Everything is a priority in the Southern District of New York

Standing next to photos of a Mercedes-Benz, gold bars and money spread across a monogrammed jacket, U.S. Attorney Damian Williams calmly describes the bribery charges against U.S. Senator Robert Menendez (D-N.J.), his wife and three New Jersey businessmen during a press conference. It’s Sept. 22, 2023, and the Southern District of New York (SDNY) has just unsealed an indictment against Menendez, then-chair of the U.S. Senate Foreign Relations Committee. (See “Southern District of New York News Conference on Senator Menendez Indictment,” C-SPAN.)

Williams tells reporters that Menendez; his wife Nadine; and businessmen Wael Hana, Jose Uribe and Fred Daibes were engaged in a bribery scheme between 2018 and 2022. In the alleged scheme, Hana, Uribe and Daibes paid Menendez and his wife hundreds of thousands of dollars in cash, gold bars, a Mercedes Benz, mortgage payments and home furnishings, in exchange for Menendez agreeing to use the power of his office to enrich the businessmen and provide preferential treatment for the government of Egypt. (See “Southern District of New York News Conference on Senator Menendez Indictment.”)

During a search of Menendez’s home, FBI agents discovered more than $480,000 in cash stuffed in envelopes, clothing (including inside the sleeves of Menendez’s monogrammed U.S. Senate jacket), and a safe. Agents also found the Mercedes in the garage and the gold bars in Menendez’s home. Menendez’s trial began this past May. He’s pleaded not guilty. (See “U.S. Senator Robert Menendez, His Wife, And Three New Jersey Businessmen Charged With Bribery Offenses,” U.S. Attorney’s Office Southern District of New York press release, Sept. 22, 2023.)

The 2023 case against Menendez is a sequel of sorts. The senator was previously indicted in 2015 by the U.S. Department of Justice (DOJ) on similar charges of bribery for accepting gifts and $660,000 in campaign contributions from a Florida ophthalmologist to promote the eye doctor’s business and personal interests with then-President Barack Obama’s administration. In 2017, the case ended in a mistrial, and Menendez went on to win a third term in the Senate in 2018. Experts say this time around it’ll be much tougher for him. There are now 16 felony counts against Menendez, including bribery, extortion, fraud, obstruction of justice and acting as a foreign agent for Egypt. The once-powerful senator could spend the rest of his life in prison if convicted. (See “Corruption Case Against Senator Menendez Ends in Mistrial,” by Nick Corasaniti and Nate Schweber, The New York Times, Nov. 16, 2017; “Bob Menendez was indicted for the second time in 10 years. How the new case compares to 2015,” by Sudiksha Kochi and Bart Jansen, USA Today, Sept. 23, 2023; and “Sen. Bob Menendez’s trial, where gold bars may shine, begins Monday,” by Salvador Rizzo, The Washington Post, May 12, 2024.)

While it’s not the first time the U.S. government’s taken a swing at Menendez for corruption, it’s the type of case that Williams has pledged to pursue as the top prosecutor in what many consider the most consequential U.S. attorney’s office in the U.S. In his statement to reporters at the press conference, Williams said, “I want to make a couple of things very clear. … my office remains firmly committed to rooting out public corruption without fear or favor and without any regard to partisan politics. That’s in our DNA.” When he was first sworn as U.S. attorney in 2021, he said that public corruption and financial fraud would be priorities for SDNY. Here, Fraud Magazine looks at how Williams is tackling those issues through initiatives such as SDNY’s new whistleblower program and through some of his most notable public corruption and fraud cases — including one he’s probably best known for — the successful prosecution of Sam Bankman-Fried, disgraced chief executive officer (CEO) of cryptocurrency exchange FTX. (See “Southern District of New York News Conference on Senator Menendez Indictment” and “Damian Williams makes history as first Black U.S. attorney in Manhattan,” by Bobby Cuza, Spectrum News, Nov. 20, 2021.)

Getting to the truth

“I’m aware of my own blind spots. I think the combination of self-confidence and self-doubt can operate together — to keep me honest, to keep me humble, and ultimately, to make me better.”

SDNY has a reputation. The office that represents the U.S. government in federal cases originating in the southeast region of New York has (half-jokingly) been called the “Sovereign District of New York” for sometimes acting independently of the DOJ. But it’s also situated in Manhattan, in the heart of international commerce, just minutes from Wall Street, so it’s prosecuted some of the highest-profile financial fraud cases, as well as international terrorists, drug traffickers and organized crime. In 2022, SDNY prosecuted Ghislaine Maxwell, companion to Jeffrey Epstein, on sex-trafficking charges. She was sentenced to 20 years in prison. It’s also investigated one of its former leaders, Rudolph Giuliani, over his alleged dealings with Ukraine before the 2020 presidential election. (Giuliani has denied any wrongdoing in the case.)

SDNY is also seen as a steppingstone of sorts for ambitious (and sometimes controversial) prosecutors. Notable former SDNY U.S. attorneys include Guiliani, James Comey and Preet Bharara. Guiliani made a name for himself in the 1980s going after the Mafia before becoming mayor of New York City and serving as a lawyer to former President Donald Trump. As U.S. attorney for SDNY, Comey oversaw the prosecutions of WorldCom and Adelphia executives before going on to become deputy U.S. attorney general and later director of the FBI. And Bharara became known for prosecuting white-collar crime cases and public corruption cases, including the prosecution of former New York State Assembly Speaker Sheldon Silver for wire fraud, extortion and mail fraud. (See “The Relentless Damian Williams,” by Errol Lewis, New York Magazine, Dec. 20. 2023; “Rudy Giuliani is served indictment papers at his own birthday party after mocking Arizona attorney general,” by Alex Tabet and Vaughn Hillyard, NBC News, May 18, 2024; and “The most notable Southern District of New York prosecutors,” by Eric Holmberg and Ashley Borja, City & State, Feb. 5, 2024.)

However, Williams doesn’t quite have the controversial reputation that some of his forebears have. He’s often described as reserved, a good listener. Not exactly someone with a big ego or purposefully looking for the limelight. Indeed, at times, he’s shown himself to be humble and reflective. In a speech to a graduating law school class at Columbia University, he recounted having a stutter and scoring poorly on an IQ test to get into a private school. “I was 5 years old. A little Black boy with a really, really bad stutter, growing up in the Deep South. Folks told me that I was ‘borderline retarded.’ That was the label I remember.” (See “The Relentless Damian Williams,” by Errol Lewis, New York Magazine, Dec. 20. 2023.)

In an interview with City & State earlier this year, Williams said, “I’m aware of my own blind spots. I think the combination of self-confidence and self-doubt can operate together — to keep me honest, to keep me humble, and ultimately, to make me better.” (See “Damian Williams is taking on public corruption, pushing for federal oversight at Rikers and telling dad jokes,” by Sahalie Donaldson, Feb. 5, 2024.)

He’s come a long way from being the little boy with a stutter in the Deep South. Williams, who was born to Jamaican immigrants in Brooklyn, New York, but raised in Atlanta, Georgia, has a sterling résumé with degrees from Harvard, Yale and Cambridge. He clerked for late U.S. Supreme Court Justice John Paul Stevens and U.S. Attorney General Merrick Garland when he was federal judge. “Both Judge Garland and Justice Stevens are extraordinary legal minds, so getting to learn from them was a real treat,” Williams tells Fraud Magazine. He also worked for the prestigious New York law firm Paul, Weiss.

Williams says that what he most wanted to do was work investigations. “I love the puzzles, you know, figuring out what happened. Getting to the truth,” he tells Fraud Magazine. “I love the way in which you can never fully feel like you’ve got it all figured out and the work that it takes to see things from different perspectives, identifying your own blind spots, always thinking, about ‘what am I missing?’” Williams’ love of investigations led him to apply to be an assistant U.S. attorney (AUSA) for the SDNY in 2012. Bharara, who was U.S. attorney at the time, has said that hiring Williams was a “no-brainer.” (See “The Rise of Damian Williams, America’s Top Crypto Cop,” by Jacob Silverman, The New Republic, March 23, 2023.)

As an AUSA, Williams worked cases that seemed to foreshadow his future focus on financial fraud and public corruption. Most notably, he helped win the conviction of the late, powerful New York Assembly Speaker Sheldon Silver on federal bribery charges. Silver’s first conviction was overturned, but he was later convicted in a second trial. Williams gave the opening statement for it, 22 pages worth of court transcripts, reportedly without any notes. After a two-week trial, Silver was convicted and subsequently sentenced to seven years in prison. He died in 2022 while serving his sentence. (See “U.S. Attorney Damian Williams’ record shows how he may handle the Adams campaign investigation,” by Samantha Max, Gothamist, Jan. 2, 2024.)

He also helped prosecute former New York Congressman Christopher Collins, who pleaded guilty in an insider trading case. Collins was later pardoned by President Trump. (See “Prosecutor in Bankman-Fried Case Made a Career of White-Collar Cases,” by Benjamin Weiser, The New York Times, Dec. 13, 2022.)

In 2020, with the election of President Joe Biden, Williams threw his hat into the ring to become U.S. attorney. Biden appointed him to the spot, and in 2021, Williams became the first Black U.S. attorney to lead the SDNY. He gave his swearing-in speech at an armory that was once headquarters of the Harlem Hellfighters, an all-Black U.S. Army regiment whose volunteers were transferred to French command during World War I to keep them from serving alongside white American soldiers. The colonel of the regiment was William Hayward, a white lawyer who later became a U.S. attorney for SDNY and hired a veteran of the regiment as its first Black prosecutor. During his swearing-in ceremony, Williams announced the creation of a civil rights unit in SDNY’s criminal division. Citing an increase in white supremacist groups, antisemitism and anti-Asian violence, Williams said adding a civil rights division to the criminal division would make SDNY more effective in handling those cases. (See “New Manhattan U.S. Attorney Vows Community, Civil Rights Focus,” by Christian Berthelsen, Bloomberg, Nov. 19, 2021 and “Manhattan U.S. Attorney Forms New Civil Rights Unit,” by Karen Zraick and Benjamin Weiser, The New York Times, Nov. 19, 2021.)

In June, Williams received the Association of Certified Fraud Examiners’ (ACFE) highest honor, the Cressey Award, at the 35th Annual Global Fraud Conference in Las Vegas, Nevada. The award is given to individuals for a lifetime of achievement in the detection and deterrence of fraud. Williams has certainly demonstrated that achievement even in his relatively short time as U.S. attorney, as he’s taken on major cases against crypto crooks and corrupt politicians.

Fighting public corruption

At his 2021 swearing-in, Williams pledged to make public corruption a focus of his tenure as U.S. attorney. And he’s largely made good on that promise. Along with the case against Menendez, SDNY also indicted New York Lieutenant Governor Brian Benjamin — while he was in office — for allegedly taking bribes from a Harlem, New York, real estate operator, prompting Benjamin’s resignation. A federal judge threw out the bribery charges in December 2022, saying prosecutors hadn’t shown an explicit case of quid pro quo. However, this year, in March, a federal appeals court reversed the decision and sent it back to the lower court for further proceedings. (See “Appeals Court Revives Corruption Case Against Ex-Lieutenant Governor,” by Benjamin Weiser and Nicholas Fandos, The New York Times, March 8, 2024.)

In November 2023, federal agents seized electronic devices belonging to New York Mayor Eric Adams and searched the home of his 2021 mayoral campaign fundraiser in an investigation into whether Turkish officials donated money in exchange for favors from the mayor. Adams hasn’t been charged with a crime and denies wrongdoing. The investigation, though, echoes the allegations against Menendez. Both cases concern political corruption and ties to foreign governments. (See “In New York, top federal prosecutor Damian Williams preaches speedy justice,” by Devlin Barrett and Shayna Jacobs, The Washington Post, April 9, 2024.)

But it’s not just well-known politicians that Williams has targeted in his public corruption cases. In February, SDNY unsealed bribery and extortion charges against 70 current and former employees of the New York City Housing Authority, a record number of charges in a single day for the DOJ, according to the New York Times. (See “Scores of N.Y. Public Housing Workers Charged in Record Corruption Case,” by Jesse McKinley, Mihir Zaveri and Corey Kilgannon, Feb. 6, 2024.) In a statement, Williams said that dozens of employees had taken more than $2 million in bribes from contractors doing work at apartment buildings throughout New York City. The scheme largely involved small-dollar repairs, many under $10,000, that don’t go through competitive bidding. According to prosecutors, more than $13 million in work, however, was wrongly handed out, and defendants allegedly demanded payments to authorize work or approve repairs after they were complete. Employees allegedly received kickbacks of 10% to 20% of the contract value. Nearly one-third of the housing authority’s properties were part of the scheme. (See “Scores of N.Y. Public Housing Workers Charged in Record Corruption Case.”)

“Corruption is not costless,” Williams told City & State earlier this year. “I don’t know anyone out there who doesn’t think that the state can do better, that our public institutions can do better. I want to do my part. I want this office to do its part to send the message that compliance with the law is not optional. Breaching the public trust is not something that we will easily forgive.” (See “Damian Williams is taking on public corruption, pushing for federal oversight at Rikers and telling dad jokes.”)

Old frauds, new ways

Another of Williams’ priorities in his almost three years as U.S. attorney has been going after financial fraud. Shortly after a jury found FTX cryptocurrency exchange CEO Sam Bankman-Fried guilty of fraud in November 2023, Williams, standing in front of the federal courthouse in Manhattan, made a pointed statement to fraudsters. “When I became U.S. attorney, I promised that we would be relentless in rooting out corruption in our financial markets.” He’s also been clear on many occasions that white-collar crime is no less serious than other types of crime. In an interview with New York Magazine in 2023, Williams said, “There should not be two standards of justice in this country, one for blue-collar crime and one for white-collar crime. I have always bristled at the expectation that white-collar criminals should get white-glove treatment.” (See “The Relentless Damian Williams,” by Errol Lewis, Dec. 20, 2023.)

Since assuming the role of top prosecutor in SDNY, Williams has earned a reputation of sorts as the nation’s “top crypto cop” because of the aggressive way he’s gone after financial frauds conducted with emerging technologies. Last year, SDNY charged Alexander Mashinsky, former CEO of bankrupt cryptocurrency platform, Celsius, with securities fraud, wire fraud and commodities fraud. According to prosecutors, Mashinsky defrauded customers and misled them about the business. In the indictment, Mashinsky was accused of manipulating the price of Celsius’s native crypto token, CEL, while offloading his tokens at inflated prices. He also allegedly portrayed the Celsius platform as a “modern-day bank” where customers could safely park their crypto assets and earn interest. However, according to prosecutors, Mashinsky treated Celsius like a risky investment fund, playing fast and loose with customers’ money. Mashinsky pleaded not guilty. (See “The Rise of Damian Williams, America’s Top Crypto Cop” and “Ex-Celsius CEO is charged with fraud,” by Kara Scannell, CNN, July 13, 2023.)

Before the charges against Mashinsky, Williams charged the former product manager of non-fungible token (NFT) marketplace OpenSea with insider trading in 2022. In August 2023, the product manager was sentenced to three months in prison. (See “Who is Damian Williams, the prosecutor behind the FTX’s Sam Bankman-Fried trial?” by Luc Cohen, Reuters, Nov. 23, 2023 and “Former Employee Of NFT Marketplace Sentenced To Prison In First-Ever Digital Asset Insider Trading Scheme,” United States Attorney’s Office, Southern District of New York, press release, Aug. 22, 2023.)

And of course, in Williams’ most high-profile case, he successfully prosecuted Bankman-Fried, founder of cryptocurrency exchange, FTX. In November 2023, he was convicted on all seven counts of fraud for stealing nearly $10 billion from his customers to finance political contributions, venture capital investments and other extravagances. In March, he was sentenced to 25 years in prison. (See “5 most scandalous fraud cases of 2023,” by Jennifer Liebman, CFE, Fraud Magazine, January/February 2024.)

While all these cases concern new technologies, they also concern old frauds. Insider trading, lying to customers and misappropriating funds are frauds as old as time, and Williams, along with SDNY is aware of this fact.

“One of the things that we see in the Southern District of New York is there’s always going to be something new happening around the fraud space — AI [artificial intelligence] or crypto or things like that,” Williams tells Fraud Magazine. “But at the same time, just as you have these kind of new-school schemes and ways of defrauding people, you’ve got the traditional old school frauds that are still around and alive and well.” Traditional Ponzi schemes, pump-and-dump schemes, business email compromises, romance scams and affinity frauds are still occurring in Williams’ jurisdiction and still a focus for SDNY. According to Williams, it’s important not to get distracted “by the new shiny thing.”

That idea of not getting distracted by shiny new things rings especially true in the case of artificial intelligence (AI). Innovation can serve as a vehicle to carry out traditional frauds. “AI can really be an accelerant in many ways for activity that’s already illegal,” says Williams. Classic romance scams, in particular, can be greatly aided by AI, especially to overcome language barriers. The fraudster doesn’t have to be in the same country or even speak the same language as their mark to carry out the scheme. They can make a connection and build trust by asking ChatGPT to come up with an appropriate script to speak to the language of love in the victim’s preferred dialect. Old frauds perpetrated in new ways means that nothing can be disregarded.

“The message from me, the message from my supervisors who oversee the day-to-day work of the prosecutors, is that we do all of it. These things aren’t going away, and we’re going to stay focused on all of it. Everything will be a priority.”

Swift justice

It took only a month for SDNY to charge Bankman-Fried with fraud after FTX went bankrupt. In early November 2022, FTX, and its $32 billion crypto empire crashed. In mid-December, Bankman-Fried was arrested in the Bahamas. “We wanted to show the world just how quickly SDNY could actually go, and I think the expectations were probably that it would take years to investigate a fraud of that magnitude, and we were able to bring charges within weeks,” Williams told the Washington Post. “We think that enhances credibility in the department and in the justice system generally because it shows that we can be just as aggressive in investigating and prosecuting white-collar crime as we are investigating quote-unquote blue-collar crime.” (See “In New York, top federal prosecutor Damian Williams preaches speedy justice,” by Devlin Barrett and Shayna Jacobs, Washington Post, April 9, 2024.)

Speeding up prosecutions of financial fraud cases and moving them through the judicial system with greater efficiency has been one of Williams’ goals as U.S. attorney. One important way that Williams has tried to speed up prosecutions is through faster data collection. As fraud examiners know too well, fraud cases are often complex, sometimes requiring years of investigation and data collection. In April, Williams told the Washington Post that he wants to be known in SDNY as the U.S. attorney who modernized the behind-the-scenes, investigative work that makes the office run faster and better. When given the chance to hire more prosecutors, Williams chose instead to add more data experts to extract and analyze more data. (See “In New York, top federal prosecutor Damian Williams preaches speedy justice.”)

“The work that we do in that area is really all about deterrence, not only deterring people from doing a bad thing again but also sending a message to other people not to engage in fraud,” Williams tells Fraud Magazine. “And some of that deterrence is really maximized when you minimize the distance between conduct and consequence.” As the speedy indictment in the FTX case showed, efficiency and justice can go hand in hand.

“I hope it sends a message to people, not only in the cryptocurrency space, but also in other areas too, that it may not be worth engaging in the misconduct because they don’t want to go to jail at all, and they certainly don’t want to go to jail quickly.”

A path to certainty

SDNY’s new whistleblower initiative could also have the effect of speeding up justice. Having people come forward sooner to report wrongdoing could mean bringing charges faster in fraud cases. SDNY’s whistleblower pilot program, launched earlier this year in January, calls on individuals involved in frauds to enter into non-prosecution agreements in exchange for their cooperation with investigators. The new policy is an alternative to cooperating witnesses entering guilty pleas for more lenient sentences. Under the new program, people involved in fraud, failures of corporate controls or bribery who come forward wouldn’t be tried in cases where prosecutors weren’t already aware of the misconduct. The initiative doesn’t apply to company executives, elected officials or other public figures. (See “Wall Street criminal enforcer urges whistleblowers to come forward,” by Luc Cohen, Reuters, Jan. 10, 2024.) The thought behind the program is that no matter how good SDNY might be at investigating and discovering misconduct, there’s no way they can know everything that’s happening. This is the tool to uncover more fraud. It’s also a program that Williams hopes will be adopted throughout the Department of Justice. A few U.S. attorneys’ offices have adopted similar whistleblower programs, and the DOJ’s criminal division has implemented its own version of the initiative. (See “Criminal Division’s Voluntary Self-Disclosures Pilot Program for Individuals,” Office of Public Affairs, U.S. Department of Justice, April 22, 2024.)

A key piece of the program is providing clarity on the requirements of whistleblowing and its benefits for people who might hesitate to report wrongdoing because of their own culpability in a case. It’s an effort to bring more misconduct to light.

“[The policy] is very clear and we’re trying to illuminate a path so that people know if they have information, if they’ve been involved in misconduct and they’re laboring under the anxiety of what may happen and they have a sense that we the government are not aware of the things that they’ve been involved in, that they feel comfortable bringing it to us, knowing that they can get a certain amount of clarity and ultimately peace,” Williams tells Fraud Magazine. “We’re inviting them to get on the right side of the law.”

Jennifer Liebman, CFE, is editor-in-chief of Fraud Magazine. Contact her at JLiebman@ACFE.com.

Header image source: Alexi J. Rosenfeld / Stringer via Getty Images contributors