Seven Men Sentenced for Their Roles in an International Child Exploitation Crowdsourcing Conspiracy

Seven men from around the country were sentenced today and yesterday for participating in an international child pornography production conspiracy, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Sherri A. Lydon of the District of South Carolina, and Special Agent in Charge Alphonso “Jody” Norris of the FBI Columbia, South Carolina Field Office.

“Today’s sentencings involve another example of a disturbing and reprehensible new trend: the ‘crowdsourcing’ of child exploitation,” said Assistant Attorney General Benczkowski.  “Through malicious trickery and technical sophistication, these men worked together over the course of many months pretending to be minor boys and girls in order to target and entice vulnerable minor girls–some as young as 10 years old–into producing child pornography.  Thanks to the tremendous efforts of the prosecutors and agents who worked on this case, these defendants will spend many years in prison, and their victims–more than 91 identified to date– have received some measure of justice for the trauma done to them.”

“This case illustrates that even sophisticated technological means will not protect predators online from being brought to justice,” said U.S. Attorney Lydon.  “The arrest and prosecution of perpetrators who commit these heinous acts of violence will continue to be a high priority of the U.S. Attorney’s Office in South Carolina, and I commend the investigators who spent endless hours on this important case.”

“These crimes are especially disturbing and it is very satisfying to see the results of the hard work of our special agents,” said FBI Special Agent in Charge Norris.  “The FBI in South Carolina will remain vigilant and continue our active role in the national strategy to ensure children are protected.”

U.S. District Judge Richard M. Gergel for the District of South Carolina imposed the following sentences:

    Brandon Gressette, aka “Samisbae,” 33, a restaurant cook of Summerville, South Carolina, was sentenced to serve 40 years in prison, followed by a lifetime of supervised release. He pleaded guilty on Sept. 29, 2017.

    James Thomas Gersky, aka “Hesh,” 35, a temporary agency employee of Grand Rapids, Michigan, was sentenced to serve 30 years in prison, followed by a lifetime of supervised release. He pleaded guilty on Oct. 25, 2017.

    Steven Fox, aka. “Steam,” 40, an unemployed resident of Elkridge, Maryland, was sentenced to serve 30 years in prison, followed by a lifetime of supervised release. He pleaded guilty on Sept. 28, 2017.

    Sean Ellis, aka. “Jeffery,” 44, a data protection specialist of Kennesaw, Georgia, was sentenced to serve 30 years in prison, followed by a lifetime of supervised release. He pleaded guilty on Sept. 28, 2017.

    Michael Augustin, aka. “Rand,” 45, a computer engineer of Fort Collins, Colorado, was sentenced to serve 25 years in prison, followed by a lifetime of supervised release. He pleaded guilty on Oct. 12, 2017.

    Dejan Becovic, aka “DryAids,” 24, a utilities locator of West Vallen City, Utah, was sentenced to serve 20 years in prison, followed by a lifetime of supervised release. He pleaded guilty on Oct. 20, 2017. Becovic also previously pleaded guilty in the District of Utah to receipt of child pornography, and on Oct. 18, 2017 was sentenced to 15 years in federal prison for the Utah conviction.

    Jonathan Cripe, aka “Terp,” 29, a security system installer of Imperial, Missouri, was sentenced to serve 18 years in prison, followed by a lifetime of supervised release. He pleaded guilty on Aug. 8, 2017.

All defendants were ordered to pay $10,000 to one victim and $98,715 to another victim in restitution, jointly and severally.  Gressette was additionally ordered to pay $2,000 in restitution to two victims.  Fox was additionally ordered to pay $5,000 in restitution to two victims and Cripe was additionally ordered to pay $2,500 in restitution to two victims.  Augustin was also ordered by Judge Gergel to pay a fine in the amount of $100,000.

According to court documents, between July 2014 and April 2015, these defendants and other co-conspirators outside the United States utilized a website that was specifically designed to help the group target and sexually exploit minor females. The website was password-protected, and only vetted individuals could become members. The members of the website worked together to identify social media profiles of girls, including girls as young as 10, and strategized regarding how to convince the girls to engage in sexually explicit activity via live web camera. Typically, while pretending to be minor boys and girls, the defendants streamed pre-recorded videos of other underage girls engaging in similar conduct to their target-victims in an effort to trick the girls into believing they were watching a live video of someone their own age. Using peer-pressure, the members convinced the victims to engage in sexually explicit activity.  The victims were unaware that they were actually communicating with adult men who were recording their sexually explicit activity. After successfully recording a victim’s sexually explicit activity, the defendants would share the videos with each other by uploading the files to a file-storage site and placing a link to download the file on a section of their members-only website. To date, 91 victims from 28 states and Canada have been positively identified.

Six of the co-conspirators each pleaded guilty to one count of conspiracy to produce child pornography and one count of conspiracy to receive and distribute child pornography.  Defendant Gressette pleaded guilty to the same count of conspiracy to produce child pornography, as well as two additional substantive counts of production of child pornography with two different victims, one of whom was under the age of 12. Additionally, another co-conspirator, Jonathan Soto, 27, of Branchburg, New Jersey, was prosecuted in the District of New Jersey and also pleaded guilty to conspiracy to produce child pornography. On March 31, 2017, Soto was sentenced to 18 years in federal prison for his role in the scheme.

Trial Attorneys Lauren Britsch and Austin M. Berry of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Dean Secor of the District of South Carolina prosecuted the case.  The FBI Newark, New Jersey and Columbia, South Carolina Field Offices and the FBI Major Case Coordination Unit investigated the case with assistance from Operation Rescue Me, the Digital Analysis and Research Center (DARC) Lab and CEOS’s High Technology Investigative Unit.

Securities Fraud Charges Announced Today Against Former Junior Analyst for Major Investment Bank and Current NFL Player

PHILADELPHIA – United States Attorney William M. McSwain announced Damilare Sonoiki, 27, of Beverly Hills, California, and Marvin Mychal Kendricks, 27, of Fresno, California were charged today by information with insider trading.

According to the information, from July 2014 to approximately March 2015, Sonoiki and Kendricks conspired together to commit securities fraud.  Sonoiki, then a junior analyst at a global investment bank in New York, provided material non-public information to Kendricks, then a linebacker for the Philadelphia Eagles, regarding upcoming mergers involving four investment bank clients of the global investment bank.  Sonoiki obtained and used this information in violation of his duty of confidentiality that he owed to the investment bank.

Relying on the material non-public information he received from Sonoiki, the information alleges that Kendricks purchased call options in the target companies, Compuware, Move, Sapient, and Oplink.  When the proposed merger was announced in each case, the value of Kendricks’s options went up significantly.  Based on the alleged insider trading related to Compuware, Mr. Kendricks made a purchase of approximately $60,000 in call option contracts, and after the public merger announcement, sold those same option contracts for approximately $138,000, which was a 130% increase.  With respect to Move, Mr. Kendricks made a purchase of approximately $71,000 and sold after the public merger announcement for approximately $350,000, which constituted a 393% increase.  For Sapient, Mr. Kendricks made a purchase of approximately $146,000 in call option contracts and sold them after the public merger announcement for approximately $635,000, which was a 335% increase.  Finally, with Oplink, Mr. Kendricks purchased the call option contracts for approximately $446,000 and sold them after the public merger announcement for approximately $798,000, which was a 79% increase from the purchase price.

Mr. Kendricks allegedly made a profit of approximately $78,000 from his Compuware investments, approximately $279,000 from Move, approximately $489,000 from Sapient, and approximately $352,000 from Oplink, for a total of approximately $1.2 million.  The information further alleges that defendant Kendricks provided defendant Sonoiki with tickets to Eagles games and approximately $10,000 in cash.

“When individuals engage in insider trading – buying and selling securities based on material, non-public information – it undermines faith in our financial markets and harms ordinary investors who do play by the rules,” said U.S. Attorney McSwain.  “As alleged, Mr. Sonoiki and Mr. Kendricks cheated the market, cheated other investors, and placed themselves above the law.  My Office will continue to work with our law enforcement partners to maintain the integrity of the financial markets, which is one of our top priorities.”

“At the heart of insider trading cases is the concept of a level playing field,” said Christian Zajac, Assistant Special Agent in Charge of the FBI’s Philadelphia Division.  “Investors bet on individual stocks, based on public knowledge of a company’s past performance and future plans.  As alleged, Mychal Kendricks used material non-public information, provided by his co-defendant, to score significant profits from expected market moves.  That’s not merely gaming the system—that’s a federal crime.  Insider trading has long posed a threat to U.S. financial markets, because it compromises the public’s trust that our markets operate fairly.  For that reason, the FBI takes seriously our responsibility to investigate insider trading and other significant financial crimes.”

If convicted, each defendant faces a maximum possible sentence of 25 years’ imprisonment, a three-year period of supervised release, $5,250,000 fine, and a $200 special assessment. Forfeiture of all proceeds from the offenses also may be ordered.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney David J. Ignall.  The U.S. Attorney’s Office also would like to thank the Securities and Exchange Commission for their assistance in this matter.

An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

Jamestown Man Arrested, Charged With Possession Of Child Pornography

BUFFALO, N.Y. - U.S. Attorney James P. Kennedy, Jr. announced today that Matthew Bailer, 33, of Jamestown, NY, was arrested and charged by criminal complaint with possession of child pornography. The charge carries a maximum penalty of 20 years in prison and a $250,000 fine.

Assistant U.S. Attorney Elizabeth R. Moellering, who is handling the case, stated that according to the complaint, on July 11, 2018, the Jamestown Police Department received a complaint from a parent that her minor children, Victim 1 and Victim 2, may have been sexually abused by the defendant. The parent stated that she was told by the defendant’s sister that she found a series of concerning pictures, sexual in nature, on a Nokia cellular telephone that was used by the defendant.

Bailer was subsequently arrested on a warrant out of Missouri related to a burglary case. During a search of the Nokia cellular telephone, investigators recovered several hundred images of images of child pornography involving sexually explicit conduct by prepubescent and pubescent children, both male and female.

The defendant made an initial appearance this afternoon before U.S. Magistrate Judge H. Kenneth Schroeder and is being detained.

The criminal complaint is the result of an investigation by the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Gary Loeffert, and the Jamestown Police Department, under the direction of Chief Harry Snellings.

The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.