Jun-19-13 Acting Attorney General and Labor Commissioner Announce Indictment Charging Accountant with Leading Scheme Involving 14 Co-Defendants to Steal $700,000 From the State By Filing False Unemployment Claims
Division of Criminal Justice
Elie Honig, Director
For Immediate Release: For Further Information Contact:
June 19, 2013 Peter Aseltine (609) 292-4791TRENTON – Acting Attorney General John J. Hoffman and Labor Commissioner Harold J. Wirths today announced an indictment charging a Livingston accountant with orchestrating a scheme in which he and 14 co-defendants allegedly defrauded the state of nearly $700,000 by filing false claims for unemployment benefits. The accountant allegedly filed claims using identities stolen from clients, and filed fraudulent employment records in the names of businesses he served in order to support the claims.
The charges stem from “Operation April Fools,” a joint investigation by the New Jersey Division of Criminal Justice and the New Jersey Department of Labor and Workforce Development.
The Division of Criminal Justice obtained a state grand jury indictment charging the accountant, Todd P. Halpern, 48, of Livingston, with money laundering (1st degree), conspiracy (2nd degree) and identity theft (2nd degree). The charge of first-degree money laundering carries a sentence of 10 to 20 years in state prison and criminal fines and penalties of up to $1 million. Halpern, who was never licensed as an accountant in New Jersey, allegedly used his fraud schemes to fund lavish expenditures that included season tickets to the New York Giants, purchases of jewelry, gold and silver, and high-end vehicles, including a Cadillac Escalade, Lexus GX-470 and classic 1957 Chevy Bel Air.
Halpern and 14 other defendants allegedly conspired in a scheme from October 2008 to May 2012 in which they stole $694,606 from the state by filing 36 fraudulent claims for unemployment benefits. To support the claims, the defendants allegedly filed false WR-30 wage records with the state indicating the claimants recently earned wages from employers that paid into the unemployment insurance fund.
“To satisfy his greed, Todd Halpern allegedly stole the identities of his clients and fraudulently collected hundreds of thousands of dollars in unemployment benefits,” said Acting Attorney General Hoffman. “The alleged thefts committed by this con artist and his co-defendants constitute an affront to honest, hardworking New Jersey residents, who pay into the unemployment insurance fund with their employers and who count on benefits being available as a safety net if they lose their jobs.”
The Department of Labor has implemented new security measures under Governor Chris Christie and Commissioner Wirths to eliminate weaknesses exploited by the defendants and detect fraud in connection with claims filed for unemployment benefits. Those software and program changes, which enable the department’s information technology systems to identify fraudulent claims, resulted in a lead on April 1, 2012 that prompted the investigation that led to the indictment of Halpern and his co-defendants. Because of the date, the investigation was dubbed “Operation April Fools.”
“If not for the many new anti-fraud measures put into the place during this administration, we would not be catching these types of schemes,” said Commissioner Harold J. Wirths of the New Jersey Department of Labor and Workforce Development. “Since March 2011, my department has stopped more than $253 million in fraud, and we have been recognized twice by the U.S. Department of Labor for leading the nation in combating fraud. We will continue to find new tools and utilize every measure possible to protect public funds.”
“This indictment serves notice that we have both the will and the technology to detect those who attempt to steal unemployment benefits, and when we do, we will prosecute them to the full extent of the law,” said Director Elie Honig of the Division of Criminal Justice. “We will continue to partner with the Department of Labor to bring these cases and safeguard the unemployment insurance fund.”
The indictment was returned on June 11, but was sealed by the court until today.
The indictment was presented to the state grand jury by Deputy Attorney General Anthony Torntore and Deputy Attorney General Valerie Noto. The investigation was conducted for the Division of Criminal Justice by Detective Lynn Patrick Fitzgerald, Deputy Chief of Detectives Alex M. Adkins, and Deputy Attorneys General Torntore and Noto, under the supervision of Deputy Attorney General Jill Mayer, Chief of the Specialized Crimes Bureau. The investigation was conducted for the Department of Labor and Workforce Development by Supervising Investigator Michael Kulyk and Supervisor of Investigations Michael B. Marich of the Bureau of Benefit Payment Control, under the direction of Charles J. Walkowiak, Director of Fraud Prevention and Risk Management. The Passaic County Sheriff’s Office and the U.S. Postal Inspection Service provided valuable assistance in the investigation.
Thirteen defendants were charged in the indictment. Two defendants, Alexis Leguizamon, 41, of Jersey City, and Chalin E. Romero, 24, of Union City, were charged on June 5 by accusation with two counts each of third-degree theft by deception. They were admitted into the Pre-Trial Intervention Program.
The 12 other defendants named in the indictment with Halpern all face multiple charges. David Altman, 42, of Monsey, N.Y., is charged with conspiracy, theft by deception and money laundering, all in the second degree. The remaining 11 defendants are charged with second-degree conspiracy and third-degree counts of theft by deception and money laundering. Those defendants include Todd Halpern’s father, George J. Halpern, 74, of Short Hills, who is also an accountant, as well as Todd Halpern’s father- and mother-in-law, Jack and Miriam Chesner of Morris Plains.
Todd Halpern allegedly devised and drove the scheme and is charged in connection with all but three of the 36 false claims. A total of 17 fraudulent claims were allegedly filed in the names of defendants. No claim was filed in the name of Todd Halpern, but claims were filed in the names of each of the other 14 defendants, with the exception of Miriam Chesner. (Two claims were filed in the name of George Halpern, two were filed in the name of Leguizamon, and two were filed in the name of Chalin Romero. In addition, claims were filed using Altman’s name as well as the name of his wife.) The remaining 19 claims were allegedly filed using stolen identities and Social Security numbers, including identities of many former clients of Todd or George Halpern. A number of the co-defendants were also clients of Todd and George Halpern.
The defendants allegedly used nine different businesses as employers in creating the false WR-30 wage records that were filed with the state to back up the unemployment insurance claims. One business was linked to Altman and Todd Halpern. The other eight businesses were used in the scheme without the knowledge of their owners and operators. Five businesses were former clients of Todd or George Halpern, and three others were bankrupt or defunct. The false employment records in most cases reported quarterly wages of $13,000 or $15,600 for each of the claimants.
The amount of unemployment benefits collected on each of the fraudulent claims ranged from $1,752 to $51,000, with the average being $19,295. In nearly all instances, the proceeds from the claims filed using stolen identities allegedly went by direct deposit or check into bank accounts controlled by Todd Halpern. Funds from two of those claims allegedly went to Altman. The benefits paid on the claims filed in the names of other defendants typically went to the defendants by direct deposit, check or debit card mailed to their addresses. It is alleged that Todd Halpern got a cut of the proceeds on some of those claims. It is alleged that well over $300,000 in fraudulently obtained unemployment benefits went into bank accounts that were controlled by Todd Halpern.
On June 5, Todd Halpern, who ran a tax preparation business in recent years, pleaded guilty to federal charges of tax and wire fraud. The U.S. Attorney’s Office for the District of New Jersey charged Halpern with filing 657 fraudulent federal income tax returns and collecting $373,938 in fraudulent tax refunds. He faces a federal prison sentence and is awaiting sentencing in U.S. District Court.
The Department of Labor and Workforce Development under Governor Christie and Commissioner Wirths has implemented the following anti-fraud measures. Most of the criminal conduct in this case occurred prior to these changes:
- Replaced paper checks with Debit Cards and Direct Deposit to distribute benefits more securely and at a cost savings.
- Created a new Anti-Fraud unit headed by a former FBI agent to improve fraud detection.
- Implemented more than 20 programs and safeguards that have saved more than $235 million in fraud since March 2011. The programs include:
- Cross-checking practice by which unemployment insurance recipients are matched against national and state “new hire” data to thwart the most common fraud, which is people collecting UI after they have found employment.
- Using a software system to detect foreign Internet Protocol addresses through which organized criminals overseas attempt to file multiple claims.
- Identity-proofing system that asks people filing claims to answer a few multiple-choice questions designed to thwart identity thieves from collecting benefits using stolen Social Security numbers and other stolen data.
The following is a full list of the 15 defendants charged by indictment or accusation:
- Todd P. Halpern, 48, of Livingston;
- George J. Halpern, 74, of Short Hills;
- Jack B. Chesner, 81, of Morris Plains;
- Miriam Chesner, 78, of Morris Plains;
- David Altman, 42, of Plainfield;
- Manuel Cruz, 28, of Union City;
- Henry Ford, 54, of Plainfield;
- Dario Gomez, 43, of Newark;
- Augustin Gomez, 29, of Jersey City;
- Alexis Leguizamon, 41, of Jersey City;
- Garry Lloyd, 58, of Williamstown;
- Andres Lopez III, 41, of Lyndhurst;
- Osiris Perez, 44, of Bronx, N.Y.;
- Chalin E. Romero, 24, of Union City; and
- Edgard Torres, 49, of North Bergen.
First-degree crimes carry a sentence of 10 to 20 years in state prison and a fine of up to $200,000, while second-degree crimes carry a sentence of five to 10 years in prison and a fine of up to $150,000. Third-degree crimes carry a sentence of three to five years in prison and a fine of up to $15,000. The money laundering counts carry an enhanced fine of up to $500,000, and an additional anti-money laundering profiteering penalty of $500,000 on the first-degree count and $250,000 on the second-degree count.
The indictment is merely an accusation and the defendants are presumed innocent until proven guilty. The indictment was handed up to Superior Court Judge Pedro J. Jimenez Jr. in Mercer County, who assigned the case to Mercer County. The indictment is posted with this release at www.njpublicsafety.com.