Two New York men admit participating in more than $25 million COVID-19 fraud, other offenses, including fentanyl distribution

Date: April 16, 2024

Contact: [email protected]

Newark, NJ - Two New York men today admitted conspiring with others to defraud dozens of states to obtain millions of dollars of COVID-19 unemployment benefits; one of the defendants also admitted to fentanyl conspiracy and distribution and conspiring to defraud the IRS of tax credit benefits, U.S. Attorney Philip R. Sellinger announced.

Natanael Valdez Brito, aka "El Pocho," of the Bronx, New York, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to a four-count information charging him with conspiracy to distribute fentanyl, possessing with intent to distribute fentanyl, and two counts of conspiracy to commit wire fraud.

Alexander Arismendy Alix Hernandez of the Bronx, New York, pleaded guilty before Judge Shipp to an information charging him with one count of conspiracy to commit wire fraud.

Billy Castro previously pleaded guilty to the wire fraud conspiracy to which Valdez and Alix pleaded guilty, and Castro and Juan De La Cruz Infante Torres previously pleaded guilty to the fentanyl offenses to which Valdez pleaded guilty. Both Castro and Infante are awaiting sentencing.

The following individuals were previously charged by complaint for the same wire fraud conspiracy: Rafael Josmin Nunez Duarte and Josmin Rafael Nunez Duarte, aka "Mello," both of the Bronx, New York; Leonel Frias Espaillat of Allentown, Pennsylvania; and Abrahan Rivas Rojas, aka "Milandro," and Yarisa Espaillat, aka "Yari," both of the Dominican Republic. Nunez, Duarte, Frias, and Espaillat have been released on bond. Rivas remains at large.

"The financial benefits provided by the government in response to the COVID-19 pandemic provided enormous relief to Americans who were struggling to get by. Unfortunately, people like the defendants who pleaded guilty today saw the pandemic as an opportunity to enrich themselves illicitly. Our office is focused on combating all types of fraud, especially when it involves exploiting the suffering of others." U.S. Attorney Philip R. Sellinger

"Much of the world has moved on from the pandemic," FBI - Newark Special Agent in Charge James E. Dennehy said. "Gone are masking, social distancing, and quarantining. However, our work searching out and bringing to justice fraudsters who used COVID-19 as a get-rich-quick scheme forges on even now and will until everyone who broke the law is held accountable. The men pleading guilty to their roles in this conspiracy should serve as a warning to others who think the more time that goes by, they will get away with it. You won't, and we will catch you."

According to documents filed in this case and statements made in court:

Valdez and Alix conspired with Castro, Nunez, Duarte, Frias, Rivas, Espaillat, and others to use the personal identifying information of thousands of individuals to create fictitious online profiles claiming to be real people seeking unemployment benefits as a result of the COVID-19 pandemic. The conspirators submitted fraudulent applications to the departments of labor of Puerto Rico and dozens of other states, including Pennsylvania, New York, and New Jersey. Once the fraudulent unemployment benefit applications were approved, the conspirators received unemployment benefit funds through debit cards, which they either cashed out at ATMs or used to make purchases. To date, law enforcement has identified that the unwitting individuals' information was used to fraudulently obtain more than $25 million in unemployment benefits from approximately 29 states and Puerto Rico.

Valdez also conspired with others to attempt to defraud the IRS of more than $1.9 million in tax credit benefits, for which the conspirators received at least $129,446. Valdez and others used personally identifying information to fraudulently apply for $1,800 child tax credit benefits and other benefits from the IRS. When law enforcement searched Valdez's residence, they recovered hundreds of completed applications in sealed envelopes, which were ready to be mailed to the IRS.

In May and June 2021, Valdez conspired with Castro, Infante, and others to distribute substantial quantities of fentanyl. Valdez obtained kilograms of fentanyl from a source of supply in Mexico. Valdez then provided the kilograms to Castro, which he coordinated with Infante to sell. On June 15, 2021, Castro and Infante took approximately 2 kilograms of fentanyl from Castro's Queens, New York apartment to Clifton, New Jersey, where they were arrested trying to sell it. Law enforcement agents then searched Castro's apartment and found approximately 2 additional kilograms of fentanyl, along with driver's licenses, Social Security cards, debit cards, tax forms, bills, and other documents - including COVID-19 unemployment benefits applications and debit cards - in the names of approximately 100 individual victims that were used in furtherance of the unemployment benefit fraud conspiracy.

The charges of conspiracy to distribute and possession with intent to distribute fentanyl each carry a maximum sentence of 20 years in prison and a maximum fine of $1 million. The conspiracy to commit wire fraud charges carry a maximum penalty of 20 years in prison and a fine of the greatest of $250,000, twice the gross amount of any pecuniary gain that any persons derived from the offense, or twice the gross amount of any pecuniary loss sustained by any victims of the offense, whichever is greatest. Sentencing for both defendants is scheduled for Aug. 27, 2024.

U.S. Attorney Sellinger credited special agents of the IRS Criminal Investigation (CI), under the direction of Acting Special Agent in Charge Jenifer L. Piovesan in Newark; special agents of the FBI, under the direction of Special Agent in Charge James E. Dennehy in Newark; special agents with the U.S. Postal Service - Office of Inspector General, under the direction of Special Agent in Charge Matthew Modafferi, Northeast Area Field Office, with the investigation leading to the guilty pleas and charges. He also thanked the U.S. Department of Labor, Pennsylvania Department of Labor and Industry, and New York Department of Labor for their assistance in the investigation.

The District of New Jersey COVID-19 Fraud Enforcement Strike Force is one of five strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud. The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds.

This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multiagency approach.

The government is represented by Assistant U.S. Attorneys Mark J. Pesce of the Economic Crimes Unit and Sam Thypin-Bermeo of the OCDETF Unit in Newark.

The charges and allegations against Nunez, Duarte, Frias, Rivas, and Espaillat are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.

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