Criminal Justice News

Friday, July 31, 2015

Founder And Managing Partner Of R2 Capital Group LLC Pleads Guilty In Connection With Commodities Investment Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, announced today that RYAN TOMAZIN, the founder and managing partner of R2 Capital Group LLC (“R2 Capital”), pled guilty in Manhattan federal court to a two-count Indictment charging him with defrauding investors and misappropriating investment funds.  TOMAZIN and other principals at R2 Capital caused over $850,000 of investors’ funds to be withdrawn from bank accounts associated with the commodity pool and directed to bank accounts held in their own names or that of their respective holding companies.  TOMAZIN was arrested on December 11, 2014 and pled guilty today before United States District Judge Paul A. Crotty.

Manhattan U.S. Attorney Preet Bharara said:  “As Ryan Tomazin acknowledged today by pleading guilty to securities and commodities fraud, he lied to investors and used his company to line his own pockets with investors’ money.”

According to the Indictment, and other statements made in open court:

In late 2009, R2 Capital created a commodity pool, R2 Capital Partners I L.P. (the “Commercial Pool”) and began to solicit investors, eventually raising approximately $2.2 million.  In early 2010, TOMAZIN solicited a potential investor in the Commercial Pool (“Investment Fund-1”) and provided Investment Fund-1 with documentation that stated, among other things, that R2 Capital would receive a management fee limited to 50% of the profits earned by the Commercial Pool.  Investment Fund-1 invested over $1 million in the Commercial Pool.  From June 2010 up to and including July 2011, the Commercial Pool experienced significant net losses.  In July 2011, all trading activity in the Commercial Pool ceased.  By August 2011, there was less than $5,000 remaining in bank accounts associated with the Commercial Pool.  Nonetheless, between August 2011 and March 2013, TOMAZIN caused false “Trading Statements” to be sent to Investment Fund-1 reflecting false purported monthly trading profits and inaccurate trade balances.  Furthermore, contrary to prior representations that R2 Capital’s management fee would be limited to 50% of profits earned, TOMAZIN and other principals at R2 Capital caused approximately $850,000 to be withdrawn from bank accounts associated with the Commercial Pool for their own personal benefit.

TOMAZIN, 35, of Stamford, Connecticut, pled guilty to one count of securities fraud and one count of commodities fraud.  The securities fraud charge carries a maximum term of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense.  The commodities fraud charge carries a maximum term of 10 years in prison and a maximum fine of $1 million, or twice the gross gain or loss from the offense.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  As part of the plea agreement, TOMAZIN agreed to pay forfeiture and restitution to the victims of the offense in the amount of $288,000.  TOMAZIN is scheduled to be sentenced by Judge Crotty on December 3, 2015.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Bharara thanked U.S. Commodity Futures Trading Commission for their assistance with the investigation.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Harry Chernoff and Aimee Hector are in charge of the prosecution.

Long Island Man Sentenced To 55 Months For Stealing More Than $31 Million Dollars In A Wire Fraud Scheme Involving Sub-Prime Mortgages

Defendant Submitted False Financial Records to His Investors

Earlier today, defendant Thomas Donovan, 67, was sentenced to 55 months of incarceration for his guilty plea to wire fraud conspiracy on May 31, 2013.  The District Court also entered an order directing Donovan to forfeit more than $31 million that he received and to pay more than $31 million in restitution.

The sentence was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

According to court filings and facts presented during the sentencing proceeding, Donovan was the co-owner of Private Capital Group that invested in sub-prime mortgages.  Private Capital Group’s main investor was Ficus Investments, Inc., which invested more than $300 million.  Rather than investing those funds as agreed upon, the owners of Private Capital Group, Thomas Donovan and Lawrence Cline, took more than $31 million for themselves and concealed that theft by providing his investors with false and misleading financial reports.  Cline and Private Capital Group’s chief financial officer, Christopher Chalavoutis, previously  pleaded guilty and have been sentenced.

“Under the guise of rehabilitating and reselling distressed mortgages, Donovan lied to his investors and stole their money.  Donovan took advantage of the residential mortgage crisis for his personal financial gain, and he has now been held to account,” stated Acting United States Attorney Currie.  Mr. Currie extended his grateful appreciation to the FBI, who led the government’s investigation.

The government’s case is being prosecuted by the Office’s Long Island Criminal Division.  Assistant United States Attorney Christopher Ott is in charge of the prosecution.

The sentence was imposed by the Honorable Joanna Seybert at the federal courthouse in Central Islip, New York.

Florida Resident Sentenced for Accessing and Removing Classified Information from Military Computers

Christopher R. Glenn, 34, a South Florida Resident, was sentenced on July 31, 2015, to 120 months of imprisonment to be followed by three years of supervised release by U.S. District Judge Kenneth A. Marra of the Southern District of Florida following his guilty plea for willful retention of classified national defense information under the Espionage Act, computer intrusion under the Computer Fraud and Abuse Act and conspiracy to commit naturalization fraud.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement.

“Christopher Glenn exploited his position as a cleared military contractor and systems administrator to steal classified U.S. military secrets,” said Assistant Attorney General Carlin.  “In doing so, he violated the unique trust placed in him by the Department of Defense.  Insider threats by trusted employees who exploit computer access are a significant danger to U.S. national security and this sentencing shows it will not be tolerated.”

“The defendant exploited and violated the special trust placed in him as a computer network system administrator working at a United States military base, in order to penetrate the computer system and steal classified materials,” said U.S. Attorney Ferrer.  “We will continue to investigate and prosecute insider threats to national security and we will bring those violators to justice.”

According to court records, while working as a computer systems administrator at Soto Cano Air Base in Honduras, Glenn accessed a classified Department of Defense network without authorization and removed classified national defense information from Department of Defense and U.S. Southern Command’s (SOUTHCOM’s) Joint Task Force-Bravo, including intelligence reports and military plans.  Glenn proceeded to encrypt the files and place them on an Internet-accessible network storage device located in his residence in Honduras.

Glenn also conspired with his wife, Khadraa A. Glenn, 28, to commit naturalization fraud for her benefit by fabricating fraudulent documents and submitting false statements and the documents to the U.S. Citizenship and Immigration Services (USCIS).  Khadraa A. Glenn previously pleaded guilty to naturalization fraud conspiracy and was sentenced on Oct. 7, 2014.

Assistant Attorney General Carlin and U.S. Attorney Ferrer commended the investigative efforts of the FBI, U.S. Army’s 470th Military Intelligence Brigade, U.S. Army’s Criminal Investigations Division, SOUTHCOM, USCIS, IRS-CI, the Department of Homeland Security and the South Florida Joint Terrorism Task Force.  The case is being prosecuted by Assistant U.S. Attorney Ricardo Del Toro of the Southern District of Florida and Trial Attorney Christian Ford of the National Security Division’s Counterintelligence and Export Control Section.