Monday, December 30, 2019

Stamford Man Sentenced to 9 Years in Federal Prison for Surgical Glove Investment Scheme

John H. Durham, United States Attorney for the District of Connecticut, announced that THOMAS J. CONNERTON, 67, of Stamford, was sentenced today by U.S. District Judge Stefan R. Underhill in Bridgeport to 108 months of imprisonment, followed by three years of supervised release, for operating an investment scheme that defrauded more than 70 individuals, including several women he met on a dating website, of more than $2 million.

According to the evidence presented during his trial, Connerton was the founder, president, and CEO of Safety Technologies, LLC (“Safety Tech”), a Connecticut company that had its principal place of business at various times in Simsbury, Madison, Westport and Stamford.  Safety Tech was founded in 2006, purportedly for the purpose of developing and commercializing what was represented to be a highly durable puncture and cut resistant material that was to be used in the surgical glove market and other related markets.  Safety Tech had not obtained any patents from the U.S. Patent and Trademark Office, and Connerton did not register Safety Tech’s securities with the U.S. Securities and Exchange Commission (“SEC”).

Beginning in approximately June 2009, Connerton induced victim-investors to provide him funds and to purchase Safety Tech securities by falsely representing that the valuation of Safety Tech was realistically in the tens or hundreds of millions of dollars, that a lucrative deal to sell or license his glove technology was imminent, and that he would use their funds for research and development, product testing, and to bring the product to market.  Connerton offered his investors small amounts of equity in Safety Tech through “Subscription Agreements” or investments contracts through which he sold what he described as “Units.”

Several of the victim-investors were women who were drawn into the scheme after Connerton met them on a popular dating website.

Connerton made numerous other false representations to victim-investors, including stating in September 2015, “I will go on the record to state that there is not a single investor that will lose one dollar invested in Safety Technologies.”

Even though Connerton represented to victim-investors and potential victim-investors that the funds they invested would be used to fund research and development, for product testing, for business expenses and for legal fees, he used invested funds to pay personal expenses including, on two separate occasions, to purchase two diamond engagement rings from Tiffany & Co.  Connerton also used funds to repay loans to an earlier investor.

Through this scheme, Connerton defrauded more than 70 victim-investors of more than $2.2 million.

The investigation also revealed that Connerton engaged in monetary transactions in an attempt to conceal from the FBI and the SEC the nature and source of funds received by Safety Tech from the sale of Safety Tech securities.  Connerton negotiated checks and purchased bank checks in order to move the fraudulent proceeds from one account to another.

The investigation further revealed that Connerton willfully failed to pay $293,033 in federal income taxes between 2003 and 2015.

On September 17, 2018, a jury found Connerton guilty of 12 counts of wire fraud, one count of mail fraud, 16 counts of securities fraud, four counts of money laundering and one count of tax evasion.

The government is seeking full restitution for the victim-investors and forfeiture of the two engagement rings that Connerton purchased with proceeds of the fraud scheme.  Connerton also owes more than $500,000 in back taxes, interest and penalties.  Restitution will be determined after additional court proceedings.

Connerton has been detained since his arrest on March 9, 2017.

This matter was investigated by the Federal Bureau of Investigation and Internal Revenue Service – Criminal Investigation Division.

U.S. Attorney Durham also acknowledged the important assistance of the Securities and Exchange Commission.

The case is being prosecuted by Assistant U.S. Attorneys Michael S. McGarry and Lauren C. Clark.

Ukrainian Man Sentenced In Manhattan Federal Court To 84 Months In Prison For Role In Check Fraud Scheme

Defendant and His Co-Conspirators Used Fake Companies, Fraudulently Obtained Identification Documents, and Sham Company Bank Accounts to Cash Hundreds of Thousands of Dollars in Fake Payroll Checks

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that MARKO STASIV was sentenced to seven years in prison today by U.S. District Judge P. Kevin Castel for his participation in a scheme to defraud banks and check-cashing stores by cashing hundreds of thousands of dollars in unfunded payroll checks.  STASIV was convicted, after a seven-day jury trial in May 2019, of wire fraud, conspiracy to commit bank and wire fraud, and aggravated identity theft.

U.S. Attorney Geoffrey S. Berman said:  “Marko Stasiv was sentenced today for his leading role in a choreographed scheme to defraud.  He led a group of conspirators in bilking banks and check-cashing businesses in state after state, staying one step ahead of the law – until he was caught.  Now he faces seven years in federal prison for his crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “There was nothing about Marko Stasiv’s payroll scheme that was on the up and up.  As one would imagine, his initial success couldn’t be sustained for long. Today’s sentencing ensures a long, well-deserved stay in prison, and this time the government will make the room arrangements.”

According to a Superseding Indictment filed December 18, 2018, other court documents, and the evidence presented at trial:

From approximately September 2016 through February 2018, the defendant and his co-conspirators engaged in a coordinated scheme to defraud check-cashing businesses and federally insured banks (the “Check Scam”).  The Check Scam’s primary objective was to generate illicit profit for its participants by deceiving check-cashing businesses and banks into honoring ostensible payroll checks for which insufficient funds were available to cover the face-value of the checks.  The Check Scam involved building trust and confidence with check-cashing businesses and banks through a purportedly legitimate course of dealings before taking advantage of that trust and confidence to stage intentional, coordinated overdrafts.  This included the use of fraudulently obtained identity documents, sham companies, and interstate wires.

As part of the scheme, the conspirators incorporated multiple sham companies (the “Sham Companies”) in multiple states, and then opened bank accounts in the names of those sham companies (the “Sham Bank Accounts”).  The individuals opening the Sham Bank Accounts often did so by using legitimate state identification cards (“State IDs”), obtained under false pretenses.  Upon opening the Sham Bank Accounts, members of the Scheme would obtain and print payroll checks, issued by a Sham Company and issued to a member of the Scheme (a “Check Casher”), who posed as an employee of the Sham Company.  Over the course of several weeks, the Check Cashers cashed multiple payroll checks, of gradually increasing values, at multiple check-cashing stores in the state of the Sham Company’s incorporation.  Members of the Scheme would then immediately redeposit these funds into the Sham Bank Account, so that the checks would clear.  In doing so, the Check Cashers developed credibility with the check-cashing stores.  In each state, the Check Scam would culminate during a final week (the “Bomb Week”).  During the Bomb Week, the Check Cashers would cash high-value checks at as many check-cashing stores as possible.  However, during the Bomb Week, the conspirators would not redeposit these funds into the Sham Bank Account, and would instead divide the proceeds among themselves.  By the time the checks bounced, the conspirators had moved on to the next state, where they executed the Check Scam again, using a new Sham Company and Sham Bank Account.

The defendant was one of the Check Scam’s leaders.  Among other things, he recruited Check Cashers; helped Check Cashers obtain State IDs and open Sham Bank Accounts under false pretenses; distributed payroll checks to the Check Cashers; drove the Check Cashers to various check-cashing stores; instructed Check Cashers on how to execute the Check Scam; and collected and redistributed the proceeds of the Check Scam.  The defendant and his conspirators executed or planned to execute the Check Scam in various locations throughout the United States, including in and around New York City, Pennsylvania, Florida, Maryland, Georgia, Virginia, Texas, Illinois, and California.

As a way to keep overhead costs lower while executing the Check Scam in various states, the conspirators obtained hotel rooms, unlawfully and without authorization, by using the names and hotel loyalty program accounts of real persons who were neither part of nor aware of the Check Scam (the “Hotel Scam”).  The defendant personally executed the Hotel Scam with the assistance of at least two associates in Ukraine, who helped arrange dozens of days-long hotel stays for the Check Scam’s participants at various locations by unlawfully accessing victims’ hotel rewards points, and using them to book hotel rooms listing the defendant and other conspirators as authorized guests.

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In addition to the prison term, Judge Castel sentenced STASIV to three years of supervised release and ordered him to pay restitution in the amount of $548,178.70, forfeiture in the amount of $122,424.92, and a $100 special assessment.

Mr. Berman praised the investigative work of the FBI and its Eurasian Organized Crime Squad.  He also thanked the New York City Police Department and United States Customs and Border Protection for their assistance in the matter.

The prosecution of this case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorney Jonathan Rebold is in charge of the prosecution.

Broward County School Board Employee Charged with Bribery and Extortion

A former supervisor of the Broward County School Board Physical Plant Operations Division has been charged with bribery and extortion under color of official right.

Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida and George L. Piro, Special Agent in Charge of the FBI’s Miami Field Office made the announcement.

Richard Allen Ellis Jr., 49, of Hollywood, Florida, was charged in an 8-count indictment with bribery concerning programs receiving federal funds and extortion under color of official right (Case No. 19cr60369). Yesterday, he was arraigned on the charges before U.S. Magistrate Judge Alicia O. Valle in Fort Lauderdale.

The indictment alleges, between September 26, 2018, and December 17, 2018, Ellis, while working as a Broward County School Board employee in the Custodial/Grounds Department, accepted four cash payments from an individual who worked for a contractor who did work at various Broward County public schools.  The indictment further states that these payments had been occurring as early as 2016.  The payments were made to Ellis, to ensure a steady flow of work for the contractor and the individual, and timely payment of the contractor’s invoices.  Ellis is alleged to have accepted bribe payments wrongfully induced by his official position.

An indictment is a formal accusation of criminal conduct, not evidence of guilt.  The defendant is presumed innocent unless and until proven guilty in a court of law.

U.S. Attorney Fajardo Orshan commended the FBI for its investigative efforts.  This case is being prosecuted by Assistant U.S. Attorney Cynthia R. Wood.