David Eisler and Salvatore Borgia, all of whom are charged with racketeering and racketeering conspiracy. The indictment also charges other individuals who committed crimes with and for the Gambino Family, including Steve Maiurro, Keith Dellitalia, Suzanne Porcelli and Anthony Vecchione.
In addition to the racketeering charges, the defendants are charged with the following crimes:
Murder of Thomas Spinelli
Marino is charged with the 1989 murder of Thomas Spinelli, a made member of the Gambino Family. In the months leading up to Spinelli’s death, concern arose in the Gambino Family about his testimony in a federal grand jury about many of the mafia’s members and activities. As a result, Marino, working with various co-conspirators, including John J. Gotti (who was then Boss of the Gambino Family) and Salvatore Gravano (who was then Underboss) set out to kill Spinelli to prevent him from further testifying. Marino and his co-conspirators lured Spinelli to a window company in Brooklyn, where he was shot in the head and killed. Marino then helped to dispose of Spinelli’s body, which has never been found.
Murder of Frank Hydell
Marino is also charged for the 1998 murder of Frank Hydell. In 1997, suspicion arose within the Gambino Family that Hydell, Marino’s nephew, was cooperating with law enforcement which, in fact, was the case. Based on these suspicions, various Gambino Family members and associates plotted to kill Hydell and sought Marino’s approval for the hit. Upon Marino’s authorization to kill Hydell, the Gambino Family members and associates lured Hydell to a strip club in Staten Island where he was shot three times in the face and back. He died in the strip club’s parking lot.
Murder of James DiGuglielmo and Richard Sbarra
Modica is charged with the double murder of James DiGuglielmo and Richard Sbarra. Modica and DiGuglielmo became involved in a drug-related dispute. As a result, on Aug. 22, 1987, Modica drove his motorcycle with a shooter riding on the back to a crowded parking lot where the shooter opened fire at DiGuglielmo. DiGuglielmo and Sbarra, an innocent bystander, were killed in the drive-by shooting.
Sex Trafficking and Sex Trafficking of A Minor
Orefice, Difiore, Manzella, Scotto, Eisler, Maiurro and Porcelli are charged with sex trafficking and sex trafficking of a minor. From 2008 to 2009, the defendants operated a prostitution business where young women and girls — including an underage girl who was 15 years old at the time — were exploited and sold for sex. The defendants first recruited various young women and girls — ages 15 through 19 — to work as prostitutes. The defendants then advertised the prostitution business on Craigslist and other websites. The defendants drove the women to appointments in Manhattan, Brooklyn, New Jersey and Staten Island to have sex with clients. The defendants then took approximately 50 percent of the money paid to the young women. The defendants also made the women available for sex to gamblers at a weekly, high-stakes poker games that Orefice and his crew ran.
Jury Tampering
In 1992, then-Boss John J. Gotti was on trial for federal racketeering and murder charges in the Eastern District of New York. Modica, along with various other Gambino Family members, took part in a plot to locate the anonymous, sequestered jurors sitting on that trial. Modica and the others eventually penetrated various security measures, and located the jury at the hotel where it was sequestered. The plan to tamper with the jury was called off, however, when Gotti came to believe that the jury would not convict him, even without outside interference.
Extortions and Assaults
Marino is charged with extorting broad swaths of the construction industry in and around New York from at least the 1980s to the present. Through the use of violence and threats, Marino and the Gambino Family have extorted millions of dollars annually from unions, contractors, developers and suppliers.
Orefice, Difiore, Manzella, Scotto, Michael Scarpaci, Thomas Scarpaci, Dellitalia, Eisler and Vecchione are charged with extorting payments from various businesses and individuals through the use of violence and threats. The defendants targeted businesses in the home heating oil industry and the financial services industry, as well as various individuals in and around New York City.
Several of the extortions resulted in serious beatings. For example:
* In December 2005, after an extortion victim failed to make a payment, Orefice, Difiore and Dellitalia punched and used a baseball bat to beat the victim.
* In 2008, Orefice and Difiore tracked down another extortion victim who failed to make a payment, beat him viciously, and left him on the street.
* In the summer of 2009, members of Orefice’s crew went to the office of a business owner in an attempt to shake him down, demanded to see their extortion victim, and, when refused, threatened the business owner’s office staff.Wire Fraud
Orefice and Manzella are charged with defrauding various high-end restaurants in New York City by inflating invoices for meat orders placed with Manzella’s company and paying kickbacks to the chefs responsible for ordering the meat. The invoices were sometimes inflated by as much as 40 percent of actual costs. To ensure that the chefs at the restaurants would continue ordering meat from Manzella’s company, and to encourage them to turn a blind eye to the scam, Orefice and Manzella kicked back about five percent of the proceeds back to them.
Narcotics Trafficking
Orefice, Difiore and Borgia are charged with trafficking in narcotics — including cocaine, oxycontin, and marijuana — for and on behalf of the Gambino Family.
Loansharking
Marino, Orefice, Difiore, Scotto, Michael Scarpaci and Thomas Scarpaci are charged with making and collecting extortionate extensions of credit — commonly known as “loansharking.” When debtors became unable to keep up their repayment obligations, the defendants threatened them. In one series of consensually-recorded discussions about the loansharking operation, a loanshark victim was said to have been “roughed up” and put in the trunk of a car. The participants then agreed that, if necessary, firearms, including AK-47s and AR-14s, could be obtained to help ensure repayment from debtors.
Gambling
Marino, Orefice, Modica, Difiore, Manzella, Michael Scarpaci, Thomas Scarpaci, Eisler, Borgia and Dellitalia are charged with running illegal gambling operations for the Gambino Family. These operations included an internet-based sports betting, or “bookmaking,” operation, and a regular, high-stakes card game.
The indictment also seeks forfeiture of the proceeds of the alleged crimes, including of $20 million as to counts one and two.
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