Around 14,000 customers in Puyallup and Graham, Washington, were impacted Sunday after burglars vandalized three power substations belonging to Tacoma Public Utilities and Puget Sound Energy, police said.
No suspects are in custody at this time, the Pierce County Sheriff’s Department added in a statement Sunday.
The sheriff’s department said their agency first received a report of a burglary at the Tacoma Public Utilities substation at 5:26 a.m. PT.
“Deputies arrived on scene and saw there was forced entry into the fenced area,” according to the statement. “Nothing had been taken from the substation, but the suspect vandalized the equipment causing a power outage in the area.”
Pierce County Sheriff Deputies were alerted to a report of a second burglary at another Tacoma Public Utilities substation, which also had forced entry with damage to equipment, the statement said. Similar to the first substation, nothing was taken.
“At 11:25 we were notified by Puget Sound Energy that they too had a power outage this morning at 02:39 am. Deputies are currently on scene at this facility where the fenced area was broken into and the equipment vandalized,” the statement continued.
“At this time deputies are conducting the initial investigation. We do not have any suspects in custody. It is unknown if there are any motives or if this was a coordinated attack on the power systems,” the statement said.
The FBI’s Seattle Division told CNN Sunday it was aware of the reports but declined to confirm or deny its role in any investigation, adding, “We do take threats against our infrastructure seriously and urge anyone with information to contact law enforcement.”
The city of Puyallup is located 10 miles south of Tacoma. Graham is located 16 miles south of Tacoma.
oversaw one of the biggest financial frauds in American history, a top federal prosecutor said in charging that the former chief executive stole billions of dollars from the crypto exchange’s customers while misleading investors and lenders.
An indictment by the U.S. attorney’s office for the Southern District of New York, unsealed Tuesday, charges Mr. Bankman-Fried with eight counts of fraud. Prosecutors allege that he took FTX.com customers’ money to pay the expenses and debts of Alameda Research, an affiliated trading firm. Mr. Bankman-Fried is charged as well with conspiring to defraud the U.S. and violate campaign-finance rules by making illegal political contributions.
Damian Williams,
the U.S. attorney for the Southern District of New York, said he authorized the charges against Mr. Bankman-Fried last Wednesday and a grand jury voted on the indictment Friday.
“This investigation is very much ongoing, and it is moving very quickly,” Mr. Williams said at a press conference in Manhattan on Tuesday. “While this is our first public announcement, it will not be our last.”
John J. Ray III, the new chief executive of FTX, testified in front of a House committee Tuesday on the collapse of the crypto exchange. Photo: Nathan Howard/Getty Images
Separately, John J. Ray III, the new chief executive of FTX, said at a congressional hearing Tuesday that FTX incurred losses in excess of $7 billion. Mr. Ray, who oversaw the Enron Corp. bankruptcy early in the 2000s decade, said funds were taken from FTX and Alameda, an affiliated trading firm that incurred trading losses.
Mr. Ray described Enron as having been brought down by sophisticated people whose machinations aimed to keep transactions secret. FTX presents as “old-fashioned embezzlement,” Mr. Ray said. “It’s taking money from customers and using it for your own purpose.”
Also Tuesday, the Securities and Exchange Commission alleged in a civil lawsuit that Mr. Bankman-Fried diverted customer funds from the start of FTX to support Alameda and to make venture investments, real-estate purchases and political donations. The Commodity Futures Trading Commission filed a lawsuit Tuesday linking his allegedly fraudulent conduct at Alameda and FTX to markets that the CFTC regulates.
“
Sam Bankman-Fried
built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” SEC Chair
Gary Gensler
said.
The charges are the latest twist in a saga that has rattled the world of cryptocurrencies, a largely unregulated market that boomed during the pandemic but has been hammered this year by rising interest rates and the failure of several significant industry players.
FTX, one of the largest crypto exchanges in the world, filed for bankruptcy last month after the firm ran out of cash and a merger with rival Binance collapsed. The firm’s failure marked a sudden fall from grace for Mr. Bankman-Fried, who portrayed FTX as a safer crypto exchange to use and cast himself as an ally of regulation.
In interviews since the filing, Mr. Bankman-Fried said he bore responsibility for FTX’s collapse but denied he committed any fraud.
Mark Cohen,
a lawyer for Mr. Bankman-Fried, said Tuesday that his client “is reviewing the charges with his legal team and considering all of his legal options.”
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Mr. Bankman-Fried, 30 years old, was arrested Monday in the Bahamas. He appeared in court Tuesday in Nassau. He was denied bail and has been remanded to jail until Feb. 8, according to a person familiar with the matter.
A U.S. court official said that while the case had been assigned to a federal judge in Manhattan, there was no timing yet for Mr. Bankman-Fried’s extradition.
The tales of Mr. Bankman-Fried’s alleged misdeeds resonated with crypto customers around the world, even those who haven’t suffered significant losses as various firms by turns suspended withdrawals and collapsed.
Vasco Tagachi, a 42-year-old Portuguese-Sri Lankan trader based in China, said he felt a sigh of relief after learning of Mr. Bankman-Fried’s arrest. He said he had $57,423 in an FTX account this fall but was able to withdraw almost all of it just before the firm stopped honoring withdrawal requests.
“I had a little bit of tears in my eyes hearing that,” he said.
Prosecutors allege that from 2019 through November 2022, Mr. Bankman-Fried conspired with unnamed individuals to defraud customers and lenders. He provided false and misleading information to lenders on the financial condition of Alameda, according to the indictment.
Sam Bankman-Fried was arrested in the Bahamas on Monday, a day before he was expected to testify on the sudden collapse of FTX before the House Committee on Financial Services. Illustration: Jacob Reynolds
While the 14-page indictment was light on detailed allegations, it says that on Sept. 18, 2022, Mr. Bankman-Fried caused an email to be sent to an FTX investor in New York that contained false information about FTX’s financial condition. In June 2022, the indictment says, Mr. Bankman-Fried and others misappropriated FTX.com customer deposits to satisfy the loan obligations of Alameda.
Mr. Bankman-Fried is also accused of defrauding the Federal Election Commission starting in 2020 by conspiring with others to make illegal contributions to candidates and political committees in the names of other people.
He and his associates contributed more than $70 million to election campaigns in recent years, The Wall Street Journal previously reported. He personally made $40 million in donations ahead of the 2022 midterm elections, most of which went to Democrats and liberal-leaning groups.
Mr. Ray, the FTX CEO, said FTX is investigating whether any loans taken by FTX executives were improperly used for campaign contributions.
Mr. Ray added that tracing fund flows from FTX to executives and third parties was difficult because of the lack of a paper trail for many corporate transactions at FTX.
“We’re dealing with a paperless bankruptcy,” he said. “It makes it very difficult to trace and track assets.”
The CFTC’s complaint contains a detailed discussion of events at Alameda and FTX and argues that the agency, generally less visible to the public than the SEC, also has jurisdiction over the case. While the CFTC regulates U.S. derivatives markets, it can go after fraud that affects some commodity markets.
Besides giving Alameda access to its customer deposits, FTX granted the crypto hedge fund controlled by Mr. Bankman-Fried a series of trading-execution privileges that provided it an edge against other traders on the platform, the CFTC lawsuit alleges.
The CFTC said that while institutional customers had their orders routed through the FTX system, Alameda was able “to bypass certain portions of the system and gain faster access.” It resulted in Alameda’s orders being received by FTX several milliseconds faster than those of other institutional clients.
The lawsuit also alleges that Alameda wasn’t subject to certain automated verification processes, including on whether it had available funds before executing a transaction, giving it further advantage on the speed of its trades.
The edge wasn’t enough to keep Mr. Bankman-Fried from thinking about shutting down Alameda in September, according to the CFTC complaint.
In a document titled “We came, we saw, we researched,” Mr. Bankman-Fried laid out reasons for shutting down Alameda, according to the CFTC lawsuit. Chief among them: Alameda wasn’t making enough money to justify its existence, he wrote.
The CFTC said the statements contradicted what Mr. Bankman-Fried and Alameda were saying publicly at the time.
Tuesday’s congressional hearing was the first public appearance for Mr. Ray on FTX’s bankruptcy. Mr. Bankman-Fried had been scheduled to appear virtually at the same hearing, before he was arrested in the Bahamas at the request of the U.S. government. Bahamian police have said that they would keep him in custody and that they are awaiting an extradition order from U.S. authorities.
“The operation of Alameda really depended, based on the way it was operated, on the use of customer funds,” Mr. Ray said, responding to questions from members of Congress at the hearing. “There were virtually no internal controls…whatsoever.”
He described numerous loans totaling billions of dollars taken out by Mr. Bankman-Fried from Alameda.
“We have no information at this time as to what purpose or use of those funds were,” Mr. Ray added. He said Mr. Bankman-Fried had signed as the issuer and recipient for some of the loans.
Mr. Ray pushed back against recent statements made by Mr. Bankman-Fried that he had little to no involvement in the management of Alameda after passing control of the company to
Caroline Ellison
and
Sam Trabucco,
as well as Mr. Bankman-Fried’s statements that customer funds were passed to Alameda because of an accounting error.
“I don’t find those statements to be credible,” Mr. Ray said.
The Justice Department’s indictment of Mr. Bankman-Fried includes an array of charges with few supporting details, a tactic that could give federal prosecutors flexibility in navigating the rules involving extradition.
The charges against Mr. Bankman-Fried run the gamut from wire fraud to securities fraud conspiracy to conspiring to launder money and conspiring to break campaign-finance laws.
The statutes charged, with the exception of the campaign-finance offense, are enormously broad, said Rebecca Mermelstein, a former federal prosecutor who is now at O’Melveny & Myers LLP.
“By not being superspecific, you protect yourself later against an argument that charges relating to different criminal conduct are being added,” she said.
The arrest of Mr. Bankman-Fried is the latest case to highlight prosecutors’ push to bring white-collar cases to justice faster.
Deputy U.S. Attorney General Lisa Monaco said in a September speech that making prosecutors and companies feel that they were “on the clock” in these cases was a key priority for the department.
FTX founder Sam Bankman-Fried sat down with The Wall Street Journal to discuss what happened to the billions of dollars deposited by the exchange’s customers. Photo: Kenny Wassus/The Wall Street Journal
“We need to do more and move faster,” she said. “In individual prosecutions, speed is of the essence.”
Former federal prosecutors say that high-profile financial cases with lots of victims can increase the pressure on authorities to bring cases more quickly.
“Appearances matter when it comes to criminal justice,” said Mark Chutkow, a former federal prosecutor who is currently head of government investigations and corporate compliance at Dykema Gossett PLLC.
If Mr. Bankman-Fried remains in the Bahamas while the details of his potential extradition to the U.S. are worked out, there is only one prison there: the Bahamas Department of Correctional Services, commonly known as Fox Hill Prison.
Prison inmates reported removing human waste by buckets and developing bed sores from lying on the bare ground, according to a 2021 human-rights report on the Bahamas by the U.S. State Department. Cells were infested with rats, maggots and insects, the report said.
Inmates are supposed to get an hour every day outside for exercise. Because of staff shortages and overcrowding, there are times when inmates will only get 30 minutes a week, said Romona Farquharson, an attorney in the Bahamas.
The prison has different sections that separate those serving terms for violent crimes, for instance, from those who aren’t. Because of overcrowding, there have been instances in which inmates awaiting trial for minor crimes have been sent to the maximum-security facility, said Ms. Farquharson.
“I think they’ve got to be careful not to have him in really rough areas in the prison,” she said.
—Angel Au-Yeung, Ben Foldy and Hannah Miaocontributed to this article.
Write to Corinne Ramey at corinne.ramey@wsj.com, James Fanelli at james.fanelli@wsj.com, Dave Michaels at dave.michaels@wsj.com, Alexander Saeedy at alexander.saeedy@wsj.com and Vicky Ge Huang at vicky.huang@wsj.com
England soccer star Raheem Sterling is returning home from the World Cup in Qatar after armed intruders broke into his home while his family were inside, a person with knowledge of the situation told CNN.
The incident happened on Saturday evening, the individual told CNN, and Sterling is said to be “shaken” and “concerned” about the well-being of his children after the break-in.
There would be an opportunity for Sterling to return to Qatar if the circumstances are right, the individual told CNN, but added that he’s “now he’s focusing on being at home and supporting his family.”
England faces France in the World Cup quarterfinals on Saturday.
In a statement to CNN, Surrey Police said it is currently investigating a report of a burglary at an address in Oxshott, Leatherhead.
“Police were contacted just before 9pm on Saturday December 3rd after the occupants of the property came home and discovered a number of items including jewellery and watches had been stolen,” a spokesperson from Surrey Police told CNN.
“Enquiries to establish the circumstances are underway and the investigation is ongoing.
“No threat of violence was involved as the items were discovered stolen retrospectively. Enquiries into the circumstances are ongoing.”
On Sunday, Sterling was absent from England’s 3-0 victory over Senegal with England manager Gareth Southgate later saying the 27-year-old was dealing with a “family matter.”
“I spent a lot of time with Raheem this morning,” Southgate told reporters on Sunday.
“You have days where events happen and you have to deal with them. He’s on his way home. We’re obviously mindful of him being allowed space and privacy respected so we don’t want to talk in too much detail.
“Of course, it’s not ideal for the group ahead of a big game but it pales into insignificance, the individual is more important than the group in those moments.”
CNN has contacted England’s Football Association for comment.
The Chelsea forward played in England’s first two games in the group stages of the World Cup and scored in the team’s 6-2 victory against Iran.
The Phoenix Police Department has arrested a 36-year-old man in connection with a break-in at Democratic Arizona gubernatorial candidate Katie Hobbs’ campaign headquarters earlier this week.
Daniel Mota Dos Reis was booked on one count of third-degree burglary, according to the department.
On Wednesday night, a patrol officer saw a news story that included a surveillance image and recognized the man shown as a suspect who had been arrested earlier in the day in connection with a separate, unrelated commercial burglary, police said in a statement Thursday.
“The officer researched the arrest and learned the suspect, 36-year-old Daniel Mota Dos Reis, was still in jail but would soon be released. The officer contacted the jail and was able to re-arrest Dos Reis,” according to the statement.
CNN is working to identify an attorney for Dos Reis.
Police earlier said in a statement that “items were taken from the property sometime during the night.”
A source within the Hobbs campaign had told CNN that CCTV video showed the man they say broke into the campaign headquarters. The Hobbs campaign hasn’t been able to get a full inventory of what was taken, the source added.
Hobbs, Arizona’s secretary of state, faces Arizona Republican gubernatorial nominee Kari Lake in next month’s midterms.
Nicole DeMont, who manages Hobbs’ gubernatorial campaign, told CNN in a statement Wednesday that “Secretary Hobbs and her staff have faced hundreds of death threats and threats of violence over the course of this campaign. Throughout this race, we have been clear that the safety of our staff and of the Secretary is our number one priority.”
“Let’s be clear: for nearly two years Kari Lake and her allies have been spreading dangerous misinformation and inciting threats against anyone they see fit,” DeMont continued. “The threats against Arizonans attempting to exercise their constitutional rights and their attacks on elected officials are the direct result of a concerted campaign of lies and intimidation.”
DeMont said that intimidation “won’t work,” and expressed thanks to the Phoenix Police Department for keeping Hobbs and her team safe.
Lake on Wednesday appeared to claim without evidence that Hobbs’ campaign was lying about the motivations behind the incident and said it “sounds like a Jussie Smollett part two,” in reference to the actor who was convicted of making false reports to police that he was the victim of a hate crime in January 2019.
When asked by CNN if she had a response to DeMont’s claim that the incident was a “direct result of concerted campaign of lies and intimidation” by Lake and her allies, the Arizona GOP nominee shot back and said the statement was “absolutely absurd.”
“And are you guys buying that? Are you really buying that? Because this sounds like a Jussie Smollett part two,” Lake said before launching into a lengthy attack on the media.
This headline and story have been updated with additional developments.
Shoppers are finding more empty space on store shelves, but not because the retailer is out of stock. In many cases, the items are locked away to prevent theft.
At a
Best Buy Co.
BBY -5.03%
store in the suburbs of Houston, hundreds of items including Bose speakers and Fitbit activity trackers have been replaced by small blue signs that read, “This product kept in secured location,” and ask shoppers to find store workers for help.
“There used to be a lot more on the floor itself than locked up in cages,” said
Gary Pearce,
a 47-year-old manager at a disaster restoration company who shops in the store weekly.
The store is a sign of an endemic challenge for retailers: how to stop theft without shrinking profits or inconveniencing shoppers. Retailers have long dealt with theft, and frequency is down from a peak last winter for some, said retail executives. But theft attempt levels are higher than they were before the pandemic.
Many large retailers, including
Home Depot Inc.,
HD -1.61%
have been locking up more items while testing other solutions. They track high-risk goods and lock up items in regions or stores being hit hardest, retail executives say.
Best Buy
BBY -5.03%
says it isn’t locking up more items overall than in the past, but continues to do so where needed.
It is a tactic that risks annoying customers and investors. In July a Best Buy analyst recommended selling the company’s stock after he observed conditions in dozens of stores and found items locked up or missing from shelves.
At Best Buy stores, less than 5% of its products are locked up or in backrooms for theft-protection reasons, about the same percentage as previous years. A Best Buy store in Lone Tree, Colo.
Photo:
David Zalubowski/Associated Press
“Putting products in cages certainly deters theft, but it probably hinders sales,” said R5 Capital CEO
Scott Mushkin
in the report titled “Heartbreaking.” Some stores, like one in Danbury, Conn., were in good shape, said the report, while others were messy or didn’t have enough items easily available for shoppers to buy.
Best Buy declined to comment on the research.
Around $69.9 billion worth of products were stolen from retailers in 2019, according to the most recent data from the Retail Industry Leaders Association, which surveyed members.
Theft surged after stores reopened early in the pandemic, retail industry executives say. In part, the rush to buy more online during that period led to more demand online for stolen goods, they say. In some cases stores have been understaffed due to the tight labor market or staffing choices, which means fewer watchful eyes, say some executives. In addition, well-organized theft groups working regionally have become prevalent, making the problem harder to solve than run-of-the-mill shoplifting.
Many retailers use a risk algorithm to determine which items to lock up and in what locations. A high-value item that is frequently stolen is a good candidate, say executives. Retailers often try other deterrents first, like moving a product closer to staffed registers, attaching an alarm that is removed at checkout or using more visible security staff.
Less-expensive items can get similar treatment. “For a store to be locking things up like toothpaste, Spam or honey, they would have had to have been repeatedly targeted over a period of time,” said
Ben Dugan,
director of organized retail crime at
CVS Health Corp.
and president of the Coalition of Law Enforcement and Retail, a group that facilitates planning between retailers and law enforcement.
Home Depot
has been locking up more products during the past 12 months as a stopgap while testing more customer-friendly, higher-tech solutions, according to the company.
“It’s a triage-type scenario. It’s stop the bleeding and give yourself some time,” said
Scott Glenn,
vice president of asset protection at Home Depot.
Overall theft attempts at Home Depot continue to rise compared with before the pandemic, Mr. Glenn said. Shoppers don’t like when items are locked and Home Depot tries to avoid it, he said. But after a high-theft item is locked up, sales gradually go up because the store stays more consistently in-stock, Mr. Glenn said. In stores where Home Depot has aggressive theft deterrents, it has reduced loss to theft, he said.
Best Buy has long locked up some products as a large retailer of high-value electronics, say executives. Across all U.S. stores, less than 5% of its products are locked up or in backrooms for theft-protection reasons, about the same percentage as previous years, said
Damien Harmon,
executive vice president of omnichannel for the company.
Included in the 5% figures is a tactic Best Buy started using last winter as retail theft jumped, he said. The company replaced some products on shelves with QR codes so shoppers could scan, then head to registers to pay and pick up the product.
In some locations including the Houston Best Buy—which sits in an area where many local stores face elevated levels of crime, according to data from the local police department—the share of locked items can be higher. Shopper Mr. Pearce said he understood the extreme measures given the threat of theft.
Best Buy’s store inventory is being held differently than it has in the past, with less on floors due to more buying online, said Mr. Harmon. Products are brought to shoppers directly, which has the added benefit of also reducing theft, said Mr. Harmon.
After an item is locked, Best Buy watches sales trends and doesn’t get many comments about products being locked up, said Mr. Harmon. The company is also experimenting with training store staff to stand near high-theft items, he said. Its internal customer experience scores for stores are at a 15-year high, said a spokeswoman.
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InVue, a Charlotte, N.C., company that sells retailers locked glass cabinets, tracking sensors and software, late last year started getting requests from retailers asking for more customer-friendly options, said
Chris Gibson,
InVue’s chief product and marketing officer.
InVue is pitching more automated solutions that are more aesthetically pleasing or make it easier for store workers or shoppers to unlock a product quickly. Locking down products “became this draconian thing” during the pandemic, said Mr. Gibson. “A lot of our partners are saying, maybe that was a bridge too far.”
Browsing videogames at the local Best Buy used to be fun, said
Zion Grassl,
a 30-year-old video producer for a videogame website. Over the summer his local Best Buy in Eugene, Ore., removed the physical videogames from store shelves, he said, swapped with photocopy images of the front of the box that provide less information about the game.
Mr. Grassl said he understands the need to protect products from theft, but the change ruins the experience of browsing for something you didn’t know you needed.
“You still have this physical representation to look at, but it’s almost like they don’t want you to come in anymore,” he said.
Best Buy declined to comment on Mr. Grassl’s views.
Write to Sarah Nassauer at Sarah.Nassauer@wsj.com and Benoît Morenne at benoit.morenne@wsj.com
Embattled actor Ezra Miller is in legal trouble again — this time for allegedly stealing booze from a home in Vermont.
Miller, 29, was charged with felony burglary and is accused of stealing several bottles of alcohol from a house in Stamford earlier this year, according to a newly released police report.
“The Flash” star was charged after the homeowners — who weren’t home at the time of the alleged burglary — reported the missing bottles to police on May 1. A subsequent investigation, in which police reviewed surveillance videos, led cops to charge Miller.
Police caught up to Miller — who uses they/them pronouns — more than three months later on Aug. 7 and issued them a citation to appear in Vermont Superior Court on Sept. 26 to be arraigned on the charge.
The charge is the latest allegation the “Perks of Being a Wallflower” actor has racked up over the past year.
In late June, Rolling Stone reported that Miller was housing a mother and her three young children in their allegedly drug-and-gun-filled Vermont farmhouse.
Miller was arrested on two separate incidents in Hawaii earlier this year.Tim Wright / MEGAPolice reviewed footage and tracked down Miller three months after the alleged theft.Tim Wright / MEGAMiller has also been accused of grooming young girls.Hawaii Police Department via AP
They were also arrested in Hawaii in March for disorderly conduct and in April for second-degree assault. They were accused of being the subject of 10 calls to 911 in less than a month during their stay in the Aloha State.
The actor has also been accused of grooming young girls in a cult-like situation.
At the end of June, multiple victims of Miller’s alleged abuse broke their silence on their interactions with the troubled actor.
Actor Ezra Miller has been charged with felony burglary in Stamford, Vermont, the latest in a string of incidents involving the embattled star of “The Flash.”
In a report Monday, Vermont State Police said they responded to a burglary complaint in Stamford on May 1 and found several bottles of alcohol were taken from a residence while the homeowners weren’t present. Miller was charged after police consulted surveillance footage and interviewed witnesses.
The police report said Miller was located shortly before midnight Sunday and was issued a citation to appear for arraignment in Vermont Superior Court on Sept. 26.
The felony charge adds to Miller’s mounting legal woes and reports of erratic behavior. The 29-year-old actor was arrested twice earlier this year in Hawaii, including for disorderly conduct and harassment at a karaoke bar. The second incident was for second-degree assault.
The parents of 18-year-old Tokata Iron Eyes, a Native American activist, also earlier this year filed a protection order against Miller, accusing the actor of grooming their child and other inappropriate behavior with her as a minor from the age of 12. Tokata Iron Eyes recently told Insider that those allegations were false.
Attorneys for Miller didn’t immediately respond to requests for comment on the Vermont felony charge or the protection order related to Tokata Iron Eyes.
After appearing in several films for Warner Bros. and D.C. Films as the Flash, Miller stars in the upcoming standalone film “The Flash,” due out in June 2023. Though Warner Bros. last week axed the nearly completed “Batgirl” film, the studio has suggested it remains committed to releasing “The Flash.”
In an earnings report last week, David Zaslav, chief executive of Warner Bros. Discovery referenced “The Flash.” “We have seen ‘The Flash,’ ‘Black Adam’ and ’Shazam 2. We are very excited about them,” said Zaslav. “We think they are terrific, and we think we can make them even better.”
Representatives for Warner Bros. didn’t respond to messages Monday.
Federal prosecutors have charged about 20 people in the past two weeks with allegedly engaging in various fraud schemes related to the Covid-19 pandemic that amounted to about $150 million in improper government claims, around $20 million of which have been paid, officials said.
The Justice Department has stepped up efforts to uncover theft from programs that were pumping billions of dollars into the healthcare system after the outbreak of the pandemic in 2020. The new cases are filed in districts around the country, and provide a sweeping look at how some healthcare providers allegedly sought to cheat Medicare and other programs by bundling charges for unnecessary services—or those that weren’t ever provided—with the delivery of relatively inexpensive Covid-19 tests.
A doctor who ran drive-through Covid-19 testing sites in Maryland, for example, allegedly billed Medicare for many of those tests, along with $1.5 million in other lengthy physician visits that purportedly accompanied them, but never actually happened. The doctor,
Ron Elfenbein,
allegedly told his employees to submit the tests for reimbursement as services that required 30-minute consultations, because the higher complexity services were “the ‘bread and butter’ of how we got paid,” an indictment returned on Tuesday alleged. A woman who answered the phone at Dr. Elfenbein’s company said he wasn’t in the office on Wednesday and a lawyer for him couldn’t be identified.
Attorney General Merrick Garland, glasses, and Kevin Chambers, who was tapped last month to lead the Justice Department’s Covid-19 fraud enforcement efforts.
Photo:
Kevin Lamarque/Associated Press
A nurse practitioner in Miami, Elizabeth Hernandez, allegedly billed Medicare for $134 million in fraudulent claims, using relaxed telemedicine rules to sign orders for unnecessary genetic tests and medical equipment. And people in New Jersey, California and Colorado allegedly sold hundreds of fake vaccine cards created to look like official Centers for Disease Control and Prevention records.
A lawyer for Ms. Hernandez said that she “vehemently denies the charges and didn’t knowingly participate in any scheme to defraud the Medicare program.” The other defendants or their lawyers couldn’t immediately be reached for comment or didn’t immediately respond to requests for comment.
The cases “involve extraordinary efforts to prosecute some of the largest and most wide-ranging pandemic frauds detected to date,” said
Kevin Chambers,
who was tapped last month to lead the Justice Department’s Covid-19 fraud enforcement efforts.
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In the wake of the pandemic, prosecutors and regulators pored over Medicare billing data, spotting anomalies and pursuing a range of investigations. Last year, prosecutors charged another dozen healthcare providers with fraud schemes related to the pandemic totaling $143 million in allegedly false bills to government programs.
In some of the new cases, providers allegedly used Covid-19 testing to obtain personal information and saliva or blood samples from patients, and used them to submit for more expensive tests. In one California case, two owners of a clinical lab—
Imran Shams
and
Lourdes Navarro
—were charged with a healthcare fraud, kickback and money-laundering scheme that involved more than $100 million in fraudulent claims for Covid-19 and respiratory pathogen tests. They also sought to conceal their role by laundering the proceeds through shell companies Ms. Navarro controlled, prosecutors said.
Officials said the pair and other defendants preyed upon patients’ fear during the pandemic to tack on other unnecessary tests that had a more lucrative reimbursement rate but weren’t medically necessary. A lawyer for Ms. Navarro said she would plead not guilty to the charges. “She always tried to follow the law and provide appropriate and quality testing services to the laboratory’s patients. She looks forward to clearing her name in court,” said the lawyer,
Mark Werksman.
A lawyer for Mr. Shams couldn’t immediately be identified.
Prosecutors allege fake Covid-19 vaccine cards were found in a Colorado man’s trash.
Photo:
U.S. Department of Justice
“What is perhaps most disturbing about healthcare fraud is that patients may be harmed in furtherance of fraud schemes advanced by medical professionals who sadly place profit above patients’ health,”
Aaron Tapp,
section chief of the FBI’s financial crimes section said Wednesday.
In other cases, defendants allegedly worked to get around new requirements installed after the Covid-19 outbreak, including a required proof of vaccination at some businesses.
In September, Colorado businessman
Robert Van Camp
told a potential customer—who turned out to be an undercover agent—he had fake Covid-19 vaccine cards. “How are you guys doing that whole vaccine bullshit?” he asked, according to a complaint and arrest warrant filed on Monday, adding that he had sold fake cards to three Olympic athletes and hundreds of others. “Until I get caught and go to jail, f— it, I’m taking the money,” he said, “I’ve saved a thousand lives. I mean we’re talking about people who can’t go to work, can’t go to school, and they’re losing their job. It’s insane they can’t travel because of this bullshit.” He sold the agent five cards for $600.
In October, agents searched Mr. Van Camp’s trash at his home that he shared with an alleged co-conspirator who worked for a defense contractor and had a security clearance, finding handwritten documents titled “Card List” and “Card Order$” with the names of people and amounts, and several torn up vaccine cards, prosecutors alleged. Mr. Van Camp was arrested on Tuesday, according to court records. A lawyer for Mr. Van Camp didn’t immediately respond to a message seeking comment.
Since the start of the Covid-19 pandemic in 2020, the scientific understanding of its transmission and prevention has evolved. WSJ’s Daniela Hernandez explains what strategies have worked for stemming the spread of the virus and which are outdated in 2022. Illustration: Adele Morgan
Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com and Sadie Gurman at sadie.gurman@wsj.com
WASHINGTON—The Justice Department said Tuesday it seized over $3.6 billion worth of digital currency stolen during a hack of a cryptocurrency exchange and arrested two suspects for allegedly trying to launder the proceeds.
The value of the cryptocurrency at the time it was seized last week marks the largest financial seizure ever by the Justice Department, officials said.
Ilya Lichtenstein,
34 years old, and his wife,
Heather Morgan,
31, were both arrested without incident Tuesday morning in Manhattan, the department said. They have promoted themselves on social media as entrepreneurs with deep knowledge of tech and a love of travel.
According to court documents, the suspects allegedly conspired to launder nearly 120,000 bitcoin stolen from Bitfinex’s platform in 2016 after a hacker breached the exchange’s systems and initiated more than 2,000 unauthorized transactions. The transactions included the use of computer programs to rapidly automate bitcoin movements and deposits to try to conceal their origin, with some of the funds eventually landing in financial accounts tied to the couple, federal prosecutors said.
“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General
Lisa Monaco.
“In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions.”
While the SEC hasn’t announced major actions against big crypto exchanges, the commission has threatened to sue companies offering crypto lending. WSJ’s Dion Rabouin explains why this one part of the crypto market has drawn such a strong reaction. Photo: Mark Lennihan/Associated Press
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At the couple’s appearance in Manhattan court Tuesday, U.S. Magistrate Judge Debra Freeman set bond at $5 million for Mr. Lichtenstein and $3 million for Ms. Morgan, requiring that their parents’ homes be posted as security. The judge also ordered that they not have devices with internet access and prohibited them from conducting cryptocurrency transactions.
Anirudh Bansal, a lawyer for Mr. Lichtenstein and Ms. Morgan, told the judge that his clients had been aware of the government’s investigation since November and hadn’t tried to flee the country. Mr. Bansal declined to comment further.
Mr. Lichtenstein and Ms. Morgan face charges relating to conspiracy to commit money laundering and conspiracy to defraud the U.S. They weren’t charged with carrying out the hack of Bitfinex. The Justice Department’s investigation is ongoing, officials said.
Hong Kong-based digital-currency exchange Bitfinex said it was hacked in 2016, causing the price of bitcoin to sharply drop. At the time, the value of the stolen bitcoin was valued at around $70 million, officials said.
Bitcoin, like many virtual currencies, can fluctuate wildly in price and has soared enormously since 2016. The $3.6 billion recovered by the Justice Department is the value of the bitcoin at the time of seizure, which occurred last week, officials said. Overall the current value of the stolen bitcoin linked to the hack is valued today at about $4.5 billion, officials said, but only about 94,000 of the roughly 119,754 stolen bitcoin were recovered.
Bitcoin is a popular type of so-called cryptocurrency, a kind of digital currency that exists as open-source computer code and that is maintained by the operations of a vast world-wide network of computers. Officials said the fact that blockchain—the inalterable ledger that records bitcoin transactions—is public was helpful in their investigation.
The Justice Department last year created a team to prosecute criminals that rely on cryptocurrency and recover illicit proceeds
Photo:
Ariel Zambelich/The Wall Street Journal
Ari Redbord, a former senior Treasury Department official now at the blockchain analytics firm TRM Labs, said the arrests show the developing capabilities of investigators to trace cryptocurrency flows, including years after illicit transactions occurred.
“As the obfuscation techniques evolve, so do the tools authorities have to track them,” said Mr. Redbord. “The blockchain is forever.”
The case also helps law enforcement understand the strategies hackers, terrorists and other criminals are using in digital-currency markets to try to move illicit funds, he said.
The Justice Department created a National Cryptocurrency Enforcement Team last October to prosecute criminals that rely on cryptocurrency and recover illicit proceeds.
Last year, authorities were able to claw back about $2.3 million in bitcoin that was paid by Colonial Pipeline Co. to a Russian ransomware gang that hacked the major conduit, causing a shutdown that lasted for days on the pipeline that runs from the Gulf Coast to New Jersey.
The couple arrested Tuesday, Mr. Lichtenstein and Ms. Morgan, allegedly used their laundered proceeds to purchase a variety of material goods and assets, including gold, nonfungible tokens and
Walmart
gift cards, officials said.
Only a small portion of the stolen money had been spent by the time of their arrest, according to officials.
Federal prosecutors unsuccessfully requested at Tuesday’s proceeding that the Ms. Morgan and Mr. Lichtenstein be held without bond, saying they were a flight risk.
During a search of the couple’s Manhattan home this month, federal agents found a bag of burner phones, $40,000 in cash and a device with an electronic file that had fake identities used to open bitcoin accounts, Assistant U.S. Attorney Maggie Lynaugh said. Another file found in the search, she said, had information on how to purchase passports on the dark web.
The couple is also believed to have access to $330 million in bitcoin that the federal government hasn’t located, Ms. Lynaugh said.
Ms. Morgan and Mr. Lichtenstein, who also goes by the nickname Dutch, have promoted themselves as veteran tech and crypto entrepreneurs, according to their social-media posts. Their enterprises include co-founding Demandpath, a venture-capital fund; Endpass, a cryptocurrency wallet; and SalesFolk, a marketing firm.
All three companies were used by the couple to justify some of their cryptocurrency transactions, Christopher Janczewski, special agent for the Internal Revenue Service’s criminal investigation division, said in a court filing.
On Medium, a publishing platform, Mr. Lichtenstein’s profile describes him as a “tech entrepreneur, explorer, and occasional magician.” His profile on LinkedIn, the professional networking platform, says he is a “coder and investor interested in blockchain technology, automation, and big data.”
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Ms. Morgan’s profile on Forbes.com, where her articles are posted under the site’s ForbesWomen banner, says she is an international economist and serial entrepreneur specializing in software development.
“When she’s not reverse-engineering black markets to think of better ways to combat fraud and cybercrime, she enjoys rapping and designing streetwear fashion,” her Forbes.com bio reads. Her LinkedIn page links to a personal website, in which she refers to herself as rapper Razzlekhan, with a “fearless entrepreneurial spirit and hacker mindset.”
A friend of Ms. Morgan said the couple, while planning to buy a $2 million apartment in New York, didn’t live a lavish lifestyle and weren’t splashy spenders. The friend said their wedding in November was modest and the couple said they often used air miles to fly.
Bitfinex, the exchange platform that was hacked in 2016, said it had been cooperating with the Justice Department since its investigation began and said it would “follow appropriate legal processes to establish our rights to a return of the stolen bitcoin.” Updates on the return of stolen bitcoin would be forthcoming, the company said.
Some financial crime experts said the seizure and others in the past several years show that cryptocurrency markets can be increasingly monitored by law enforcement. Top law-enforcement officials whose agencies investigate cryptocurrency crimes, including the U.S. Secret Service, have said the blockchain ledger provides a digital trail for their probes, but have urged policy makers to strengthen reporting rules on the identities of users.
Corrections & Amplifications Ari Redbord is a former senior Treasury Department official now at the blockchain analytics firm TRM Labs. An earlier version of this article incorrectly spelled his last name as Redboard. (Corrected on Feb. 8)
—James Fanelli contributed to this article.
Write to Dustin Volz at dustin.volz@wsj.com and Ian Talley at ian.talley@wsj.com
COVINA, Calif. (KABC) — The man believed to be the burglary suspect accused of shooting and killing a father of three in Covina who confronted him during the incident is now in custody.
Officers with the Covina Police Department began surrounding a neighborhood Wednesday afternoon after reports began coming in of a man seen in the area that matched the description of the burglary suspect.
Police say a UPS driver saw him near an apartment complex on the corner of Bonnie Cove Avenue and Calora Street.
After an hours-long standoff, the man was taken into custody just before 8 p.m.
The father of three was shot and killed after confronting the burglary suspect.
It happened around 11 p.m. Tuesday after two residents spotted a man possibly burglarizing a vehicle in the 1100 block of N. Charter, according to police.
The suspect ran away but the residents later located him in the 1800 E. Covina Boulevard and confronted him. That’s when police say the suspect opened fire, killing one of them before running away.
Police haven’t officially identified the victim, but family members tell Eyewitness News 38-year-old Joey Casias was the man killed.
Family members say Casias was a UPS employee of 19 years and described him as a devoted father and great neighbor. The heartbroken family says they had plans to visit Disneyland and were preparing for the holidays.
Police released two images of the suspect earlier on Wednesday – he was considered to be armed and dangerous.
Meanwhile, a GoFundMe account has been set up for the Casias family.
