Federal prosecutors unsealed a 13-count indictment in Brooklyn charging four people with running a bribery and fraud scheme tied to New York City migrant shelter contracts, alleging they steered public funds into private hands while hiding payments through a law firm account and fake paperwork.
Federal authorities charged Anthony J. Carone, 54; Frank V. Carone, 56; Crystal Chen, 39; and Yan Po Zhu, 51, in a 13-count indictment unsealed today in Brooklyn. The charges cover fraud, bribery, money laundering, obstruction of justice, and tax fraud, and all four were arrested and arraigned before U.S. Magistrate Judge Marcia M. Henry.
The case centers on the city’s response to the 2022 migrant influx, when New York, as a right to shelter city, contracted hotels under Emergency Shelter Contracts to house asylum seekers. The city received roughly $1.8 billion in federal grant money to fund those emergency contracts, and the indictment alleges defendants exploited that funding stream for private gain.
As alleged, the four defendants devised a plan starting around 2022 to capitalize on the demand for shelter by steering a multimillion-dollar contract to a specific hotel. The indictment claims the scheme involved bribe payments, sham retainer agreements, and steps to conceal the origin and purpose of the funds.
“As alleged in the indictment, the defendants exploited the unprecedented migrant crisis in New York City for their own personal gain,” stated First Assistant United States Attorney Considine. “The defendants engaged in a bribery scheme to secure a migrant shelter contract worth millions of dollars from a city agency funded in part by billions of federal dollars. Frank Carone and his brother Anthony Carone are also charged with evading taxes on the proceeds of that scheme. This case demonstrates the Office’s commitment to protecting taxpayer dollars, and holding accountable those who misuse public funds for private gain.”
Investigators say employees at the Department of Social Services reviewed hotel proposals and recommended which sites might meet shelter needs, yet the Microtel repeatedly failed DSS suitability checks. Despite those rejections, Frank Carone allegedly used his influence as a former chief of staff to push the Microtel forward, resulting in an Emergency Shelter Contract worth $6,825,000.
According to the indictment, Zhu owned the Microtel and Chen acted as his business manager, while Frank Carone allegedly accepted $120,000 in bribe payments to steer the contract. The FBI asserts those payments were then funneled through a law firm account controlled by Anthony Carone to disguise their true purpose and move money back to Frank Carone.
“The alleged conspiracy resulted in a massive betrayal of the American taxpayers’ trust by steering millions of dollars in funding for asylum housing in exchange for illegal bribe payments, which were then funneled to cover personal expenses. Frank Carone allegedly influenced and steered business to his brother and associates in exchange for cash. May today’s indictment emphasize the FBI’s determination to root out corrupt officials, and their co-conspirators, who use government funding for personal enrichment,” said FBI Assistant Director in Charge Barnacle.
To hide the payments, Zhu and Chen are accused of directing money into the Law Firm Account in the name of Anthony Carone’s practice, commingling the alleged bribes with legitimate fees from clients Frank Carone referred. The indictment describes checks, credit card payments, and other transfers from that account benefiting Frank Carone, along with a sham retainer meant to make the payments appear lawful.
“Today’s charges show how these defendants chose greed over integrity, exploiting a humanitarian crisis and siphoning taxpayer funds intended to support vulnerable migrant families. IRS Criminal Investigation worked alongside our law enforcement partners to unravel the financial maneuvers used to conceal bribe payments and evade taxes. Our mission in this case was simple—follow the money, expose corruption, and protect taxpayer funds,” stated IRS-CI New York Special Agent in Charge Chavis.
The case also alleges that both Carones failed to report income from the scheme on their 2022 tax returns and that Anthony later amended filings in 2025 after learning of the probe. When investigators closed in, the indictment claims the defendants fabricated a promissory note, backdated to January 2022, to create the false impression that payments were loans rather than concealed bribes.
“The conduct charged in this indictment is the epitome of corrupt self-dealing. The former chief of staff in the prior mayoral administration allegedly used his connections and the influence afforded to him by his public office to push through a multimillion dollar, publicly funded contract to personally enrich himself. By allegedly engaging in this criminal scheme, as charged, all four defendants used the plight of migrants for their own profit, resulting in the inefficient use and approval of a shelter location that could house fewer people than more appropriate locations and required the City to expend additional resources to make up the difference. That two of the defendants are attorneys who allegedly violated their ethical duty to act with honesty and integrity underscores the seriousness of these charged offenses. DOI thanks the U.S. Attorney’s Office for the Eastern District of New York and the New York Offices of the FBI and the IRS for their steadfast partnership on this joint investigation, which highlights the need to protect the integrity of City processes and public funds, particularly during a crisis,” stated DOI Commissioner Shihata.
The charges remain allegations, and the defendants are presumed innocent unless proven guilty. If convicted on the counts charged, each faces up to 20 years in prison, and prosecutors from the Public Integrity Section and the Long Island Division are handling the case.
The indictment arrives as the Department of Justice rolls out a new National Fraud Enforcement Division focused on major fraud against the American people, signaling heightened federal attention to schemes that abuse public dollars. The Justice Department framed this prosecution as part of a broader effort to protect taxpayer funds and hold those who misuse public office accountable.
