Central District of California
Press releases recorded for this federal judicial district.
Former Newport Beach Doctor Pleads Guilty to Possession of Hundreds of Images and Video of Child Sexual Abuse MaterialRead the Press Release
SANTA ANA, California – A former Newport Beach gynecologist pleaded guilty today to federal criminal charges for possessing child sexual abuse material (CSAM) across multiple personally owned devices.
Mark Albert Rettenmaier, 72, of Laguna Hills, pleaded guilty to two counts of possession of child pornography. He is free on $600,000 bond.
According to his plea agreement, on June 7, 2020, Rettenmaier uploaded 15 images of CSAM to an Adobe cloud-based storage system. At least four of the images Rettenmaier uploaded depicted two minors, one under the age of 12, engaging in sexually explicit conduct.
On July 22, 2020, law enforcement officers executed a search warrant of Rettenmaier’s residence and seized his cellphone and a laptop. Upon review of the cellphone, law enforcement identified at least two additional images of CSAM. Review of the laptop revealed at least one video and 209 images of minors engaged in sexual activity.
Rettenmaier admitted that he knowingly downloaded the images and video of CSAM from the internet and stored them on his personal devices.
United States District Judge Sherilyn Peace Garnett scheduled an August 6 sentencing hearing at which time Rettenmaier will face a statutory maximum sentence of 20 years in federal prison for each count. Prosecutors have agreed to recommend that Rettenmaier be sentenced to no more than five years in federal prison.
Rettenmaier will also be required to pay a mandatory minimum of $3,000 restitution to each of six victims named in this case, for a total of at least $18,000.
The FBI investigated this matter.
Assistant United States Attorney Melissa Rabbani of the Orange County Office is prosecuting this case.
Financial TV News Analyst-Turned-Fugitive Agrees to Plead Guilty to Federal Charge for Conning Investors Out of Millions of DollarsRead the Press Release
LOS ANGELES – A former San Gabriel Valley resident – who was a frequent guest on financial television news programs then became a fugitive from justice after being accused of scamming investors – has agreed to plead guilty to defrauding his victims out of at least $2.7 million, the Justice Department announced today.
James Arthur McDonald Jr., 53, formerly of Arcadia, has agreed to plead guilty to one count of securities fraud, a felony that carries a statutory maximum sentence of 20 years in federal prison.
McDonald has been in federal custody since June 2024, when he was arrested in a residence in Port Orchard, Washington, after being a fugitive since November 2021, when he failed to appear before the United States Securities and Exchange Commission (SEC) to testify after allegations arose that he had defrauded investors.
According to his plea agreement, at McDonald’s Washington state hideout, law enforcement found, among other things, a fake Washington, D.C., driver’s license bearing McDonald’s photograph and the name “Brian Thomas.”
“This defendant was entrusted by his clients to care for their money and he violated that trust by using it to enrich himself,” said Acting United States Attorney Joseph T. McNally. “Because of the work of the prosecutors in our office, the FBI, and IRS Criminal Investigation, he will be held accountable for stealing from others. We hope it will bring some solace to his victims.”
McDonald was the CEO and chief investment officer of two companies headquartered in Los Angeles: Hercules Investments LLC and Index Strategy Advisors Inc. (ISA). He frequently appeared as an analyst on the CNBC financial television news network.
In late 2020, McDonald lost tens of millions of dollars of Hercules client money after adopting a risky short position that effectively bet against the health of the United States economy in the aftermath of the U.S. presidential election. McDonald projected that the COVID-19 pandemic and the election would result in major selloffs that would cause the stock market to drop. When the market decline didn’t occur, Hercules clients lost between $30 million and $40 million. By December 2020, Hercules clients were complaining to company employees about the losses in their accounts, according to court documents.
In early 2021, McDonald solicited millions of dollars' worth of funds from investors in the form of a purported capital raise for Hercules but misrepresented how the funds would be used and failed to disclose the massive losses Hercules previously sustained. As part of the capital raise, McDonald obtained $675,000 in investment funds from one victim group on March 9, 2021. He misappropriated most of those funds in various ways, including spending $174,610 at a Porsche dealership and transferring $109,512 to the landlord of a home McDonald was renting in Arcadia.
McDonald also defrauded clients of ISA, his other firm, using less than half of the approximately $3.6 million he raised for trading purposes. Instead, McDonald frequently commingled ISA client funds with funds from his personal bank account, which he used to purchase luxury cars and to pay rent on his home, personal credit card charges, and Hercules operating expenses and to make Ponzi-like payments to ISA clients -- that is, paying some ISA clients using funds from other clients.
In total, McDonald caused losses of between approximately $2,745,892 and approximately $3,025,892, according to his plea agreement.
The FBI and IRS Criminal Investigation are investigating this matter.
In September 2022, the SEC filed a civil complaint charging McDonald and Hercules with violations of federal securities law. In April 2024, United States District Judge Percy Anderson found McDonald and Hercules liable and ordered that they pay several million dollars in disgorgement and civil penalties.
Assistant United States Attorneys Alexander B. Schwab and Nisha Chandran of the Corporate and Securities Fraud Strike Force are prosecuting this case.
Sylmar Man Sentenced to 10 Years in Federal Prison for Using Instagram to Advertise and Distribute Child Sexual Abuse MaterialRead the Press Release
LOS ANGELES – A San Fernando Valley man was sentenced today to 120 months in federal prison for using Instagram to advertise sexually explicit images of high school girls without their permission, to distribute child sexual abuse material (CSAM) and to threaten victims who objected to his behavior.
Alejandro Garcia Aranda, 23, of Sylmar, was sentenced by United States District Judge Stanley Blumenfeld Jr., who also ordered him to pay $45,000 total restitution to 15 victims. In sentencing Garcia Aranda, Judge Blumenfeld emphasized the “cruel,” “callous,” and “monstrous” nature of the offense.
Garcia Aranda pleaded guilty in November 2024 to one count of distribution of child pornography. He has been in federal custody since July 2024.
In April and May of 2020, Garcia Aranda used the Instagram handle “valleyhoezzz818” with the self-proclaimed goal of “[e]xposing all valley hoes with their @’s” to target local girls who attended schools in the San Fernando Valley.
Using Cash App, PayPal, Venmo, and Zelle, Garcia Aranda received payments from customers who wanted to obtain sexually explicit content of the victims that he had advertised and offered to sell on the Instagram account. After receiving and confirming payment, using the Instagram account, Garcia Aranda then sent a direct message to customers and provided a link to a zip file containing the CSAM.
When victims discovered that sexually explicit materials depicting them were being advertised and disseminated by Garcia Aranda and requested that he stop and remove them, Garcia Aranda attempted to extract further additional sexually explicit material from them, including by threatening to post additional photographs.
Garcia Aranda admitted to knowingly distributing CSAM – three sexually explicit videos and one sexually explicit image involving children – in May 2020. Garcia Aranda further admitted to possessing more than 600 images of CSAM.
The FBI investigated this matter.
Assistant United States Attorney Kathy Yu prosecuted this case.
Long Beach Man Who Was Getaway Driver in Fatal Armed Robbery of Victim Dealing Marijuana in Inglewood Pleads Guilty to Federal ChargesRead the Press Release
LOS ANGELES – A Long Beach man pleaded guilty today to federal criminal charges for his role in the March 2021 murder of a victim in Inglewood during a marijuana deal.
Mateo Paul, 22, pleaded guilty to one count of interference with commerce by robbery (Hobbs Act) and one count of brandishing and discharging a firearm in furtherance of a crime of violence. Paul has been in custody since November 2023.
“This defendant’s recklessness led to a victim’s violent death and the prospect of a life sentence in federal prison,” said Acting United States Attorney Joseph T. McNally. “When local and federal law enforcement work together – as we did in this case – we can bring severe punishment for perpetrators of violent gun crime.”
According to his plea agreement, in March 2021, Paul and co-defendants Leandrew Raglin, 22, of Lancaster, and Iysis Elanore Smith, 22, of Inglewood, agreed to rob a marijuana dealer at gunpoint. They devised a plan to lure the dealer via a social media application to a meeting location, where they would ambush him at gunpoint and steal his marijuana.
On March 15, 2021, Smith approached the vehicle occupied by the victim. While Smith distracted the victim, Paul and Raglin parked behind the victim’s vehicle. Raglin then exited the vehicle Paul was driving, approached the passenger side of the victim’s car and opened fire, repeatedly wounding the victim in the passenger seat. Raglin then walked around to the driver’s side of the vehicle and opened fire, fatally wounding the victim in the driver’s seat of the vehicle, according to court documents.
Raglin’s brandishing and discharge of the firearm fell within the scope of Paul’s criminal agreement and could reasonably have been foreseen to be a necessary or natural consequence of the unlawful agreement, the plea agreement states.
United States District Judge Fernando L. Aenlle-Rocha scheduled a June 27 sentencing hearing, at which time Paul will face a statutory maximum sentence of life in federal prison.
Raglin has pleaded not guilty to the charges in the indictment against him in this case and is scheduled to go to trial on May 19. The criminal charges against Smith are still pending. Both defendants face potential life sentences.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The FBI and the Inglewood Police Department investigated this matter.
Assistant United States Attorneys Chelsea Norell of the Violent and Organized Crimes Section and Gregg E. Marmaro of the International Narcotics, Money Laundering, and Racketeering Section are prosecuting this case.
Former Riverside School Counselor Sentenced to 30 Years in Prison for Child Sexual Exploitation Crimes, Including Hiding Cameras in BathroomsRead the Press Release
LOS ANGELES – A former counselor at a private school in Riverside County was sentenced today to 360 months in federal prison for possessing child sexual abuse material (CSAM) and placing a hidden camera inside bathrooms to film boys using the toilet and showers.
Matthew Daniel Johnson, 34, of Bryan, Texas, was sentenced by United States District Judge Sherilyn Peace Garnett, who scheduled a restitution hearing for May 28. Upon his eventual release from prison, Johnson will be placed on lifetime supervised release. Johnson has been in federal custody since October 2024.
Law enforcement searched Johnson’s home in March 2020 and seized several videos featuring minor boys engaged in sexual activity. The videos depicted victims under the age of 12 and some as young as 3 to 5 years old.
During the search of his residence, Johnson admitted to law enforcement that he had hidden a pen-shaped recording device in a toilet paper holder inside of a school bathroom, across the hall from his office as a school counselor at La Sierra Academy in Riverside.
Another video file depicted Johnson adjusting a recording device inside a different bathroom at a Junior High School Bible Camp where he was working as a chaperone of children attending the camp. The video file subsequently captured minor boys using the toilet and the shower.
Johnson further admitted to using and employing a minor victim in January 2020 for the purpose of creating a visual depiction of the victim engaging in sexual conduct.
The Fontana Internet Crimes Against Children Task Force, Riverside Police Department, and the FBI investigated this matter.
Assistant United States Attorney Sonah Lee of the Riverside Branch Office prosecuted this case.
Montebello Man Receives 20 Years in Prison for Distributing Fentanyl that Resulted in Fatal Overdose at Long Beach Drug Rehab ClinicRead the Press Release
LOS ANGELES – A Montebello man was sentenced today to 240 months in federal prison for distributing fentanyl to a buyer who then distributed it to a victim who the next day suffered a fatal overdose of the powerful synthetic opioid at a Long Beach drug treatment facility in late 2021.
Juan Carlos Gutierrez, 34, a.k.a. “Johnny G,” was sentenced by United States District Judge Stanley Blumenfeld Jr.
A federal jury in July 2024 found Gutierrez guilty of one count of distribution of fentanyl resulting in death and serious bodily injury. Gutierrez has been in federal custody since May 2023.
“The distribution of fentanyl is causing incredible devastation to families and communities,” said Acting United States Attorney Joseph McNally. “Today’s sentencing serves as a reminder that those who peddle these lethal drugs and fuel this crisis will be held accountable for the destruction they cause.”
“This case underscores the callous and insatiable greed that fuels drug distributors,” said Matthew Allen, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Los Angeles Field Division. “They are indifferent to the stories, vulnerabilities, and the struggles of those tunneling through addiction and recovery. DEA is working in lockstep with our federal and local partners to bring to justice fentanyl distributors, who engage in dangerous and deadly activity.”
The evidence presented at an eight-day trial showed that, on December 9, 2021, Gutierrez distributed fentanyl to co-defendant Jayleen Feusier, 37, of South Gate. Previously that night, Feusier agreed to get fentanyl for the victim, a 34-year-old man who was residing at a Long Beach drug treatment facility. In exchange for $60, Feusier agreed to get the fentanyl for the victim from Gutierrez, her longtime fentanyl dealer.
Later that night, Feusier broke off approximately one gram of the fentanyl that Gutierrez provided her, packaged it in a small plastic bag, and placed the bag, a lighter, and drug paraphernalia into a small box. She then placed the small box into another bag with a black t-shirt to mask the contents, ordered an Uber delivery service to Gutierrez’s home, and placed the item on the backseat of the vehicle to be delivered to the victim at the rehabilitation facility. Feusier then sent a link to the victim so he could track the Uber as it traveled to him.
At around 11 p.m. that night, the victim jumped a fence and retrieved the package from the Uber vehicle, then went back inside the drug treatment facility. Approximately six hours later, the victim’s body was discovered inside the facility’s living room. Drug paraphernalia sent by Feusier was discovered nearby the victim.
The Los Angeles County Medical Examiner’s Office ruled that the victim’s death was caused by a fentanyl overdose.
Feusier, who has been in federal custody since February 2024, pleaded guilty to one count of possession with intent to distribute fentanyl and was sentenced in August 2024 to 100 months in prison.
The Drug Enforcement Administration and the Long Beach Police Department investigated this matter.
Assistant United States Attorneys Jeremy K. Beecher of the International Narcotics, Money Laundering, and Racketeering Section and Danbee C. Kim of the Environmental Crimes and Consumer Protection Section prosecuted this case.
Los Angeles Attorney Sentenced to 18 Months in Prison for Evading Payment of More Than $7.2 Million in Income Tax over Two DecadesRead the Press Release
LOS ANGELES – Milton C. Grimes, a long-time Los Angeles lawyer, was sentenced today to 18 months in federal prison for evading the payment of more than $7.2 million in federal and state taxes over a period of more than two decades.
Grimes was sentenced by United States District Judge Stanley Blumenfeld Jr., who also ordered him to pay $7,236,556 in restitution, both to the IRS and to the California Franchise Tax Board.
In October 2024, Grimes pleaded guilty to one count of tax evasion relating to his 2014 taxes and admitted that he failed to pay $1,690,922 to the IRS.
“Despite being a respected attorney, Mr. Grimes also made the deliberate decision to cheat on his taxes for decades, evading the payment of millions of dollars in tax that all citizens are required to pay,” said Acting United States Attorney Joseph T. McNally. “Tax fraud has a corrosive effect on society’s foundations, and we thank our partners at the IRS for their diligence in bringing this defendant to justice.”
“As a successful attorney and owner of a law practice, Mr. Grimes was well aware of his income tax obligations, which he repeatedly chose to evade,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office. “Despite multiple attempts by the IRS to help him settle his tax obligations, Mr. Grimes continued to obfuscate his income. Unfortunately for him, IRS Criminal Investigation special agents are the best financial investigators in the world, and now he will feel the repercussions of his actions.”
Grimes did not pay federal income taxes due for 23 years, 2002 through 2005, 2007, 2009 through 2011, and 2014 through 2023. The amount owed totaled $5,921,260, including tax, penalties, and interest owed to the IRS. Grimes also admitted he did not file a 2013 tax return with the IRS.
In addition to the federal tax evasion, Grimes admitted that he owed over $1,313,231 in delinquent state taxes to the Franchise Tax Board from 2014 to 2023.
Beginning in September 2011, the IRS attempted to collect Grimes’ taxes by issuing more than 30 levies on his personal bank accounts. However, from at least May 2014 to April 2020, Grimes willfully evaded the payment of the outstanding income tax owed to the IRS by not depositing income he earned from his clients into his personal bank accounts that were subject to levy.
Instead, Grimes purchased approximately 238 cashier’s checks totaling $16 million to keep the money out of the reach of the IRS. Grimes would routinely purchase cashier’s checks and withdraw cash from his client trust account, his Interest on Lawyers’ Trust Accounts (IOLTA), and his law firm’s bank account, rather than pay the IRS.
For example, on December 5, 2018, Grimes purchased nine cashier’s checks worth approximately $1,001,961, following the deposit of the same amount and on the same date into his IOLTA bank account.
IRS Criminal Investigation investigated this matter.
Assistant United States Attorneys Valerie L. Makarewicz and Sarah S. Lee of the Major Frauds Section prosecuted this case.
Two Mexican Nationals Arrested for Alleged Train Cargo Theft and Repeated Reentry into United States Following DeportationRead the Press Release
LOS ANGELES – Two men from Mexico who are in the United States illegally have been charged in a federal criminal complaint with stealing cargo from a freight train traveling through the Mojave Desert and taking approximately 71 cases of construction tools, the Justice Department announced today.
Jesus Omar Lopez Quintero, 34, and Juan Alonso Hernandez Enrique, 24, both Mexican nationals, were charged Thursday with possession or receipt of goods stolen from interstate shipment, removing goods from customs custody and breaking seals, and illegal reentry into the United States following deportation.
During initial appearances Thursday afternoon in U.S District Court in downtown Los Angeles, a federal magistrate judge ordered them detained and scheduled their arraignment for February 25.
“This case demonstrates the threat that transnational criminal theft organizations pose to our nation’s commerce, as well as the danger posed to trains and their operators,” said Acting United States Attorney Joseph McNally. “Our office will aggressively prosecute those who repeatedly violate our laws and ensure they face consequences in the criminal justice system.”
According to the criminal complaint, the San Bernardino County Sheriff’s Department (SBSD) received a call for a suspicious vehicle parked near train tracks in Barstow on the night of January 28.
When law enforcement arrived, they observed a white cargo van driving away from a stopped freight train and a shipping container with its doors open. After following the vehicle, law enforcement turned on their sirens and lights and the white cargo van drove into oncoming traffic and kept driving before eventually pulling off to the side of the road. Quintero and Enrique then exited the vehicle and ran into the desert.
SBSD officers took Quintero into custody after he fell while running, and Enrique soon after was discovered hiding in bushes.
Inside the cargo van, authorities discovered approximately 71 cases of Milwaukee Tools with an estimated wholesale value of approximately $16,307. Law enforcement also recovered approximately 13 cases of Milwaukee Tools on the side of the train tracks, next to the open container, with an estimated wholesale value of approximately $7,792.
Quintero – who has been deported from the United States to Mexico a total of five times from 2013 to 2024 – was previously convicted of illegal entry into the United States in 2013, 2022 and 2023. Enrique was deported from the United States to Mexico in November 2022 and again the next month.
A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
If convicted of all charges, Quintero and Enrique each face a statutory maximum sentence of 10 years in federal prison for the possession or receipt of goods stolen from interstate shipment, up to 10 years in federal prison for the removal of goods from customs custody and breaking seals, and up to two years in federal prison for illegal reentry into the United States following deportation or removal.
Homeland Security Investigations and the San Bernardino County Sheriff’s Department investigated this matter.
Assistant United States Attorney Sophia Carrillo of the General Crimes Section is prosecuting this case.
Texas Man Sentenced to 35 Years in Federal Prison for Kidnapping 13-Year-Old Girl at Gunpoint and Repeatedly Assaulting HerRead the Press Release
LOS ANGELES – A Texas man was sentenced today to 420 months in federal prison for kidnapping a 13-year-old girl at gunpoint last year in San Antonio, admitting that he drove her to California, threatened her with a firearm, and sexually assaulted her multiple times before his arrest in Long Beach.
Steven Robert Sablan, 63, of Cleburne, Texas, was sentenced by United States District Judge Fernando L. Aenlle-Rocha, who also ordered him to pay $1,158 in restitution.
Sablan pleaded guilty in January 2024 to one count of kidnapping. He has been in federal custody since July 2023.
“The 35-year sentence imposed ensures this defendant will not have the opportunity to victimize children,” said Acting United States Attorney Joseph T. McNally. “There is nothing as important as protecting our young people. I commend our federal and local law enforcement partners for their efforts to secure justice here.”
“Mr. Sablan took this young girl from the safety of her Texas home and repeatedly sexually assaulted her at gunpoint throughout a lengthy drive of terror to California,” said Akil Davis, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The FBI will not tolerate sexual deviants who exploit our children at will and – as in this case – will hold these violent offenders accountable.”
“This sentencing announcement represents a collaborative commitment to holding individuals accountable for victimizing and inflicting trauma upon our children,” said Long Beach Police Chief Wally Hebeish. “I am deeply grateful to our officers and federal law enforcement partners from the FBI and DOJ for their tireless efforts on this case.”
On July 6, 2023, in San Antonio, Sablan abducted the victim, held her, and transported her in his gray Nissan Sentra to Long Beach, California. The victim told Sablan she was 13 years old. During this ordeal, Sablan used a firearm to threaten and control the victim.
Sablan confined the victim until she was rescued on July 9, 2023, in Long Beach after a Good Samaritan called 911 after seeing her holding a “Help Me” sign in the window of Sablan’s car.
During the Texas-to-California journey, he sexually assaulted the victim. At the time of the crime, Sablan had no legal custody or familial relationship to the victim.
“[Sablan] violently abducted a child and repeatedly sexually assaulted her while driving her thousands of miles from her home,” prosecutors argued in a sentencing memorandum. “And while [Sablan] spent days abusing her for his own pleasure, her parents agonized over their missing child, fearing the worst. The worst was not far from reality.”
The FBI and the Long Beach Police Department investigated this matter. The Cleburne (Texas) Police Department and the Fort Worth (Texas) Police Department provided assistance.
Assistant United States Attorney Chelsea Norell of the Violent and Organized Crime Section prosecuted this case.
Postal Service Supervisor Pleads Guilty to Stealing More Than $300,000 in Checks and Gold and Collectable Currency from MailRead the Press Release
SANTA ANA, California – A United States Postal Service (USPS) supervisor pleaded guilty today to stealing approximately $284,000 in checks and up to $40,000 in other items – including gold and collector-type currency such as a Confederate $10 bill – from the U.S. mail.
Joivian Tjuana Hayes, 36, of Compton, who was a supervisor at the Costa Mesa Post Office, pleaded guilty to one count of theft of mail matter by Postal Service employee and one count of unlawful transfer, possession, and use of means of identification.
According to her plea agreement, from early last year until December 2024, while on duty with USPS, Hayes stole mail from the Costa Mesa Post Office, including checks that had been mailed, which she then deposited into her own bank accounts by forging the payees listed on the checks.
Hayes stole at least 20 checks totaling approximately $284,000, which she then deposited into her bank accounts at various banks. She also stole and deposited $3,000 in postal money orders that had been mailed. She deposited the stolen checks by using her banks’ mobile apps and at ATMs. During some of the ATM deposits, Hayes wore a blue t-shirt bearing a USPS logo.
During a search of Hayes’ residence last month, law enforcement found multiple gold coins and bills of U.S. currency that had been sent by registered mail. Hayes had stolen these items from the Costa Mesa Post Office. Among those items included a $1 bill dating from 1917 with a sticky note listing a value of $675, a $100 bill dating from 1914 valued at $1,500, and a $10 Confederate States of America bill.
During that same search, federal agents also found various gold pieces, including a $5 gold piece with sticky note listing a value of $1,600. Federal agents also found inside Hayes’ bedroom a pink wallet with a U.S. Treasury check payable to a victim in the amount of $2,599, addressed to a location in Costa Mesa, which defendant had also stolen from the mail at the Costa Mesa Post Office.
The intended loss from Hayes’ theft of mail is approximately $304,000 to $324,288, which is comprised of approximately $284,000 in stolen checks that Hayes deposited into her various bank accounts and approximately $20,000 to $40,000 in other items she had stolen from the mail, including gold coins and currency.
United States District Judge John W. Holcomb scheduled a May 23 sentencing hearing, at which time Hayes will face a statutory maximum sentence of five years in federal prison for the theft count and up to 15 years in federal prison for the unlawful transfer count.
The United States Postal Service Office of Inspector General investigated this matter.
Assistant United States Attorney Charles E. Pell of the Orange County Office is prosecuting the case.
Former Army Private Sentenced to 22 Years in Prison for Child Sexual Exploitation Crimes Involving Girls He Met on SnapchatRead the Press Release
LOS ANGELES – A former Army private based at Fort Irwin was sentenced today to 264 months in federal prison for producing child sexual abuse material (CSAM) depicting a 14-year-old girl, using Snapchat to receive CSAM of her when she was 13 years old, possessing CSAM featuring her on his iPhone, and for receiving sexually explicit images of a 15-year-old girl via Snapchat.
Parker William White, 24, of Johnsonville, New York, was sentenced by United States District Judge André Birotte Jr., who scheduled a restitution hearing for May 2. Upon his eventual release from prison, White will be placed on lifetime supervised release. White has been in federal custody since February 2023.
At the conclusion of a five-day trial in August 2024, a jury found White guilty of one count of production of child pornography, three counts of receipt of child pornography, and one count of possession of child pornography.
In January 2022, the Department of Children and Families in Bay County, Florida received a tip that White was engaging in an online, sexual relationship with a 14-year-old girl. Later, investigators found CSAM of her on White’s iPhone as well as CSAM that White had received via Snapchat featuring her and another minor.
White used Instagram, Snapchat, and other social media platforms to find minor “girlfriends” as young as 13 years old, according to court documents. White groomed these minor girls by boasting about his military service, telling them that they were “beautiful” and “queens,” and pretending to be in love with them. In some instances, White deceptively portrayed himself as teenager to earn their trust. White’s behavior would then escalate to a practice that he called “teasing.” He would send these children sexually explicit videos and photographs of himself via social media and encourage them to “tease” him back by doing the same.
Homeland Security Investigations, the Department of the Army Criminal Investigation Division, and the Bay County Sheriff’s Office investigated this case.
Assistant United States Attorneys Lyndsi C. Allsop of the Violent and Organized Crime Section and Laura A. Alexander of the Environmental Crimes and Consumer Protection Section prosecuted this case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the Justice Department’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Corona Customs Broker Pleads Guilty to Defrauding Clients Out of More Than $5 Million and Evading More Than $1 Million in TaxesRead the Press Release
LOS ANGELES – A customs broker pleaded guilty today to defrauding his clients – businesses who ship goods into the United States from foreign countries – out of more than $5 million, including after he had been indicted on fraud charges, and to committing more than $1 million in tax evasion.
Frank Seung Noah, 64, of Corona, pleaded guilty to one count of tax evasion and two counts of wire fraud.
According to his plea agreement, Noah owned and operated Comis International Inc., a Cerritos-based logistics and supply-chain company, which offered customs import brokerage services on behalf of businesses. From 2007 to 2019, Comis was a customs import broker for Daiso, a Japan-based variety and value store with stores in the United States, including Southern California.
During that time, Noah provided Daiso with false customs duty forms and invoices in support of fraudulent requests for reimbursement for duty fees. These forms differed materially from those Noah submitted to U.S. Customs and Border Protection (CBP) and inflated the total amounts, resulting in Daiso overpaying Noah nearly $3.4 million.
After Noah was indicted for defrauding Daiso in 2022, he continued to defraud his other clients out of more than $2 million using a different fraud scheme. Noah defrauded two other client companies by invoicing and receiving funds from the two victim companies, and then simply pocketing the funds instead of paying the customs duties to CBP. After CBP notified the victim clients of their unpaid customs duties, they asked Noah about the unpaid fees, and he sent the victim clients altered bank statements falsely reflecting that he had paid the customs duties.
Noah also willfully evaded payment of federal taxes resulting in a loss to the IRS of approximately $2.4 million, with penalties and interest continuing to accrue. After agreeing with the IRS that he owed more than $1 million in taxes in 2014, Noah actively avoided IRS attempts to collect the amount owed. This included paying for two homes in his former girlfriend’s name, using check cashing businesses to avoid IRS levies of his bank accounts, lying to IRS collection agents, and spending thousands of dollars on country club memberships, travel, and golf purchases.
United States District Judge Josephine L. Staton scheduled a May 8 sentencing hearing at which time he will face a maximum sentence of 20 years in federal prison for each wire fraud count and up to five years in federal prison for the tax evasion count.
IRS Criminal Investigation and Homeland Security Investigations investigated this matter with the assistance of United States Customs and Border Protection.
Assistant United States Attorneys Nandor F.R. Kiss and Robert J. Keenan of the Orange County Office are prosecuting this case.
Two Hacienda Heights Men Arrested in Alleged Large-Scale Smuggling Scheme from China through L.A.-Area PortsRead the Press Release
LOS ANGELES – Two men have been arrested on a criminal complaint by federal law enforcement for allegedly participating in a conspiracy to smuggle contraband from China into the United States via the Ports of Los Angeles and Long Beach, the Justice Department announced today.
Zhongliang Wang, 39, of Hacienda Heights, was arrested Wednesday. Chenyu Zhao, 31, also of Hacienda Heights, was arrested last Thursday as he was boarding a plane on a one-way ticket to China. Both defendants were charged with conspiracy and illegally removing goods from customs custody. Wang and Zhao allegedly directed cargo shipping containers flagged for U.S. Customs and Border Protection (CBP) secondary inspection to unauthorized off-site locations, where they unloaded the contraband in the containers, replaced it with filler cargo, and then returned the cargo containers to CBP for inspection, in an attempt to deceive customs officials and evade law enforcement.
To date, law enforcement has seized more than $1.3 billion worth of contraband associated with this and similar cargo-swapping schemes. According to the court documents, a search of one warehouse used by the group charged in this case led to the seizure of significant quantities of counterfeit goods, including luxury handbags and footwear, as well as approximately 19.5 kilograms of enobosarm, an illicit steroid.
“Protecting our nation’s borders from illegal smuggling is a top priority,” said Acting United States Attorney Joseph McNally. “These arrests highlight the unrelenting efforts of law enforcement to dismantle criminal networks that seek to exploit our trade system and endanger American businesses and consumers.”
According to court documents, Zhao and other co-conspirators maintained and operated warehouses to store, conceal and sell large amounts of contraband goods that were illegally imported into the United States from China. When the contraband containers were selected by CBP for inspection, the defendants hired commercial truck drivers to transport the containers from the ports to locations that the conspirators controlled, including at least one warehouse in the City of Industry that was controlled or managed by Zhao and others.
At these locations, co-conspirators broke the security seals on the shipping containers and removed the contraband from inside. Then, they affixed counterfeit security seals onto the containers to conceal that the cargo had been tampered with. Wang, Zhao and others then directed co-conspirators to transport the containers – after they had been emptied of much of their original cargo and re-secured with counterfeit seals – to CBP-authorized locations for the “filler” cargo to be presented to customs officials for inspection.
Wang, Zhao and others paid fees to co-conspirators that were substantially above normal trucking fees to transport the contraband shipping containers. As alleged in the complaint, Wang paid $15,000 to divert a single cargo container in December of 2024.
A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
If convicted of all charges, Wang and Zhao would face a statutory maximum sentence of five years in federal prison for each conspiracy count and up to 10 years in federal prison for each count of breaking customs seals.
Homeland Security Investigations, U.S. Customs and Border Protection, and Coast Guard Investigative Services are investigating this matter.
This effort is part of an Organized Crime Drug Enforcement Task Force (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
Assistant United States Attorneys Colin S. Scott and Amanda B. Elbogen of the Terrorism and Export Crimes Section are prosecuting this matter.
Los Angeles County Sheriff’s Deputy Found Guilty of Federal Civil Rights Violation for Using Excessive Force Against WomanRead the Press Release
LOS ANGELES – A Los Angeles County Sheriff’s deputy was found guilty by a jury today of using excessive force when he assaulted and pepper-sprayed a woman outside a supermarket in Lancaster in June 2023.
Trevor James Kirk, 32, of Santa Clarita, was found guilty of one felony count of deprivation of rights under color of law.
According to evidence presented at a three-day trial, on June 24, 2023, Kirk and another deputy were responding to a possible robbery at a WinCo Foods supermarket by a man and a woman. Kirk and the other deputy arrived on scene and handcuffed and detained a man matching the description of the male suspect, while the victim, identified in court documents as “J.H.” – who matched the description of the female suspect – recorded the deputies on her cellphone. While recording, J.H. told Kirk that he had a legal obligation to inform the man of the basis for his detention and that she was broadcasting his actions on social media.
Kirk then approached J.H. and, without giving any commands, attempted to grab her phone. J.H. turned away, at which point Kirk grabbed J.H. by her arm, hooked his left hand behind her neck, and violently threw her face first to the ground. While on the ground, Kirk yelled at J.H. to “get on the ground,” and she told him that “It’s already on YouTube Live,” implying her video of Kirk and the other deputy handcuffing D.B. had already been shared on social media.
Kirk then placed his knee on J.H.’s shoulder and, when J.H. yelled for Kirk to “stop,” Kirk cocked his right arm back with a clenched fist and said, “Stop or you’re gonna get punched in the face.” Kirk then pressed his knee into J.H.’s neck, and she said, “Get your neck [sic] off my… off my… I can’t breathe.” While on top of J.H., Kirk used his LASD radio to give a misleading report that he was in a “fight.”
Without giving any additional commands to J.H., Kirk pepper-sprayed her twice in the face. While Kirk pepper sprayed J.H., her hands were holding only prescription sunglasses and a cloth surgical mask. J.H. received medical attention for her injuries sustained from the pepper spray and from being thrown to the ground. J.H. was treated for blunt-force head trauma and injuries to her head, arms, and wrist.
United States District Judge Stephen V. Wilson scheduled an April 21, sentencing hearing, at which point Kirk will face a statutory maximum sentence of 10 years in federal prison.
The FBI investigated this matter. The Los Angeles County Sheriff’s Department assisted in the investigation.
Assistant United States Attorneys Eli A. Alcaraz, Brian R. Faerstein and Michael J. Morse of the Public Corruption and Civil Rights Section prosecuted this case.
Former Interpreter Sentenced to Nearly 5 Years in Prison for Illegally Transferring Nearly $17 Million from Baseball Star’s Bank AccountRead the Press Release
SANTA ANA, California – A former Japanese-language interpreter was sentenced today to 57 months in federal prison for illegally – and without authorization – transferring nearly $17 million from the bank account of Major League Baseball (MLB) star Shohei Ohtani to pay off his own substantial gambling debts incurred with an illegal bookmaking operation and for signing a false tax return.
Ippei Mizuhara, 40, of Newport Beach, was sentenced by United States District Judge John W. Holcomb, who also ordered him to pay $16,975,010 in restitution to Ohtani and $1,149,400 in restitution to the IRS.
Mizuhara pleaded guilty in June 2024 to one count of bank fraud and one count of subscribing to a false tax return. He is free on $25,000 bond and was ordered to surrender to federal authorities by March 24.
“Mr. Mizuhara had a unique position of trust that gave him power, brought him fame, and paid him well,” said Acting United States Attorney Joseph T. McNally. “Unfortunately, he exploited this dream job to steal millions of dollars from his friend and confidant. This is a sad tale of an American success story gone wrong – so wrong that Mr. Mizuhara will be spending years inside a prison cell.”
“Mr. Mizuhara exploited his position of trust as an advisor to steal from Mr. Ohtani to cover debts incurred through illegal and irresponsible gambling,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office. “Furthermore, Mr. Mizuhara failed to report his ill-gotten gains as taxable income. This sentencing should serve as a warning to those who neglect to report all income during tax season. We are proud to have partnered with Homeland Security Investigations to bring closure to Mr. Ohtani and justice to Mr. Mizuhara.”
“Mr. Mizuhara is yet another example of how those in a position of trust can take advantage of a relationship and defraud the government,” said Homeland Security Investigations Los Angeles Acting Special Agent in Charge John Pasciucco. “The HSI-led El Camino Real Financial Crimes Task Force will leverage all partnerships to locate and bring to justice those who commit financial crimes, especially those who think they can hide in plain sight.”
Mizuhara was the translator and de facto manager of a professional baseball player identified in court documents as “Victim A,” but who in fact was MLB star Shohei Ohtani. As part of his job duties, Mizuhara regularly interacted with Ohtani’s sports agents and financial advisors – who did not speak Japanese – on behalf of Ohtani, who did not speak English. Although Mizuhara was an employee of the Los Angeles Angels MLB team, for whom Ohtani played from 2018 to 2023, and, later, the Los Angeles Dodgers, for whom Ohtani has played since 2024, Ohtani paid him separately for the additional work of driving him to meetings and interpreting for non-baseball-related activities.
In March 2018, Mizuhara accompanied Ohtani to a bank in Phoenix to help him open a bank account to deposit his MLB salary. Inside the bank branch, Mizuhara interpreted for Ohtani when the bank employee provided Ohtani the login information for this bank account.
Beginning in September 2021, Mizuhara began placing sports bets with an illegal bookmaker. Shortly thereafter, Mizuhara began to lose bets and quickly became indebted to the bookmaker. Unable to pay his gambling debts, Mizuhara orchestrated a scheme to deceive and cheat the bank to fraudulently obtain money from the account.
From no later than November 2021 to March 2024, Mizuhara used Ohtani’s password to successfully sign into the bank account and then changed the account’s security protocols without Ohtani’s knowledge or permission. Specifically, Mizuhara changed the registered email address and telephone number on the account so bank employees would call him – not Ohtani – when attempting to verify wire transfers from the account.
Mizuhara impersonated Ohtani and used Ohtani’s personal identifying information to deceive the bank’s employees into authorizing wire transfers from the bank account. In total, Mizuhara called the bank and impersonated Ohtani on approximately 24 occasions.
In addition, in September 2023, Mizuhara needed $60,000 worth of dental work and Ohtani agreed to pay for it via a check drawn on a business account at a different bank. However, Mizuhara provided his dentist Ohtani’s debit card number for the bank account Ohtani had opened in Phoenix, charged $60,000 to that account, then deposited the $60,000 check into Mizuhara’s personal bank account.
From January 2024 to March 2024, Mizuhara purchased approximately $325,000 worth of baseball cards from online resellers such as eBay from Ohtani’s bank account with the intent to resell them later and for his own personal benefit.
When Ohtani’s sports agent and financial advisors asked Mizuhara for access to the bank account, Mizuhara lied and said Ohtani did not want them to access the account because it was private. In fact, Mizuhara did not want them to know that he had been stealing from Ohtani and had fraudulently obtained more than $16,975,010 from him.
In February 2024, he willfully made and subscribed to a false individual federal income tax return for the tax year 2022. On that tax return, Mizuhara falsely claimed that his total taxable income for that year was $136,865 when in fact he knew the amount was substantially higher and he knowingly failed to report additional income of $4.1 million.
Mizuhara, under penalty of perjury, signed the false income tax return and owes approximately $1,149,400 in additional taxes for the tax year 2022, plus additional interest and penalties.
IRS Criminal Investigation and Homeland Security Investigations are investigating this matter.
Assistant United States Attorneys Jeff Mitchell of the Major Frauds Section and Jonathan Galatzan of the Asset Forfeiture and Recovery Section prosecuted this case.
5 Arrested in Law Enforcement Operation Targeting Fraudulent Withdrawal of Benefits Designated for Low-Income FamiliesRead the Press Release
LOS ANGELES – A multi-agency law enforcement operation has resulted in the arrest of five illegal aliens who allegedly used information from “skimmed” electronic benefit transfer (EBT) cards to “clone” counterfeit cards and steal funds that had been disbursed to low-income individuals by the State of California, the Justice Department announced today.
Three of the defendants have been ordered detained without bond, and two of the five defendants arrested on Sunday are expected to make their initial appearances in United States District Court today.
During the operation on Sunday, approximately 70 law enforcement officers began monitoring ATM locations across the Los Angeles area to identify individuals who were making multiple cash withdrawals with cards encoded with information that had been stolen from cards used by the California Department of Social Services (DSS) to provide CalFresh and CalWORKs benefits to qualified recipients.
Authorities made arrests after determining that the suspects making withdrawals at the ATMs were not entitled to access funds that had been deposited into accounts belonging to legitimate EBT beneficiaries.
“These defendants who are illegally in the United States targeted and stole from some of the poorest members of our community,” said Acting United States Attorney Joseph T. McNally. “This fraudulent activity has contributed to significant financial losses, undermining an essential lifeline for struggling families. The U.S. Attorney’s office, in close collaboration with our law enforcement counterparts, will continue to root out this criminal conduct and protect our most vulnerable citizens from further exploitation.”
“This successful operation targeted transnational criminal organizations that have been stealing from our less fortunate neighbors and the taxpayers,” said HSI Los Angeles Acting Special Agent in Charge John Pasciucco. “HSI Los Angeles and our partners will work day and night to ensure that this help continues to be available to those who need it most, and not in the pockets of greedy criminals.”
Late Monday, federal prosecutors filed three criminal complaints charging the five defendants with the use of unauthorized access devices (the cards with stolen EBT account numbers and PINs used to make the cash withdrawals). The defendants arrested Sunday allegedly made unauthorized withdrawals, obtaining as much as $25,480. The defendants named across three criminal complaints are:
- Marcel Musat, 53, of Romania, who is charged with one count of use of unauthorized access devices and allegedly had approximately 45 cloned cards on his person when he was arrested. Musat admitted to investigators he had overstayed his visa and therefore is illegally in the United States. At a hearing Tuesday afternoon, Musat was ordered held without bond. He is scheduled to be arraigned on March 11.
- Ionut Calciu, 31, of Romania, who is charged with one count of use of unauthorized access devices and allegedly possessed 10 counterfeit EBT cards when he was arrested. According to court documents, Calciu previously was convicted of aggravated robbery in Romania. Calciu, who is an illegal alien, is scheduled to appear in court today.
- Florian Serban, 51, of Romania, who is charged with one count of use of unauthorized access devices and he allegedly possessed 58 re-encoded California EBT cards. Serban is due to appear in court today.
- Wesley David Adrian Dimoua-Moua, 36, of France, who is charged with one count of use of unauthorized devices and allegedly had 11 counterfeit EBT cards when he was arrested. Dimoua-Moua is a visa overstay illegally present in the United States. At a hearing Tuesday afternoon, Dimoua-Moua was ordered held without bond. He is scheduled to be arraigned on February 24.
- Hichem Mohamed El Mabrouk, 35, of France, who is charged with one count of use of unauthorized access devices and allegedly was in possession of 37 re-encoded California EBT cards when he was arrested. At a hearing Tuesday afternoon, El Mabrouk was ordered held without bond. He is scheduled to be arraigned on March 11.
DSS detected more than $126.8 million stolen from victim EBT cards in 2024, according to court documents. This fraud has targeted CalWORKs and CalFresh (previously known as “food stamps”), both of which are intended to help low-income beneficiaries purchase food and provide for basic needs.
The investigation has revealed that the fraudulent withdrawal of these benefits is done with “cloned” cards, which are debit cards, gift cards or other devices with magnetic strips that have been encoded with information from legitimate EBT cards. Court documents allege that at least some of those involved in the fraudulent withdrawals also possessed “skimming” devices that could be used to record personal identification information from victims.
Criminal complaints and indictments contain allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Homeland Security Investigation’s El Camino Real Task Force, which includes special agents with HSI and the United States Secret Service, as well as officers with the Los Angeles Police Department, is conducting the investigations in this matter.
A number of law enforcement agencies provided significant support during Sunday’s operation, including the California Department of Social Services, the United States Marshals Service, the Los Angeles County District Attorney’s Office, the Los Angeles County Sheriff’s Department, the Hermosa Beach Police Department, the Baldwin Park Police Department, the Culver City Police Department, the El Monte Police Department, the Inglewood Police Department, the Orange County District Attorney’s Office, and the U.S. Department of Agriculture – Office of Inspector General.
Assistant United States Attorneys Diane Roldán, Alexander H. Tran and Sophia Carrillo of the General Crimes Section are prosecuting these cases.
Riverside County Man Sentenced to over 15 Years in Prison for Producing Sexually Explicit Images of Children He Met OnlineRead the Press Release
SANTA ANA, California – A Riverside County man was sentenced today to 188 months in federal prison for catfishing a preteen girl he met on an online gaming platform and persuading her to send him sexually explicit photos of herself and, later, of her five-year-old relative.
John Matthew Piecuch, 64, of Hemet, was sentenced by United States District Judge John W. Holcomb, who scheduled a May 1, 2025, restitution hearing in this matter.
Piecuch pleaded guilty in July 2024 to one count of production of child pornography. He has been in federal custody since August 2021.
“Online games and platforms can allow child predators to hide behind fake identities and lure children into sharing private information,” said Acting U.S. Attorney Joseph McNally. “It is critical that we hold these predators accountable and convey a message of zero tolerance for those who prey on our youth. I also urge parents everywhere to monitor their children’s online activity to ensure their health and safety.”
Piecuch met on Roblox, an online gaming platform, an individual identified in court documents as “Minor Victim 1,” a 12-year-old-girl. Piecuch told the victim he was a 13-year-old boy.
In January 2021, Piecuch and Minor Victim 1 texted each other, during which time he persuaded her to send him sexually explicit images of herself. Piecuch also persuaded Minor Victim 1 to take and send him sexually explicit photographs of Minor Victim 2, a five-year-old girl, her relative.
Minor Victim 1’s mother saw some of the text messages between her daughter and Piecuch on the girl’s mobile device, which prompted her to contact law enforcement, according to court documents.
Once he completes his prison sentence, Piecuch will remain on supervised release for the rest of his life.
The FBI investigated this matter in conjunction with the Carroll County (Maryland) Sheriff’s Office.
Assistant United States Attorney Sonah Lee of the Riverside Branch Office is prosecuting this case
Former U.S. Marine Lance Corporal Pleads Guilty in Relation to Fentanyl Poisoning Death of Another MarineRead the Press Release
LOS ANGELES – A Wisconsin man pleaded guilty today to a felony drug offense for his actions surrounding a 2020 fentanyl transaction that resulted in the death of a U.S. Marine.
Anthony Ruben Whisenant, 24, pleaded guilty in United States District Court to the use of a communication facility – a cellphone – in committing a felony drug offense.
United States District Judge Dolly M. Gee is scheduled to sentence Whisenant on May 7, at which time he will face a maximum sentence of four years in federal prison.
“Fentanyl continues to claim the lives of too many in our community,” said Acting United States Attorney Joseph McNally. “Our office remains committed to holding accountable those responsible for circulating fentanyl and other dangerous substances in our district and threatening the health and safety of our residents.”
According to court documents, in May 2020, Whisenant was an active-duty lance corporal in the United States Marine Corps stationed aboard Camp Pendleton in Oceanside when he ordered pills marketed as oxycodone – but which actually contained fentanyl – for a fellow U.S. Marine, identified in court papers as “L.M.”
Whisenant contacted the drug dealer, Gustavo Jaciel Solis, 28, based on an advertisement Solis shared via his Snapchat account, according to court documents. L.M. drove Whisenant and another U.S. Marine, Ryan Douglas White, 27, from Camp Pendleton to collect the drugs from Solis later that same day. The three Marines then drove to a party in Compton where L.M. ingested some of the pills purchased from Solis and died shortly after. At the direction of Whisenant, White flushed the remaining pills down a toilet before first responders arrived.
Solis was charged in 2020, along with Whisenant and two other civilian co-conspirators, with being part of a drug ring that distributed narcotics to civilians and members of the Marine Corps, and White was charged as an accessory after the fact.
Solis was arrested in July 2020, at which time investigators seized narcotics and several firearms – including a 9mm “ghost gun” – from his residence. Solis pleaded guilty in April 2022 to two federal drug trafficking offenses: participating in a drug trafficking conspiracy and distributing fentanyl resulting in death. His sentencing is pending, and he faces a maximum sentence of life.
White pleaded guilty in December 2024 to one count of misprision of a felony for his knowledge of the fatal drug transaction and his attempts to hinder law enforcement’s investigation. His sentencing is scheduled for June 6, at which time he will face a maximum sentence of 3 years.
A superseding indictment filed in September 2020 named two other defendants: Jordan Nicholas McCormick, 29, of Palmdale, and Jessica Sarah Perez, 25, of Pacoima.
McCormick allegedly supplied provided LSD, ecstasy, cocaine and oxycodone pills laced with fentanyl to co-conspirators. McCormick has pleaded not guilty and is scheduled to go to trial on April 22.
Perez distributed narcotics including fentanyl and cocaine to the conspiracy’s civilian customers. She pleaded guilty to one count of conspiracy to distribute and possess with intent to distribute controlled substances and was sentenced in September 2022 to pay a $100 fine and placed on probation for two years.
This matter was investigated by the Naval Criminal Investigative Service, the Drug Enforcement Administration, the FBI, the United States Postal Inspection Service, and the Ventura County Sheriff’s Office.
This case is being prosecuted by Assistant United States Attorney Patrick Castañeda of the International Narcotics, Money Laundering, and Racketeering Section.
Former Owner of ‘Timepiece Gentleman’ Luxury Watch Consignment Store in Beverly Hills Sentenced to Nearly 6 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Los Angeles man who ran a Beverly Hills luxury watch consignment business and was known as “The Timepiece Gentleman” was sentenced today to 70 months in federal prison for swindling dozens of his customers of out a total of at least $5.6 million.
Anthony Farrer, 36, formerly of downtown Los Angeles, was sentenced by United States District Judge Josephine L. Staton.
Farrer pleaded guilty in October 2024 to one count of wire fraud and one count of mail fraud. He has been in federal custody since November 2023.
“This defendant stole millions of dollars from customers who trusted him and then used his ill-gotten gains to fund his exorbitant lifestyle,” said Acting United States Attorney Joseph T. McNally. “The sentence imposed today sends a message that those who defraud the public will be held accountable.”
“The so-called ‘Timepiece Gentleman” was actually a con-man whose time living lavishly ran out when the high-end watch owners he victimized brought his crimes to the attention of law enforcement,” said Akil Davis, the Assistant Director in Charge of the FBI’s Los Angeles Field. “This successful prosecution is the result of a joint collaboration among local and federal partners working together in order to bring Mr. Farrer to justice.”
“Mr. Farrer exploited his clients’ trust for personal gain,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office. “Instead of making good on his business promises, Mr. Farrer swindled his clients out of money and property to fund his own extravagant expenditures, and now he’ll suffer the consequences. IRS-CI is committed to protecting clients and consumers from this sort of dubious behavior, and we are proud to have been a partner in this investigation.”
From November 2022 to November 2023, Farrer used his business – also called “The Timepiece Gentlemen” – to connect purchasers and sellers of high-end watches. In a typical consignment sale, a client would ship a watch to The Timepiece Gentleman and Farrer would take possession of the watch, agreeing to display it at his Beverly Hills store and through online and social media marketing. The items involved in this case included luxury watches by Rolex, Richard Mille, and Patek Phillipe, among others.
Once the watch was sold, Farrer was supposed to remit the sales proceeds back to the client, minus a consignment fee, which typically was approximately 5% of the sales price. If the watch did not sell within a specific time or for a specified price, Farrer was to return the watch to the client.
But instead of remitting watch sales proceeds – or the unsold watches themselves – back to the clients, Farrer sold the client watches and kept the proceeds for himself. He also used client watches – without the client’s knowledge or permission – as collateral for loans that he took out from lenders.
When a client asked about the status of a watch on consignment sale, Farrer lied and said that the watch had not yet been sold. In fact, Farrer already had sold the watch or otherwise disposed of it, keeping the funds for his own personal benefit.
In addition to his consignment sale business, Farrer also purported to purchase watches on behalf of his clients. Typically, a client sent funds to Farrer, often by wire transfers to his bank accounts or through payment processors such as Zelle, for the purpose of Farrer locating and buying a specified watch on the client’s behalf.
But Farrer took the clients’ money and used it for other purposes, including to fund his lavish lifestyle such as buying or leasing luxury automobiles, apartments, and other luxury goods.
When a client who had sent him money asked Farrer about the status of a watch purchase, Farrer often sent another watch to the client to tide the client over or lull them into a false sense of security regarding the status of the purchase. Like a Ponzi scheme, the other watch Farrer sent to the client often belonged to other clients who had themselves sent him that watch for a consignment sale. These clients were unaware Farrer was using their watches for that purpose, rather than attempting to sell the watches on behalf of the clients.
In total, Farrer fraudulently obtained money and property belonging to more than 40 victims and caused total losses of at least $5,691,005. Farrer also will be subject to a restitution order for payment owed to victims in amounts to be determined later.
The FBI, IRS Criminal Investigation, and the Beverly Hills Police Department investigated this matter.
Assistant United States Attorney Joshua O. Mausner of the Violent and Organized Crime Section prosecuted this case.
Culver City Man Agrees to Plead Guilty to Recklessly Crashing Drone into Super Scooper Firefighting Aircraft During Palisades FireRead the Press Release
LOS ANGELES – A Culver City man agreed to plead guilty to recklessly operating a drone that crashed into and damaged a Super Scooper firefighting aircraft fighting the Palisades Fire earlier this month, the Justice Department announced today.
Peter Tripp Akemann, 56, has agreed to plead guilty to one count of unsafe operation of an unmanned aircraft. This morning federal prosecutors filed a criminal information charging Akemann with the misdemeanor offense that carries a prison sentence of up to one year in federal prison.
In a plea agreement also filed this morning, Akemann agreed to plead guilty to the criminal offense and admitted to his reckless and illegal conduct in flying the drone that posed an imminent safety hazard to the Super Scooper crew. As a result of the drone collision, the firefighting aircraft was taken out of service for a period of time and was not able to continue its firefighting mission. As part of the plea agreement, Akemann agreed to pay full restitution to the Government of Quebec, which supplied the plane, and an aircraft repair company that repaired the plane. Akemann also agreed to complete 150 hours of community service in support of the 2025 Southern California wildfire relief effort.
“This defendant recklessly flew an aircraft into airspace where first responders were risking their lives in an attempt to protect lives and property,” said Acting United States Attorney Joseph T. McNally. “This damage caused to the Super Scooper is a stark reminder that flying drones during times of emergency poses an extreme threat to personnel trying to help people and compromises the overall ability of police and fire to conduct operations. As this case demonstrates, we will track down drone operators who violate the law and interfere with the critical work of our first responders.”
“Lack of common sense and ignorance of your duty as a drone pilot will not shield you from criminal charges,” said Akil Davis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Please respect the law, respect the FAA’s rules and respect our firefighters and the residents they are protecting by keeping your drone at home during wildfires.”
Akemann is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles.
According to the plea agreement, while the wildfire was burning in and around Pacific Palisades on January 9, Akemann drove to the Third Street Promenade in Santa Monica and parked his vehicle on the top floor of the parking structure. He then launched a drone and flew it towards Pacific Palisades to observe damage caused by the Palisades Fire.
Akemann flew the drone at least 2,500 meters (more than 1.5 miles) toward the fire and lost sight of the drone. As Akemann was flying the drone, it collided with a Government of Quebec Super Scooper carrying two crewmembers attempting to fight the blaze. The impact caused an approximately 3-inch-by-6-inch hole in the left wing. After landing, maintenance personnel identified the damage and took the aircraft out of service for repairs.
At the time of the collision, the Federal Aviation Administration had issued temporary flight restrictions that prohibited drone operations near the Los Angeles County wildfires that erupted earlier this month.
As a result of the collision, the Government of Quebec and an aircraft repair company incurred costs of at least $65,169 to repair the plane.
The FBI investigated this matter. The Department of Transportation’s Office of Inspector General, the Federal Aviation Administration, the Los Angeles Fire Department, and the California Department of Forestry and Fire Protection (CALFIRE) provided substantial assistance.
Assistant United States Attorneys Kedar S. Bhatia and Ian V. Yanniello of the Terrorism and Export Crimes Section are prosecuting this case.
Four Members of Online Neo-Nazi Group that Exploited Minors Charged with Producing Child Sexual Abuse MaterialRead the Press Release
Note: View the indictment here.
Two men were arrested today on charges of participating in a neo-Nazi child exploitation enterprise that groomed and then coerced minors to produce child sexual abuse material (CSAM) and images of self-harm. The group allegedly victimized at least 16 minors around the world, including two in Southern California.
Colin John Thomas Walker, 23, of Bridgeton, New Jersey, and Clint Jordan Lopaka Nahooikaika Borge, 41, of Pahoa, Hawaii, were arrested this morning pursuant to a grand jury indictment that charges them with one count of engaging in a child exploitation enterprise. They are expected to make their initial appearances in court later today in New Jersey and Hawaii.
The indictment also charges two other defendants who are already in custody: Rohan Sandeep Rane, 28, of Antibes, France, and Kaleb Christopher Merritt, 24, of Spring, Texas. The indictment returned by a grand jury on Jan. 17 and unsealed today, also charges Rane and Walker with one count of engaging in a child exploitation enterprise.
According to the indictment, from at least 2019 to 2022, Rane, Walker, Merritt, and Borge were members of CVLT (pronounced “cult”), an online group that espoused neo-Nazism, nihilism, and pedophilia as its core principles. Members of the international enterprise engaged in online child sexual exploitation offenses and trafficked CSAM. Rane, Walker, and Merritt acted as leaders and administrators in the CVLT enterprise, hosting and running CVLT online servers and controlling membership for the group.
CVLT members worked collectively to entice and coerce children to self-produce CSAM on a platform run by CVLT members where they groomed children for the eventual production of CSAM through various means of degradation, including exposing the victims to extremist and violent content. CVLT specifically targeted vulnerable victims, including ones suffering from mental health challenges or a history of sexual abuse.
Victims were encouraged to engage in increasingly dehumanizing acts, including cutting and eating their own hair, drinking their urine, punching themselves, calling themselves racial slurs, and using razor blades to carve CVLT members’ names into their skin. CVLT members’ coercion escalated to pressuring victims to kill themselves on a video livestream.
When victims hesitated, resisted, or threatened to tell parents or authorities, CVLT members would threaten to distribute already-obtained compromising photos and videos of the victims to their family and friends. For victims who stopped participating in the CSAM, CVLT would sometimes carry through on their threats.
Rane previously was charged with several child exploitation and related offenses in France and has been in French custody since 2022. Merritt is currently in Virginia state custody, serving a 50-year sentence for child sex abuse crimes committed in 2020 and 2021.
If convicted, the defendants would face a minimum penalty of 20 years in prison and a statutory maximum penalty of life in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Homeland Security Investigations (HSI), the Los Angeles Police Department, San Bernardino County Sheriff’s Office, Henry County Sheriff’s Office (Virginia), Iowa State University Police, Police Nationale (France), the National Crime Agency (United Kingdom), the New Zealand Department of Internal Affairs, and EUROPOL are investigating this matter.
Assistant U.S. Attorney Catharine A. Richmond for the Central District of California and Trial Attorneys Justin Sher and James Donnelly of the National Security Division’s Counterterrorism Section are prosecuting this case.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Four Members of Online Neo-Nazi Group that Exploited Minors Charged with Producing Child Sexual Abuse MaterialRead the Press Release
LOS ANGELES – Two men were arrested today on federal charges of participating in a neo-Nazi child exploitation enterprise that groomed and then coerced minors to produce child sexual abuse material (CSAM) and images of self-harm. The group allegedly victimized at least 16 minors around the world, including two in Southern California.
Collin John Thomas Walker, 23, of Bridgeton, New Jersey, and Clint Jordan Lopaka Nahooikaika Borge, 41, of Pahoa, Hawaii, were arrested this morning pursuant to a grand jury indictment that charges them with one count of engaging in a child exploitation enterprise. They are expected to make initial court appearances later today in New Jersey and Hawaii.
The indictment charges two other defendants who are already in custody: Rohan Sandeep Rane, 28, of Antibes, France, and Kaleb Christopher Merritt, 24, of Spring, Texas. The indictment, which was returned by a grand jury on January 17 and unsealed today, also charges Rane and Walker with one count of engaging in a child exploitation enterprise.
“The defendants here are alleged to have committed horrific acts against children,” said Acting United States Attorney Joseph T. McNally. “There is nothing more important than protecting our youth. Our office will continue its effort to aggressively prosecute and incarcerate dangerous predators.”
“Sextortion and other forms of online child sexual abuse have tragically altered the trajectory of too many young lives and this group preyed upon the vulnerable to fulfill their sick and twisted desires,” said Homeland Security Investigations (HSI) Los Angeles Special Agent in Charge Eddy Wang. “HSI and our partners will work tirelessly to protect children from victimization in communities across the United States and around the globe.”
According to the indictment, from at least 2019 to 2022, Rane, Walker, Merritt and Borge were members of CVLT (pronounced “cult”), an online group that espoused neo-Nazism, nihilism and pedophilia as its core principles. Members of the international enterprise engaged in online child sexual exploitation offenses and trafficked CSAM. Rane, Walker, and Merritt acted as leaders and administrators in the CVLT enterprise, hosting and running CVLT online servers and controlling membership for the group.
CVLT members worked collectively to entice and coerce children to self-produce CSAM on a platform run by CVLT members where they groomed children for the eventual production of CSAM through various means of degradation, including exposing the victims to extremist and violent content. CVLT specifically targeted vulnerable victims, including ones suffering from mental health challenges or a history of sexual abuse.
Victims were encouraged to engage in increasingly dehumanizing acts, including cutting and eating their own hair, drinking their urine, punching themselves, calling themselves racial slurs, and using razor blades to carve CVLT members’ names into their skin. CVLT members’ coercion escalated to pressuring victims to kill themselves on a video livestream.
When victims hesitated, resisted or threatened to tell parents or authorities, CVLT members would threaten to distribute already-obtained compromising photos and videos of the victims to their family and friends. For victims who stopped participating in the CSAM, CVLT would sometimes carry through on their threats.
Rane previously was charged with several child exploitation and related offenses in France and has been in French custody since 2022. Merritt is currently in Virginia state custody, serving a 50-year sentence for child sex abuse crimes committed in 2020 and 2021.
If convicted, the defendants would face a 20-year mandatory minimum sentence and a statutory maximum sentence of life in prison.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorney’s Offices and the Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Homeland Security Investigations (HSI), the Los Angeles Police Department, San Bernardino County Sheriff’s Office, Henry County Sheriff’s Office (Virginia), Iowa State University Police, Police Nationale (France), the National Crime Agency (United Kingdom), the New Zealand Department of Internal Affairs, and EUROPOL are investigating this matter.
Assistant United States Attorney Catharine A. Richmond of the Violent and Organized Crime Section, and Trial Attorneys Justin Sher and James Donnelly of the National Security Division’s Counterterrorism Section are prosecuting this case.
Orange County Man Charged in Six-Count Indictment Alleging He Distributed Fentanyl and Caused Two Fatal Drug OverdosesRead the Press Release
SANTA ANA, California – A federal grand jury today indicted an Orange County man who allegedly distributed fentanyl, which resulted in the overdose deaths of two people during the spring of 2023.
Michel Joseph Abdallah, 21, a.k.a. “Mike,” of Laguna Niguel, is charged in a six-count indictment with two counts of distribution of fentanyl resulting in death, two counts of possession with intent to distribute fentanyl, and two counts of possession of a firearm in furtherance of drug trafficking crimes.
Abdallah’s arraignment is expected to occur in United States District Court in Santa Ana in the coming weeks. He currently is in state custody.
“The indictment alleges that this defendant continued dealing fentanyl despite two deaths resulting from his drug dealing activities,” said Acting United States Attorney Joseph T. McNally. “Although criminal charges cannot bring back a loved one, we hope today’s indictment brings some measure of solace to the families and friends of the victims.”
According to the indictment, Abdallah distributed fentanyl to a victim – identified as “C.R.” – on March 25, 2023, in Mission Viejo. C.R. used the drug, which resulted in a fatal overdose. On May 15, 2023 in Aliso Viejo, Abdallah again distributed fentanyl – this time, to victim “L.F.,” who ingested the powerful synthetic opioid and died.
The indictment further alleges that Abdallah possessed a total of 1.3 kilograms (2.9 pounds) of fentanyl on June 10, 2023. On this date, he allegedly also possessed two firearms, including an AR-15-style pistol bearing no serial number, which commonly is referred to as a “ghost gun.”
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
If convicted of all charges, Abdallah would face a mandatory minimum sentence of 20 years in federal prison and a statutory maximum sentence of life imprisonment.
The Drug Enforcement Administration, the Orange County Sheriff’s Department, and the Santa Ana Police Department are investigating this matter.
Assistant United States Attorney Lisa J. Lindhorst of the Orange County Office is prosecuting this case.
Woman Sentenced for Fraud Scheme Involving Claims for Unnecessary Respiratory Tests Submitted with COVID-19 TestsRead the Press Release
A California woman was sentenced today to nine years in prison for her role in fraudulently submitting claims to governmental and private insurance programs during the COVID‑19 pandemic for expensive respiratory pathogen panel (RPP) tests that were medically unnecessary and never ordered by health care providers.
According to court documents, Lourdes Navarro, 66, of Glendale, and Imran Shams owned and controlled Matias Clinical Laboratory, doing business as Health Care Providers Laboratory (HCPL). Navarro and Shams conspired to obtain nasal swab specimens that enabled HCPL to test for COVID-19, as well as to obtain testing orders from physicians and other medical professionals. The specimens were collected from, among others, residents and staff at nursing homes, assisted living facilities, rehabilitation facilities, and similar types of facilities, and from students and staff at primary and secondary schools, for the purported purpose of conducting screening tests to identify and isolate individuals infected with COVID-19. However, Navarro and Shams caused HCPL to perform RPP tests on most of the specimens, even though only COVID-19 testing had been ordered and there was no medical justification for conducting RPP tests on asymptomatic individuals who needed only COVID-19 screening tests. Through HCPL, Navarro and Shams billed approximately $369 million for the RPP tests to Medicare, the Health Resources and Services Administration COVID-19 Uninsured Program, and a private health insurance company, and were reimbursed approximately $46.7 million for fraudulent claims.
Navarro was also ordered to forfeit $11,662,939 in funds that the government had previously seized from three bank accounts. The total amount seized and forfeited from Navarro and Shams is $14,518,485. Navarro also was ordered to pay $46,735,400 in restitution.
Navarro pleaded guilty on Oct. 5, 2023, to conspiracy to commit health care fraud and wire fraud. Shams pleaded guilty on Jan. 24, 2023, in the Central District of California to conspiracy to commit health care fraud and concealment of his exclusion from Medicare and was sentenced to 10 years in prison on Jan. 30, 2024. In addition, on May 29, 2024, Shams was sentenced to five years in prison in connection with his 2017 plea in the Eastern District of New York to conspiracy to commit money laundering, conspiracy to pay and receive kickbacks, and defrauding the United States by obstructing the lawful functions of the IRS, of which three years were ordered to run consecutive to the Central District of California sentence.
Supervisory Official Antoinette T. Bacon of the Justice Department’s Criminal Division, Assistant Director in Charge Akil Davis of the FBI Los Angeles Field Office, and Acting Special Agent in Charge Rochelle Wong of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Regional Office made the announcement.
The FBI and HHS-OIG investigated the case.
Trial Attorneys Gary A. Winters and Raymond E. Beckering III of the Criminal Division’s Fraud Section prosecuted the case. Assistant U.S. Attorney Maxwell Coll for the Central District of California handled the financial penalties.
The Justice Department’s COVID-19 Fraud Enforcement Task Force marshals the resources of the department in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, visit www.justice.gov/coronavirus.
Multi-Convicted Felon Sentenced to More Than 5 Years in Federal Prison for Illegally Possessing AmmunitionRead the Press Release
LOS ANGELES – A Los Angeles-area man with multiple prior felony convictions has been sentenced to 63 months in federal prison for illegally possessing ammunition during an incident last year in which pointed a firearm at a victim and also threatened to shoot the victim’s dog, the Justice Department announced today.
Edward Conway, 47, who was a transient at the time of the offense, was sentenced Monday afternoon by United States District Judge Percy Anderson. Conway pleaded guilty in October 2024 to one count of being a felon in possession of ammunition.
According to court documents, on February 25, 2024, Conway held a gun to the head of his ex-girlfriend’s cousin, demanding that the victim get Conway’s ex-girlfriend on the phone. Conway also threatened to shoot the man’s dog if he didn’t cooperate.
During the incident, Conway pointed to a camera on the man’s house and demanded that the victim turn the camera off. When the victim told Conway he was unable to do so, Conway fired his gun at the camera, pushed his gun into the victim’s back and pinned him to a car while continuing to threaten him.
When Conway shot toward the camera, a child was taking shelter from the commotion in a house adjacent to where Conway fired the gun, prosecutors wrote in a sentencing memorandum. Investigators recovered a 9mm caliber shell casing from the scene.
After shooting at the camera, Conway fled the scene on foot, but he was later arrested by officers with the Los Angeles Police Department.
Earlier that same day, Conway harassed and strangled his ex-girlfriend outside of a grocery store in Los Angeles, then proceeded to throw her car keys onto a neighboring apartment, preventing her from escaping him, according to the sentencing memo. As a result of this conduct, Conway was convicted of felony domestic violence and sentenced to 60 days in custody.
Conway is not legally permitted to possess ammunition because of his criminal history, which includes felony convictions in Los Angeles Superior Court for second-degree robbery, being a felon in possession of a firearm, and assault with a deadly weapon.
The FBI and the Los Angeles Police Department investigated this matter.
Assistant United States Attorney Mirelle N. Raza of the General Crimes Section prosecuted this case.
Eight Defendants Arrested on Federal Grand Jury Indictment Alleging Large-Scale Smuggling Scheme from China through L.A.-Area PortsRead the Press Release
LOS ANGELES – Federal law enforcement has arrested eight defendants charged in an indictment alleging a conspiracy among logistic companies’ executives, warehouse owners and truck drivers to smuggle hundreds of millions of dollars’ worth of counterfeit and other illegal goods from China into the United States via the Ports of Los Angeles and Long Beach, the Justice Department announced today.
The 15-count indictment, returned last month and unsealed Friday, charges nine defendants with conspiracy, smuggling and breaking customs seals. The defendants allegedly took containers flagged for off-site secondary inspection, unloaded the contraband, then stuffed the targeted containers with filler cargo to deceive customs officials and evade law enforcement.
During the investigation into this group, investigators seized more than $130 million in contraband, and the organization is believed to be responsible for smuggling at least $200 million worth of goods. According to the indictment, a search of one warehouse used by the group led to the seizure in June 2024 of $20 million worth of counterfeit items including shoes, perfume, luxury handbags, apparel and watches.
Seven defendants were arrested Friday, an eighth was taken into custody Saturday evening, and one defendant is a fugitive. The seven arrested last week were arraigned Friday in United States District Court, where each pleaded not guilty to the charges against them. A trial date was scheduled for March 18. The eighth defendant, who was arrested on unrelated state charges, is expected to be arraigned in federal court in the coming days.
“Secure seaports and borders are critical to our national security,” said Acting United States Attorney Joseph T. McNally. “The smuggling of huge amounts of contraband from China through our nation’s largest port hurts American businesses and consumers. The charges and arrests here demonstrate our commitment to enforce our customs laws and keep the American public safe.”
“Homeland Security Investigations (HSI) Los Angeles and its partners are committed to enforcing customs laws and practices, facilitating legitimate trade, and protecting the integrity of the nation’s supply chain,” said HSI Los Angeles Special Agent in Charge Eddy Wang. “The $1.3 billion dollars’ worth of contraband seized during the investigation into this type of scheme illuminates how complex smuggling schemes try to exploit our legitimate trade practices and the American consumer.”
The 15-count indictment details a conspiracy to coordinate the shipment of large quantities of contraband from China to the United States through the Port of Los Angeles from at least August 2023 to June 2024. The defendants charged are:
- Weijun Zheng, 57, a.k.a. “Sonic,” of Diamond Bar, the lone fugitive in the case, who controls several logistics companies operating in the Los Angeles area;
- Hexi Wang, 32, of El Monte, who manages K&P International Logistics LLC, a City of Industry-based company that hires commercial truckers to transport shipping containers from the Port of Los Angeles;
- Jin “Mark” Liu, 42, of Irvine, the owner of K&P International Logistics LLC and who managed the finances of one of the warehouses where contraband was unloaded and issued payments to truck drivers who transported smuggled goods;
- Dong “Liam” Lin, 31, of Hacienda Heights, who – along with Zheng – controlled and operated one of the contraband warehouses;
- Marck Anthony Gomez, 49, of West Covina, the owner and operator of Fannum Trucks LLC, a West Covina-based company that coordinated the movement of shipping containers from the Port of Los Angeles, including large shipments of contraband smuggled into the United States from China;
- Andy Estuardo Castillo Perez, 32, of Apple Valley, a driver for M4 Transportation Inc., a Carson-based company that transports shipping containers from the Port of Los Angeles;
- Jesse James Rosales, 41, of Apple Valley, who coordinated truckers from the ports to warehouses;
- Daniel Acosta Hoffman, 41, of Hacienda Heights, worked with Rosales to bring cargo containers from the Port of Los Angeles to warehouses; and
- Galvin Biao Liufu, 33, of Ontario, directed and managed truck drivers to bring the contraband into the warehouses.
According to the indictment, Zheng, Wang, Liu and others maintained and operated warehouses to store, conceal and sell large amounts of contraband goods that were illegally imported into the United States from China. When the contraband containers were selected by U.S. Customs and Border Protection (CBP) for inspection, the defendants hired commercial truck drivers to transport the containers from the Port of Los Angeles to locations that the conspirators controlled, including warehouses in the City of Industry that were controlled or managed by Zheng, Wang and others.
At these locations, co-conspirators broke the security seals on the shipping containers and removed the contraband from inside. Then, they affixed counterfeit security seals onto the containers to conceal that cargo had been removed from them. Zheng, Wang and others then directed co-conspirators to transport the containers – after they had been emptied of much of their original cargo and re-secured with counterfeit seals – to CBP-authorized locations for the remaining cargo to be presented to customs officials for inspection.
Zheng, Wang, Liu and others paid fees to co-conspirators, including Gomez and Castillo Perez, that were substantially above normal trucking fees to transport the contraband shipping containers.
To date, law enforcement has seized more than $1.3 billion worth of counterfeit goods associated with this and similar seal-swapping schemes.
“It was a team of CBP agriculture specialists assigned to the Los Angeles/Long Beach seaport who in 2023, during a routine examination of a container made the initial discovery,” said Cheryl Davies, U.S. Customs and Border Protection, Director of Field Operations in Los Angeles. “This case attests to their unwavering vigilance, upmost professionalism, and keen focus in protecting the integrity of lawful trade, a key component of our critical national security mission.”
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
If convicted of all charges, the defendants would face a statutory maximum sentence of five years in federal prison for each conspiracy count, up to 10 years in federal prison for each count of breaking customs seals, and up to 20 years in prison for each smuggling count.
Homeland Security Investigations, U.S. Customs and Border Protection, and Coast Guard Investigative Services are investigating this matter.
This effort is part of an Organized Crime Drug Enforcement Task Force (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
Assistant United States Attorneys Colin S. Scott and Amanda B. Elbogen of the Terrorism and Export Crimes Section are prosecuting this matter.
Wisconsin Man Pleads Guilty to ‘Swatting’ Scheme that Took over Ring Doorbell Cameras to Livestream Police ResponseRead the Press Release
LOS ANGELES – A Wisconsin man pleaded guilty today to participating in a one-week nationwide “swatting” spree that gained access to Ring home security door cameras, placed bogus emergency phone calls designed to elicit an armed police response, then livestreamed the events on social media, sometimes while taunting responding police officers in communities such as West Covina and Oxnard.
Kya Christian Nelson, 23, of Racine, Wisconsin, pleaded guilty to one count of conspiracy and two counts of unauthorized access to a protected computer to obtain information.
Nelson, who is doing time in a Kentucky state prison after being convicted in an unrelated case, has been in federal custody since August 2024.
“Swatting puts innocent lives in danger,” said Acting United States Attorney Joseph T. McNally. “Today’s guilty plea demonstrates that individuals who engage in this dangerous conduct will be held accountable through federal prosecutions.”
“The defendant’s malicious actions traumatized his victims and put their lives – and the lives of responding officers – at risk," said Akil Davis, Assistant Director in Charge of the FBI Los Angeles Field Office. “Swatting hoaxes drain crucial law enforcement resources at the expense of taxpayers and diverts police officers from responding to actual crisis situations. This case is a good reminder for security doorbell users that it's important to practice strict cyber hygiene by using difficult passwords and by employing two-factor authentication.”
According to his plea agreement, from November 7, 2020, to November 13, 2020, Nelson and co-conspirators gained access to home security door cameras sold by Ring LLC, a Santa Monica-based home security technology company. Nelson acquired without authorization the username and password information for Yahoo! email accounts belonging to victims throughout the United States.
The conspirators then determined whether the owner of each compromised Yahoo! account also had a Ring account using the same email address and password that could control associated internet-connected Ring doorbell camera devices. Using that information, they identified and gathered additional information about their victims.
Then, the conspirators placed false emergency reports or telephone calls to local law enforcement in the areas where the victims lived. These reports or calls were intended to elicit an emergency police response to the victim’s residence. The conspirators then accessed without authorization the victims’ Ring devices and transmitted the audio and video from those devices on social media during the police response. They also taunted responding police officers and victims through the Ring devices during several of the incidents.
For example, on November 8, 2020, Nelson and a co-conspirator accessed without authorization Yahoo! and Ring accounts belonging to a victim in West Covina. A hoax telephone call was placed to the West Covina Police Department purporting to originate from the victim’s residence and posing as a minor child reporting her parents drinking and shooting guns inside the residence. The caller claimed that her parents had multiple firearms and had fired approximately seven gunshots inside the house. Based on this hoax call, West Covina Police Department officers made an emergency response to the house and cleared the residents from the home at gunpoint.
During the police response, Nelson accessed the Ring doorbell camera located at the West Covina residence and used it to verbally threaten and taunt the police officers who responded to the reported incident.
In another incident, on November 11, 2020, Nelson illegally possessed the Yahoo! and Ring login credentials of a victim living in Oxnard. Nelson then used those credentials to access the victim’s Ring account. Nelson or a co-conspirator made a hoax call to the Oxnard Police Department purporting to be coming from inside the victim’s home.
The caller told the police that they were a child whose father was wielding a handgun inside the residence. Nelson made a second hoax call to Oxnard Police to report hearing shots fired at the victim’s residence. Based on these hoax calls, Oxnard Police officers made an emergency response to the house and cleared the residents from the home at gunpoint.
Nelson accessed the Ring doorbell camera located at the Oxnard residence and used it to threaten and taunt the police officers who had responded to the reported incident.
United States District Judge John A. Kronstadt scheduled a May 1 sentencing hearing, at which time Nelson will face a statutory maximum sentence of five years in federal prison for each count.
One of Nelson’s indicted co-conspirators, James Thomas Andrew McCarty, 22, of Kayenta, Arizona, was sentenced in June 2024 to seven years in federal prison both for his role in this case, and on additional charges in the District of Arizona. In connection with the Ring swatting incidents, McCarty pleaded guilty to the same conspiracy as Nelson.
McCarty further admitted to illegally accessing a victim’s Ring camera in Florida and making a call to the North Port Florida Police Department, in which he purported to be the victim’s husband who had just killed her, was holding a hostage, and had rigged explosives at the residence. McCarty then livestreamed the law enforcement response and posted a message on social media taking credit for the swatting incident and stating that he thought it was amusing.
The FBI investigated this matter.
Assistant United States Attorney Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section is prosecuting this case.
Four SoCal Residents Found Guilty of Participating in an Armed Robbery and Carjacking at Car Repair Shop in San Bernardino CountyRead the Press Release
RIVERSIDE, California – Three San Gabriel Valley residents and one San Bernardino County man have been found guilty by a jury of participating in an armed robbery and carjacking of a car repair business last year in Bloomington in which one victim was pistol-whipped into near unconsciousness, the Justice Department announced today.
At the conclusion of a 13-day trial, a federal jury on late Wednesday returned a guilty verdict on all counts against the following defendants:
- Marcos Guerrero, 49, of Glendora;
- Elijah Gafare, 35, of West Covina;
- Cinthia Leal, 39, of Glendora; and
- Vincent Solarez, 58, of Upland.
All four defendants were found guilty of one count of conspiracy to interfere with commerce by robbery (Hobbs Act), one count of Hobbs Act robbery, and one count of carjacking.
Guerrero, Gafare, and Leal also were found guilty of witness tampering and using, carrying, and brandishing a firearm in furtherance of and in relation to a crime of violence. Guerrero further was found guilty of being a felon in possession of a firearm and ammunition.
“Violent crime tears at the fabric of our communities,” said Acting United States Attorney Joseph T. McNally. “The verdict reached in this case highlights our office’s ongoing efforts to root out and punish criminals who use guns to harm innocent people.”
According to evidence presented at trial, Guerrero, Gafare, Leal, and Solarez participated in an armed robbery of a car repair shop in Bloomington in the early morning hours of March 12, 2024. During the robbery, two of the defendants brandished firearms and one of the defendants pistol-whipped one of the victims into near unconsciousness.
The defendants kept the victims hostage and threatened to kill them if the victims did not hand over cash, their car, and if they ever called law enforcement. In total, defendants stole several thousand dollars in cash and the business surveillance system, in addition to the victim’s car and other property.
Law enforcement tracked the defendants down and arrested them in May and June of 2024.
On May 30, 2024, Guerrero illegally possessed a .45-caliber firearm and dozens of rounds of ammunition. He is not permitted to possess firearms and ammunition because his criminal history includes convictions in San Bernardino County Superior Court for home invasion robbery, first-degree residential burglary, false imprisonment by violence, possession of a firearm by a felon, and evading a police officer.
United States District Judge Jesus G. Bernal scheduled an April 21 sentencing hearing, at which Guerrero, Gafare, and Leal will face a mandatory minimum sentence of seven years in federal prison and a statutory maximum sentence of life imprisonment.
Solarez will face a statutory maximum sentence of 65 years in federal prison.
The FBI Inland Violent Crimes Suppression Task Force and the San Bernardino County Sheriff’s Department investigated this matter.
Assistant United States Attorneys Joshua J. Lee and Neil P. Thakor of the General Crimes Section, and Tritia L. Yuen of the Riverside Branch Office, are prosecuting this case.
South Bay-Based Nursing Facilities Chain and Owner Agree to Pay $18 Million to Resolve COVID-Related False Claims Act AllegationsRead the Press Release
LOS ANGELES – Torrance-based skilled nursing facilities chain Unified Care Services LLC, its affiliates, and its owner, Emmanual David, have agreed to pay $18 million to resolve allegations that they violated the False Claims Act (FCA) by knowingly providing false information in support of Paycheck Protection Program (PPP) loan applications and loan forgiveness applications submitted by Unified Care and its affiliates, the Justice Department announced today.
The PPP, an emergency loan program established by Congress in March 2020 under the Coronavirus Aid, Relief and Economic Security (CARES) Act and administered by the Small Business Administration (SBA), was intended to support small businesses struggling to pay employees and other business expenses during the COVID-19 pandemic.
Borrowers were eligible to seek forgiveness of the loans if they spent the loan proceeds on employee payroll and other eligible expenses. Only small businesses were eligible for PPP loans. Whether an applicant qualified as a small business was determined by assessing the employees, revenues, or net worth of the applicant along with all corporate affiliates that shared common operational control. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications, including their size and number of employees.
The settlement resolves allegations that Unified Care and its affiliates falsely certified they were small business with fewer than 500 employees when they submitted their PPP loan and loan forgiveness applications in 2020. These applications allegedly failed to disclose that the entities applying were part of a larger chain of facilities that all shared common ownership and control that rendered Unified Care and its affiliates ineligible for PPP loans.
“COVID-relief programs were designed to help people and businesses during the worst public health crisis this nation had seen in one century,” said United States Attorney Martin Estrada. “My office will continue to pursue those who knowingly cheat taxpayers by violating PPP and other pandemic-related programs.”
The Unified Care affiliates covered by the settlement include Unified Care Services LLC; Casa Montana LLC; Geri-Care Inc.; Geri Care V LLC; Pacific Palms Healthcare LLC; Foothill Care Center Inc.; Mount Megiddo LLC; Canyon Properties III LLC; Cloverleaf Enterprises Inc.; Foothill Care Center LLC; Foothill Care Center II LLC; David Kleis III LLC; David Kleis II LLC; Miramonte Enterprises LLC; and Washington Enterprises III LLC.
“PPP loans were intended to assist eligible small businesses during the pandemic,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When ineligible businesses improperly obtained loans, they harmed both the taxpayers who funded the program and the eligible businesses who were denied relief.”
“This resolution demonstrates the department’s commitment to ensuring that those who improperly obtain federally guaranteed PPP loans are held accountable and funds repaid to the American taxpayer” said Director of COVID-19 Fraud Enforcement Mandy Riedel of the Justice Department.
“The SBA Office of Inspector General is committed to ensuring the integrity of CARES Act programs,” said Special Agent in Charge Weston King of the SBA Office of Inspector General, Western Region. “Through partnerships with federal agencies, we continue to identify fraud schemes and protect relief funds from misuse.”
The settlement resolved a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit is captioned United States ex rel. Ashwani Chawla v. Unified Care Services et al., CV 21-5935-GW (CDCA). The whistleblower will receive $2,070,000 in connection with the settlement.
The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Central District of California, with assistance from the SBA’s Office of General Counsel (SBA-OGC) and the SBA Office of Inspector General (SBA-OIG).
Assistant United States Attorney Jack D. Ross of the Civil Fraud Section and Senior Trial Counsel Benjamin C. Wei of the Justice Department’s Civil Division handled the matter, with assistance from Mary Cvengros of SBA-OGC and Christopher H. Stephens of SBA-OIG.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department in partnership with agencies across the federal government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international actors committing civil and criminal fraud and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.
Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
Perris Man Sentenced to 12 Years in Prison for Possessing Kilograms of Methamphetamine and Illegally Possessing Firearms and AmmoRead the Press Release
LOS ANGELES – A Riverside County man was sentenced today to 144 months in federal prison for possessing while intending to distribute kilogram quantities of methamphetamine and for illegally possessing firearms and ammunition.
Alvaro Hector Martinez, 33, of Perris, was sentenced by United States District Judge Fernando L. Aenlle-Rocha.
Martinez pleaded guilty in June 2023 to one count of possession with intent to distribute methamphetamine and one count of being a felon in possession of firearms and ammunition.
In February 2021, Martinez – acting at the direction of a Sinaloan drug trafficker – sold approximately 872 grams of methamphetamine to a buyer. The following month, law enforcement conducted a traffic stop on Martinez. In his car, Martinez possessed 35 packages containing approximately 15.4 kilograms (34 pounds) of pure methamphetamine, which he intended to distribute.
Following the traffic stop, law enforcement executed a search warrant at a residence where DEA agents had observed Martinez departing with the drugs. There, they found five containers of methamphetamine weighing approximately 8.5 kilograms (18.7 pounds), three firearms, and 38 rounds of ammunition. Martinez admitted in his plea agreement to knowingly possessing the firearms and ammunition.
Martinez is not legally permitted to possess firearms or ammunition because of his criminal history, which includes felony convictions in Los Angeles Superior Court in 2014 for grand theft and possession of a firearm by a felon.
The Drug Enforcement Administration investigated this matter.
Assistant United States Attorney Amanda B. Elbogen of the Terrorism and Export Crimes Section prosecuted this case.
New Mexico Man Pleads Guilty to Federal Criminal Charge for Setting a Fire at San Bernardino County Church and Preschool Last YearRead the Press Release
LOS ANGELES – A New Mexico man pleaded guilty today to setting on fire a San Bernardino County church and preschool last year while children and school employees were inside.
Jonathan A. Barajas Nava, 37, of Albuquerque, New Mexico, pleaded guilty to a single-count superseding information charging him with damage to religious property.
"This defendant's violent actions against a religious property put lives - including those of children - in danger," said United States Attorney Martin Estrada. "I commend our federal and local partners for working together to arrest and prosecute this individual, whose criminal acts could have caused a much larger tragedy."
According to his plea agreement, on April 24, 2024, Nava set fire to the Retreat Church and Yucaipa Christian Preschool in Yucaipa. Before setting the church on fire, Nava traveled to a nearby gasoline station and purchased a gasoline can and filled it with gasoline. He then traveled to the church with the can and poured the liquid on the church’s front door. Then, he used an open-flame device to set the area on fire.
The resulting fire damaged the church’s interior carpet, the doorframe seal, and an outdoor mat. Staff and children inside evacuated the building.
Nava then traveled to a nearby strip mall and set fire to the exterior wall, which resulted in no damage.
Nava admitted in his plea agreement that he set fire to the church because of its religious character.
Nava was arrested on April 24 and was charged in state court prior to a federal criminal case being brought against him.
United States District Judge John F. Walter scheduled a March 31 sentencing hearing, at which time Nava will face a statutory maximum sentence of 20 years in federal prison.
The Bureau of Alcohol, Tobacco, Firearms and Explosives; the California Department of Forestry and Fire Protection; and the San Bernardino County Sheriff’s Department investigated this matter.
Assistant United States Attorneys Austin D. Young and Peter Dahlquist of the Riverside Branch Office are prosecuting this case.
Los Angeles-Area Man Pleads Guilty to Fraudulently Seeking Millions of Dollars in COVID-Related Tax Credits for Nonexistent BusinessRead the Press Release
LOS ANGELES – A Los Angeles-area man pleaded guilty today a federal felony charge and admitted to seeking more than $65 million from the IRS by falsely claiming on tax returns that his nonexistent farming business was entitled to COVID-19-related tax credits.
Kevin J. Gregory, 57, pleaded guilty to one count of making false claims to the IRS. Gregory has been in federal custody since May 2023.
In response to the COVID-19 pandemic and its economic impact, Congress authorized an employee retention tax credit that a small business could use to reduce the employment tax it owed to the IRS, also known as the “employee retention credit.”
To qualify, the business had to have been in operation in 2020 and to have experienced at least a partial suspension of its operations because of a government order related to COVID-19 (for example, an order limiting commerce, group meetings or travel) or a significant decline in profits. The credit was an amount equal to a set percentage of the wages that the business paid to its employees during the relevant time period, subject to a maximum amount.
Congress also authorized the IRS to give a credit against employment taxes to reimburse businesses for the wages paid to employees who were on sick or family leave and could not work because of COVID-19. This “paid sick and family leave credit” was equal to the wages the business paid the employees during the sick or family leave, also subject to a maximum amount.
According to his plea agreement, from November 2020 to April 2022, Gregory made false claims to the IRS for the payment of nearly $65.4 million in tax refunds for a purported Beverly Hills-based farming-and-transportation company named Elijah USA Farm Holdings.
The IRS issued a portion of the refunds Gregory claimed, and Gregory used that portion – more than $2.7 million – for personal expenses.
Specifically, in January 2022, Gregory made a false claim to the IRS for the payment of a tax refund in the amount of $23,877,620, which he submitted as part of Elijah Farm’s quarterly federal tax return. Gregory claimed Elijah Farm employed 33 people, paid nearly $1.6 million in quarterly wages, had deposited nearly $18 million in federal taxes, and was entitled to nearly $6.5 million in COVID-relief tax credits.
In fact, Gregory knew that Elijah Farm employed nobody and paid wages to no one and had not made federal tax deposits to the IRS in the amounts stated on his tax return.
United States District Judge Josephine L. Staton scheduled a May 16 sentencing hearing, at which time Gregory will face a statutory maximum sentence of five years in federal prison.
IRS Criminal Investigation investigated this matter.
Assistant United States Attorney Valerie L. Makarewicz of the Major Frauds Section is prosecuting this case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. More information on the Justice Department’s response to the pandemic may be found here.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it to the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at (866) 720-5721 or via the NCDF online complaint form.
Justice Department Recovers an Additional $20M in Misappropriated 1MDB FundsRead the Press Release
Note: View the complaint here.
View the stipulation and request to enter consent judgment of forfeiture here.
The Justice Department announced today that it has reached an agreement to recover an additional $20 million in misappropriated 1Malaysia Development Berhad (1MDB) funds. In June 2024, the department announced it has already recovered and returned and assisted in returning to Malaysia approximately $1.4 billion.
Beginning in 2016, a landmark effort encompassing now 43 civil forfeiture actions filed in the Central District of California and one in the District of Columbia by the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) led to the seizure of over $1.7 billion in stolen assets. This is the largest recovery to date under the Justice Department’s Kleptocracy Asset Recovery Initiative. The funds include both funds finally forfeited to the government and funds the department assisted in recovering and returning. The department continues to litigate actions against additional assets allegedly linked to this scheme.
According to court documents, the funds from 1MDB, formerly Malaysia’s investment development fund, were laundered through major financial institutions worldwide, including in the United States, Switzerland, Singapore, and Luxembourg.
As alleged in the civil forfeiture complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1MDB were misappropriated by high-level officials of 1MDB and their associates, and Low Taek Jho, also known as aka Jho Low, through a criminal scheme involving international money laundering and embezzlement. Some of the embezzlement proceeds were also allegedly used to pay bribes. As alleged in the complaint filed in this case, tens of millions of dollars in funds misappropriated from 1MDB were paid to companies owned and controlled by Frank White Jr. and others. The unlawful source of these funds was unknown to White Jr. at the time of the payment. White Jr. has consented to $20 million in forfeiture in this case, all of which derives from these embezzled funds.
In conjunction with the agreement announced today, White Jr.’s company, DuSable Capital Management LLC (DuSable), submitted amended filings pursuant to the Foreign Agents Registration Act (FARA). The amended filings disclose additional political activities performed by DuSable for the government of Malaysia, including lobbying the U.S. government to provide non-financial support for a solar project in Malaysia.
1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment. Its funds were intended to be used for improving the well-being of the Malaysian people. Instead, funds held by 1MDB and proceeds of bonds issued for and on behalf of 1MDB were misappropriated and spent on a wide variety of extravagant items, including luxury homes and properties in Beverly Hills, California, New York, and London; a 300-foot superyacht; and fine art by Monet and Van Gogh. The funds also were sent into numerous business investments, including a boutique hotel in Beverly Hills, a movie production company that made “The Wolf of Wall Street,” the redevelopment of the Park Lane Hotel in Manhattan, and shares in EMI, the largest private music-rights holder. As alleged, other funds were provided to various public officials and co-conspirators.
Principal Deputy Assistant Attorney General Brent S. Wible, head of the Justice Department’s Criminal Division; Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division; Acting U.S. Attorney Carolyn Pokorny for the Eastern District of New York; and Assistant Director in Charge James E. Dennehy of the FBI New York Field Office made the announcement.
The FBI’s International Corruption Squad in New York is leading this investigation.
MLARS Trial Attorney Joshua Sohn is prosecuting the civil forfeiture case. MLARS Trial Attorney Joshua Sohn and former MLARS Trial Attorney Sean Fern, Deputy Chief Erik Paulsen of the U.S. Attorney’s Office for the Eastern District of New York’s International Narcotics and Money Laundering Section, and Trial Attorney Christine Bonomo of the National Security Division’s Counterintelligence and Export Control Section investigated the case. Asset Forfeiture Section Chief Jonathon Galatzan of the U.S. Attorney’s Office for the Central District of California provided critical assistance with the investigation and prosecution.
The Justice Department’s Office of International Affairs is providing substantial assistance. MLARS’ Program Operations Unit, the U.S. Marshals Service, and the U.S Attorney’s Office for the Central District of California have also provided significant support.
Significant assistance has also been provided to the Justice Department over the course of its work in the investigations and civil and criminal litigation by the Attorney General’s Chambers of Malaysia, Royal Malaysian Police, Malaysian Anti-Corruption Commission, U.K. Financial Conduct Authority, U.K. Prudential Regulation Authority, U.K. National Crime Agency, Attorney General’s Chambers of the Territory of the British Virgin Islands, Attorney General’s Office of the Bailiwick of Guernsey and Guernsey Economic Crime Division, International Anti-Corruption Coordination Centre, Attorney General’s Chambers of Singapore, Singapore Police Force — Commercial Affairs Division, Office of the Attorney General and Federal Office of Justice of Switzerland, judicial investigating authority of the Grand Duchy of Luxembourg, Criminal Investigation Department of the Grand-Ducal Police of Luxembourg, Republic of Indonesia, Latvian authorities, and French authorities, including the Parquet National Financier and Agency for Management and Recovery of Seized and Confiscated Assets (AGRASC).
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated MLARS prosecutors in partnership with federal law enforcement agencies, and often with U.S. Attorneys’ Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to repatriate those recovered assets to governments for the benefit of the people harmed by these acts of corruption and abuse of office. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should email [email protected] or submit information at tips.fbi.gov/.
Crypto ‘Godfather’ and LASD Detective Agree to Plead Guilty to Violating Civil Rights of Business Rivals and Tax CrimesRead the Press Release
LOS ANGELES – A cryptocurrency businessman who dubbed himself “The Godfather” and a Los Angeles County Sheriff’s Department (LASD) deputy have agreed to plead guilty to federal criminal charges, including for their roles in a conspiracy that targeted multiple victims in Los Angeles, violating their civil rights via intimidation, extortion, illegal search warrants and other abuses of police power, the Justice Department announced today.
Adam Iza, 24, who has residences in Beverly Hills and Newport Coast, was named this week in a three-count superseding information that charges him with conspiracy against rights, wire fraud and tax evasion. Iza has been in federal custody since September 2024.
Eric Chase Saavedra, 41, of Chino, an LASD deputy and a former federal task force officer, was separately charged today with conspiracy against rights and subscribing to a false tax return.
Iza and Saavedra have agreed to plead guilty to these felony charges and are expected to make their initial appearances in United States District Court in downtown Los Angeles in the coming days.
“When law enforcement officers violate their oath, they betray not only the public but also the vast majority of officers who do the job the right way,” said United States Attorney Martin Estrada. “The conduct admitted to in these plea agreements is deeply disturbing and cannot be tolerated. I am grateful for the cooperation of Sheriff Robert Luna and the Los Angeles County Sheriff’s Department in working with our office to root out corruption and uphold civil rights.”
“The defendants profited handsomely by abusing the criminal justice system and trampling on victims’ civil rights,” said Akil Davis, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI is committed to rooting out corrupt officials and their coconspirators whose actions erode trust in law enforcement.”
The plea agreement for Iza was filed this morning. Federal prosecutors late Thursday filed charges, as well a plea agreement, in the case against Saavedra.
According to their plea agreements, Iza hired off-duty LASD deputies to act as his personal enforcers against his enemies. As part of the conspiracy to violate civil rights, Iza would have the deputies assist him in carrying out extortion, intimidation, setting people up for arrest, and abuse of legal process. One of the deputies Iza employed was Saavedra, who was assigned to LASD’s Operation Safe Streets Bureau and served as a federal task force officer assigned to the United States Marshals Service’s Pacific Southwest Regional Fugitive Task Force.
Saavedra founded a private security company, Saavedra & Associates LLC. This company provided private security for its clients and often employed active LASD deputies and other law enforcement officers. From August 2021 to March 2022, Iza – who then lived in a Bel Air mansion – hired Saavedra & Associates to provide him round-the-clock private security at a typical cost of $100,000 per month. Iza hired the company again from July 2024 until Iza’s arrest in September 2024.
Starting in the fall of 2021, Saavedra illegally and regularly used his LASD credentials to access sensitive law enforcement databases to obtain personal identifiable information for Iza, including PII for people with whom Iza had personal or business disputes, their associates and their family members. Saavedra knew he was not authorized under LASD rules to access this information for non-law enforcement matters or to share it with private clients. He did so because he wanted to impress Iza with his access to law enforcement information and to continue to receive lucrative business from Iza, according to court documents.
Saavedra admitted that he used his powers as a sworn law enforcement officer to improperly obtain court-authorized search warrants related to individuals with whom Iza had disputes, including a warrant to search an individual’s residence that Saavedra helped facilitate and a warrant to obtain location information associated with another individual that Saavedra directly obtained.
Iza, Saavedra and others used confidential information that the LASD deputies obtained in their official capacities to locate, intimidate, harass, threaten and extort individuals with whom Iza had disputes and their associates, according to court documents. They also used Telegram and other encrypted communications apps to avoid law enforcement detection.
For example, in late 2021 or early 2022, Iza – believing a victim possessed a laptop computer containing more than $100 million in cryptocurrency – discussed and agreed that Saavedra would obtain a search warrant for GPS location associated with that victim’s telephone number. In January 2022, Saavedra applied for and obtained a search warrant under false pretenses from a Los Angeles Superior Court judge. In an affidavit supporting the search warrant application, Saavedra falsely stated that the victim’s telephone number was associated with a suspect in a firearms investigation.
After securing the illegal warrant, Saavedra tracked down the victim and provided the victim’s address to Iza. In March 2022, Iza caused three armed individuals to try to force entry into the victim’s home to steal the laptop. The individuals fled after the victim fired a gunshot in their direction. Afterward, Iza sent the victim a video of the attempted home invasion robbery.
The documents filed this week describe other violent acts, including an August 2021 event during which two LASD deputies held a victim at gunpoint inside Iza’s residence, after which Iza caused $25,000 to be transferred from the victim’s bank account to his own, and an October 2021 event in which Iza himself held a victim at gunpoint, causing that victim to transfer $127,000 to Iza.
Iza also admitted to stealing more than $37 million by fraudulently gaining access to Meta Platforms Inc. business manager accounts and their associated lines of credit from 2020 to 2022.
Both Iza and Saavedra admitted in their plea agreements to federal tax crimes. Iza willfully avoided the assessment of approximately $6,772,725 in federal income tax due for the year 2021. Saavedra received approximately $373,146 in unreported income and subscribed to a false tax return for 2021.
“Mr. Iza’s and Mr. Saavedra’s relationship was little more than a thuggish partnership between a thief and a crooked cop,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office. “The public should be able to trust members of law enforcement, but Mr. Saavedra violated his oath for a payday. Mr. Iza stole from anyone he could and found a big payday by ripping off Meta so that he could afford to pay for Mr. Saavedra’s corrupt protection and assistance. Unfortunately for both of them, money leaves trails and IRS Criminal Investigation is the best in the world at finding and following those trails. When you commit fraud and take a payday from fraudsters you must pay taxes on those funds. Now they will face justice for their actions.”
After pleading guilty, Iza will face up to 35 years in federal prison. Saavedra will face up to 13 years in federal prison.
The FBI and IRS Criminal Investigation are investigating this matter. The Los Angeles County Sheriff’s Department has provided assistance.
Assistant United States Attorneys Daniel J. O’Brien and J. Jamari Buxton of the Public Corruption and Civil Rights Section, and Maxwell K. Coll of the Cyber and Intellectual Property Crimes Section are prosecuting this case.
Justice Department Secures Agreement with San Luis Obispo County, California, to Resolve Claims that Conditions in the County Jail Violate Federal LawsRead the Press Release
The Justice Department announced today that the department has reached an agreement with San Luis Obispo County, California, resolving the department’s findings that the conditions of confinement at the San Luis Obispo County Jail (the jail) violate the Eighth and 14th Amendments to the U.S. Constitution and the Americans with Disabilities Act (ADA). The agreement recognizes and outlines the significant strides the county has made in some areas since the findings were issued.
“We are encouraged by the improvements the San Luis Obispo County Jail has made since we announced our investigation, but there is still more that must be done to achieve constitutional compliance,” said Assistant Attorney General Kristen Clarke of the Justice Department's Civil Rights Division. “This agreement includes strong remedial provisions that, if fully implemented, should improve suicide prevention, reduce excessive force and reduce the use of unnecessary isolation.”
“Safeguarding civil rights is core to American values,” said U.S. Attorney Martin Estrada for the Central District of California. “We are pleased that — with the cooperation of San Luis Obispo County — we have achieved a comprehensive agreement that will protect the safety and civil rights of people incarcerated at the county’s jail. Under this agreement, the county must implement reforms in suicide prevention, restrictive housing, use of force and quality assurance. My office is committed to protecting the civil rights of everyone in our district.”
Under the agreement, the jail will, among other things:
- Take steps to protect incarcerated people at risk of suicide;
- Stop housing people with serious mental illness in isolation absent specific and significant protections;
- Require any use of force by staff comply with constitutional standards; and
- Implement a quality assurance program to identify and correct systemic deficiencies.
The agreement also requires the appointment of a lead expert to assess the county’s compliance with the agreement and provide technical assistance and recommendations to facilitate compliance. The lead expert will issue public reports every six months on the county’s compliance with the agreement.
The Justice Department initiated its investigation of the San Luis Obispo Jail in October 2018 under the Civil Rights of Institutionalized Persons Act (CRIPA) and the ADA. The department provided San Luis Obispo County written notice in August 2021 of its findings, along with the supporting facts for its findings, and the minimum remedial measures necessary to address the violations found.
The Civil Rights Division continues to prioritize unconstitutional conditions and violations of federal law in correctional and juvenile justice facilities. It opened new investigations into prisons and jails in Tennessee, California, South Carolina, and juvenile justice facilities across Kentucky. The division also issued findings in its investigations of Mississippi prisons, Texas juvenile justice system’s facilities, the Alvin S. Glenn Detention Center in Columbia, South Carolina, and the Georgia Department of Corrections. The division entered into agreements, including consent decrees, regarding the Fulton County, Georgia, Jail, the Cumberland County, New Jersey, Jail, the Edna Mahan Correctional Facility for Women in New Jersey, the Broad River Road Complex in South Carolina, the Manson Youth Institution in Connecticut, and the Massachusetts Department of Correction. The division is also litigating matters related to the constitutionality of conditions in Alabama’s prisons for men and the incarceration of people beyond their release dates in Louisiana prisons.
Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.
Individuals in the seven counties of the Central District of California may file a complaint asserting civil rights violations with the Civil Rights Section, Civil Division of the U.S. Attorney’s Office by completing and submitting this form (English) (Spanish) by email to [email protected].
Justice Department Secures Agreement with San Luis Obispo County to Resolve Claims that Jail Conditions Violate Federal LawsRead the Press Release
SETTLEMENT AGREEMENT
LOS ANGELES – The Justice Department announced today that the department has reached an agreement with San Luis Obispo County, resolving the department’s findings that the conditions of confinement at the San Luis Obispo County Jail violate the Eighth and 14th Amendments to the U.S. Constitution and the Americans with Disabilities Act (ADA). The agreement recognizes and outlines the significant strides the county has made in some areas since the findings were issued.
“Safeguarding civil rights is core to American values,” said United States Attorney Martin Estrada. “We are pleased that — with the cooperation of San Luis Obispo County — we have achieved a comprehensive agreement that will protect the safety and civil rights of people incarcerated at the county’s jail. Under this agreement, the county must implement reforms in suicide prevention, restrictive housing, use of force and quality assurance. My office is committed to protecting the civil rights of everyone in our district.”
“We are encouraged by the improvements the San Luis Obispo County Jail has made since we announced our investigation, but there is still more that must be done to achieve constitutional compliance,” said Assistant Attorney General Kristen Clarke of the Justice Department's Civil Rights Division. “This agreement includes strong remedial provisions that, if fully implemented, should improve suicide prevention, reduce excessive force, and reduce the use of unnecessary isolation.”
Under the agreement, the Jail will, among other things:
- Take steps to protect incarcerated people at risk of suicide;
- Stop housing people with serious mental illness in isolation absent specific and significant protections;
- Require any use of force by staff comply with constitutional standards; and
- Implement a quality assurance program to identify and correct systemic deficiencies.
The agreement also requires the appointment of a lead expert to assess the county’s compliance with the agreement and provide technical assistance and recommendations to facilitate compliance. The lead expert will issue public reports every six months on the county’s compliance with the agreement.
The Justice Department initiated its investigation of the San Luis Obispo Jail in October 2018 under the Civil Rights of Institutionalized Persons Act (CRIPA) and the ADA. The department provided San Luis Obispo County written notice in August 2021 of its findings, along with the supporting facts for its findings, and the minimum remedial measures necessary to address the violations found.
Assistant United States Attorney Matthew J. Barragan of the Civil Division’s Civil Rights Section conducted this investigation in coordination with the Special Litigation Section of the U.S. Department of Justice Civil Rights Division.
The Civil Rights Division continues to prioritize unconstitutional conditions and violations of federal law in correctional and juvenile justice facilities. It opened new investigations into prisons and jails in Tennessee, California, South Carolina, and juvenile justice facilities across Kentucky. The division also issued findings in its investigations of Mississippi prisons, Texas juvenile justice system’s facilities, and the Georgia Department of Corrections. The division entered into agreements, including consent decrees, regarding the Fulton County, Georgia, Jail, the Cumberland County, New Jersey, Jail, the Edna Mahan Correctional Facility for Women in New Jersey, the Broad River Road Complex in South Carolina, the Manson Youth Institution in Connecticut, and the Massachusetts Department of Correction. The division is also litigating matters related to the constitutionality of conditions in Alabama’s prisons for men and the incarceration of people beyond their release dates in Louisiana prisons.
Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.
Individuals in the seven counties of the Central District of California may file a complaint asserting civil rights violations with the Civil Rights Section, Civil Division of the U.S. Attorney’s Office by completing and submitting this form (English) (Spanish) by email to [email protected].
Federal and Local Law Enforcement Officials Form Task Force to Combat Crimes Related to Los Angeles-Area WildfiresRead the Press Release
LOS ANGELES – The leaders of federal and local law enforcement agencies have joined together to create the Joint Regional Fire Crimes Task Force to investigate and prosecute fire-related crimes as Los Angeles County recovers from devastating wildfires. The Task Force will focus on investigating and prosecuting criminal actors seeking to exploit the wildfire crisis.
The Joint Regional Fire Crimes Task Force includes representatives of the United States Attorney’s Office; the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); Homeland Security Investigations (HSI); the Los Angeles County District Attorney’s Office; the Los Angeles City Attorney’s Office; the Los Angeles Police Department; and the Los Angeles County Sheriff’s Department.
Members of the Task Force will meet to discuss case leads, develop and share crime intelligence, and facilitate the efficient prosecution of crimes related to the Los Angeles County wildfires. The Task Force will primarily focus on four areas: looting, burglary and impersonation offenses; crimes related to arson; illegal drone activity; and financial fraud targeting both disaster victims and those wishing to make charitable donations.
“We will not permit victims to be re-victimized,” said United States Attorney Martin Estrada. “Our community has suffered tremendously, and we are here to support them. The Joint Fire Crimes Task Force is committed to addressing crimes coming out of the fires, including any looting, arson, illegal drone flights and fraud. As the rebuilding process begins and donations and relief funds come in, we must ensure that those seeking to take advantage through criminal activity are held fully accountable.”
“Every crisis generates the best of us – brave first responders and average people who step up financially to support victims – as well as the worst in our society, including those who steal well-intentioned money or defraud victims who are already suffering,” said Akil Davis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “In addition to our efforts to combat fraud, we will devote resources to the task force to investigate allegations of arson, and we will not tolerate careless and criminal drone operators who put firefighters and residents in harm’s way. The FBI will commit resources to address this new crop of criminals callously taking advantage of the vulnerable during and after these devastating wildfires.”
“ATF possesses unparalleled expertise in determining the origin and cause of fires, even under the most complex and challenging conditions,” said Jose Medina, Acting Special Agent in Charge of the ATF Los Angeles Field Division. “Our agency offers a comprehensive set of resources for arson investigations, including certified fire investigators, chemists, electrical engineers, accelerant-detection canines, and a state-of-the-art fire research laboratory. Arson destroys lives, businesses, and entire communities. Together with our partners, we are committed to identifying, apprehending, and prosecuting those responsible.”
“Far too often, during tragic events like the Los Angeles-area wildfires, we have seen greedy individuals seek to line their pockets and divert critical funds from those most in need,” said HSI Los Angeles Special Agent in Charge Eddy Wang. “HSI Los Angeles and partner agencies will do our part to help the region recover and rebuild by ensuring that disaster-related funds will go to individuals and families that lost loved ones, homes and livelihoods – and not unscrupulous fraudsters.”
“The Los Angeles County District Attorney’s Office, in partnership with local and federal law enforcement agencies, will relentlessly pursue and hold accountable those who despicably seek to exploit this tragedy for personal gain,” said Los Angeles County District Attorney Nathan Hochman. “We want to send a clear and unequivocal message to criminals: If you seek to commit crime during this crisis, from arson, looting, burglary and theft to price gouging and financial scams, we will arrest you, prosecute you, and seek to punish you to the full extent of the law. As billions of dollars in vital aid relief pour into Los Angeles County, our Task Force, comprised of over a thousand prosecutors and thousands of law enforcement agents, will protect those who have suffered from being victimized again. Justice will be swift, certain and significant. Los Angeles County has been tested before and prevailed; and we will prevail again.”
“I am proud to stand with this powerful collaboration as we work together to ensure that no individual or business gets away with illegal or predatory conduct, including price gouging. People preying on others will face criminal justice,” said Los Angeles City Attorney Hydee Feldstein Soto. “In addition, with so many people now facing uncertainty about their future, my office is also leaning in to bring every legislative, executive and civil resource at our disposal to help us get through this emergency, and to heal, recover and rebuild together. As Angelenos, it’s what we’ve always done.”
“As our community continues to deal with these devastating wildfires, we remain steadfast in our commitment to protect our residents from those who would exploit their vulnerability,” said Los Angeles County Sheriff Robert G. Luna. “Whether it’s arson, illegal drone activity disrupting first responders, or fraud targeting victims and donors, this joint task force will investigate and hold individuals accountable. These efforts are about protecting our communities and ensuring those affected by this unimaginable disaster recover without fear or further victimization.”
“The Joint Task Force brings together individuals and agencies with the most experience and best resources to ensure that those suspected of breaking the law are identified and held accountable,” said LAPD Chief of Police Jim McDonnell. “The LAPD will not allow criminals to compound the devastation of our residents, and we will devote whatever resources are necessary to protect them.”
The Joint Regional Fire Crimes Task Force will aggressively pursue offenders in the following categories:
Looting, Burglary, Curfew Violations and Impersonation
The Task Force and partner agencies are investigating any looting, burglary, robbery, grand theft, impersonation of firefighters or law enforcement, curfew violations, and related crimes stemming from the Palisades Fire, the Eaton Fire, and other wildfires. To date more than 50 individuals have been arrested, and nine defendants have been charged and face maximum sentences ranging from six years to life in prison.
Arson
Members of the Task Force and fire authorities are investigating the Palisades Fire, the Eaton Fire and the other wildfires that started over the past week. At the request of the U.S. Attorney’s Office, ATF Los Angeles and the LAPD, ATF deployed its renowned National Response Team to the Palisades fire to investigate. These specialized investigators are working around the clock to determine the origins of these fires.
In addition, as wind events and dry conditions continue to leave the region vulnerable to wildfires, the Task Force will aggressively prosecute anyone who attempts to cause new fires by malice or reckless behavior. The federal arson statute carries a five-year mandatory minimum prison sentence and a statutory maximum sentence of 20 years in federal prison. Those penalties can increase to life sentence if a death has occurred. Under California law, arson carries a prison sentence of up to nine years.
Illegal Drones
Fire personnel must be able to perform their duties without interference. Illegal drone activity in active fire zones has disrupted operations, including one instance where a drone collided with a fire suppression plane.
The areas around the Palisades and Eaton fires are under temporary flight restrictions through January 25, and it is a crime to fly a drone in these areas. The FBI has deployed equipment to detect drones flying in these restricted areas. The federal offense of flying a drone in ones of these restricted airspaces carries a penalty of up to one year in federal prison and a fine of up to $75,000.
Fraud
The Task Force will not allow fire victims to be re-victimized by fraud and theft. Its efforts focus on ensuring that relief funds reach those in need and working to swiftly prosecutor those engaged in defrauding donors.
Generous people around the world are making donators to assist victims. Unfortunately, this creates opportunities for scams as criminals exploit disasters for their own gain by sending fraudulent solicitations or creating deceiving websites. Potential donors are urged to make donations only to known entities and to avoid giving donations in cash or via wire transfer.
The Task Force will also investigator the misuse of aid programs administered by government agencies, such as the Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA). Federal agencies are deploying significant financial resources to support homeowners, renters, nonprofits and businesses affected by the fires, and any attempt to misuse these funds through fraud or identity theft will be vigorously investigated and prosecuted.
There are numerous other potential scams that might victimize victims such as contractor fraud. The Task Force will target any individual seeking to defraud victims of the wildfires.
Price-gouging laws went into effect immediately upon the declaration of a state of emergency. No person and no business can increase pricing on housing, shelter, food, water, clothing, pet care, health care or any other essential goods or services by more than 10% without violating the law. The Los Angeles City Attorney’s Office is leading Task Force efforts in this area. Violations of the price gouging statute are subject to criminal prosecution for up to one year in prison, plus a fine of up to $10,000. They are also subject to civil enforcement actions to include civil penalties of up to $2,500 per violation, injunctive relief and mandatory restitution.
Members of the Task Force remain committed to seeing that victims of these devastating fires receive justice and that those who exploit or harm them are held accountable.
Members of the public are encouraged to report wrongdoing to authorities at any law enforcement agency. For example, tips may be directed to the FBI at 1-800-CALL-FBI or https://tips.fbi.gov/home. The public may also report examples of financial fraud to the National Center for Disaster Fraud at (866) 720-5721 or https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form
U.S. Attorney Martin Estrada to Leave Justice Department After Serving as Chief Federal Law Enforcement Officer in the Largest District in the NationRead the Press Release
LOS ANGELES – United States Attorney Martin Estrada announced today that he will resign his position as the chief prosecutor for the nation’s most-populous federal district, the Central District of California. While serving as the top federal law enforcement officer in the Los Angeles-based district since September 2022, Mr. Estrada oversaw more than 500 Assistant U.S. Attorneys and staff who serve almost 20 million people in the seven counties that comprise the district.
Mr. Estrada tendered his resignation to the President and the Attorney General today, and he will conclude his service as United States Attorney on January 17.
“As the child of immigrants from Guatemala, neither my family nor I could ever have believed that I would one day have the opportunity to serve as United States Attorney in service to the greatest country in the world,” Mr. Estrada said. “To say that serving in this position has been an honor would be a profound understatement. Giving back to the community where I grew up and that I love so dearly – and doing so alongside such talented and generous attorneys and staff – has been the greatest privilege of my life.”
During his tenure, Mr. Estrada prioritized protecting the public by taking on the most significant and impactful cases, outreach to the community, and recruiting the best lawyers in the country to continue the office’s excellent service to the nation.
Notable Casework
With regard to casework, Mr. Estrada focused on matters addressing hate crimes, civil rights, violent crime, national security, fentanyl and other synthetic drugs, public corruption, corporate fraud and financial crimes, and protecting vulnerable communities and environmental justice.
Hate Crimes
In one of the most diverse regions in the country, Mr. Estrada collaborated with other civic and law enforcement leaders in numerous events to highlight the community’s unity against hate and prejudice of all types. Delivering on this message, the office aggressively prosecuted hate crimes in the district, including by convicting and obtaining a 35-year prison sentence against a man who attempted to murder two orthodox Jewish men in the Pico-Robertson area of Los Angeles; carrying out the largest-ever takedown of a Neo-Nazi organization, involving 68 members and associates of the San Fernando Valley Peckerwoods and Aryan Brotherhood; convicting an active-duty Marine and his conspirators who firebombed a Planned Parenthood clinic, sought to attack Dodger Stadium during “Pride Night” and conspired to attack the power-grid system to start a race war; obtaining a 98-count indictment against the shooter who murdered one congregant and attempted to kill 44 others at a Taiwanese church in Laguna Woods; and convicting a man who drove his car through a “stop Asian hate” rally in Diamond Bar.
Civil Rights
In the field of civil rights, under Mr. Estrada’s leadership, prosecutors charged a Los Angeles County Sheriff’s Department (LASD) deputy who allegedly, along with his former law enforcement and military accomplices, unlawfully held an Irvine family as part of a multimillion-dollar business dispute; convicted a former FBI agent who accepted bribes from an organized crime figure; and convicted an LASD deputy for using excessive force against a teacher and then attempting to cover up the act.
Lawyers in the office’s Civil Division obtained the largest redlining settlement in the history of the Department of Justice – $31 million – against City National Bank; secured a settlement with the County of Los Angeles to ensure access for voters with disabilities; filed a lawsuit against LA Fitness, the largest fitness club chain in the country, alleging disability discrimination at its fitness clubs; and initiated an investigation into allegations of sexual assault and harassment at the two women’s state prisons in California.
Violent Crime
To address violent crime, Mr. Estrada built greater federal and local partnerships throughout the region. In particular, he launched Operation Safe Cities, an enhanced collaboration with local police and sheriffs’ departments to address the most violent gun criminals, particularly those involved in commercial robberies, kidnappings, extortion and gun offenses. Through Operation Safe Cities, the office has filed dozens of cases subjecting dangerous gun criminals to enhanced federal penalties.
Other notable violent crime results under Mr. Estrada’s leadership include decades-long prison sentences against three gang members who murdered an off-duty Los Angeles Police Department officer while he was shopping for a home with his girlfriend; a life sentence against a gang member who murdered the son of a former federal agent; a racketeering indictment targeting the leadership of a gang allegedly responsible for the murder of two El Monte Police Department officers; the indictment of a car-rental business and its operators who allegedly facilitated more than 120 burglaries by South American crime tourists; the indictment of a man who shot at a San Bernardino County Sheriff’s Department deputy responding to a domestic violence call; and the indictment of Grammy-winning Chicago rapper Durk Banks, a.k.a. “Lil Durk,” for allegedly conspiring to murder a rival rapper and killing his cousin.
In September 2024, Mr. Estrada was joined by Mayor Karen Bass, City Attorney Heidi Feldstein-Soto and other law enforcement officials to announce the Figueroa Corridor Human Trafficking Initiative, a multi-agency initiative to address the sexual exploitation of children and young people along Figueroa Street, a notorious prostitution hub. With this initiative, prosecutors were able to obtain major sentences against pimps trafficking in children.
National Security
In the national security area, prosecutors obtained a life sentence against a Long Beach man whose bomb attack in Orange County killed his ex-girlfriend and injured two other victims; prison time for a U.S. Navy officer who transmitted sensitive U.S. military information to a Chinese intelligence officer; convictions and prison time for weapons traffickers who illegally exported military items to Russia; the indictment of a Chinese national who allegedly worked to illegally ship firearms, ammunition and sensitive technology to North Korea; and the indictment of a former member of the Chinese military who allegedly illegally operated as an agent for the People’s Republic of China and sought to influence the U.S. political system.
Prosecutors also worked to protect the cybersecurity of the nation with notable cases, including indicting the leaders of the cybercriminal group known as Anonymous Sudan that launched more than 35,000 cyber attacks in one year against U.S. government agencies, major corporations and foreign governments; dismantling the massive, global botnet known as Qakbot, which was tied to ransomware attacks around the world; and indicting four individuals connected to the Scattered Spider network, which was responsible for more than $11 million in losses.
Synthetic Drugs
With fentanyl becoming the leading cause of death for Americans between 18 and 45 and wreaking havoc on the streets, Mr. Estrada focused major resources on combating this epidemic. As for large-scale drug traffickers, prosecutors filed critical cases, including matters against a Chinese laboratory and its staff for allegedly selling fentanyl precursor chemicals; a Canadian and former Olympic snowboarder and his conspirators charged with trafficking tons of drugs from Mexico to the United States and Canada; Mexican cartel members and Canadian truckdrivers moving hundreds of pounds of methamphetamine throughout the United States and Canada; an alliance alleged between the Sinaloa cartel and money launderers in the People’s Republic of China; and numerous fentanyl traffickers operating on the dark web.
Mr. Estrada also directed the office to put significant focus on charging drug-traffickers who cause the death of another person, cases which carry 20-year mandatory minimum sentences in federal prison. Partnering with local law enforcement and district attorney’s offices in the region, the office filed over 70 “death-resulting” cases during Mr. Estrada’s tenure, by far the most of any office in the country. Among these was the prosecution of five individuals, including two doctors, responsible for the death of actor Matthew Perry in October 2023.
Public Corruption
Mr. Estrada led the office to continued success in combating public corruption. Among other matters, prosecutors obtained a RICO conspiracy conviction and 13-year prison sentence for former Los Angeles city councilman Jose Huizar; a 12-year prison sentence for former Los Angeles deputy mayor Raymond Chan; a bribery and fraud conviction and 3½-year prison sentence against longtime politician Mark Ridley-Thomas; a five-year prison sentence for a real estate executive who bribed a San Luis Obispo County supervisor; and convictions of the former Commerce city manager and Baldwin Park city attorney for a bribery scheme concerning cannabis permits. Prosecutors also secured the guilty plea of Orange County Supervisor Andrew Do to charges of bribery involving more than $10 million in COVID-19 pandemic relief funds.
Corporate Fraud and Financial Crimes
To put greater focus and resources on fraud by executives and insiders, Mr. Estrada launched the Corporate and Securities Fraud Strike Force, a section dedicated to prosecuting complex corporate crimes, abuses by company insiders, and offenses that impact the nation’s financial system. Among other cases, prosecutors charged Fat Brands Inc., its former CEO, and former CFO on fraud charges; indicted an activist short seller with multiple counts of securities fraud; and convicted the former CEO and chairman of a health care company of securities fraud and insider trading.
Financial fraud prosecutors also brought criminal charges against those involved in illegal gambling, including Ippei Mizuhara, the former translator for Major League Baseball superstar Shohei Ohtani.
Protecting Vulnerable Communities and Environmental Justice
Mr. Estrada placed great emphasis on protecting vulnerable victims. To do so, he launched the Vulnerable Communities Task Force, which addresses scams aimed at groups that historically have had less legal recourse to address offenders targeting them, such as immigrants, indigent individuals, and older adults. With this initiative, prosecutors have convicted and sentenced numerous individuals and groups involved in “pig butchering” scams and other fraud. Prosecutors also convicted celebrity lawyer Tom Girardi, who stole from his clients in their greatest time of need.
Recognizing the need to combat environmental violations in the nation’s most populous and diverse district, Mr. Estrada created the position of Environmental Justice Coordinator and bolstered the Environmental Crimes and Consumer Protection Section of the office. The section indicted Phillips 66 Company for alleged violations of the Clean Water Act by illegally discharging hundreds of thousands of gallons of contaminated wastewater; convicted the captain of the Conception dive boat for a fire that killed 34 people; and secured a landmark $20 million settlement with the City of Los Angeles for the discharge of millions of gallons of wastewater from the Hyperion Water Reclamation Plant into Santa Monica Bay in 2021.
Community Outreach and Recruitment
Mr. Estrada, the first U.S. Attorney of Central American heritage and a native of Southern California, prioritized outreach to allow the community to better understand the work of the office. A fluent Spanish speaker, Mr. Estrada made it a point to provide Spanish-language segments in the over four dozen press conferences and interviews he provided to reporters. Mr. Estrada also created the Community Service and Outreach Committee to direct the office’s outreach efforts. Among other events, the office organized court visits for youth nonprofits in South Los Angeles, met with Tribal leaders and youth, organized civil rights roundtable events with public-interest and faith-based organizations, partnered with AARP and local leaders at fraud-prevention events for older adults, and participated in Adoption Day. To expand outreach at local schools, the office partnered with the Los Angeles Unified School District, the second largest school district in the country, to educate students about cyber safety and other cybersecurity dangers. In launching this partnership, Mr. Estrada served as “Principal for the Day” at LAUSD’s Whitman High School in the Fairfax area of Los Angeles.
Additionally, Mr. Estrada strengthened private sector-public sector collaboration through a series of summits attended by federal and local law enforcement, private companies, and non-profits. Among these were the Power Grid Security Summit, the Semiconductor Security Summit, and the Public Interest Summit.
In the area of criminal justice reform, Mr. Estrada established one of the first federal conviction integrity committees and created an executive position of Chief of Ethics and Post-Conviction Review. The new committee and position allowed for expedited review of innocence claims, ethical issues, and requests for commutation or pardon. Further, working with the district court, U.S. Probation and Pretrial Services, and the Federal Public Defender’s Office, Mr. Estrada announced the expansion of the Conviction and Sentence Alternatives (CASA) program, which is being made available to a wider group of defendants by expanding admission criteria to include defendants facing federal charges who have demonstrated an ability and willingness to make significant and meaningful changes in their lives.
To move the office toward better reflecting the diversity of the region, Mr. Estrada also significantly expanded recruitment efforts, sending attorneys to speak at law schools throughout the country and personally visiting dozens of law schools. Mr. Estrada also spoke to bar organizations throughout the country to discuss the work of the office and encourage applicants from nontraditional backgrounds to apply to become AUSAs.
In addition, Mr. Estrada recruited federal investigators to create the office’s first-ever Investigative Division, which will help the office bring more meritorious cases.
* * *
On June 6, 2022, President Biden nominated Mr. Estrada to be U.S. Attorney, and he was unanimously confirmed by the Senate on September 13, 2022. He was sworn in as U.S. Attorney on September 19, 2022.
Mr. Estrada received his B.A. from the University of California, Irvine, where he graduated magna cum laude, and his J.D. from Stanford Law School, where he graduated with distinction.
Mr. Estrada, who served as an Assistant United States Attorney from 2007 to 2014, is a fellow of the American College of Trial Lawyers. He also was an Adjunct Professor for Loyola Law School’s Ninth Circuit Appellate Clinic, part of the Alarcón Advocacy Project, where his teams achieved success for indigent clients.
Mr. Estrada served as a law clerk for U.S. District Judge Robert J. Timlin of the Central District of California and Judge Arthur L. Alarcón of the U.S. Court of Appeals for the Ninth Circuit.
Two Southern California Men Who Supplied Fentanyl Sold to Darknet Customers in All 50 States Sentenced to Federal PrisonRead the Press Release
SANTA ANA, California – An Orange County man and South Los Angeles man were sentenced today to federal prison for supplying fentanyl-laced pills to a drug trafficking ring that sold these drugs to more than 1,000 customers nationwide via the dark web.
Adan Ruiz, 27, of Garden Grove, was sentenced by United States District Judge David O. Carter to 215 months (17 years, 11 months) in federal prison. Judge Carter separately sentenced Omar Navia, 39, of South Los Angeles to 180 months (15 years) in federal prison.
In imposing the sentences, Judge Carter at today’s hearings called this case “the most sophisticated fentanyl distribution ring that this court has seen.”
Navia pleaded guilty on April 29 to one count of conspiracy to distribute controlled substances. Ruiz pleaded guilty on June 3 to one count of conspiracy to distribute controlled substances and one count of distribution of fentanyl.
Both defendants have been in federal custody since November 2023.
Navia and Ruiz admitted in their plea agreements that, from at least August 2021 to December 2022, they supplied fentanyl-laced pills to Michael Ta, 26, of Westminster, and Rajiv Srinivasan, 38, of Houston, who used the darknet and encrypted messaging applications to sell more than 120,000 fentanyl-laced pills and other drugs to more than 1,000 customers across the country, causing several fatal overdoses in the process. Navia further admitted to supplying methamphetamine to Ta and Srinivasan’s drug trafficking operation.
Srinivasan operated the account “redlightlabs” on multiple darknet marketplaces, including the site “Dark0de.” Srinivasan and Ta used the redlightlabs account to advertise and sell counterfeit M30 oxycodone pills containing fentanyl and other illicit drugs.
Srinivasan also used the encrypted messaging application Wickr to communicate with and sell drugs to customers. Srinivasan received virtual currency as payment for the drugs and then routed that virtual currency through cryptocurrency exchanges.
Ta communicated with Srinivasan about drug orders, obtained fentanyl-laced pills and methamphetamine from sources of supply, stored those drugs in his residence, and mailed out packages with drugs to customers who had ordered them from Srinivasan on the “redlightlabs” account.
From at least February 2022 to November 2022, Srinivasan and Ta engaged in at least 3,800 drug deals to approximately 1,400 customers in all 50 U.S. states, totaling more than 123,000 fentanyl-laced M30 pills, more than 9 kilograms (20 pounds) of methamphetamine, nearly 300 grams of “China white” (fentanyl powder) and black tar heroin, and 27 grams of cocaine.
Ta and Srinivasan admitted in their plea agreements to causing the fentanyl overdose deaths of three victims. Both defendants further admitted to distributing fentanyl-laced pills to two additional victims, both of whom suffered fatal drug overdoses shortly after they received the pills from Ta and Srinivasan.
Ta pleaded guilty in August 2023 to one count of conspiracy to distribute controlled substances and is serving a prison sentence of 260 months (21 years and eight months). Srinivasan pleaded guilty in June 2023 to the same charge and to one count of distributing fentanyl resulting in death and is serving a prison sentence of 235 months (19 years and seven months).
The FBI investigated this matter. The United States Postal Inspection Service, and the United States Attorney’s Office for the Southern District of Texas provided substantial assistance.
The investigation in this matter was conducted under the auspices of the FBI-led Joint Criminal Opioid Darknet Enforcement Team (JCODE), which targets darknet vendors by using sophisticated, high-tech techniques to identify drug traffickers who wrongly believe the dark web allows them to engage in criminal conduct with anonymity. Since its inception in 2018, JCODE investigations have resulted in the arrest of more than 300 darknet drug traffickers, as well as the seizure of more than $42 million in drug-tainted proceeds, over 800 kilograms of narcotics, and approximately 145 firearms.
The Northern Colorado Drug Task Force (NCDTF) also helped investigate this matter. NCDTF works to protect the community by identifying, investigating, and impacting drug-related crime in Larimer County. Participating agencies who make this effort possible include Fort Collins Police Services, Larimer County Sheriff's Office, Loveland Police Department, Windsor Police Department, the Eighth Judicial District Attorney’s Office, and Colorado Adult Parole. The Drug Enforcement Administration’s Fayetteville Resident Agency also assisted during the investigation.
Assistant United States Attorney Gregg E. Marmaro of the International Narcotics, Money Laundering, and Racketeering Section prosecuted this case.
Art Dealer Sentenced to 2 Years in Federal Prison for Embezzling Bankruptcy Estate of Miracle Mile and Beverly Hills Art GalleryRead the Press Release
LOS ANGELES – An internationally known art dealer was sentenced today to 24 months in federal prison for embezzling from the bankruptcy estate of Ace Gallery Los Angeles, an art gallery located in Beverly Hills and Los Angeles, while acting as the estate’s trustee and custodian.
Douglas J. Chrismas, 80, of the Mid-Wilshire area of Los Angeles, was sentenced by United States District Judge Mark C. Scarsi, who also ordered him to pay $12,809,192 in restitution.
At the conclusion of a four-day trial in May 2024, a jury found Chrismas guilty of three counts of embezzlement against a bankruptcy estate.
“Instead of performing his fiduciary duty and properly managing the gallery’s bankruptcy estate, this defendant chose to use funds that belonged to the creditors of the gallery to make them whole, but for his dream of an art museum that never came to be,” said United States Attorney Martin Estrada. “Today’s sentence provides a just punishment for these crimes, which were brazenly undertaken by a thief who gamed a system designed to protect those in financial desperation.”
Chrismas was the president and CEO of Art and Architecture Books of the 21st Century, which did business as Ace Gallery and had offices located in the Miracle Mile area of Los Angeles as well as in Beverly Hills.
In February 2013, Ace Gallery filed a Chapter 11 petition in federal bankruptcy court in Los Angeles and continued to operate while in bankruptcy with Chrismas acting as its fiduciary and trustee.
In late March and early April of 2016, Chrismas embezzled approximately $264,595 that belonged to the Ace Gallery bankruptcy estate, including a $50,000 check that Chrismas signed, was drawn against the estate, and was paid to Ace Museum, a separate non-profit corporation that Chrismas owned and controlled.
Chrismas also embezzled $100,000 owed to Ace Gallery by a third party for the purchase of artwork. Instead, the funds were paid – at his direction – to Ace Museum. Finally, Chrismas embezzled approximately $114,595 owed to the gallery by a third party that purchased artwork, but which Chrismas instead had paid to Ace Museum’s landlord to keep current with its $225,000 monthly rent.
Chrismas funneled money from the bankrupt Ace Gallery for over three years, until April 2016, when the bankruptcy court appointed an independent trustee to run Ace Gallery’s bankruptcy estate and Chrismas was removed.
The FBI’s Art Crime Team investigated this matter.
Assistant United States Attorney Valerie L. Makarewicz of the Major Frauds Section prosecuted this case.
Chairman of High Times’ Parent Agrees to Plead Guilty in Scheme to Give Undisclosed Payments to Analyst Touting its Securities OfferingRead the Press Release
LOS ANGELES – The founder and chairman of Hightimes Holding Corp., the company that publishes High Times magazine, has agreed to plead guilty to joining a criminal conspiracy to pay more than $150,000 in undisclosed compensation to an analyst for an investment newsletter that touted its stock and assisted Hightimes in raising at least $6 million.
Adam Levin, 45, of Marina Del Rey, was charged last month with one count of conspiracy to tout securities for undisclosed compensation. In a plea agreement filed December 20, Levin agreed to plead guilty to that felony offense.
Levin is scheduled to appear January 14 in United States District Court to make his initial appearance in this case.
Levin is the fourth defendant to be charged in this scheme in which companies paid the analyst at “Palm Beach Venture,” an investment newsletter with subscribers nationwide. That analyst, Jonathan William Mikula – along with his associate, Christian Fernandez, who acted as a money launderer for the scheme; and Raj Beri, the CEO of a Beverly Hills company who brokered deals for undisclosed payments by other issuers, each received a portion of the payments. Mikula, Fernandez and Beri each pleaded guilty last year and are scheduled to be sentenced in July.
The payments made by executives such as Levin were in exchange for Palm Beach Venture publishing promotional pieces for securities offerings, according to court documents.
Federal law requires full and public disclosure from anyone who has received payment – directly or indirectly – from an issuer for publishing, publicizing or circulating any advertisement or communication that describes the issuer’s security offered for sale.
According to Levin’s plea agreement, in 2020 and 2021, “Hightimes raised approximately $20 million from more than 10 investor-victims, with at least $6 million in investment proceeds associated with Palm Beach Venture’s promotion.”
In exchange for the favorable articles in the newsletter, Levin admitted he paid $150,000 via wire transfers, as well as tens of thousands of dollars for entertainment expenses.
To conceal the scheme, Levin entered into a sham “marketing agreement” and routed the payments through a Canadian bank to a shell company in Canada, according to the plea agreement.
Mikula then caused Palm Beach Venture to promote Hightimes’ securities offering on April 6 and September 23 in 2020 in articles that falsely stated, “Neither the Palm Beach Research Group nor its affiliates receive compensation for bringing this deal to you,” the plea agreement states.
Levin also admitted that he lied to the United States Securities and Exchange Commission when he denied knowing that he entered into a “pay-for-play arrangement.”
The FBI is investigating this matter.
The SEC filed a civil action against Hightimes that was resolved in 2023 with Hightimes agreeing to a cease-and-desist order and paying a penalty of $558,071.
Any investors who believe they are a victim of the crimes in this scheme are encouraged to go to https://www.justice.gov/usao-cdca/united-states-v-jonathan-william-mikula-christian-fernandez-and-amit-raj-beri for further information and updates regarding this matter.
Assistant United States Attorney Adam P. Schleifer of the Corporate and Securities Fraud Strike Force is prosecuting this case.
Former State Government Employee and Her Former Boyfriend Plead Guilty to Fraudulently Obtaining COVID Jobless BenefitsRead the Press Release
LOS ANGELES – A former employee of the California Employment Development Department (EDD), which administers the state’s unemployment insurance (UI) program, pleaded guilty this afternoon to fraudulently obtaining more than $750,000 in COVID jobless relief.
Phyllis Hope Stitt, 61, of Carson, pleaded guilty today to one count of conspiracy to commit mail fraud and bank fraud for filing at least 29 fraudulent UI claims that caused the EDD to suffer approximately $768,958 in losses. Also pleading guilty today to the same charge was Kenneth Earl Riley, 64, of South Los Angeles, Stitt’s former boyfriend.
According to their plea agreements, Stitt and Riley had been in a relationship as domestic partners with each other for over a decade at the beginning of the COVID-19 pandemic when Stitt was employed by the EDD as an employment program representative. Her job duties included determining claimant eligibility for unemployment insurance (UI) benefits and performing claim processing activities.
From March 2020 to September 2021, while using the access and information available to her in her position with the EDD, Stitt acquired the names, dates of birth, Social Security numbers, and other personal identifying information of victims that were used to submit fraudulent claims.
Stitt then filed fraudulent applications for UI benefits without the victims’ knowledge or consent, and then increased the amount of UI benefits paid out by backdating the fraudulent requests to maximize the claims.
Stitt certified the fraudulent applications alleging that the victims had submitted their employment history and driver’s license information, and she confirmed they were unemployed because of the pandemic and actively were searching for work.
Many of the victims were ineligible to receive these benefits because they were currently employed, not unemployed because of the pandemic, or were deceased at the time.
In filing the fraudulent applications, Stitt used mailing addresses that Riley had access to. Debit cards and accounts created as a result of these fraudulent applications were then accessed by Riley and others, who made cash withdrawals at ATMs, bank transfers and retail purchases.
United States District Judge André Birotte Jr. scheduled sentencing hearings for May 9, at which time each defendant will face a statutory maximum sentence of 30 years in federal prison.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
On September 15, 2022, the Attorney General selected the U.S. Attorney’s Offices for the Central and Eastern Districts of California to jointly head one of three national COVID-19 Fraud Strike Force Teams. The Department of Justice established the Strike Force to enhance existing efforts to combat and prevent COVID-19 related financial fraud. The Strike Force combines law enforcement and prosecutorial resources and focuses on large-scale, multistate pandemic relief fraud perpetrated by criminal organizations and transnational actors, as well as those who committed multiple instances of pandemic relief fraud. The Strike Force uses prosecutor-led and data analyst-driven teams to identify and bring to justice those who stole pandemic relief funds. Additional information regarding the Strike Force may be found at https://www.justice.gov/opa/pr/justice-department-announces-covid-19-fraud-strike-force-teams.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The United States Department of Labor – Office of Inspector General, the FBI, and the California Employment Development Department – Investigation Division investigated this matter.
Assistant United States Attorney Steven M. Arkow of the Major Frauds Section is prosecuting this case.
Whittier Man Sentenced to over 10 Years in Prison for Selling Ghost Guns and Planning Armed Robbery of Federal InformantRead the Press Release
LOS ANGELES – A Whittier man was sentenced today to 121 months in federal prison for operating an unlicensed firearm dealing business that sold guns lacking serial numbers, commonly known as “ghost guns,” and for planning the armed robbery of a confidential federal informant.
Salvador Lopez, 24, was sentenced by United States District Judge Percy Anderson, who also ordered him to pay $2,000 in restitution.
Lopez pleaded guilty in October 2024 to one count of engaging in the business of dealing firearms without a license and one count of armed robbery of money of the United States while using a dangerous weapon.
“Selling firearms illegally and putting more untraceable weapons into the community shows a blatant disregard for the law and puts the safety of our citizens at great risk,” said United States Attorney Martin Estrada. “This defendant’s lengthy sentence should serve as a warning to others that law enforcement will act decisively to prevent violent gun crime.”
Ivan Quintos, 27, of Azusa, another defendant charged in this case, also pleaded guilty in October 2024 to one count of firearms trafficking. His sentencing hearing is scheduled for April 14, when he will face up to 15 years in federal prison.
The two remaining defendants charged in this case – Mark Perez, 23, and Zachary Dry, 24, both of Henderson, Nevada – pleaded guilty to criminal charges in October 2024. Dry is scheduled for sentencing on February 3. Perez’s sentencing hearing is scheduled for March 24.
Perez and the other defendants used Instagram to coordinate and sell more than five dozen firearms. Some of the defendants used Instagram – direct messages and public posts – to sell the firearms, which included “ghost guns” and “Glock switches” as well as firearms with obliterated serial numbers and firearms that had been stolen. The illegal firearm sales occurred in North Hollywood, Las Vegas, and elsewhere.
In total, Lopez sold or helped to sell 15 firearms to law enforcement agents and those working for them. Neither Lopez nor his codefendants are federal firearms licensees.
Later, Lopez agreed to sell firearms to a confidential informant working for federal law enforcement. Instead of following through with the transaction, Lopez messaged a minor with instructions to rob the informant at gun point. The minor and his accomplices not only robbed the informant of $5,000, but they also robbed the informant’s personal cellphone and vehicle. Lopez then received a cut of the robbery’s proceeds.
Operation Safe Cities establishes strategic enforcement priorities with an emphasis on prosecuting the most significant drivers of violent crime. Across this region, the most damaging and horrific crimes are committed by a relatively small number of particularly violent individuals. This strategic enforcement approach is expected to increase the number of arrests, prosecutions and convictions of repeat offenders engaged in the most dangerous conduct. It is designed to improve public safety across the region by targeting crimes involving illicit guns, prohibited persons possessing firearms, or robbery crews that cause havoc and extensive losses to retail establishments.
The Bureau of Alcohol, Tobacco, Firearms and Explosives; the Baldwin Park Police Department; and the Los Angeles Police Department investigated this matter.
Assistant United States Attorney William M. Larsen of the General Crimes Section prosecuted this case.
Part-Time Actor from O.C. Sentenced to over 8 Years in Prison for Soliciting Investors for Shell Companies Peddling Bogus COVID CureRead the Press Release
LOS ANGELES – An Orange County man and part-time actor was sentenced today to 98 months in federal prison for soliciting investors in companies that marketed what in fact were a bogus cure and treatment for COVID-19 during the pandemic’s early days.
Keith Lawrence Middlebrook, 57, of Huntington Beach, was sentenced by United States District Judge Dale S. Fischer, who also fined him $25,000 and ordered him immediately remanded to federal custody to begin serving his prison sentence.
At the conclusion of a three-day trial in May 2024, a jury found Middlebrook guilty of 11 counts of wire fraud.
In March 2020, Middlebrook solicited potential investors in California, Nevada, New York, Texas, and Colorado via text messages, videos and statements posted on YouTube and Instagram about his purported cure for COVID-19. Middlebrook called this so-called cure “QC20,” and he also marketed a purported COVID treatment, which he called “QP20.”
Middlebrook claimed to have personally developed a “patent-pending” cure and a treatment to prevent coronavirus infection. Middlebrook fraudulently solicited investments in various companies with a series of false promises. These fraudulent claims included miraculous results from the prevention product and the cure, risk-free and 100 percent guaranteed “enormous returns” on investments,” and that former Los Angeles Lakers point guard Earvin “Magic” Johnson was a director and officer of Middlebrook’s company. He induced victims to invest their money by promising them enormous returns. Judge Fischer based Middlebrook’s sentence in part on finding that he obstructed justice by his lying on the witness stand when he testified about his purported relationship and business dealings with Johnson.
To bolster these claims, Middlebrook lied that a party in Dubai had offered to purchase his companies for $10 billion, and this offer would secure the victim-investors’ investments in the companies. He also lied that he had secured funding from seven investors who had each already invested between $750,000 and $1 million.
The FBI arrested Middlebrook in this case in March 2020 after Middlebrook delivered pills – purportedly the treatment that prevents coronavirus infection – to an undercover agent who was posing as an investor.
The FBI investigated this matter.
Assistant United States Attorneys Kenneth R. Carbajal of the Violent and Organized Crime Section and Joseph S. Guzman of the General Crimes Section are prosecuting this case.
Man Sentenced for Insider Trading SchemeRead the Press Release
A California man was sentenced today to two years in prison for his role in an insider trading scheme that netted more than $650,000 in illicit profits.
According to court documents and evidence presented at trial, between 2012 and 2013, Shahriyar Bolandian, 36, of the Brentwood neighborhood of Los Angeles, received material non-public information about two upcoming corporate acquisitions from his childhood friend, who was an investment banking analyst at J.P. Morgan Securities LLC. Bolandian then used the inside information to trade in advance of the public announcements of Integrated Device Technology Inc.’s April 2012 planned acquisition of PLX Technology Inc., and Salesforce.com Inc.’s June 2013 acquisition of ExactTarget Inc. As a result of his illegal trades, Bolandian personally made over $340,000, which he used, among other things, to cover previous trading losses and repay loans to family and friends.
In April 2024, a federal jury convicted Bolandian of six counts of insider trading.
Principal Deputy Assistant Attorney General Brent S. Wible, head of the Justice Department’s Criminal Division; U.S. Attorney Martin Estrada for the Central District of California; and Assistant Director in Charge Akil Davis of the FBI Los Angeles Field Office made the announcement.
The FBI Los Angeles Field Office investigated the case.
Trial Attorney Della Sentilles of the Criminal Division’s Fraud Section and former Assistant U.S. Attorney Ali Moghaddas and Assistant U.S. Attorney Andrew Roach for the Central District of California prosecuted the case.
Brentwood Man Sentenced to 2 Years in Federal Prison for Insider Trading Scheme That Netted More Than $650,000 in Illegal GainsRead the Press Release
LOS ANGELES – A man from the Brentwood neighborhood of Los Angeles was sentenced today to 24 months in federal prison for his role in an insider trading scheme that netted more than $650,000 in illicit profits.
Shahriyar Bolandian, 36, was sentenced by United States District Judge Terry J. Hatter Jr. to 24 months in federal prison. A forfeiture order will be imposed at a later date.
At the conclusion of a five-day trial, a jury in April 2024 found Bolandian guilty of six counts of insider trading.
“This defendant – now a convicted felon – illegally traded on inside information to enrich himself and others,” said United States Attorney Martin Estrada. “All those who seek to get rich by manipulating the financial markets and taking advantage of others should think again – there will be consequences for this misconduct.”
In 2012 and 2013, Bolandian received material non-public information about two upcoming corporate acquisitions by publicly traded companies. Bolandian then used the inside information to trade in advance of the public announcements of Integrated Device Technology Inc.’s April 2012 planned acquisition of PLX Technology Inc., and Salesforce.com Inc.’s June 2013 acquisition of ExactTarget Inc.
As a result of his illegal trades, Bolandian’s personal share of the scheme’s illicit proceeds was $450,000, which he used, among other things, to cover previous trading losses and repay loans to family and friends.
The United States Securities and Exchange Commission in August 2015 filed a civil complaint against Bolandian and others in connection with the scheme. That litigation remains pending.
Judge Hatter today also sentenced Kevan Sadigh, 37, formerly of Encino and now a Miami resident, to two years of probation and ordered forfeiture in the amount of $36,684 and a money judgment in the amount of $206,525. In a separate, six-day trial, a jury in July 2024 found Sadigh guilty of seven counts of insider trading. Sadigh’s personal share of the illicit proceeds was approximately $200,000.
The Corporate and Securities Fraud Strike Force is designed to expand and prioritize complex corporate and securities fraud investigations, some of which involves corporate executives and other individuals involved in criminal conduct. Members of the Strike Force examine accounting fraud, insider trading, and other matters that directly impact the financial system and trading markets.
The FBI investigated this matter.
Assistant United States Attorneys Andrew M. Roach of the General Crimes Section and Solomon D. Kim of the Major Frauds Section, and Trial Attorney Della Sentilles of the Justice Department’s Criminal Division’s Fraud Section prosecuted this case.
Southern California-Based Clinics, Laboratory, and Owners to Pay $15 Million to Settle Allegations of False Claims Arising from Kickbacks and Self-ReferralsRead the Press Release
SETTLEMENT AGREEMENT
LOS ANGELES – A former Van Nuys physician, a medical center he founded, a laboratory he co-owned, and an executive at these entities have agreed to pay $15 million to settle allegations that they submitted false claims to Medicare and Medi-Cal from the payment of illegal kickbacks and self-referring patients, the Justice Department announced today.
Mohammad Rasekhi, who surrendered his medical license in December 2024; Sheila Busheri; Southern California Medical Center (SCMC); and R & B Medical Group, Inc. d/b/a Universal Diagnostic Laboratories (UDL) agreed to pay the amount.
Rasekhi is the founder and chief medical officer of SCMC and the co-owner of UDL. Busheri is the chief executive officer of SCMC and the co-owner and chief executive officer of UDL. SCMC is a federally qualified health center that operates six clinics in Southern California. UDL is a reference and esoteric laboratory in Southern California.
Medicaid is funded jointly by the states and the federal government. The State of California paid a portion of the Medicaid claims at issue and will receive approximately $7 million from the settlement.
The United States alleged that the defendants knowingly submitted or caused the submission of false claims to Medicare and Medi-Cal by:
- paying kickbacks to marketers to refer Medicare and Medi-Cal beneficiaries to SCMC clinics in violation of the Anti-Kickback Statute (AKS):
- paying kickbacks to third-party clinics in the form of above-market rent payments, complimentary and discounted services to clinic staff, and write-offs of balances owed by patients and clinic staff in exchange for referring Medicare and Medi-Cal beneficiaries to UDL for laboratory tests in violation of the AKS; and
- referring Medicare and Medi-Cal beneficiaries from SCMC clinics to UDL for laboratory tests in violation of the Stark Act’s prohibition against self-referrals.
The AKS prohibits parties who participate in federal health care programs from knowingly and willfully offering or paying remuneration in return for referring an individual to, or arranging for the furnishing of any item or services for which payment is made by, a federal health care program.
Likewise, the Stark Act, which is also known as the Physician Self-Referral Law, prohibits physicians from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies.
“Providers who exploit the Medicare, Medicaid, and TRICARE programs for their personal financial gain will be held accountable under the False Claims Act,” said U.S. Attorney Martin Estrada. “This significant resolution evidences our steadfast commitment to ensuring the integrity of federally funded health care programs.”
“Kickback and self-referral schemes risk impairing the judgment of healthcare providers and diminish the reliability of the care that they render,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This resolution upholds the Department’s abiding view that Medicare and Medicaid beneficiaries deserve care that is free from the taint of referrals that were driven by the providers’ financial interest.”
“There is an expectation that providers who receive Medicare and Medicaid program funds obey the law and operate with integrity,” said Acting Special Agent in Charge Eric Larson of the U.S. Department of Health & Human Services Office of the Inspector General (HHS-OIG). “This settlement is a reminder that HHS-OIG is committed to working with our law enforcement partners on holding those providers accountable who exploit taxpayer-funded healthcare programs for their own personal gain.”
“The announced settlement brings closure to the defendants’ schemes to defraud federal healthcare programs, including the Department of Defense’s TRICARE program,” said Bryan D. Denny, Special Agent in Charge for the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (“DCIS”), Western Field Office. “This case underscores DCIS’s commitment to working with its partners to hold accountable those who defraud TRICARE, particularly in instances wherein the alleged illicit activities jeopardize patient care.”
The settlement announced today resolves claims brought under the qui tam, or “whistleblower,” provisions of the False Claims Act in a joint filing by Ferzad Abdi, Julia Butler, Jameese Smith, and Karla Solis, who were former employees or managers of SCMC and UDL. The qui tam provisions permit a private party called a “relator” to file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Abdi v. Rasekhi, No. 18-cv-03966 (C.D. Cal.). The settlement announced today includes a $10 million payment for the portion of the case handled by the United States and a $5 million payment in a separate settlement between the relators and the defendants.
The resolution obtained in this matter was the result of a coordinated effort between the United States Attorney’s Office; the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section; and the California Department of Justice. The U.S. Department of Health and Human Services, Office of Inspector General; the U.S. Department of Defense, Office of Inspector General; and DCIS provided assistance.
The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
Assistant United States Attorney Jack D. Ross of the Civil Fraud Section and Justice Department Trial Attorney Samson Asiyanbi of the Fraud Section handled this matter for the United States.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
Southern California-Based Clinics, Laboratory and Their Owners to Pay $10M for False Claims Arising from Kickbacks and Self-ReferralsRead the Press Release
WASHINGTON – Mohammad Rasekhi M.D., Sheila Busheri, Southern California Medical Center (SCMC) and R & B Medical Group Inc., doing business as Universal Diagnostic Laboratories (UDL) (collectively, the defendants), have agreed to pay $10 million to resolve allegations that they submitted false claims to Medicare and California’s Medicaid program, known as Medi-Cal, arising from allegations of paying kickbacks and making self-referrals. The defendants are all based in southern California. Rasekhi is the founder and chief medical officer of SCMC and the co-owner of UDL. Busheri is the chief executive officer of SCMC and the co-owner and chief executive officer of UDL. SCMC is a federally qualified health center that operates six clinics in southern California. UDL is a reference and esoteric laboratory in Southern California.
The United States alleged that the defendants knowingly submitted or caused the submission of false claims to Medicare and Medi-Cal by (a) paying kickbacks to marketers to refer Medicare and Medi-Cal beneficiaries to SCMC clinics in violation of the Anti-Kickback Statute (AKS), (b) paying kickbacks to third-party clinics in the form of above-market rent payments, complimentary and discounted services to clinic staff and write-offs of balances owed by patients and clinic staff in exchange for referring Medicare and Medi-Cal beneficiaries to UDL for laboratory tests in violation of the AKS and (c) referring Medicare and Medi-Cal beneficiaries from SCMC clinics to UDL for laboratory tests in violation of the Stark Act prohibition against self-referrals.
The AKS prohibits parties who participate in federal health care programs from knowingly and willfully offering or paying remuneration in return for referring an individual to, or arranging for, the furnishing of any item or services for which payment is made by, a federal health care program. Likewise, the Stark Act, which is also known as the Physician Self-Referral Law, prohibits physicians from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. “Designated health services” include “clinical laboratory services.” Compliance with the AKS and Stark Act are conditions of payment under federal healthcare programs.
“Kickback and self-referral schemes risk impairing the judgment of healthcare providers and diminish the reliability of the care that they render,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This resolution upholds the department’s commitment to ensuring that Medicare and Medicaid beneficiaries receive care that is untainted by the providers’ financial interest.”
“Providers who exploit the Medicare, Medicaid and TRICARE programs for their personal financial gain will be held accountable under the False Claims Act,” said U.S. Attorney Martin Estrada for the Central District of California. “This significant resolution evidences our steadfast commitment to ensuring the integrity of federally funded health care programs.”
“There is an expectation that providers who receive Medicare and Medicaid program funds obey the law and operate with integrity,” said Acting Special Agent in Charge Eric Larson of the Department of Health & Human Services Office of the Inspector General (HHS-OIG). “This settlement is a reminder that HHS-OIG is committed to working with our law enforcement partners on holding those providers accountable who exploit taxpayer-funded healthcare programs for their own personal gain.”
“The announced settlement brings closure to the defendants’ schemes to defraud federal healthcare programs, including the Department of Defense’s TRICARE program,” said Special Agent in Charge Bryan D. Denny of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS) Western Field Office. “This case underscores DCIS’ commitment to working with its partners to hold accountable those who defraud TRICARE, particularly in instances wherein the alleged illicit activities jeopardize patient care.”
Medicaid is funded jointly by the states and the federal government. The State of California paid a portion of the Medicaid claims at issue and will receive approximately $4 million from the settlement.
The settlement announced today resolves, in part, claims brought under the qui tam or whistleblower provisions of the False Claims Act by Ferzad Abdi, Julia Butler, Jameese Smit and Karla Solis, who were former employees or managers of SCMC and UDL. The qui tam provisions permit a private party called a “relator” to file an action on behalf of the United States and receive a portion of any recovery. The relators’ qui tam case is captioned United States ex rel. Abdi v. Rasekhi, No. 18-cv-03966 (CDCA). Concurrent with this announcement, the relators reached a separate settlement with the defendants for $5 million to resolve additional allegations in their qui tam complaint. The United States and the State of California declined to intervene as to those allegations and was not a party to the separate agreement. The relators’ share of the two settlements has not yet been determined.
The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, U.S. Attorney’s Office for the Central District of California and California Department of Justice, with assistance from HHS-OIG.
The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).
Trial Attorney Samson Asiyanbi of the Civil Division’s Fraud Section and Assistant U.S. Attorney Jack Ross for the Central District of California handled the matter.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
Settlement
Two California Men Charged in Largest NFT Scheme Prosecuted to DateRead the Press Release
Note: View the indictment here.
A six-count indictment was unsealed today in Los Angeles charging two California men with defrauding investors of more than $22 million in cryptocurrency through a series of digital asset project “rug pulls,” a type of fraud scheme in which the creator of a nonfungible token (NFT) or other digital asset project solicits funds from investors for the project and then abruptly abandons the project and fraudulently retains investors’ funds. Both men were arrested yesterday by Homeland Security Investigations (HSI) in Los Angeles.
According to court documents, from May 2021 to May 2024, Gabriel Hay, 23, of Beverly Hills, and Gavin Mayo, 23, of Thousand Oaks, sponsored several NFT and other digital asset projects and undertook promotional activities in support of those projects. Hay and Mayo allegedly made or caused others to make materially false and misleading statements regarding the digital asset projects being launched and provided false and misleading project “roadmaps” detailing plans for the NFTs or other digital asset projects after their launch that the sponsors never intended to fulfill. For example, the indictment alleges that in promoting the Vault of Gems NFT project, Hay and Mayo falsely claimed that the project would be the “first NFT project to be pegged to a hard asset.” However, instead of pursuing the Vault of Gems project or others as they had represented they would, Hay and Mayo allegedly abandoned the projects after collecting millions in funds from investors.
“Gabriel Hay and Gavin Mayo allegedly defrauded investors in digital asset projects of tens of millions of dollars and threatened an individual who attempted to expose their roles in these fraudulent schemes,” said Principal Deputy Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Fraudsters take advantage of new technologies and financial products to steal investors’ hard-earned money. The department is committed to protecting investors and will continue to work with our law enforcement partners to root out fraud involving cryptocurrency and other digital assets and bring offenders to justice.”
“For three years, Hay and Mayo apparently lied to their investors in order to defraud them out of millions of dollars,” said HSI Executive Associate Director Katrina W. Berger. “Such technological fraud schemes cost investors millions of dollars every year. Just because such crimes aren’t violent does not mean they are victimless. HSI will continue to investigate, disrupt, and dismantle such cryptocurrency fraud networks.”
“Whenever a new investment trend occurs, scammers are sure to follow,” said U.S. Attorney Martin Estrada for the Central District of California. “My office and our law enforcement partners will continue our efforts to protect consumers and punish wrongdoers involved in crypto fraud.”
Hay, Mayo, and others allegedly used these tactics with a variety of digital asset projects, including Vault of Gems, Faceless, Sinful Souls, Clout Coin, Dirty Dogs, Uncovered, MoonPortal, Squiggles, and Roost Coin. Hay and Mayo also allegedly used a variety of means to conceal their involvement in the fraudulent projects by falsely identifying other individuals or causing other individuals to be falsely identified as owners of the projects. When one project manager on the Faceless NFT project exposed Hay and Mayo as being behind that project, Hay and Mayo allegedly embarked on a harassment campaign against the project manager, sending or causing the sending of messages to the project manager and his parents for the purpose of intimidating him and his family and causing them great emotional distress.
Hay and Mayo are each charged with one count of conspiracy to commit wire fraud, two counts of wire fraud, and one count of stalking. If convicted, they each face a maximum penalty of 20 years in prison on each of the conspiracy and wire fraud counts and a maximum penalty of five years on the stalking count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
HSI Baltimore is investigating the case.
Trial Attorneys Tian Huang and Tamara Livshiz of the Criminal Division’s Fraud Section, both members of the National Cryptocurrency Enforcement Team (NCET), and Assistant U.S. Attorney Maxwell Coll for the Central District of California are prosecuting the case.
The NCET was established to combat the growing illicit use of cryptocurrencies and digital assets. Within the Criminal Division’s Computer Crime and Intellectual Property Section, the NCET conducts and supports investigations into individuals and entities that are enabling the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and tumbling services, and infrastructure providers. The NCET also works to set strategic priorities regarding digital asset technologies, identify areas for increased investigative and prosecutorial focus, and lead the department’s efforts to collaborate with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets.
If you believe that you are a victim of any of the scams listed above or other scams involving the defendants, please email [email protected].
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Beverly Hills and Ventura County Men Indicted for Allegedly Running NFT Crypto Fraud that Conned Investors Out of More Than $22 MillionRead the Press Release
LOS ANGELES – A six-count indictment was unsealed today charging two Southern California men with defrauding investors of more than $22 million in cryptocurrency through a series of digital asset project “rugpulls,” a type of fraud scheme in which the creator of a nonfungible token (NFT) or other digital asset project solicits funds from investors for the project and then abruptly abandons the project and fraudulently retains investors’ funds.
Gabriel Hay, 23, of Beverly Hills, and Gavin Mayo, 23, of Thousand Oaks, are each charged with one count of conspiracy to commit wire fraud, two counts of wire fraud, and one count of stalking.
Their arraignments are scheduled for this afternoon in United States District Court in downtown Los Angeles.
“Whenever a new investment trend occurs, scammers are sure to follow,” said United States Attorney Martin Estrada. “My office and our law enforcement partners will continue our efforts to protect consumers and punish wrongdoers involved in crypto fraud.”
“Gabriel Hay and Gavin Mayo allegedly defrauded investors in digital asset projects of tens of millions of dollars and threatened an individual who attempted to expose their roles in these fraudulent schemes,” said Principal Deputy Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Fraudsters take advantage of new technologies and financial products to steal investors’ hard-earned money. The department is committed to protecting investors and will continue to work with our law enforcement partners to root out fraud involving cryptocurrency and other digital assets and bring offenders to justice.”
“For three years, Hay and Mayo allegedly lied to their investors in order to defraud them out of millions of dollars,” said HSI Executive Associate Director Katrina W. Berger. “Such technological fraud schemes cost investors millions of dollars every year. Just because such crimes aren’t violent does not mean they are victimless. HSI will continue to investigate, disrupt, and dismantle such cryptocurrency fraud networks.”
According to court documents, from May 2021 to May 2024, Hay and Mayo sponsored several NFT and other digital asset projects and undertook promotional activities in support of those projects. Hay and Mayo allegedly made or caused others to make materially false and misleading statements regarding the digital asset projects being launched and provided false and misleading project “roadmaps” detailing plans for the NFTs or digital asset projects after their launch that the sponsors never intended to fulfill.
For example, the indictment alleges that in promoting the Vault of Gems NFT project, Hay and Mayo falsely claimed that the project would be the “first NFT project to be pegged to a hard asset.” However, instead of pursuing the Vault of Gems project or others as they had represented they would, Hay and Mayo allegedly abandoned the projects after collecting millions in funds from investors.
Hay, Mayo, and others allegedly used these tactics with a variety of other digital asset projects, including Vault of Gems, Faceless, Sinful Souls, Clout Coin, Dirty Dogs, Uncovered, MoonPortal, Squiggles, and Roost Coin. Hay and Mayo also allegedly used a variety of means to conceal their involvement in the fraudulent projects by falsely identifying other individuals or causing other individuals to be falsely identified as owners of the projects.
When one project manager on the Faceless NFT project exposed Hay and Mayo as being behind that project, Hay and Mayo allegedly embarked on a harassment campaign against the project manager, sending or causing the sending of messages to the project manager and his parents for the purpose of intimidating him and his family and causing them great emotional distress.
“Using NFTs to commit fraud not only exploits emerging technology but also erodes trust in the broader digital ecosystem,” said Special Agent in Charge Michael McCarthy of Homeland Security Investigations (HSI). “The alleged actions of Hay and Mayo, who defrauded investors out of millions over several years, highlight the profound harm these schemes cause. These crimes may not involve violence, but they leave countless victims in their wake. HSI remains dedicated to exposing and dismantling cryptocurrency fraud schemes to protect investors and ensure that technological advancements are used to drive progress, not deception.”
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
If convicted, they each face a maximum penalty of 20 years in prison on each of the conspiracy and wire fraud counts and a maximum penalty of five years on the stalking count.
The HSI Baltimore Field Office is investigating the case.
Assistant United States Attorney Maxwell K. Coll of the Cyber and Intellectual Property Crimes Section and Justice Department Trial Attorneys Tian Huang and Tamara Livshiz of the Criminal Division’s Fraud Section, both members of the National Cryptocurrency Enforcement Team (NCET), are prosecuting this case.
The NCET was established to combat the growing illicit use of cryptocurrencies and digital assets. Within the Criminal Division’s Computer Crime and Intellectual Property Section, the NCET conducts and supports investigations into individuals and entities that are enabling the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and tumbling services, and infrastructure providers. The NCET also works to set strategic priorities regarding digital asset technologies, identify areas for increased investigative and prosecutorial focus, and lead the department’s efforts to collaborate with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets.