Central District of California
Press releases recorded for this federal judicial district.
Former Los Angeles City Politician José Huizar Pleads Guilty to Racketeering Conspiracy and Tax Evasion ChargesRead the Press Release
LOS ANGELES – Former Los Angeles City Councilmember José Huizar pleaded guilty today to federal criminal charges for using his powerful position at City Hall to enrich himself and his associates, and for cheating on his taxes.
Huizar, 54, of Boyle Heights, pleaded guilty to one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act and one count of tax evasion. The plea agreement was filed Thursday in United States District Court.
Huizar represented Council District 14 (CD-14), which includes downtown Los Angeles and its surrounding communities, from 2005 until his resignation in 2020.
In his plea agreement, Huizar admitted to leading the CD-14 Enterprise, which operated as a pay-to-play scheme in which Huizar – assisted by others – unlawfully used his office to give favorable treatment to real estate developers who financed and facilitated bribes and other illicit financial benefits.
Specifically, Huizar and other city officials demanded and accepted cash bribes, casino gambling chips, prostitution and escort services, political contributions, flights on private jets and commercial airlines, stays at luxury hotels and casinos, expensive meals, tickets to concerts and sporting events, and other benefits.
Huizar also admitted to accepting a $600,000 bribe in the form of collateral from a billionaire real estate developer for Huizar to confidentially settle a pending sexual harassment lawsuit against Huizar by a former staffer.
“Huizar has admitted to orchestrating a racketeering scheme that enriched himself and others as they sought to monopolize political power at the expense of Los Angeles residents,” said United States Attorney Martin Estrada. “This is one of the most wide-ranging and brazen public corruption cases ever uncovered in this district, demonstrating that our office will use all the tools of the federal government to vigorously prosecute crooked politicians whose betrayal of the public trust significantly erodes confidence in our local government.”
“Mr. Huizar's actions, to include accepting a staggering amount of bribe money and lavish gifts, eroded the trust in the office he held for many years,” said Donald Alway, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “Angelenos deserve better than being used for the personal enrichment of politicians grifting the system and foreign investors whose currency is corruption. I'm proud of the investigators and prosecutors whose hard work led to today's admission of guilt.”
Huizar led the CD-14 Enterprise from at least February 2013 until July 2020, including for several years when he chaired the city’s Planning and Land Use Management (PLUM) Committee, which oversaw major commercial and residential development projects in the city.
Members and associates of the CD-14 Enterprise also included lobbyists, consultants, and other city officials and staffers, who sought to personally enrich themselves and their families and associates in exchange for official acts. These members included George Esparza, Huizar’s former special assistant, real estate development consultant George Chiang, political fundraiser Justin Jangwoo Kim, and lobbyist Morrie Goldman, among others. Each of these individuals has pleaded guilty in this case, is cooperating with the government’s investigation, and awaits sentencing.
The enterprise’s members and associates raised and solicited funds from developers and their proxies with projects in CD-14 to be paid to Huizar’s desired accounts and political action committees, including to benefit a Huizar relative’s campaign for the CD-14 seat.
In exchange for these benefits, Huizar, Esparza and other city officials agreed to perform and performed official acts, including:
- presenting motions and resolutions in various city committees to benefit projects;
- voting on projects in various city committees, including the PLUM Committee, and City Council;
- taking, or not taking, action in the PLUM Committee to expedite or delay the approval process and affect project costs;
- exerting pressure on city officials to influence the approval and/or permitting process of projects;
- using their office to negotiate with and exert pressure on labor unions to resolve issues on projects;
- leveraging voting and scheduling power to pressure developers with projects pending before the city to affect their business practices; and
- introducing or voting on city resolutions to enhance the professional reputation and marketability of businesspersons in the city.
In return for Huizar pleading guilty to the two felony counts, prosecutors have agreed to seek no more than 13 years in prison for Huizar, who also has agreed to forfeit $129,000 in cash that law enforcement found during a law enforcement search of his home in November 2018. The government also intends to seek more than $1 million in restitution on the city’s behalf.
As part of the plea agreement, Huizar has agreed to seek a sentence of no less than nine years in prison.
United States District Judge John F. Walter scheduled an April 3 sentencing hearing for Huizar.
The plea agreement is “binding,” which means the court must accept or reject all aspects of it. Should the court reject the plea agreement, any party may withdraw from it. Judge Walter said at today’s hearing that he would make that decision prior to Huizar’s sentencing date.
In June 2022, real estate developer Dae Yong Lee, a.k.a. “David Lee,” 57, of Bel Air and one of his companies, 940 Hill LLC, were found guilty of providing $500,000 in cash to Huizar and Esparza in exchange for their help in resolving a labor organization’s appeal of their downtown Los Angeles development project. Both defendants are scheduled to be sentenced on May 5.
In November 2022, downtown Los Angeles-based company Shen Zhen New World I LLC was found guilty of eight felonies for – through the actions of its owner, billionaire real estate developer and fugitive Wei Huang, 57, of Shenzhen, China – paying more than $1 million in bribes – including luxury trip expenses, casino gambling chips and the $600,000 sham loan – to Huizar to obtain city approval to build a 77-story skyscraper. The company’s sentencing hearing is scheduled for May 12. Huang, who is charged with several felonies, has yet to make a court appearance in this case and is considered a fugitive believed to be in China.
On February 21, former Los Angeles deputy mayor and co-defendant Raymond She Wah Chan, 66, of Monterey Park, is scheduled to go on trial. Chan, who is accused of being a member of the corrupt CD-14 Enterprise, has pleaded not guilty to charges of RICO conspiracy, bribery, honest services fraud and lying to federal agents.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
In a related case, Huizar’s brother, Salvador Huizar, 56, of Boyle Heights, pleaded guilty in October 2022 to lying to federal investigators and a federal grand jury about accepting cash from his brother on numerous occasions in exchange for paying certain of Huizar’s bills. Salvador Huizar’s sentencing hearing is scheduled for May 15.
The FBI is investigating this matter, with assistance from IRS Criminal Investigation.
Assistant United States Attorney Mack E. Jenkins, Chief of the Criminal Division, and Assistant United States Attorneys Cassie D. Palmer, Susan S. Har, and Brian R. Faerstein of the Public Corruption and Civil Rights Section, are prosecuting this case.
Any member of the public who has information related to this or any other public corruption matter in the City of Los Angeles is encouraged to send information to the FBI’s tip line at tips.fbi.gov or to contact the FBI’s Los Angeles Field Office at (310) 477-6565.
Three Prison Inmates Found Guilty of Murder for Beating Fellow Prisoner to Death at Victorville Federal PrisonRead the Press Release
SANTA ANA, California – Three prison inmates have been found guilty of second-degree murder in the beating death of another inmate at the Federal Correctional Institution II in Victorville, the Justice Department announced today.
A federal jury found the defendants committed the October 1, 2013, murder of a 38-year-old inmate identified in court documents as “J.S.,” who was repeatedly hit and kicked, dying because of blunt force trauma to the head.
The defendants who were found guilty late Wednesday are:
- Aurelio Patino, a.k.a. “Augie,” 39, most recently of Riverside, who at the time of the murder was serving a 16-month sentence for being a felon in possession of a firearm and ammunition, and previously was serving a 100-month sentence in a California state prison;
- Christopher Ruiz, 48, most recently of San Diego, who is serving a 10-year sentence after being convicted of racketeering and methamphetamine-related charges; and
- Jose Villegas, a.k.a. “Torch,” 41, most recently of Los Angeles, who is serving a 15-year sentence in a methamphetamine case.
According to evidence presented at their six-day trial, J.S. was escorted to the recreation yard in the prison, where he was attacked. Patino, Ruiz and Villegas used their hands and feet to strike J.S. In addition to the murder charge, all three defendants pleaded guilty in November 2022 to conspiracy to commit the second-degree murder of J.S.
United States District Judge Cormac J. Carney scheduled a June 12 sentencing hearing, at which time each defendant will face a statutory maximum sentence of life in federal prison.
The FBI investigated this matter.
Assistant United States Attorneys Gregory S. Scally, Gregory W. Staples, and Faraz R. Mohammadi of the Santa Ana Branch Office are prosecuting this case.
Former Top Official in Orange County’s Democratic Party Agrees to Plead Guilty to Attempted Wire Fraud and Admits to Bribery SchemeRead the Press Release
SANTA ANA, California – The former executive director of the Democratic Party of Orange County has agreed to plead guilty to a felony charge for attempting to defraud one of her political consultancy firm’s clients. She further admitted in court documents that she agreed to bribe two members of the Irvine City Council – both on cannabis-related matters.
Melahat Rafiei, 45, of Anaheim, agreed to plead guilty to one count of attempted wire fraud. She is expected to make her initial appearance in United States District Court in Santa Ana on February 6.
Rafiei is the principal and founder of Progressive Solutions Consulting, a Long Beach-based political consulting firm. Rafiei was a longtime leader in Orange County’s Democratic Party and formerly served as secretary of the California Democratic Party and state representative to the Democratic National Committee.
Bribery
According to her plea agreement, from April to June 2018, Rafiei agreed to give at least $225,000 in bribes to Irvine City Councilmembers in exchange for their introducing and passing a city ordinance that would allow Rafiei’s clients to open a retail cannabis store in Irvine.
In April 2018, Rafiei presented a business opportunity to an individual who was then employed in the medical cannabis industry and offered to introduce the individual to an Irvine politician, identified in court documents as “Elected Official 1.”
The next month, Rafiei met with Elected Official 1 to discuss introducing an ordinance in Irvine that would legalize retail medical cannabis and ultimately benefit the individual’s business. At this meeting, Rafiei and Elected Official 1 told the individual and his business partner that they planned to use a separate member of the Irvine City Council – identified in court documents as “Elected Official 2” – to introduce the ordinance.
Following this meeting, still in May 2018, Rafiei asked the individual’s business partner to pay her between $350,000 and $400,000 in exchange for getting the cannabis ordinance introduced.
To avoid detection and mask the bribe payments to the Irvine elected officials, Rafiei planned to enter into legal retainer agreements with them. In June 2018, Rafiei caused a contract to be drafted between herself and Elected Official 2, the terms of which included a $25,000 retainer for “legal services.” Later, Rafiei explained to the individual’s business partner that Elected Official 2 had asked for approximately $25,000 and that Elected Official 1 had asked for $200,000.
Rafiei then instructed the business partner that the bribe payments would be disguised as attorney fees for legal services rendered to her various public affairs and campaign management companies. The payments had to be “maneuvered” in this way, she said, to circumvent the elected officials’ disclosure requirements.
Attempted Wire Fraud
In September and October of 2019, Rafiei falsely represented to a commercial cannabis company owner that, in exchange for a payment of at least $300,000, she would work to pass a cannabis-related ordinance in Anaheim that would benefit and be specifically tailored for the victim’s business. However, Rafiei already had been working on such an ordinance for other paying clients.
Rafiei then falsely represented to the victim that she would keep only $10,000 of the payment in exchange for her purported work. In fact, Rafiei intended to keep $100,000 of the payment.
Rafiei also falsely represented to the victim that $200,000 of the $300,000 would go to the Anaheim Chamber of Commerce, when in fact, she intended to split the $200,000 equally between herself and an associate of hers who was not affiliated with the Anaheim Chamber of Commerce. She instructed the victim to pay the $300,000 to various entities whose accounts she controlled.
Once Rafiei enters her guilty plea, she will face a statutory maximum sentence of 20 years in federal prison.
The FBI investigated this matter.
Assistant United States Attorneys Daniel S. Lim and Melissa S. Rabbani of the Santa Ana Branch Office are prosecuting this case.
Pomona Man Who Worked at Group Homes Sentenced to Life in Prison for Producing Sexually Explicit Material of Disabled ChildrenRead the Press Release
SANTA ANA, California – A certified nursing assistant who worked at a Southern California group home for severely disabled patients has been sentenced to life in federal prison for committing multiple child exploitation crimes, including filming himself sexually abusing several severely disabled children at the group home facility, while he was working as their nighttime caretaker, the Justice Department announced today.
Steve Jackson Rodriguez, 38, of Pomona, was sentenced late Friday afternoon by United States District Judge John W. Holcomb, who said at the hearing that Rodriguez’s crimes constituted “unspeakable acts.” Judge Holcomb scheduled a restitution hearing in this case for March 10.
Rodriguez pleaded guilty in September 2022 to two counts of obtaining custody of a minor for the purposes of producing child pornography, five counts of production of child pornography, and one count of enticement of a minor to engage in criminal sexual activity.
From January 2016 to May 2020, Rodriguez produced sexually explicit images and videos with four minor victims, three of whom were severely disabled patients being housed at an Inland Empire group home that employed Rodriguez. One of the disabled victims was 8 years old when Rodriguez began filming his illegal sexual conduct – two years after he began abusing this victim.
“Rodriguez had a duty as medical caregiver was to keep his victims safe and alive, but he instead violated that trust in the most despicable way,” said United States Attorney Martin Estrada. “His abhorrent abuse of disabled children was intolerable and properly sanctioned by the court. This result underscores our office’s determination to zealously prosecute those who commit these sorts of horrific crimes against children.”
“Rodriguez took advantage of our most vulnerable population. The horror he inflicted upon these children was unconscionable. Homeland Security Investigations will stop at nothing, in order to bring people like Rodriguez to justice,” said Eddy Wang Acting Special Agent in Charge Homeland Security Investigations Los Angeles.
In a related matter, during a five-day trial in November 2022, co-defendants Cyr Dino Banguguilan, 36, of Azusa, and Miguel Bocardo, 23, of Baldwin Park, to whom Rodriguez sent the sexually explicit material he made with his victims, each was found guilty of one count of receipt of child pornography and one count of possession of child pornography.
Judge Holcomb scheduled a February 24 sentencing hearing, at which time Banguguilan and Bocardo will face a mandatory minimum of five years in federal prison and a statutory maximum of 20 years in federal prison.
Homeland Security Investigations investigated this matter as part of the Los Angeles Internet Crimes Against Children Task Force. The United States Postal Inspection Service; the FBI; the Baldwin Park Police Department; the Los Angeles County Sheriff’s Department; the Los Angeles Police Department; the Pomona Police Department; and the Burbank Police Department provided assistance.
Assistant United States Attorneys Scott M. Lara and Catharine A. Richmond of the Violent and Organized Crime Section are prosecuting this case.
Former CEO of Los Angeles-Based Anti-Poverty Nonprofit Agrees to Plead Guilty to Embezzling and Misusing Funds and Tax OffenseRead the Press Release
LOS ANGELES – The former president and CEO of a Hollywood-based anti-poverty nonprofit agency has agreed to plead guilty to federal criminal charges for embezzling money from the nonprofit for his personal benefit and intentionally misapplying more than $600,000 in grant money to pay for unauthorized expenses and lying on his tax returns, the Justice Department announced today.
Howard Dixon Slingerland, 53, of Studio City, has agreed to plead guilty to a two-count information charging him with conversion and intentional misapplication of funds from an organization receiving federal money, and subscribing to a false federal income tax return.
Both the information and plea agreement were filed today in United States District Court. Slingerland is expected to make his initial court appearance in the coming weeks.
According to his plea agreement, from 1996 until he was fired in September 2019, Slingerland was the president and CEO of Youth Policy Institute Inc. (YPI), a Hollywood-based nonprofit agency that worked to eradicate poverty in some of the highest needs neighborhoods in Los Angeles with a comprehensive approach addressing education, youth development, safety, job training, and health and wellness. In these roles, Slingerland had check-signing authority over YPI’s bank accounts and was the personal guarantor of YPI’s credit card.
From January 2015 to February 2019, Slingerland caused at least $71,533 of YPI funds to be spent on unauthorized expenditures, including Slingerland’s personal property tax bill that exceeded $14,000, more than $6,000 for a family dinner at a New York City restaurant, nearly $11,000 for a family member’s tutoring, and nearly $2,000 on a home computer and software.
In July 2019, Slingerland caused approximately $401,561 in funds YPI had received from a federal grant to be used for the unauthorized payment of YPI payroll. That same month, he also caused approximately $201,466 in federal grant money to be illegally used to pay off YPI’s credit card bill, including for expenses Slingerland had incurred.
Slingerland further admitted in his plea agreement that he underreported on his individual federal income tax returns more than $100,000 in income each year for the tax years 2015 through 2018 by not reporting money he obtained from YPI including through the embezzlement. Slingerland admitted to owing the United States Treasury a total of approximately $147,398 in unpaid taxes – not including penalties and interest – for these years.
After Slingerland enters his guilty plea, he will face a statutory maximum sentence of 10 years in federal prison on the conversion count and three years in federal prison on the tax count.
IRS Criminal Investigation; the FBI; the United States Department of Labor Office of Inspector General; the United States Department of Education Office of Inspector General; the United States Department of Justice Office of Inspector General; and the Los Angeles Unified School District investigated this matter. The Office of the United States Trustee provided substantial assistance.
Assistant United States Attorney Ranee A. Katzenstein, Chief of the Major Frauds Section, is prosecuting this case.
Former Owner of Orange County Wastewater Treatment Company Pleads Guilty to Federal Environmental Criminal ChargeRead the Press Release
LOS ANGELES – The former owner of a wastewater treatment facility in Orange County and his company each pleaded guilty today to a federal environmental criminal charge for discharging untreated industrial wastewater into the county’s sewer system.
Tim Miller, 65, of Kewaskum, Wisconsin, and his company, Klean Waters Inc., pleaded guilty to one felony count of knowingly violating a requirement of an approved pretreatment program.
According to their plea agreements, from 2013 to April 2015, Miller was the owner and president of Klean Waters, a wastewater treatment facility in Orange. Klean Waters was permitted to receive non-hazardous industrial wastewater, treat it for pollutants if needed, and then discharge the water into the Orange County Sanitation District’s (OCSD) sewer.
OCSD runs a pretreatment program that was approved under federal law and that implements and enforces the national pretreatment standards established under the Clean Water Act (CWA). Pursuant to the CWA, any violation of any requirement imposed in OCSD’s local pretreatment program is a violation of federal law.
In 2013, Miller applied for and received a permit from OCSD for Klean Waters to discharge wastewater into the sewer. Klean Waters’ permit from OCSD required defendant to, among other things, test and, if necessary, treat wastewater so that the level of pollutants in it remained below permitted levels when it was discharged to the sewer.
In April 2015, without testing the wastewater, Miller knowingly caused Klean Waters to discharge wastewater into the sewer, so that the type and concentration of pollutants in the wastewater remained unknown.
United States District Judge Josephine L. Staton scheduled an April 14 sentencing hearing, at which time Miller will face a statutory maximum sentence of three years in federal prison and Klean Waters will face a statutory maximum sentence of three years’ probation and $50,000 in fines.
The FBI and the U.S. Environmental Protection Agency’s Criminal Investigation Division investigated this matter.
Assistant United States Attorneys Rosalind Wang of the Santa Ana Branch Office and James A. Santiago of the International Narcotics, Money Laundering, and Racketeering Section are prosecuting this case.
Former Adelanto Mayor Agrees to Plead Guilty to Wire Fraud Charge for Accepting Bribes in Support of Commercial Marijuana ActivityRead the Press Release
SANTA ANA, California – The former mayor of Adelanto has agreed to plead guilty to a federal criminal charge for accepting more than $57,000 in bribes and kickbacks in exchange for approving ordinances authorizing commercial marijuana activity within the city, and ensuring his co-schemers obtained city licenses or permits for their commercial marijuana activities, the Justice Department announced today.
Richard Allen Kerr, 65, of Adelanto, has agreed to plead guilty to one count of honest services wire fraud, a crime that carries a statutory maximum sentence of 20 years in federal prison.
United States District Judge John W. Holcomb scheduled a February 17 change of plea hearing for Kerr.
According to his plea agreement filed on Thursday afternoon in United States District Court, Kerr served as Adelanto mayor from 2015 to 2018. Based on his employment and duties, Kerr owed a duty of honest services to the city and its residents. Among other things, Kerr voted on ordinances governing zoning regulations in the city, and served on the city’s Cannabis Dispensary Permit Committee, which determined the number of dispensary permits that would be issued, and determined which applicants would receive a dispensary permit.
From at least November 2015 to June 2018, Kerr executed a scheme to deprive the city of the honest performance of his duties as mayor. Kerr secretly used his official position to enrich himself and his co-schemers by passing ordinances authorizing various types of commercial marijuana activities, including marijuana cultivation, marijuana distribution and transportation, and retail sales of marijuana via a dispensary.
Kerr also drafted zones for commercial marijuana activities to include locations used by his supporters, ensured his supporters obtained the licenses or permits they sought; all in violation of conflict-of-interest prohibitions applying to Kerr, in exchange for bribes, kickbacks, gifts, payments, and other things of value.
Kerr’s co-schemers were a lawyer who specialized in plaintiffs’ tort litigation – identified in court documents as “Person A” – and an individual labeled “Person C” who had business interests in the city, including those involving marijuana cultivation.
The bribes and kickbacks were disguised by Kerr and his co-schemers as gifts, donations to a charitable fund, donations to Kerr’s election campaign, or advance payments for the proceeds of planned litigation associated with a motorcycle accident.
In exchange for the bribes and kickbacks, Kerr provided favorable official action on behalf of the city to Person A, Person C, and other co-schemers with business interests in the city by authorizing various types of commercial marijuana activities, ensuring his supporters obtained the licenses or permits they sought, and interfering with enforcement activities by city officials.
From December 2016 to April 2018, Kerr – who did not publicly disclose his financial relationship with his co-schemers while he was mayor – accepted multiple payments totaling at least $57,500, in bribes and kickbacks from Person A, Person C, and other co-schemers.
The FBI investigated this matter.
Assistant United States Attorneys Sean D. Peterson, Chief of the Riverside Branch Office, and Julius J. Nam of the Public Corruption and Civil Rights Section, are prosecuting this case.
Justice Department Secures over $31 Million from City National Bank to Address Lending Discrimination AllegationsRead the Press Release
LOS ANGELES – The Justice Department announced today an agreement to resolve allegations that City National Bank engaged in a pattern or practice of lending discrimination by “redlining” in Los Angeles County. This resolution will include over $31 million in relief to impacted individuals and communities.
The agreement, which is part of the Department’s nationwide Combating Redlining Initiative that Attorney General Merrick B. Garland launched in October 2021, represents the largest redlining settlement in its history. City National is the largest bank headquartered in Los Angeles and among the fifty largest banks in the United States.
“Redlining” is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color, or national origin of the residents in those communities. A complaint filed in federal court today alleges that from 2017 through at least 2020, City National avoided providing mortgage lending services to majority-Black and Hispanic neighborhoods in Los Angeles County and discouraged residents in these neighborhoods from obtaining mortgage loans.
The complaint also alleges that during that time period other banks received more than six times as many applications in majority-Black and Hispanic neighborhoods in Los Angeles County than City National each year. In addition, City National only opened one branch in a majority-Black and Hispanic neighborhood in the past twenty years, despite having opened or acquired 11 branches during that time period. And unlike at its branches in majority-white areas, City National did not assign any employee to generate mortgage loan applications at that branch.
“Fifteen months after I vowed that the Justice Department would be aggressively stepping up our efforts to combat discriminatory practices in the housing market, we have today secured the largest redlining settlement in Department history,” said Attorney General Merrick B. Garland. “So far, the Combating Redlining Initiative has secured over $75 million dollars in relief for communities that have suffered from lending discrimination. The Justice Department will continue to build on our efforts to vigorously enforce federal fair lending laws and work to ensure that financial institutions provide equal opportunity for every American to obtain credit. In advance of what would have been Dr. Martin Luther King Jr.’s 94th birthday, it is a fitting time to reaffirm our commitment to that work, and to the pursuit of justice for all Americans.”
“In the words of Dr. Martin Luther King Jr., the issue of fair housing is a ‘moral issue.’ Thus, ending redlining is a critical step to closing the widening gaps in homeownership and wealth, especially in a city as large and diverse as Los Angeles,” said United States Attorney Martin Estrada. “It is unacceptable that redlining persists into the 21st century, and this case demonstrates our commitment to combat redlining and hold banks and others accountable when they engage in unlawful discrimination. Through this agreement, we are taking a major step forward by removing unlawful and discriminatory barriers in residential mortgage lending, and meeting the credit needs in Los Angeles.”
“This settlement is historic, marking the largest settlement ever secured by the Justice Department against a bank engaged in unlawful redlining,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This settlement embodies Dr. Martin Luther King Jr.’s commitment to fighting economic injustice and ensuring that Black Americans and all communities of color are able to access the American dream and freely access the credit needed to purchase a home. Redlining is a practice from a bygone era, runs contrary to the principles of equity and justice, and has no place in our economy today. This settlement should send a strong message to the financial industry that we expect lenders to serve all members of the community and that they will be held accountable when they fail to do so.”
Under the proposed consent order, which is subject to court approval and was filed today in the U.S. District Court in Los Angeles along with the complaint, City National Bank has agreed to do the following:
• Invest at least $29.5 million in a loan subsidy fund for residents of majority-Black and Hispanic neighborhoods in Los Angeles County; at least $500,000 for advertising and outreach targeted toward the residents of these neighborhoods; at least $500,000 for a consumer financial education program to help increase access to credit for residents; and at least $750,000 for development of community partnerships to provide services that increase access to residential mortgage credit.
• Open one new branch in a majority-Black and Hispanic neighborhood and evaluate future opportunities for expansion within Los Angeles County; ensure at least four mortgage loan officers are dedicated to serving majority-Black and Hispanic neighborhoods; and employ a full-time Community Lending Manager who will oversee the continued development of lending in majority-Black and Hispanic neighborhoods.
• Conduct a Community Credit Needs Assessment, a research-based market study, to help identify the needs for financial services for majority-Black and Hispanic census tracts within Los Angeles County.
City National worked cooperatively with the Department to remedy the redlining allegations. In conjunction with this settlement, City National has announced that it is proactively taking steps to expand its lending services in other markets around the country to provide greater access to credit in communities of color. Specifically, City National is working to facilitate additional homeownership opportunities in underserved communities, including by creating a residential mortgage special purpose credit program to cover geographic areas in various locations throughout the country, including New York, Georgia, Nevada, and Tennessee. Additionally, City National is planning to launch a small business lending program that will be aimed at assisting underserved business owners in operating and growing their business.
In October 2021, Attorney General Garland launched the Justice Department’s Combating Redlining Initiative, a coordinated enforcement effort to address this persistent form of discrimination against communities of color. The Initiative is expanding the Department’s reach by strengthening partnerships with U.S. Attorneys’ Offices around the country, regulatory partners and its partners in state Attorneys General offices. Since the Initiative was launched, the Department has announced five redlining cases and settlements with a combined $75 million in relief for communities that have been the victims of lending discrimination, including a $20 million settlement with Trident Mortgage Company and a $13 million settlement with Lakeland Bank.
Assistant United States Attorney Katherine Hikida of the Civil Division’s Civil Rights Section and attorneys from the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division handled this matter.
Individuals in the seven counties of the Central District of California may report housing discrimination by contacting the United States Attorney’s Office at (213) 894-2879 or emailing [email protected].
city_national_-_complaint.pdf city_national_-_consent_order.pdfJustice Department Secures over $31 Million from City National Bank to Address Lending Discrimination AllegationsRead the Press Release
The Justice Department announced today an agreement to resolve allegations that City National Bank (City National) engaged in a pattern or practice of lending discrimination by “redlining” in Los Angeles County. City National is the largest bank headquartered in Los Angeles and among the 50largest banks in the United States. This resolution will include over $31 million in relief to impacted individuals and communities. The agreement, which is part of the Department’s nationwide Combating Redlining Initiative that Attorney General Merrick B. Garland launched in October 2021, represents the largest redlining settlement in its history.
“Fifteen months after I vowed that the Justice Department would be aggressively stepping up our efforts to combat discriminatory practices in the housing market, we have today secured the largest redlining settlement in Department history,” said Attorney General Merrick B. Garland. “So far, the Combating Redlining Initiative has secured over $75 million dollars in relief for communities that have suffered from lending discrimination. The Justice Department will continue to build on our efforts to vigorously enforce federal fair lending laws and work to ensure that financial institutions provide equal opportunity for every American to obtain credit. In advance of what would have been Dr. Martin Luther King Jr.’s 94th birthday, it is a fitting time to reaffirm our commitment to that work, and to the pursuit of justice for all Americans.”
“This settlement is historic, marking the largest settlement ever secured by the Justice Department against a bank engaged in unlawful redlining,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This settlement embodies Dr. Martin Luther King Jr.’s commitment to fighting economic injustice and ensuring that Black Americans and all communities of color are able to access the American dream and freely access the credit needed to purchase a home. Redlining is a practice from a bygone era, runs contrary to the principles of equity and justice, and has no place in our economy today. This settlement should send a strong message to the financial industry that we expect lenders to serve all members of the community and that they will be held accountable when they fail to do so.”
“In the words of Dr. Martin Luther King Jr., the issue of fair housing is a ‘moral issue.’ Thus, ending redlining is a critical step to closing the widening gaps in homeownership and wealth, especially in a city as large and diverse as Los Angeles,” said U.S. Attorney Martin Estrada for the Central District of California. “It is unacceptable that redlining persists into the 21st century, and this case demonstrates our commitment to combat redlining and hold banks and others accountable when they engage in unlawful discrimination. Through this agreement, we are taking a major step forward by removing unlawful and discriminatory barriers in residential mortgage lending, and meeting the credit needs in Los Angeles.”
“Redlining” is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color, or national origin of the residents in those communities. The complaint filed in federal court today alleges that from 2017 through at least 2020, City National avoided providing mortgage lending services to majority-Black and Hispanic neighborhoods in Los Angeles County and discouraged residents in these neighborhoods from obtaining mortgage loans. The complaint also alleges that during that time period other banks received more than six times as many applications in majority-Black and Hispanic neighborhoods in Los Angeles County than City National each year. In addition, City National only opened one branch in a majority-Black and Hispanic neighborhood in the past 20 years, despite having opened or acquired 11 branches during that time period. And unlike at its branches in majority-white areas, City National did not assign any employee to generate mortgage loan applications at that branch.
Under the proposed consent order, which is subject to court approval and was filed today in the U.S. District Court for the Central District of California along with a complaint, City National Bank has agreed to do the following:
- Invest at least $29.5 million in a loan subsidy fund for residents of majority-Black and Hispanic neighborhoods in Los Angeles County; at least $500,000 for advertising and outreach targeted toward the residents of these neighborhoods; at least $500,000 for a consumer financial education program to help increase access to credit for residents; and at least $750,000 for development of community partnerships to provide services that increase access to residential mortgage credit.
- Open one new branch in a majority-Black and Hispanic neighborhood and evaluate future opportunities for expansion within Los Angeles County; ensure at least four mortgage loan officers are dedicated to serving majority-Black and Hispanic neighborhoods; and employ a full-time Community Lending Manager who will oversee the continued development of lending in majority-Black and Hispanic neighborhoods.
- Conduct a Community Credit Needs Assessment, a research-based market study, to help identify the needs for financial services for majority-Black and Hispanic census tracts within Los Angeles County.
City National worked cooperatively with the Department to remedy the redlining allegations. In conjunction with this settlement, City National has announced that it is proactively taking steps to expand its lending services in other markets around the country to provide greater access to credit in communities of color. Specifically, City National is working to facilitate additional homeownership opportunities in underserved communities, including by creating a residential mortgage special purpose credit program to cover geographic areas in various locations throughout the country, including New York, Georgia, Nevada, and Tennessee. Additionally, City National is planning to launch a small business lending program that will be aimed at assisting underserved business owners in operating and growing their business.
In October 2021, Attorney General Garland launched the Justice Department’s Combating Redlining Initiative, a coordinated enforcement effort to address this persistent form of discrimination against communities of color. The initiative is expanding the Department’s reach by strengthening partnerships with U.S. Attorneys’ Offices around the country, regulatory partners and its partners in state Attorneys General offices. Since the initiative was launched, the Department has announced five redlining cases and settlements with a combined $75 million in relief for communities that have been the victims of lending discrimination, including a $20 million settlement with Trident Mortgage Company and a $13 million settlement with Lakeland Bank.
Additional information about the section’s fair lending enforcement can be found at www.justice.gov/fairhousing. Individuals may report lending discrimination by calling the Justice Department’s housing discrimination tip line at 1-833-591-0291, or submitting a report online.
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El Departamento de Justicia obtiene más de $31 millones de City National Bank para resolver alegaciones de discriminación crediticiaRead the Press Release
El Departamento de Justicia anunció hoy un acuerdo para resolver alegaciones de que City National Bank (City National) desarrolló un patrón o una práctica de discriminación crediticia a través de la exclusión financiera [“redlining” en inglés] en el Condado de Los Angeles. City National es el banco más importante con sede en Los Angeles y se cuenta entre los 50 bancos más grandes en los Estados Unidos. Esta resolución incluirá más de $31 millones en concepto de reparaciones para las personas y comunidades afectadas. El acuerdo, que forma parte de la Iniciativa para Combatir la Exclusión Financiera (solo en inglés) de nivel nacional del Departamento que lanzó el Fiscal General Merrick B. Garland en octubre de 2021, representa el acuerdo sobre exclusión financiera más importante de su historia.
"Quince meses después de que prometí que el Departamento de Justicia intensificaría agresivamente nuestros esfuerzos por combatir prácticas discriminatorias en el mercado de vivienda, hoy hemos conseguido el acuerdo sobre exclusión financiera más importante de la historia del Departamento”, dijo el Fiscal General Merrick B. Garland. “A la fecha, la Iniciativa para Combatir la Exclusión Financiera ha obtenido más de $75 millones en concepto de reparaciones para las comunidades que han sufrido discriminación crediticia. En el Departamento de Justicia seguiremos ampliando nuestros esfuerzos por hacer cumplir enérgicamente las leyes federales sobre equidad crediticia y nos esforzaremos para asegurar que las instituciones financieras ofrezcan a toda persona estadounidense igualdad de oportunidades para obtener crédito. En vísperas de la fecha en que el Dr. Martin Luther King Jr. hubiera cumplido 94 años, es un momento idóneo para reafirmar nuestro compromiso con su misión y para procurar la justicia para toda persona estadounidense”.
“Este acuerdo es histórico y marca la resolución más grande que jamás ha obtenido el Departamento de Justicia contra un banco que practicaba la exclusión financiera ilícita”, dijo la Fiscal General Auxiliar Kristen Clarke de la División de Derechos Civiles del Departamento de Justicia. “Este acuerdo personifica el compromiso del Dr. Martin Luther King con la lucha contra la injusticia económica y con asegurar que toda persona de ascendencia afroestadounidense y todas las comunidades de color puedan tener acceso al sueño estadounidense y acceso libre al crédito que necesitan para comprar una vivienda. La exclusión financiera es una práctica de época antigua, contraviene los principios de equidad y justicia, y no tiene cabida en nuestra economía de hoy. Este acuerdo debe servir para enviar un mensaje claro a la industria financiera: nuestra expectativa es que los prestamistas proveen servicios a todos los miembros de la comunidad, y se responsabilizará a quienes no lo hagan”.
“Aprovechando las palabras del Dr. Martin Luther King Jr., el asunto de la vivienda justa es un ‘asunto moral’. Por lo tanto, poner fin a la exclusión financiera es un paso necesario para cerrar las brechas cada vez más amplias en términos de vivienda propia y patrimonio, especialmente en una ciudad tan grande y diversa como Los Angeles”, dijo Martin Estrada, Fiscal de los EE. UU. para el Distrito Central de California. “Es inaceptable ver que persiste la exclusión financiera en el siglo XXI, y este caso demuestra nuestro compromiso con combatir la exclusión financiera y responsabilizar a los bancos y demás entidades cuando desarrollan prácticas de discriminación ilícita. A través de este acuerdo, estamos tomando un paso grande hacia adelante al eliminar las barreras ilícitas y discriminatorias en los préstamos hipotecarios residenciales, y al satisfacer las necesidades de crédito en Los Angeles”.
La exclusión financiera es una práctica ilegal mediante la cual los prestamistas evitan prestar servicios crediticios a personas que residen en comunidades de color debido a la raza, color de piel u origen nacional de los residentes de dichas comunidades. La demanda entablada este día en el tribunal federal alega que entre el 2017 y al menos el 2020, City National evadió prestar servicios de crédito hipotecario a los vecindarios de mayoría afroestadounidense e hispana en el Condado de Los Angeles, y puso obstáculos a la obtención de préstamos hipotecarios de parte de los residentes de dichos vecindarios. La demanda alega también que durante el mismo período, otros bancos recibieron más de seis veces el número de solicitudes de vecindarios de mayoría afroestadounidense e hispana en Los Angeles que lo que recibió City National cada año. Además, durante los últimos 20 años, City National abrió solamente una sucursal en un vecindario de mayoría afroestadounidense e hispana, a pesar de abrir o adquirir 11 sucursales durante el mismo período. Y en contraste con sus sucursales en zonas de mayoría blanca, City National no asignó a ningún empleado en dicha sucursal para generar solicitudes de préstamos hipotecarios.
Según la orden por consentimiento propuesta, la cual está sujeta a la aprobación del tribunal y fue presentada este día ante el Tribunal de Distrito de los EE. UU. para el Distrito Central de California, junto con una demanda, City National Bank ha aceptado las siguientes condiciones:
- Invertirá al menos $29.5 millones en un fondo de subsidios crediticios para residentes de vecindarios de mayoría afroestadounidense e hispana en el Condado de Los Angeles; al menos $500,000 en publicidad y alcance destinados a los residentes de dichos vecindarios; al menos $500,000 en un programa de educación financiera de consumidores para ayudar a mejorar el acceso al crédito por parte de los residentes; y al menos $750,000 en el desarrollo de alianzas comunitarias para prestar servicios que mejoren el acceso al crédito hipotecario residencial.
- Abrirá una nueva sucursal en un vecindario de mayoría afroestadounidense e hispana, y evaluará oportunidades de expansión futura dentro del Condado de Los Angeles; garantizará que se dediquen al menos cuatro ejecutivos de crédito hipotecario para atender a los vecindarios de mayoría afroestadounidense e hispana; y contratará a un Gerente de Crédito Comunitario a tiempo completo para supervisar el desarrollo continuo de servicios crediticios en los vecindarios de mayoría afroamericana e hispana.
- Desarrollará una Evaluación Comunitaria de Necesidades Crediticias, un estudio de mercado basado en la investigación, para ayudar a identificar las necesidades de servicios financieros en las secciones censales de mayoría afroestadounidense e hispana dentro del Condado de Los Angeles.
City National trabajó en cooperación con el Departamento para remediar los alegatos de exclusión financiera. Simultáneamente con este acuerdo, City National ha anunciado que está tomando medidas proactivas para ampliar sus servicios crediticios en otros mercados del país para ofrecer mayor acceso al crédito por parte de las comunidades de color. Específicamente, City National se está esforzando para facilitar mayores oportunidades de vivienda propia en comunidades desfavorecidas, incluso mediante la creación de un programa de crédito hipotecario residencial de propósito especial para atender zonas geográficas en varias partes del país, entre ellas New York, Georgia, Nevada y Tennessee. Además, City Nacional tiene proyectado el lanzamiento de un programa de crédito para pequeñas empresas a fin de ayudar a los empresarios desfavorecidos a manejar y hacer crecer sus negocios.
En octubre de 2021, el Fiscal General Garland lanzó la Iniciativa para Combatir la Exclusión Financiera (solo en inglés) del Departamento de Justicia, un esfuerzo coordinado de ejecución de la ley para abordar esta forma persistente de discriminación en contra de las comunidades de color. Esta iniciativa está ampliando el alcance del Departamento mediante el fortalecimiento de las alianzas entre las fiscalías de los EE. UU. en todo el país, sus socios regulatorios y sus aliados en las fiscalías generales estatales. Desde el lanzamiento de la iniciativa, el Departamento ha anunciado cinco casos de exclusión financiera y acuerdos por un valor combinado de $75 millones en concepto de reparaciones para las comunidades que han sido víctimas de discriminación crediticia, incluyendo un acuerdo por $20 millones con Trident Mortgage Company y un acuerdo por $13 millones con Lakeland Bank.
Se puede encontrar información adicional sobre la aplicación de las leyes sobre equidad crediticia en www.justice.gov/fairhousing. Las personas pueden denunciar la discriminación crediticia al llamar a la línea telefónica del Departamento de Justicia para informar sobre discriminación en la vivienda en 1-833-591-0291 o mediante la presentación de un informe en línea.
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Port of Long Beach Dockworker Pleads Guilty to Conspiracy Count for Fraudulently Billing Union’s Health Plan for Sexual ServicesRead the Press Release
LOS ANGELES – A dockworker at the Port of Long Beach pleaded guilty today to participating in a scheme that submitted fraudulent bills to his labor union’s health insurance plan for sexual services or for physical therapy that never was provided.
Cameron Rahm, 39, of Pico Rivera, pleaded guilty to one count of conspiracy to commit health care fraud.
According to his plea agreement, Rahm obtained sexual services from women employed at three businesses: Back to Life Wellness Center LLC and The Chiroman Wellness Center – both based in San Pedro – and the Wilmington-based Waterfront Wellness Center Inc. These companies offered patients chiropractic services and acupuncture treatments, in addition to sexual services.
In exchange for receiving sexual services, Rahm authorized the conspiracy’s leader – Sara Victoria, 46, of San Pedro – to submit false claims to Rahm’s health plan run by his union, the International Longshore and Warehouse Union – Pacific Maritime Association. The ILWU-PMA benefit plan provided coverage for chiropractic services and generally covered all of the cost with no deductible and without requiring plan members receiving the services to contribute any copay amount or incur any other out-of-pocket costs.
From January 2017 to April 2021, Rahm authorized Victoria to submit false claims to the union’s health benefit plan under the name of his wife, who was a plan beneficiary. Rahm’s false and fraudulent claims that Victoria submitted to the ILWU-PMA plan were for services that were not actually rendered, including chiropractic and physical therapy services.
Rahm also requested $240 in cash per month from Victoria in exchange for his authorization for Victoria to submit additional false claims for reimbursement to the ILWU-PMA plan for services not rendered using his and his wife’s insurance information.
Victoria, aided and abetted by Rahm, submitted approximately $178,495 in fraudulent claims to the ILWU-PMA plan for services purportedly rendered to Rahm’s wife, for which for which the plan paid approximately $30,243.
United States District Judge Stanley Blumenfeld Jr. scheduled an April 25 sentencing hearing, at which time Rahm will face a statutory maximum sentence of 10 years in federal prison.
In December 2022, Victoria pleaded guilty to one count of conspiracy to commit health care fraud and one count of aggravated identity theft. In total, Victoria submitted approximately $2,110,920 in claims to the ILWU-PMA plan, for which the plan paid approximately $551,810. Her sentencing hearing is scheduled for April 14.
Four other dockworkers at the Port of Long Beach pleaded guilty to one felony count of conspiracy to commit health care fraud and face up to 10 years in federal prison at their sentencing hearings:
- Rodolpho Bojorquez, 68, of Carson, who is to be sentenced on April 11;
- Cesar Delgadillo, 49, of Wilmington, who has a January 31 sentencing date;
- Joel Lizarraga, 55, of Palmdale, whose sentencing hearing is scheduled for February 28; and
- Simon Ramirez, 50, of Wilmington, who is scheduled for sentencing on January 24.
Three additional defendants – also dockworkers at the Port of Long Beach – each pleaded guilty to one misdemeanor count of theft in connection with health care. Each defendant faces a statutory maximum sentence of one year in federal prison:
- Clifford Hopson, 65, of the Willowbrook area of South Los Angeles, who is scheduled for sentencing on January 24;
- Rogelio Martinez, 53, of Torrance, whose sentencing hearing is scheduled for February 14; and
- Lawrence Robles, 42, of San Pedro, who is to be sentenced on February 28.
The FBI and the United States Department of Labor – Employee Benefits Security Administration investigated this matter.
Assistant United States Attorney Jason C. Pang of the Major Frauds Section is prosecuting this case.
San Fernando Valley Man Pleads Guilty to Selling Used and Counterfeit Medical Devices Used for Skin Tightening and Fat BurningRead the Press Release
LOS ANGELES – A Tarzana man pleaded guilty today to federal criminal charges for running a nearly $6 million scheme in which he knowingly sold used skin-tightening medical devices that were deliberately misbranded as new, as well as counterfeit devices that he claimed were to be used with fat-reducing laser machines.
Kambiz Youabian, 49, pleaded guilty to a two-count information charging him with mail fraud and introducing a misbranded medical device into interstate commerce.
According to his plea agreement, Youabian owned and operated MSY Technologies Inc., a West Los Angeles-based company that did business under the names “Thermagen” and “Global Electronic Supplies” (GES).
From March 2016 to June 2022, Youabian purchased used transducers, which are medical devices used to tighten the skin of dermatology patients by delivering ultrasound energy to a patient’s skin. Used properly, transducers are designed to provide no more than 2,400 treatments. After this number is reached, the devices are considered depleted and should be disposed of in accordance with health code regulations.
Through GES, Youabian purchased depleted transducers for nominal sums, typically $50. Youabian then remanufactured the depleted transducers and added fabricated serial numbers to make the transducers appear to be new.
Then, through his Thermagen company, Youabian fraudulently marketed and sold – for many times more than he paid for them – the remanufactured transducers to health care providers and customers as “new” transducers with 2,400 remaining treatments. To conceal his connection to Thermagen, Youabian used names of fabricated Thermagen employees on correspondences with victim providers and used out-of-state commercial mailboxes for Thermagen’s return of address on shipments, which he sent through the U.S mail.
For example, in February 2020, Youabian, through Thermagen’s website, sold a device falsely advertised as “new” and “containing 2,400 lines” – and with a retail price of $1,695 – to a buyer. Youabian then shipped the device – which contained a fake serial number – from Los Angeles to Florida via the United States Postal Service.
Youabian also shipped counterfeit PAC keys, medical devices used to operate laser machines designed to reduce fat on patients, through the mail.
He then transferred his ill-gotten gains to bank account his controlled, including accounts he opened in the names of MSY Technologies, himself, and his au pair.
In June 2022, law enforcement executed search warrants at Youabian’s home and the GES-Thermagen office in West Los Angeles.
In the GES-Thermagen office, law enforcement seized 75 transducers in various states of refurbishment, a manufacturing workstation containing tools and transducer parts, and detailed records of GES and Thermagen’s expenses.
Youabian admitted in his plea agreement to unlawfully selling thousands of medical devices, including transducers and PAC keys, and receiving at least $5,821,474 in fraudulent proceeds that should have been paid to the companies that are the sole U.S. distributors for these devices. Youabian also admitted to causing reputational harm to the device manufacturers and distributors of these medical devices.
United States District Judge Dale S. Fischer scheduled a June 26 sentencing hearing, at which time Youabian will face a statutory maximum sentence of 23 years in federal prison.
The U.S. Food and Drug Administration Office of Criminal Investigations and the United States Postal Inspection Service investigated this matter.
Assistant United States Attorney Gregory D. Bernstein of the Major Frauds Section is prosecuting this case.
West Los Angeles Man Pleads Guilty to Federal Charges for Using Snapchat to Entice Child into Producing Sexually Explicit VideosRead the Press Release
LOS ANGELES – A resident of the Westside of Los Angeles pleaded guilty today to federal criminal charges for using websites and apps such as Snapchat to meet and entice children to engage in sexually explicit conduct via video-chat then take screen shot images and videos of them.
Mark David Wallin, 42, of the Del Rey neighborhood of Los Angeles, pleaded guilty to one of production of child pornography and one count of enticement of a minor to engage in criminal sexual activity. Wallin has been in federal custody since his arrest in this case in July 2022.
According to his plea agreement, from 2019 to August 2021, Wallin used the internet to “meet” pre-teen boys and girls – both abroad and in the United States – then develop romantic relationships with them online, with the intent to obtain sexually explicit images and videos from the children. Wallin also persuaded the victims to engage in sexually explicit conduct via video-chat, which allowed him to take screen shot images and videos, according to court documents.
After his victims sent him sexually explicit content, Wallin would demand additional sexually explicit images and videos from them.
For example, in February and March of 2020, Wallin enticed a victim, who was approximately 9-10 years old at the time, to engage in sexually explicit conduct to be displayed to him via Snapchat, a multimedia instant messaging application.
Wallin admitted to knowingly causing at least four additional victims – ranging in age from 12 to 16 years old – to create or participate in the creation of multiple files of sexually explicit material featuring themselves.
Wallin further admitted to possessing on a smartphone approximately 200 sexually explicit videos featuring children in August 2021.
United States District Judge Maame Ewusi-Mensah Frimpong scheduled an April 21 sentencing hearing, at which time Wallin will face a mandatory minimum sentence of 15 years in federal prison and a statutory maximum sentence of life imprisonment.
Homeland Security Investigations investigated this matter, with the Los Angeles County Sheriff’s Department providing assistance.
Assistant United States Attorney Damaris Diaz of the Violent and Organized Crime Section is prosecuting this case.
Former Bank Manager in Orange County Pleads Guilty to Bank Fraud for Stealing $1.2 Million from Elderly Customers’ AccountRead the Press Release
SANTA ANA, California – A former Orange County-based bank manager pleaded guilty today to a federal criminal charge for stealing $1.2 million in savings from elderly customers by using one the victims’ identities to fraudulently open a bank account, then impersonating the victim to transfer the stolen money to different bank accounts.
Lana Pothos, 59, of Anaheim, pleaded guilty to one count of bank fraud, a crime that carries a statutory maximum sentence of 30 years in federal prison.
According to her plea agreement, during the summer of 2020, Pothos – who worked as a relationship manager at a Bank of America branch in Yorba Linda – and an accomplice worked together to steal the savings of approximately $1.2 million from two married senior citizen clients who shared an account with the bank.
In June 2020, Pothos used one victim’s personal identifiable information to create an online banking profile for the victim without the victim’s knowledge or permission. Using Bank of America’s internal computer system, Pothos then changed the victims’ mailing address to a hair salon in Yorba Linda that Pothos frequented and also changed their telephone number to a phone number she used. Using that phone number, Pothos called the bank several times while impersonating one of the victims. In July 2020, Pothos’ co-schemer opened a new bank account and email address in one victim’s name.
On seven occasions from July 2020 to October 2020, approximately $1,212,144 was transferred out of the victims’ bank account into the fraudulently opened account Pothos and her accomplice controlled, then transferred again to an account used by the co-schemer at a different bank. The stolen money was then used for personal expenses, including $47,000 that was transferred to a Pothos-controlled entity.
United States District Judge Cormac J. Carney scheduled a July 10 sentencing hearing in this case.
Theron Fox, 49, of Tustin, Pothos’ alleged co-schemer, is charged with five counts of bank fraud and two counts of aggravated identity theft. Fox is scheduled to go to trial on February 7.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The FBI investigated this matter.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office is prosecuting this case.
Two Mexican Men Found Guilty of Smuggling Undocumented Non-Citizens on Panga Boat that Landed on Santa Barbara County BeachRead the Press Release
LOS ANGELES – A federal jury has found two Mexican men guilty of drug and alien trafficking charges after law enforcement caught them on a panga boat containing 45 pounds of methamphetamine and 11 undocumented non-citizens from Mexico on a Santa Barbara County beach, the Justice Department announced today.
Jorge Muñoz-Muñoz, 26, of Ensenada, Mexico, and Roel Aranzubia-Álvarez, 43, of Sinaloa, Mexico, were found guilty on Tuesday afternoon of one count of conspiracy to bring non-citizens into the United States, 11 counts of alien smuggling, 11 counts of alien smuggling for private financial gain, and one count of aiding and assisting an alien convicted of an aggravated felony to enter the United States.
Muñoz-Muñoz also was found guilty of one count of conspiracy to distribute methamphetamine, one count of possession with intent to distribute methamphetamine, one count of conspiracy to import methamphetamine, and one count of importation of methamphetamine. Aranzubia-Álvarez was found not guilty of the drug-related charges.
According to evidence presented at their five-day trial, on the morning of September 27, 2021, law enforcement sighted a panga boat adrift off the coast of Santa Barbara County. The vessel, which was having engine trouble, ultimately made landfall at Arroyo Quemada Beach, approximately 25 miles west of Santa Barbara.
The investigation in this matter revealed that there were 15 people on the boat, including several crewmembers, and that Aranzubia-Álvarez was the boat’s captain. Two black bags that contained a total of 40 vacuum-sealed and plastic wrapped bindles, totaling approximately 45 pounds, were thrown off the boat by passengers at Muñoz-Muñoz’s direction and later were recovered by law enforcement.
Law enforcement also later confirmed that all occupants of the boat were undocumented non-citizens. Based on interviews with the passengers, it was determined that the passengers arrived at a beach in Ensenada, Mexico to board a panga that would smuggle them into the United States for a price of approximately $15,000 each.
Both defendants have been in federal custody since their arrest in September 2021.
United States District Judge Dale S. Fischer scheduled an April 10 sentencing hearing, at which time Muñoz-Muñoz will face a statutory maximum sentence of life in federal prison, and Aranzubia-Álvarez will face a statutory maximum sentence of 15 years in federal prison.
Homeland Security Investigations investigated this matter. United States Customs and Border Protection, the Santa Barbara County Sheriff’s Office, and the California Department of Parks and Recreation provided substantial assistance.
Assistant United States Attorney Haoxiaohan Cai and Justice Department Trial Attorney Siobhan M. Namazi, both of the General Crimes Section, are prosecuting this case.
Former Federal Special Agent Found Guilty of Civil Rights Crimes for Committing Sexual Assaults Against Two WomenRead the Press Release
RIVERSIDE, California – A former special agent with Homeland Security Investigations (HSI) was found guilty by a jury today of federal civil rights violations for sexually assaulting two women and abusing his official position to prevent them from reporting his violent conduct.
John Jacob Olivas, 48, of Riverside, was found guilty of three counts of deprivation of rights under color of law. Olivas was ordered remanded into federal custody after today’s verdict was read.
According to evidence presented at his 11-day trial, Olivas began his career with Immigration and Customs Enforcement in 2007 and resigned in September 2015 after working as an HSI special agent for just over six years. He sexually assaulted the two victims in 2012.
Olivas attempted to rape one woman in January 2012 after making it clear to her that the police would not be responsive to any report she would make about Olivas because he was “above a cop,” and “untouchable” and “invisible” to police due to his position as a federal agent, according to the victim’s trial testimony. Olivas also threatened the victim that he could make her “disappear,” have her children taken from her, and get her arrested on fake criminal charges, the victim testified.
Olivas raped another woman in September 2012 and then again in November 2012. Both times, Olivas made it clear to the victim that police would not respond to any report she might make about attacks by him, causing the victim to believe that he was “invincible” to the criminal justice system, the victim testified. She also testified at trial that Olivas pointed his HSI-issued service weapon into her back moments before he sexually assaulted her in September 2012.
Both victims endured Olivas’s “violent, escalating, controlling, and intimidating behavior, which included his repeated brandishing of HSI credentials to [them] and asserting that he was above the law,” prosecutors wrote in court documents. In all three sexual assaults, Olivas violated the victims’ constitutional rights to liberty and bodily integrity.
United States District Judge Jesus G. Bernal scheduled a March 11, 2023 sentencing hearing, at which time Olivas will face a statutory maximum sentence of life in federal prison.
The FBI and U.S. Immigration and Customs Enforcement’s Office of Professional Responsibility investigated this matter.
Assistant United States Attorneys Eli A. Alcaraz of the Riverside Branch Office and Frances S. Lewis of the General Crimes Section are prosecuting this case.
Corona Man Arrested on Federal Complaint Alleging Armed Robbery Spree Last Month That Targeted Businesses in Orange CountyRead the Press Release
LOS ANGELES – A Riverside County man was arrested today on a federal criminal complaint alleging he committed eight armed robberies – and two attempted armed robberies – of businesses, mostly restaurants, during a week-long crime spree last month.
George Arizon, 27, of Corona, is charged with one count of interference with commerce by robbery (in violation of the Hobbs Act) and one count of brandishing a firearm in furtherance of a crime of violence.
Arizon is expected to make his initial appearance on Thursday in United States District Court in Santa Ana.
According to an affidavit filed last Friday with the complaint, Arizon robbed three restaurants – and attempted to rob two more – in Santa Ana on November 1, stealing a total of $1,200 in cash.
During the robberies, Arizon allegedly displayed a black semi-automatic handgun, which had a gold-colored barrel, pointed the handgun at the victims, and told the restaurant employees to give him the money.
On November 8, Arizon allegedly brandished a handgun while robbing two restaurants located adjacent to each other in Garden Grove. Approximately 15 minutes after the Garden Grove robberies, Arizon allegedly again brandished a firearm and, in succession, robbed a Chinese restaurant, a Supercuts store and a 7-Eleven located on the same block in Westminster.
Police officers responding to calls about the Westminster robberies later recovered and retained a black sweatshirt, black hat, and mask that Arizon is alleged to have worn during the crimes. Officers also recovered the black semi-automatic handgun, with a gold-colored barrel, which had been discarded nearby. Security camera footage showed Arizon wearing this apparel, the affidavit states.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of all charges, Arizon would face a statutory maximum sentence of 20 years in federal prison for the Hobbs Act robbery count, and seven years in federal prison for the firearm brandishing count.
The Bureau of Alcohol, Tobacco, Firearms and Explosives’ Orange County Violent Crime Task Force investigated this matter, and received assistance from the Santa Ana Police Department, the Garden Grove Police Department, and the Westminster Police Department.
Assistant United States Attorney Jeffrey M. Chemerinsky of the Violent and Organized Crime Section is prosecuting this case.
Justice Department Secures Settlement with Colton Joint Unified School District to Protect the Civil Rights of English Learner StudentsRead the Press Release
LOS ANGELES – The Justice Department announced today that it has reached a settlement agreement with the Colton Joint Unified School District to resolve an investigation into the district’s program for students learning English.
The department’s investigation, conducted jointly by the United States Attorney’s Office and the Justice Department’s Civil Rights Division, revealed that the district denied some English learner students the instruction they needed to become fluent in English, and the necessary supports to fully participate and thrive in school.
“We are committed to giving English learners meaningful access to the education provided by their school districts,” said United States Attorney Martin Estrada. “These students can learn English, develop critical skills, graduate and attend college, and then contribute to our shared society. But first they must have real access to the educational programs offered in their district. This settlement ensures that English learner students have that access.”
“Students learning English have a right to receive an education equal to that of their classmates,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “School districts have an obligation to overcome language barriers and support English learners in participating fully in their schools’ academic programs. The Civil Rights Division is committed to ensuring that school districts across the nation comply with federal law and provide all students equal access to a quality education.”
The department’s investigation identified failures to ensure that all teachers were qualified to provide instruction in how to learn English, meaning that some students did not have access to the language services they needed to become fluent. Similarly, math, science and social studies teachers were often not qualified to support English learner students in their classrooms, depriving those students of an education on these essential subjects. In addition, the department found lapses in services to English learners with disabilities, as well as barriers to participation in the district’s gifted and talented program, among other issues.
Under the agreement, the district will work to ensure that all English learners receive instruction on the English language from a trained and qualified teacher. Similarly, the district will ensure that teachers instructing these learners on core subjects, like math, science and social studies, can provide the type of support necessary for those students to understand and learn the material. The department will monitor the district’s progress over the next three years.
Assistant United States Attorney Katherine Hikida of the Civil Division’s Civil Rights Section and attorneys from the Educational Opportunities Section of the Justice Department’s Civil Rights Division handled this matter.
Information about the Civil Division’s Civil Rights Section is available on its website at https://www.justice.gov/usao-cdca/civil-division/civil-rights-section. Individuals in the seven counties of the Central District of California may report possible civil rights violations to the United States Attorney’s Office by calling (213) 894-2879 or emailing [email protected].
El Departamento de Justicia llega a un acuerdo con un distrito escolar del sur de California para proteger los derechos civiles de estudiantes que están aprendiendo inglésRead the Press Release
LOS ANGELES –- El Departamento de Justicia anunció hoy que ha llegado a un acuerdo conciliatorio con el Distrito Escolar Unificado Conjunto Colton para resolver una investigación del programa del distrito para estudiantes que están aprendiendo inglés. La investigación del Departamento, realizada como esfuerzo conjunto entre la División de Derechos Civiles y la Fiscalía Federal para el Distrito Centro de California, reveló que el distrito denegaba a ciertos estudiantes que están aprendiendo inglés la enseñanza que necesitan para llegar a dominar el inglés y los apoyos necesarios para poder participar plenamente y progresar en la escuela.
«Estamos comprometidos a proveer a los estudiantes que están aprendiendo inglés con un acceso significativo a la educación que se proporciona en sus distritos escolares», comentó el Fiscal General Auxiliar para el Distrito Centro de California, Martin Estrada. «Estos estudiantes pueden aprender inglés, desarrollar destrezas esenciales, graduarse e ir a la universidad y después contribuir a nuestra sociedad compartida. Pero primero necesitan tener acceso real a los programas educativos que se ofrecen en su distrito. Este acuerdo asegura que los estudiantes que están aprendiendo inglés dispongan de ese acceso».
«Los estudiantes que están aprendiendo inglés tienen el derecho a recibir una educación que sea igual a la de sus compañeros de clase», afirmó Kristen Clarke, la Fiscal General Auxiliar de la División de Derechos Civiles del Departamento de Justicia. «Los distritos escolares tienen la obligación de superar las barreras lingüísticas y apoyar a los estudiantes que están aprendiendo inglés para que puedan participar plenamente en los programas académicos de sus escuelas. La División de Derechos Civiles está comprometido a garantizar que los distritos escolares por todo el país cumplan con las leyes federales y que brinden a todo estudiante la igualdad de acceso a una educación de calidad».
La investigación del Departamento identificó que no se garantizó que todos los maestros estuvieran debidamente calificados para enseñar cómo se aprende el inglés, lo que significa que algunos estudiantes no tenían acceso a los servicios lingüísticos que necesitaban para dominar el idioma. Igualmente, en muchos casos los maestros de matemáticas, ciencias y estudios sociales no estaban debidamente calificados para apoyar a los estudiantes que estaban aprendiendo inglés en sus aulas, lo que privó a tales estudiantes de una educación en esas asignaturas esenciales. Asimismo, el departamento halló, entre otros problemas, lapsos en los servicios prestados a estudiantes con discapacidades que estaban aprendiendo inglés, así como barreras a la participación en el programa del distrito para alumnos dotados.
Conforme el acuerdo, el distrito trabajará para garantizar que todos los estudiantes que están aprendiendo inglés lo aprendan de un maestro capacitado y debidamente calificado. Asimismo, el distrito asegurará que los maestros que enseñan a estos estudiantes asignaturas básicas –como matemáticas, ciencias y estudios sociales– a estudiantes que están aprendiendo inglés puedan ofrecerles el tipo de apoyo que esos estudiantes necesitan para poder entender y aprender la materia. El departamento supervisará el progreso del distrito a lo largo de los próximos tres años.
Grand Jury Indicts 2 in ‘Swatting’ Scheme that Took over Ring Doorbells Across U.S. to Livestream Police Response to Fake CallsRead the Press Release
LOS ANGELES – Two men – one from Wisconsin, the other from North Carolina – have been charged with participating in a “swatting” spree that, over a one-week span, gained access to a dozen Ring home security door cameras nationwide, 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, the Justice Department announced today.
Kya Christian Nelson, a.k.a. “ChumLul,” 21, of Racine, Wisconsin, who is currently incarcerated in Kentucky in an unrelated case; and James Thomas Andrew McCarty, a.k.a. “Aspertaine,” 20, of Charlotte, North Carolina (who at the time of the alleged criminal conduct lived in Kayenta, Arizona), who was arrested last week on federal charges filed in the District of Arizona, are charged with one count of conspiracy to intentionally access computers without authorization. Nelson also was charged with two counts of intentionally accessing without authorization a computer and two counts of aggravated identity theft.
According to the indictment returned Friday afternoon by a federal grand jury in Los Angeles, from November 7, 2020, to November 13, 2020, Nelson and McCarty gained access to home security door cameras sold by Ring LLC, a home security technology company. Nelson and McCarty allegedly acquired without authorization the username and password information for Yahoo email accounts belonging to victims throughout the United States.
Then, they allegedly 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, according to the indictment.
Nelson and McCarty allegedly 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 indictment alleges.
The defendants then allegedly 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 allegedly verbally taunted responding police officers and victims through the Ring devices during several of the incidents.
For example, on November 8, 2020, Nelson and an accomplice 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 of the victim’s parents.
Nelson allegedly accessed without authorization a Ring doorbell camera, located at the residence of the victim’s parents and linked to the victim’s Ring account, and used it to verbally threaten and taunt West Covina Police officers who responded to the reported incident.
The indictment alleges other similar Ring-related swatting incidents occurred in Flat Rock, Michigan; Redding, California; Billings, Montana; Decatur, Georgia; Chesapeake, Virginia; Rosenberg, Texas; Oxnard, California; Darien, Illinois; Huntsville, Alabama; North Port, Florida; and Katy, Texas.
This series of swatting incidents prompted the FBI in late 2020 to issue a public service announcement urging users of smart home devices with cameras and voice capabilities to use complex, unique passwords and enable two-factor authentication to help protect against swatting attacks.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If they were to be convicted of the conspiracy charge in the indictment, each defendant would face a statutory maximum penalty of five years in federal prison. The charge of intentionally accessing without authorization a computer carries a maximum possible sentence of five years, and the charge of aggravated identity theft carries a mandatory two-year consecutive sentence.
The FBI is investigating this matter.
Assistant United States Attorney Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section is prosecuting this case.
Justice Department Secures Settlement with San Bernardino City School District to Protect the Rights of English Learner StudentsRead the Press Release
LOS ANGELES – The Justice Department announced today it has secured a settlement agreement with the San Bernardino City Unified School District to resolve the department’s investigation into the district’s educational program for English learners.
The department investigation, conducted jointly by the United States Attorney’s Office and the Justice Department’s Civil Rights Division, concluded that the district was not providing English learners with the necessary services and supports to become fluent in English, or to meaningfully participate in core content classes like math, science or social studies.
The district has agreed to improve its services so that English learners have access to the same crucial educational opportunities as their peers.
“Federal laws protect the rights of English learners to fully participate in the classroom,” said United States Attorney Martin Estrada. “Today’s agreement is an important step in ensuring that students learning English receive the programming they need to progress towards fluency and to participate in school on an equal basis with their peers. This agreement will improve the services and support offered to English learners.”
“Education is a fundamental part of achieving the American dream, but for many students learning English across the country, their school districts do not provide the services and support they need,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Civil Rights Division will fight to hold districts to their obligations under federal law to provide all their students, regardless of language ability, with a full and meaningful education.”
The department’s investigation identified failures to ensure that all teachers providing English language instruction were qualified. In addition, teachers of core subjects like math, science and social studies were often not trained and qualified to provide the supports that English learner students need to learn grade-level material, among other concerns.
Under the settlement, the district will provide language instruction to English learners to help them develop fluency in English, and it will ensure that its teachers are trained and certified to provide that instruction. The district will also provide training to teachers of core classes – such as math, science and social studies – on the use of tools that help English learners understand the content of those courses. And the district will effectively monitor student progress and identify whether students need additional services or supports to guarantee that English learners have access to gifted and talented programs and advanced courses, including Advanced Placement classes. The department will monitor the district’s compliance with the settlement for three years.
Assistant United States Attorney Katherine Hikida of the Civil Division’s Civil Rights Section and attorneys from the Educational Opportunities Section of the Justice Department’s Civil Rights Division handled this matter.
Information about the Civil Division’s Civil Rights Section is available on its website at https://www.justice.gov/usao-cdca/civil-division/civil-rights. Individuals in the seven counties of the Central District of California may report possible civil rights violations to the United States Attorney’s Office by calling (213) 894-2879 or emailing [email protected].
Federal Grand Jury Indicts 2 on Charges of Selling Fentanyl, Other Narcotics through Darknet and Encrypted Messaging ApplicationsRead the Press Release
LOS ANGELES – A federal grand jury has indicted two men who allegedly used the darknet and encrypted messaging applications to sell over 120,000 fentanyl-laced pills and other drugs to thousands of customers across the country.
The 19-count indictment charges Rajiv Srinivasan, 37, of Houston, and Michael Ta, 24, of Westminster, in a conspiracy to distribute and to possess with the intent to distribute fentanyl and methamphetamine. Both defendants are also named in various counts alleging the distribution and possession with the intent to distribute both drugs.
According to the indictment, Srinivasan operated the account “redlightlabs” on the darknet, including the site “Dark0de.” He allegedly used the redlightlabs account to advertise and sell counterfeit M30 oxycodone pills containing fentanyl.
Srinivasan also allegedly used the encrypted messaging application Wickr to communicate with and sell drugs to customers. Srinivasan allegedly received virtual currency as payment for the drugs and then routed that virtual currency through cryptocurrency exchanges.
The indictment alleges that 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.
The indictment alleges that between February and November 2022, Srinivasan and Ta sold over 7,000 pills to a person they believed was a drug customer, but who was in fact an undercover law enforcement agent. Srinivasan and Ta allegedly maintained a shared electronic document that detailed approximately 3,800 drug transactions to approximately 1,500 unique customers. That database documented sales between May and November 2022 totaling approximately 123,188 fentanyl pills, over 143 kilograms of methamphetamine, and smaller amounts of fentanyl powder, black tar heroin and cocaine, according to the indictment.
FBI agents arrested both defendants last month pursuant to a criminal complaint. Srinivasan was ordered jailed without bond and is being transported to the Central District of California from Houston. Ta was released on bond and is scheduled to be arraigned on the indictment on December 22.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The statutory maximum sentence for the conspiracy charge alleged in the indictment is life in federal prison.
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.
Assistant United States Attorney Gregg E. Marmaro of the International Narcotics, Money Laundering, and Racketeering Section is prosecuting this case.
El Departamento de Justicia llega a un acuerdo con un distrito escolar de la Ciudad de San Bernardino para proteger los derechos civiles de estudiantes que están aprendiendo inglésRead the Press Release
LOS ANGELES – El Departamento de Justicia anunció hoy que ha llegado a un acuerdo conciliatorio con el Distrito Escolar Unificado de la Ciudad de San Bernardino, el cual resuelve la investigación del Departamento del programa del distrito escolar para sus estudiantes que están aprendiendo inglés. La investigación del Departamento, que se llevó a cabo entre la División de Derechos Civiles y la Fiscalía Federal para el Distrito Centro de California, concluyó que el distrito no estaba proveyendo a estudiantes que están aprendiendo inglés con los servicios y apoyos necesarios como para llegar a dominar el inglés, ni tampoco para poder participar, de manera significativa, en clases de contenido básico, como matemáticas, ciencias o estudios sociales. El distrito ha acordado mejorar sus servicios para que estudiantes que están aprendiendo inglés tengan acceso a las mismas oportunidades educativas esenciales que sus compañeros de clase.
«Las leyes federales protegen los derechos de estudiantes que están aprendiendo inglés a participar plenamente en el aula», declaró Martin Estrada, el Fiscal Federal para el Distrito Centro de California. «El acuerdo de hoy representa un paso importante hacia garantizar que los estudiantes que están aprendiendo inglés reciban la enseñanza que necesitan para avanzar y dominar el inglés y para participar en la escuela de la misma forma que sus compañeros de clase. El acuerdo mejorará los servicios y el apoyo que se ofrecen a los estudiantes que están aprendiendo inglés».
«La educación es una parte fundamental del logro del sueño americano, pero para muchos estudiantes que están aprendiendo inglés por todo el país, sus distritos escolares no proporcionan los servicios y apoyo que necesitan», comentó Kristen Clarke, la Fiscal General Auxiliar de la División de Derechos Civiles del Departamento de Justicia. «La División de Derechos Civiles luchará por garantizar que los distritos cumplan con sus obligaciones en virtud de las leyes federales a brindar a todos sus estudiantes, independientemente de sus habilidades lingüísticas, una educación completa y significativa».
La investigación del Departamento identificó que no se garantizó que todos los maestros que enseñan el idioma inglés estuvieran debidamente calificados. Además, en muchos casos, los maestros de asignaturas básicas como matemáticas, ciencias y estudios sociales no estaban capacitados o calificados como para proporcionar los apoyos que estudiantes que están aprendiendo inglés necesitan para aprender materias apropiadas para su grado, entre otras preocupaciones.
Conforme el acuerdo, el distrito ofrecerá enseñanza lingüística a estudiantes que están aprendiendo inglés para ayudarles a dominar el inglés y asegurará que sus maestros sean capacitados y certificados en la provisión de tal enseñanza. Por otra parte, el distrito ofrecerá capacitación a los maestros de asignaturas básicas, tales como matemáticas, ciencias y estudios sociales, en lo que se refiere al uso de herramientas que ayudan a estudiantes que están aprendiendo inglés a entender el contenido de tales asignaturas. Además, el distrito supervisará, de manera eficaz, el progreso de los estudiantes e identificará si los estudiantes necesitan servicios o apoyos adicionales para garantizar que los estudiantes que están aprendiendo inglés tengan acceso a programas de estudiantes dotados y cursos avanzados, incluyendo las asignaturas de Advanced Placement [clases avanzadas con crédito universitario]. El Departamento supervisará el cumplimiento del distrito con el acuerdo durante un período de tres años.
Operator of San Gabriel Valley Employment Staffing Company Pleads Guilty to Criminal Charge for Failing to Pay over Payroll Taxes to IRSRead the Press Release
LOS ANGELES – A Diamond Bar man pleaded guilty today to a federal criminal charge for deliberately failing to pay more than $200,000 for one three-month period’s payroll taxes that were owed by a San Gabriel Valley employment staffing company.
Robinson Rin Yang, 54, a.k.a. “Robert Mora,” a.k.a. “David Lee,” pleaded guilty to one count of willful failure to pay over employment taxes.
According to his plea agreement, from March 2016 to March 2020, Yang operated B&S Staffing, a Covina-based staffing service business. From mid-2017 until the end of 2019, B&S accrued large unpaid employment tax liabilities, failed to make timely employment tax deposits, and repeatedly failed to timely file quarterly employment tax returns with the IRS. Notably, B&S did not file -- until February 2019 – employment tax returns for the periods ending June 30, 2017 through December 31, 2018.
After these tax returns were filed, B&S again fell into non-compliance with its reporting obligations. B&S did not file – until September 2020 – employment tax returns for the quarterly tax periods ending March 31, 2019, through December 31, 2019.
Yang admitted he was aware of B&S’s tax situation, but willfully failed to pay over to the IRS all the employment taxes due and owing, including income taxes and Social Security and Medicare taxes withheld from employee wages. Instead, Yang repeatedly used his control over B&S to direct payments from the corporate bank account, which he controlled, for his personal benefit.
For example, in July 2018, for the quarterly tax period ending on June 30, 2018, Yang willfully failed to account for and pay over approximately $221,108 in B&S payroll taxes.
In total, B&S accrued approximately $2,791,783 in unpaid employment taxes during this 2½-year period. Yang has agreed to pay this amount in restitution to the IRS.
Yang further admitted that from 2017 to 2019, to frustrate IRS collection actions against him regarding his personal income taxes – and to conceal the true extent of how much money he made – he did not pay himself a salary from B&S. Instead, Yang caused weekly checks to be issued from B&S’s corporate bank account to a business named “Advanced Business Konsulting,” and deposited these checks into an account held in the same name and which he controlled.
In addition, Yang used B&S funds for the down payment and monthly mortgage payments on his purchase of a home, but kept the property titled in the name of another person to conceal Yang’s ownership of the property. Yang also directed payments from the corporate bank accounts of B&S to pay for personal expenses, including a portion of his daughter’s college tuition, and funding for Yang’s other business interests, including a failed construction business and a failed restaurant.
Despite the fact Yang earned hundreds of thousands of dollars from his operation of B&S during each of the calendar years 2017 through 2019, he failed to timely file federal income tax returns for those years.
United States District Judge George H. Wu scheduled a February 27, 2023 sentencing hearing, at which time Yang will face a statutory maximum sentence of five years in federal prison.
IRS Criminal Investigation is investigating this matter.
Assistant United States Attorney James C. Hughes of the Major Frauds Section is prosecuting this case.
Developer Sentenced to 4 Years in Federal Prison for Offering a Million-Dollar Bribe to Secure a $45 Million L.A. County LeaseRead the Press Release
LOS ANGELES – A real estate developer was sentenced today to 48 months in federal prison for offering to buy a million-dollar home for a Los Angeles County public official in exchange for the official’s assistance securing a $45 million county lease for the developer.
Arman Gabaee, 61, a.k.a. “Arman Gabay,” of Beverly Hills, was sentenced by United States District Judge George H. Wu, who also ordered him to pay a fine of $1,149,000.
Gabaee pleaded guilty on May 2 to one count of bribery.
Gabaee was a co-founder and co-managing partner of the Charles Company, a Hollywood-based commercial and residential real estate development firm. The then-county employee whom Gabaee bribed was Thomas M. Shepos, 72, of Palmdale. Shepos was a high-level official in Los Angeles County’s Real Estate Division involved in awarding contracts to real estate developers.
In the years leading up to his million-dollar bribe offer, from approximately 2010 to April 2017, Gabaee paid Shepos bribes and kickbacks of approximately $1,000 every month in exchange for county leases, preferential contract terms, non-public information and other benefits. Shepos began cooperating with the FBI in December 2016. From then until April 2017, Gabaee paid Shepos $6,000 in cash bribes during recorded meetings in cars, restaurants and men’s restrooms, prosecutors said.
After years of paying cash bribes, Gabaee in 2016 “sought to further exploit the corrupt arrangement, this time soliciting Shepos’s help obtaining a $45 million county lease for his Hawthorne Mall property – a lease he believed would increase the value of his property ten-fold,” prosecutors said in sentencing papers. In recordings, Gabaee offered to buy Shepos a million-dollar home in exchange for his assistance securing a 10-year, $45 million county lease for office space in the Hawthorne Mall, which Gabaee owned and was redeveloping. Gabaee admitted in his plea agreement to placing two offers on a Northern California home, first for $1,035,000 and later for $1,065,000, as a bribe for Shepos in exchange for the $45 million lease.
Wiretap calls showed that with a long-term, reliable tenant like the county anchoring the mall, Gabaee believed he could get bank loans to redevelop the property, attract other tenants, and ultimately increase the mall’s assessed value from $17 million to $500 million. With the county lease, Gabaee was considering selling the mall to capitalize on its increased value, wiretap calls showed.
“This defendant gamed the system during a seven-year bribery spree designed to expand his real estate empire,” said United States Attorney Martin Estrada. “The scheme culminated in a massive million-dollar bribe that was motivated by Mr. Gabaee’s immense greed. By facilitating this pay-to-play system, Mr. Gabaee undermined confidence in the integrity and fairness of our public institutions.”
Shepos pleaded guilty in November 2018 to one count of making false statements to federal investigators who were investigating his financial relationship with Gabaee and one count of subscribing to a false tax return related to payments he received from Gabaee. Shepos is scheduled to be sentenced on January 19, 2023.
The FBI investigated this matter.
Assistant United States Attorneys Lindsey Greer Dotson and Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section prosecuted this case.
Woman Pleads Guilty to $2.6 Million Commodity Futures Trading SchemeRead the Press Release
A Southern California woman pleaded guilty yesterday to her involvement in an investment fraud scheme that caused more than $2.6 million in losses to investors.
According to court documents, Sharief Deona McDowell, 57, of Loma Linda, defrauded at least 28 investors by falsely representing that she would invest their money in commodity futures and options contracts. In actuality, McDowell did not trade with the investors’ money and instead misappropriated the funds for her personal use. McDowell also provided investors with fabricated trade confirmations and account statements to falsely indicate that their investments were generating returns. In addition, McDowell used money provided by new investors to repay earlier investors – a tactic often used to conceal and prolong Ponzi and other investment fraud schemes. McDowell had a history of defrauding investors and committed this fraud in violation of a prior judicial order.
McDowell pleaded guilty to one count of wire fraud. She is scheduled to be sentenced on March 10, 2023, and faces a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Martin Estrada for the Central District of California, and Assistant Director in Charge Don Alway of the FBI Los Angeles Field Office made the announcement.
The FBI is investigating the case.
Trial Attorney Lauren Archer of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Byron Tuyay for the Central District of California are prosecuting the case.
Loma Linda Woman Pleads Guilty to Federal Charge for Investment Fraud that Caused More Than $2.6 Million in LossesRead the Press Release
LOS ANGELES – A San Bernardino County woman has pleaded guilty to a federal criminal charge for her involvement in an investment fraud scheme that caused more than $2.6 million in losses to investors, the Justice Department announced today.
Sharief Deona McDowell, 57, of Loma Linda, pleaded guilty Tuesday afternoon to one count of wire fraud.
According to her plea agreement, McDowell defrauded at least 28 investors by falsely representing that she would invest their money in commodity futures and options contracts. In reality, McDowell did not trade with the investors’ money and instead misappropriated the funds for her personal use. McDowell also provided investors with fabricated trade confirmations and account statements to falsely indicate that their investments were generating returns.
In addition, McDowell used money provided by new investors to repay earlier investors – a tactic often used to conceal and prolong Ponzi and other investment fraud schemes. McDowell had a history of defrauding investors and committed this fraud in violation of a prior judicial order.
United States District Judge André Birotte Jr. scheduled a March 10, 2023 sentencing hearing, at which time McDowell will face a statutory maximum sentence of 20 years in federal prison.
The FBI is investigating this case.
Assistant United States Attorney Byron R. Tuyay of the Riverside Branch Office and Trial Attorney Lauren Archer of the Justice Department Criminal Division’s Fraud Section are prosecuting this case.
Justice Department Secures Landmark Agreement with Hesperia and Sheriff’s Department to End ‘Crime-Free’ Rental Housing ProgramRead the Press Release
LOS ANGELES – The Justice Department announced today it has secured a landmark agreement to resolve a race and national origin discrimination lawsuit against the City of Hesperia and the San Bernardino County Sheriff’s Department that alleged the defendants engaged in a pattern or practice of discrimination against Black and Latino individuals and communities in Hesperia through the adoption and enforcement of a so-called “crime-free” rental housing program.
This is the Justice Department’s first resolution requiring the complete end of a “crime-free” rental housing program.
“The Justice Department is committed to ensuring housing policies do not discriminate against individuals based on their race, including so-called ‘crime-free’ programs,” said Associate Attorney General Vanita Gupta. “In addition to promoting fair access to housing, today’s resolution will protect individuals who call for emergency or law enforcement assistance from retaliation.”
“The right to fair housing is fundamental and should not be infringed,” said U.S. Attorney Martin Estrada. “This important settlement with Hesperia prevents the so-called ‘crime-free’ program from devastating individuals and families with the emotional upheaval and financial hardship that accompanies evictions that occur with little notice. Today’s agreement and consent order will bring real change to Hesperia and beyond.”
“So-called ‘crime-free’ ordinances are often fueled by racially discriminatory objectives, destabilize communities and promote modern-day racial segregation,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “These ordinances can uproot lives, force families into homelessness and result in loss of jobs, schooling, and opportunities for people who are disproportionately low-income people of color. ‘Crime-free’ ordinances may also constitute a discriminatory solution in search of a problem and run afoul of the core goals underlying the Fair Housing Act. As this settlement makes clear, the Justice Department will continue to fight discriminatory and unlawful ‘crime-free’ ordinances across the country and work to ensure that everyone has fair and equal access to housing.”
“Discriminatory housing policies based on race and national origin, including those sanctioned and implemented by local governments, have no place in our society,” said Principal Deputy Assistant Secretary Demetria L. McCain of the U.S. Department of Housing and Urban Development’s Office of Fair Housing and Equal Opportunity. “This agreement sends a strong message that HUD and DOJ will continue to work together to vigorously enforce our nation’s fair housing laws.”
The United States’ Lawsuit
The department’s lawsuit, filed in 2019 based on an investigation by HUD, alleged that the City of Hesperia, with substantial support from the sheriff’s department, enacted a “crime-free” program with the intent of addressing what one city councilmember called a “demographical problem” – Hesperia’s increasing Black and Latin population.
The program required all rental property owners to evict tenants upon notice by the sheriff’s department that the tenants had engaged in any alleged “criminal activity” on or near the property – regardless of whether those allegations resulted in an arrest, charge or conviction. In addition, the program encouraged housing providers to evict entire families when only one household member engaged in purported criminal activity and even notified landlords to evict survivors of domestic violence. It also required all landlords to screen potential tenants through the sheriff’s department, which would notify landlords whether the applicant had “violated” the rules of the program in the past. The City of Hesperia also later passed an ordinance relating to business licenses for rental housing properties that made registration in the “crime-free” program mandatory and imposed excessive fees.
The department’s complaint relied in part on analysis conducted by HUD, which showed that Black renters were almost four times more likely, and Latino renters 29 percent more likely, to be evicted under the program than white renters. HUD’s analysis also showed that over 96 percent of individuals and households evicted under the “crime-free” ordinance lived in majority-minority Census blocks, even though only 79 percent of rental households in Hesperia live in such blocks.
The department’s lawsuit alleged that hundreds of people were targeted under Hesperia’s “crime-free” ordinance.
The program had real and devastating impacts on families across the City of Hesperia:
- For example, a Black woman living in Hesperia called the police repeatedly to come to her home because she did not feel safe with her boyfriend. The sheriff’s department notified her landlord about the numerous domestic disturbance calls and threatened the landlord with a misdemeanor. The landlord then forced the woman and her children out of their home. With nowhere to go, the family moved into a motel and attempted to rent another home in Hesperia, but the applications were repeatedly denied. Unable to rent another home for her family in Hesperia, she was forced to uproot her life, leave a house full of furniture behind, and move across the country.
- The program also impacted a Latina woman living in Hesperia who called the police to get assistance for her boyfriend, who was experiencing a mental health crisis at her home. When the sheriff’s department arrived before the paramedics, her boyfriend was arrested. The woman then received a notice to vacate based on the supposed violation of the ordinance, and she was forced to temporarily move into a motel.
- One Black family was torn apart after a mother’s call to the police for help got them kicked out of their home and placed on the violators list, making it impossible to find another rental in Hesperia. The parents moved away and made the impossible decision to leave their teenage daughter behind to finish high school.
The Consent Order
As part of the resolution of this case, Hesperia already has repealed its “crime-free” ordinance, modified the rental housing business license ordinance, and reduced the fees associated with rental housing business licenses. The sheriff’s department also has agreed to stop enforcement of Hesperia’s “crime-free” program.
Under the proposed consent order, which was filed today but still must be approved by a federal judge, the defendants will spend $950,000 and commit to significant injunctive relief to remedy the effects of the “crime-free” and business license programs, including: a settlement fund of $670,000 to compensate individuals harmed by the program; the payment of $100,000 in civil penalties; funding of $95,000 for affirmative marketing to promote fair housing in Hesperia; funding of $85,000 for partnerships with community-based organizations; notifications to property managers, landlords, and owners of the changes to the ordinances and fee schedule; submission of certain policies, procedures and ordinances for the United States’ review and approval prior to adoption; adoption of non-discrimination policies and complaint procedures; designation of civil rights coordinators; anti-discrimination training; a fair housing needs assessment; and regular reporting to the court and the United States during the order’s five-year term.
Individuals who believe they were harmed by Hesperia’s “crime-free” program may be entitled to compensation under the settlement fund and should contact the Justice Department at [email protected] or 1-833-223-1571.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Title VI of the Civil Rights Act of 1964 prohibits discrimination on the ground of race, color, or national origin in programs and activities receiving federal financial assistance.
Assistant United States Attorney Katherine Hikida of the Civil Division’s Civil Rights Section and attorneys from the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division handled this matter.
Individuals in the seven counties of the Central District of California may report housing discrimination by contacting the United States Attorney’s Office at (213) 894-2879 or emailing [email protected].
Former San Luis Obispo County Sheriff’s Deputy Faces Federal Civil Rights Charge Stemming from Alleged Assault of Female InmateRead the Press Release
LOS ANGELES – A former San Luis Obispo County sheriff’s deputy has been indicted on federal criminal charges alleging he abused a county jail inmate by dragging the victim by her hair on the ground from one cell into another jail cell and then obstructing a federal probe into his actions by lying about the incident in an official sheriff’s office report, the Justice Department announced today.
Joshua Fischer, 40, of Grover Beach, is charged in a federal grand jury indictment with one count of deprivation of rights under color of law and one count of falsification of records.
According to the indictment returned Tuesday, Fischer was a sworn law enforcement officer and San Luis Obispo County Sheriff’s Office senior correctional deputy assigned to work at the Intake Release Center in the city of San Luis Obispo between January 2017 and December 2018.
On November 18, 2018, Fischer allegedly used unreasonable force against a jail inmate who had removed her shirt, exited her cell, and then returned to her cell. Upon returning to her cell, Fischer then allegedly grabbed the victim from behind by her hair while she was still topless and dragged her on the ground into another cell.
Fischer then falsified a San Luis Obispo County sheriff’s incident report by including false statements that the victim had thrown her shirt on the ground after removing it outside her cell, that she yelled and flailed her arms while re-entering her cell, and that Fischer “was in fear for the safety of the other female arrestee in the cell” because the victim was “still without her shirt, yelling and flailing her arms,” the indictment alleges.
In fact, the victim did not throw her shirt on the ground after removing it outside the cell, she was not flailing her arms around as she re-entered her cell, but instead her arms were by her side and then near her bare chest when Fischer assaulted her, according to the indictment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Fischer is expected to be arraigned on the indictment in the coming weeks at United States District Court in downtown Los Angeles.
If convicted of both charges, Fischer would face a statutory maximum sentence of 10 years in federal prison on the deprivation of rights count and 20 years in federal prison for the falsification of records count.
The FBI investigated this matter.
Assistant United States Attorneys Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section and Frances S. Lewis of the General Crimes Section are prosecuting this case.
Former Mail Carrier Pleads Guilty to Bank Fraud Charge for Stealing Jobless Benefit Debit Cards from Her Mail Delivery RouteRead the Press Release
LOS ANGELES – A former United States Postal Service mail carrier pleaded guilty today to federal criminal charges for stealing debit cards containing unemployment insurance benefits while on duty and giving them to an accomplice in exchange for cash payments and gifts.
Toya Toshell Hunter, 45, of South Los Angeles, pleaded guilty to one count of bank fraud.
According to her plea agreement, from January 2019 to May 2020, Hunter stole mail – including letters sent by the California Employment Development Department (EDD), which administers the state’s unemployment insurance program – and then gave the stolen EDD debit cards as well as other credit cards and financial instruments to her co-schemer. The co-schemer then activated and fraudulently used the cards to commit bank fraud, the plea agreement states.
For example, in March 2020, Hunter stole mail from her assigned route, including an EDD debit card belonging to a victim. Hunter also stole correspondence in the mail that contained the victim’s name and the last four digits of the victim’s Social Security number, which she later gave to her accomplice in exchange for cash and gifts, knowing the accomplice intended to activate and fraudulently use the victim’s debit card.
Hunter’s co-schemer used the debit card and the last four digits of the victim’s Social Security number to fraudulently activate the card and create a personal identification number (PIN) to access funds from the victim’s account, which was held at Bank of America, the plea agreement states. The co-schemer then used the victim’s stolen EDD card to withdraw cash from a Bank of America ATM located in Corona.
During the scheme Hunter aided and abetted her accomplice in making fraudulent and unauthorized cash withdrawals from 68 separate victims’ accounts and stole approximately $145,191 from Bank of America.
In July 2021, Hunter stole from the mail and fraudulently activated a stolen debit card containing COVID-19 pandemic unemployment relief money belonging to another victim. Hunter used the card to make fraudulent purchases and cash withdrawals, thereby stealing approximately $1,400 from Fiserv Bank.
United States District Judge John F. Walter scheduled a March 6, 2023 sentencing hearing, at which time Hunter will face a statutory maximum sentence of 30 years in federal prison.
Hunter’s co-defendant in this case, Michalea Latise Barksdale, a.k.a. “Miichii Bee,” 34, of Corona, has pleaded not guilty to the 17 felony charges against her, which include bank fraud, aggravated identity theft, and possession of unauthorized access devices and stolen mail. Barksdale has a March 28, 2023 trial date scheduled in this case.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The United States Postal Inspection Service; United States Postal Service – Office of Inspector General; and the United States Treasury Inspector General for Tax Administration are investigating this matter.
Special Assistant United States Attorney Kyle W. Kahan of the General Crimes Section is prosecuting this case.
Federal Prosecutors in Los Angeles and Alaska Charge 6 Defendants with Operating Websites that Offered Computer Attack ServicesRead the Press Release
LOS ANGELES – The Justice Department today announced the court-authorized seizure of 48 internet domains associated with some of the world’s leading DDoS-for-hire services, as well as criminal charges against six defendants who allegedly oversaw computer attack platforms commonly called “booter” services.
The FBI is now in the process of seizing the websites that allowed paying users to launch powerful distributed denial-of-service, or DDoS, attacks that flood targeted computers with information and prevent them from being able to access the internet. Booter services such as those named in this action allegedly attacked a wide array of victims in the United States and abroad, including educational institutions, government agencies, gaming platforms and millions of individuals. In addition to affecting targeted victims, these attacks can significantly degrade internet services and can completely disrupt internet connections.
The websites targeted in this operation were used to launch millions of actual or attempted DDoS attacks targeting victims worldwide. While some of these services claimed to offer “stresser” services that could purportedly be used for network testing, the FBI determined these claims to be a pretense, and “thousands of communications between booter site administrators and their customers…make clear that both parties are aware that the customer is not attempting to attack their own computers,” according to an affidavit filed in support of court-authorized warrants to seize the booter sites.
The coordinated law enforcement action comes just before the Christmas holiday period, which typically brings a significant increase in DDoS attacks across the gaming world.
In conjunction with the website seizures, the FBI, the United Kingdom’s National Crime Agency, and the Netherlands Police have launched an advertising campaign using targeted placement ads in search engines, which are triggered by keywords associated with DDoS activities. The purpose of the ads is to deter potential cyber criminals searching for DDoS services in the United States and around the globe, as well as to educate the public on the illegality of DDoS activities.
“These booter services allow anyone to launch cyberattacks that harm individual victims and compromise everyone’s ability to access the internet,” said United States Attorney Martin Estrada. “This week’s sweeping law enforcement activity is a major step in our ongoing efforts to eradicate criminal conduct that threatens the internet’s infrastructure and our ability to function in a digital world.”
“Criminals are increasingly targeting essential services and our critical infrastructure with DDoS attacks that can cost victims valuable time, money and reputational harm,” said Donald Alway, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Whether a criminal launches an attack independently or pays a skilled contractor to carry one out, the FBI will work with victims and use the considerable tools at our disposal to identify the person or group responsible. Victims of cybercrime are urged to contact their local FBI field office or file a complaint with the FBI’s Internet Crime Complaint Center at ic3.gov."
The law enforcement actions this week include the filing of charges against six defendants across the United States who allegedly offered booter services. Each defendant allegedly operated at least one website that offered one-stop DDoS services and subscriptions of various lengths and attack volumes. In each of these criminal cases, the FBI posed as a customer and conducted test attacks to confirm that the booter site functioned as advertised.
Central District of California
Prosecutors in Los Angeles this week filed four criminal informations charging four defendants with running booter services.
The defendants charged in Los Angeles are:
- Jeremiah Sam Evans Miller, aka “John The Dev,” 23, of San Antonio, Texas, who is charged with conspiracy to violate and violating the computer fraud and abuse act related to the alleged operation of a booter service named RoyalStresser.com (formerly known as Supremesecurityteam.com);
- Angel Manuel Colon Jr., aka “Anonghost720” and “Anonghost1337,” 37, of Belleview, Florida, who is charged with conspiracy to violate and violating the computer fraud and abuse act related to the alleged operation of a booter service named SecurityTeam.io;
- Shamar Shattock, 19, of Margate, Florida, who is charged with conspiracy for allegedly running a booter service known as Astrostress.com; and
- Cory Anthony Palmer, 22, of Lauderhill, Florida, who is charged with conspiracy for allegedly running a booter service known as Booter.sx.
The four defendants have been informed of the charges against them and are expected to make their initial court appearances in United States District Court in Los Angeles early next year.
Assistant United States Attorneys Cameron L. Schroeder, Chief of the Cyber and Intellectual Property Crimes Section, and Aaron Frumkin, also of the Cyber and Intellectual Property Crimes Section, are prosecuting the Los Angeles cases. Assistant United States Attorney James E. Dochterman of the Asset Forfeiture and Recovery Section is handling the seizure of the domains.
District of Alaska
The defendants charged in criminal informations filed in Alaska are:
- John M. Dobbs, 32 of Honolulu, Hawaii, who is charged with aiding and abetting violations of the computer fraud and abuse act related to the alleged operation of a booter service named Ipstressor.com, also known as IPS, between 2009 and November 2022.
- Joshua Laing, 32, of Liverpool, New York, who is charged with aiding and abetting violations of the computer fraud and abuse act related to the alleged operation of a booter service named TrueSecurityServices.io between 2014 and November 2022.
The two defendants have been informed of the charges against them and are expected to make their initial court appearance early next year.
Assistant United States Attorney Adam Alexander is prosecuting the Alaska cases.
Criminal informations contain allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
In recent years, booter services have continued to proliferate as they offer a low barrier to entry for users looking to engage in cybercriminal activity. These types of DDoS attacks are so named because they result in the “booting” or dropping of the targeted computer from the internet. For additional information on booter and stresser services and the harm that they cause, please visit: https://www.fbi.gov/contact-us/field-offices/anchorage/fbi-intensify-efforts-to-combat-illegal-ddos-attacks.
The cases announced today are being investigated by the FBI’s Anchorage and Los Angeles field offices.
Invaluable assistance was provided by the FBI field offices in Albany, Honolulu, Miami, Philadelphia and San Antonio; the United Kingdom’s National Crime Agency; the Netherlands Police; EUROPOL; and the Brandon Police Service in Manitoba, Canada. Akamai, Cloudflare, Digital Ocean, Entertainment Software Association, Google, Oracle, Palo Alto Networks Unit 42, PayPal, Unit 221B, the University of Cambridge, Yahoo and other valued private sector partners provided additional assistance.
These law enforcement actions were taken in conjunction with Operation PowerOFF, an ongoing, coordinated effort among international law enforcement agencies aimed at dismantling criminal DDoS-for-hire infrastructures worldwide, and holding accountable the administrators and users of these illegal services.
In a previous law enforcement action involving prosecutors and investigators in Los Angeles and Anchorage four years ago, the Justice Department charged three defendants who facilitated DDoS-for hire services and seized 15 internet domains associated with DDoS-for-hire services. The multi-prong investigation announced today builds on the success of the prior cases by targeting all known booter sites, shutting down as many as possible, and undertaking a public education campaign.
Former Mobile Phone Store Owner Sentenced to 10 Years in Federal Prison for Multimillion-Dollar Scheme to Illegally Unlock CellphonesRead the Press Release
LOS ANGELES – A former owner of a T-Mobile retail store in Eagle Rock was sentenced today to 120 months in federal prison for his multimillion-dollar scheme in which he stole T-Mobile employee credentials and illegally accessed the company’s internal computer systems to illicitly “unlock” and “unblock” cellphones.
Argishti Khudaverdyan, 44, of Burbank, was sentenced by United States District Judge Stephen V. Wilson, who also ordered him to pay $28,473,535 in restitution.
Khudaverdyan ran a multi-year scheme that illegally unlocked and unblocked cellphones, which generated tens of millions of dollars in criminal proceeds. During this time, most cellphone companies – including T-Mobile – “locked” their customers’ phones so they could be used only on the company’s network until the customers’ phone and service contracts had been fulfilled. If customers wanted to switch to a different carrier, their phones had to be “unlocked.” Carriers also “blocked” cellphones to protect consumers in the case of lost or stolen cellphones.
From August 2014 to June 2019, Khudaverdyan fraudulently unlocked and unblocked cellphones on T-Mobile’s network, as well as the networks of Sprint, AT&T, and other carriers. Removing the unlock allowed the phones to be sold on the black market and enabled T-Mobile customers to stop using T-Mobile’s services and thereby deprive T-Mobile of revenue generated from customers’ service contracts and equipment installment plans.
Khudaverdyan advertised his fraudulent unlocking services through brokers, email solicitations and websites. He falsely claimed the fraudulent unlocks that he provided were “official” T-Mobile unlocks.
From January 2017 through June 2017, Khudaverdyan and a former business partner were also co-owners of Top Tier Solutions Inc., a T-Mobile store in Eagle Rock Plaza. However, after T-Mobile terminated Khudaverdyan’s contract in June 2017 based on his suspicious computer behavior and association with unauthorized unlocking of cellphones, Khudaverdyan continued his fraud.
To gain unauthorized access to T-Mobile’s protected internal computers, Khudaverdyan obtained T-Mobile employees’ credentials through various dishonest means, including sending phishing emails that appeared to be legitimate T-Mobile correspondence, and socially engineering the T-Mobile IT Help Desk. Khudaverdyan used the fraudulent emails to trick T-Mobile employees to log in with their employee credentials so he could harvest the employees’ information and fraudulently unlock the phones.
In total, Khudaverdyan and others compromised and stole more than 50 different T-Mobile employees’ credentials from employees across the United States, and they unlocked and unblocked hundreds of thousands of cellphones during the years of the scheme.
Khudaverdyan obtained more than $25 million for these criminal activities. He used these illegal proceeds to pay for, among other things, real estate in Burbank and Northridge.
In a sentencing memorandum, prosecutors argued that Khudaverdyan was “a sophisticated fraudster with no remorse for his crimes. He personally caused millions of dollars in losses to wireless carriers while furthering the trafficking of lost and stolen cell phones.”
At the conclusion of a four-day trial, a federal jury on August 1 found Khudaverdyan of 14 felonies: one count of conspiracy to commit wire fraud, three counts of wire fraud, two counts of accessing a computer to defraud and obtain value, one count of intentionally accessing a computer without authorization to obtain information, one count of conspiracy to commit money laundering, five counts of money laundering, and one count of aggravated identity theft.
Alen Gharehbagloo, 43, of La Cañada Flintridge, a co-defendant and a former co-owner of Top Tier Solutions Inc., pleaded guilty on July 5 to three felonies: conspiracy to commit wire fraud, accessing a protected computer with intent to defraud, and conspiracy to commit money laundering. His sentencing hearing is scheduled for February 13, 2023.
The United States Secret Service’s Cyber Fraud Task Force (CFTF) and IRS Criminal Investigation investigated this matter. The CFTF includes representatives of the United States Secret Service, the FBI, the Los Angeles Police Department, the Los Angeles County District Attorney’s Office, and the California Highway Patrol.
Assistant United States Attorneys Lisa E. Feldman and Andrew M. Roach of the Cyber and Intellectual Property Crimes Section prosecuted this case. Assistant United States Attorney Jonathan S. Galatzan, Chief of the Asset Forfeiture and Recovery Section, is handling the asset forfeiture portion of this case.
Former Mail Carrier and Co-Schemer Who Lived on His Mail Delivery Route Each Sentenced to Nearly 3½ Years in Prison for COVID FraudRead the Press Release
LOS ANGELES – A former United States Postal Service mail carrier was sentenced today to 41 months in federal prison for scheming to steal more than $250,000 in unemployment insurance (UI) funds by making false claims of COVID-related job losses and for stealing UI debit cards intended for other people on his mail route.
Stephen Glover, 33, of Palmdale, was sentenced by United States District Judge Percy Anderson, who also ordered him to pay $151,698 in restitution.
Glover pleaded guilty on July 11 to one count of mail fraud and one count of theft of mail matter by an officer or employee.
Judge Anderson today also sentenced Glover’s co-schemer, Travis McKenzie, 26, of Valencia, to 41 months in federal prison and ordered him to pay $448,228 in restitution. McKenzie, who lived on Glover’s mail route, pleaded guilty on July 13 to a three-count information charging him with mail fraud, mail theft and identity theft.
From August 2020 to June 2021, while he was employed at the United States Post Office in Valencia, Glover schemed to defraud the California Employment Development Department (EDD) out of hundreds of thousands of dollars in COVID-19 -related unemployment benefits. Glover’s co-schemers applied for unemployment benefits using false statements and sometimes using stolen identities. Based upon the fraudulent claims, EDD mailed out debit cards to addresses listed on the applications.
The fraudulent UI claims were federally funded through programs authorized by Congress in response to the pandemic, including the Pandemic Unemployment Assistance and Lost Wage Assistance programs.
Glover abused his position as a mail carrier by providing co-schemers with addresses on his mail route, which his co-schemers then used as mailing addresses on the fraudulent EDD applications. After EDD mailed debit cards to those addresses, Glover intercepted and stole that mail.
Glover also stole legitimate EDD debit cards intended for recipients on his mail route. Glover used the EDD debit cards in other people’s names to withdraw thousands of dollars in cash from ATMs. He also activated the debit cards in other people’s names by calling EDD and using PINs he had discovered from stolen EDD mail. During a search of his girlfriend’s residence in June 2021, law enforcement found 37 pieces of mail from EDD address to 15 different individuals.
The total intended loss related to Glover’s mail fraud scheme is $270,698.
McKenzie admitted in his plea agreement that law enforcement found more than 150 pieces of mail from EDD addressed to more than 50 different names, as well as mail from the Virginia Employment Commission, at his residence. McKenzie used cash withdrawn from ATMs using EDD debit cards to purchase items from luxury retailers including Louis Vuitton and Prada handbags from luxury retailers Nieman Marcus and Saks Fifth Avenue.
The intended loss applicable to McKenzie’s participation in the mail fraud scheme is approximately $577,522. McKenzie further admitted to possessing 317 pieces of stolen mail.
The United States Department of Labor, Office of Inspector General; the United States Postal Service, Office of Inspector General; the California Employment Development Department, Investigation Division; and the Los Angeles County Sheriff’s Department investigated this matter.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office prosecuted these cases.
Anyone with information about allegations of fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Beverly Hills Father and Son Sentenced to Prison for Scheming to Defraud COVID-Relief Programs Designed to Help BusinessesRead the Press Release
LOS ANGELES – A Beverly Hills father and son were sentenced today to federal prison terms for defrauding government programs designed to help businesses survive the economic shock of the COVID-19 pandemic.
Ramiro Da Rosa Mendes, 61, was sentenced to 41 months in federal prison by United States District Judge Percy Anderson, who also ordered him to pay $2,228,302 in restitution.
In a separate case, Judge Anderson today sentenced Ammon Jose de Pina Mendes, 27, Ramiro’s son, to 21 months in federal prison and ordered him to pay $222,225 in restitution.
Ramiro and Ammon Mendes each pleaded guilty to one count of wire fraud in September 2022.
From April 2020 to August 2020, Ramiro Mendes schemed to fraudulently obtain federal disaster relief funds distributed through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs that were intended to help businesses during the pandemic.
Ramiro Mendes claimed to own numerous fake businesses purportedly based in Beverly Hills, including One Wilshire Enterprises, Professional Music Services, and MB Property Management Group LLC. These companies were fake businesses that did not exist prior to the COVID-19 pandemic and did not have any operations or employees.
He also claimed to be the owner of fake real estate services companies, including Ramiro Mendes Real Estate Services, Real Estate Services, and Real Estate Invesst-ments, also located in Beverly Hills and Massachusetts, as well as other businesses registered in Wyoming.
Ramiro Mendes submitted 19 applications for PPP and EIDL loans that contained false and fraudulent information, including the purported existence of payroll expenses, phony tax forms, and the operational status of the businesses.
For example, on June 24, 2020, Ramiro Mendes submitted a fraudulent PPP loan application to a Florida-based bank, seeking a loan of $975,100. The loan application falsely stated that One Wilshire Enterprises employed 18 people, had an average monthly payroll of $390,040, and, according to a false tax form, earned $4,810,149 in revenue in 2019. Based on this false information, the bank approved and funded a PPP loan in the amount of $793,300. The loan amount was wired into a bank account Mendes controlled.
Ramiro Mendes stole the COVID-relief loans and misused the proceeds for his own personal benefit, including the purchase of cryptocurrency. He further admitted that the intended loss in this case was approximately $6,708,963 and the actual loss was at least approximately $2,228,302.
Ammon Mendes admitted he used information from fake businesses to fraudulently obtain $225,225 in PPP and EIDL loans.
Another son of Ramiro Mendes – Mateus Pina Mendes, 33, of downtown Los Angeles – also previously pleaded guilty in September to wire fraud and admitted fraudulently obtaining $143,283 in PPP and EIDL loans. Mateus Mendes is scheduled to be sentenced on January 10, 2023.
This matter was investigated by the FBI; the Federal Housing Finance Agency – Office of the Inspector General; the United States Postal Inspection Service; the Federal Deposit Insurance Corporation – Office of the Inspector General; the Treasury Inspector General for Tax Administration – Office of the Inspector General; IRS Criminal Investigation; and the Small Business Administration – Office of the Inspector General.
Assistant United States Attorney Scott Paetty of the Major Frauds Section and Trial Attorney Jennifer Bilinkas of the Justice Department’s Fraud Section are prosecuting this case.
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 Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Surgeon Sentenced to 5 Years in Prison for Accepting $3.3 Million in Illicit Payments to Perform Spinal Surgeries at Corrupt HospitalRead the Press Release
LOS ANGELES – A neurosurgeon was sentenced today to 60 months in federal prison for accepting approximately $3.3 million in bribes for performing spinal surgeries at a now-defunct Long Beach hospital whose owner later was imprisoned for committing a massive workers’ compensation system scam.
Lokesh S. Tantuwaya, 55, of San Diego, was sentenced by United States District Judge Josephine L. Staton, who also ordered him to forfeit his ill-gotten gains of $3.3 million.
Tantuwaya pleaded guilty on September 1 to one count of conspiracy to commit honest services mail and wire fraud and to receive illegal payments for health care referrals. He has been in federal custody since May 2021 after he was found to have violated the terms of his pretrial release.
From 2010 to 2013, Tantuwaya accepted money from Michael Drobot, who owned Pacific Hospital in Long Beach, in exchange for Tantuwaya performing spinal surgeries at that hospital. The bribe amount varied depending on the type of spinal surgery.
Pacific Hospital specialized in surgeries, especially spinal and orthopedic procedures. Drobot, who in 2018 was sentenced to 63 months in prison for his crimes in this scheme, conspired with doctors, chiropractors and marketers to pay kickbacks and bribes in return for the referral of thousands of patients to Pacific Hospital for spinal surgeries and other medical services paid for primarily through the California workers’ compensation system. During its final five years, the scheme resulted in the submission of more than $500 million in medical bills for spine surgeries involving kickbacks.
Tantuwaya entered into contracts with Drobot and Drobot-owned companies. Tantuwaya knew or deliberately was ignorant that the payments were being given to him in exchange for bringing his patient surgeries to Pacific Hospital.
In furtherance of the scheme, Tantuwaya met with Drobot and Drobot’s employees. Tantuwaya deposited bribe checks into his bank accounts. He knew the receipt of money in exchange for the referral of medical service was illegal and that he owed a fiduciary duty to his patients to not accept money in exchange for taking their surgeries to Pacific Hospital.
In total, Tantuwaya received approximately $3.3 million in illegal payments.
“Despite his privileges at San Diego-area hospitals, [Tantuwaya] caused several patients to travel from Imperial County and San Diego County up to Pacific Hospital for spine surgery so that [Tantuwaya] could get his bribes,” prosecutors argued in a sentencing memorandum. “This resulted in numerous patient-victims enduring the physical anguish of multi-hour trips after invasive spinal surgeries, in addition [to] dealing with the mental anguish of now wondering whether they needed a surgery, whether the medical hardware drilled into their bones was legitimate hardware, and whether they should have trusted [Tantuwaya] with their lives.”
In April 2013, law enforcement searched Pacific Hospital, which was sold later that year, bringing the kickback scheme to an end.
To date, 23 defendants have been convicted for participating in the kickback scheme.
The FBI, IRS Criminal Investigation, the United States Postal Service Office of Inspector General, and the California Department of Insurance investigated this matter.
Assistant United States Attorneys Joseph T. McNally and Billy Joe McLain of the Violent and Organized Crime Section prosecuted this case.
Former TSA Officer Sentenced to Nearly 6 Years in Federal Prison for Attempting to Smuggle Methamphetamine Through LAXRead the Press Release
LOS ANGELES – A former Transportation Security Administration (TSA) officer was sentenced today to 70 months in federal prison for smuggling what he believed was methamphetamine through Los Angeles International Airport (LAX) in exchange for a total of $8,000 in cash.
Michael Williams, 39, of Hawthorne, was sentenced by United States District Judge Fernando L. Aenlle-Rocha.
Williams pleaded guilty on June 10 to one count of attempted distribution of methamphetamine.
In 2020, authorities conducted undercover operations involving Williams, whom they suspected of helping smuggle narcotics past security checkpoints at LAX. During the operations, Williams met several times with a drug source to receive what he thought was methamphetamine.
As a TSA employee with unscreened access to LAX, Williams agreed to deliver the “methamphetamine” in a backpack to the drug source’s accomplice in the men’s restroom past the airport terminal’s security checkpoint.
After taking possession of what he believed was real narcotics, Williams transported an unscreened package containing the fake methamphetamine beyond the TSA screening area and delivered the package to another individual. This individual, whom Williams did not know was a federal agent, on both occasions exchanged $4,000 in cash in the stalls of the men’s restroom in the airport’s secure area.
“It is critical to national security that the government agents who are charged with keeping our nation safe do not sell their access to criminals,” prosecutors argued in a sentencing memorandum.
The FBI, the Drug Enforcement Administration investigated this matter as part of the Los Angeles High Intensity Drug Trafficking Area (HIDTA) program.
Assistant United States Attorneys Jeffrey M. Chemerinsky and Jeremiah Levine of the Violent and Organized Crime Section prosecuted this case.
Three Central Coast Health Care Providers Agree to Pay $22.5 Million for Alleged False Claims to Medi-Cal ProgramRead the Press Release
LOS ANGELES – Pursuant to two settlements announced today, several Central Coast health care providers have agreed to pay a total of $22.5 million to resolve allegations that they violated federal and California law by causing the submission of false claims to Medi-Cal related to Medicaid Adult Expansion under the Patient Protection and Affordable Care Act (ACA).
Dignity Health, a not-for-profit health system that owns and operates three hospitals and one clinic in Santa Barbara and San Luis Obispo counties, entered into one agreement with the United States and the California. The second settlement agreement resolves allegations against Twin Cities Community Hospital and Sierra Vista Regional Medical Center, two acute healthcare facility subsidiaries of Tenet Healthcare Corporation operating in San Luis Obispo County.
Pursuant to the ACA, beginning in January 2014, Medi-Cal was expanded to cover the previously uninsured “Adult Expansion” population – adults between the ages of 19 and 64 without dependent children with annual incomes up to 133% of the federal poverty level. The federal government fully funded the expansion coverage for the first three years of the program. Under contracts with California’s Department of Health Care Services (DHCS), if a California county organized health system (COHS) did not spend at least 85% of the funds it received for the Adult Expansion population on “allowed medical expenses,” the COHS was required to pay back to the state the difference between 85% and what it actually spent. California, in turn, was required to return that amount to the federal government.
The two settlements resolve allegations that Dignity, Twin Cities and Sierra Vista knowingly caused the submission of false claims to Medi-Cal for “Enhanced Services” that Dignity purportedly provided to the Adult Expansion patients of a COHS between February 1, 2015 and June 30, 2016, and that Twin Cities and Sierra Vista purportedly provided to such patients between January 1, 2014 and April 30, 2015.
The United States and California alleged that the payments were not “allowed medical expenses” permissible under the contract between DHCS and the COHS; were pre-determined amounts that did not reflect the fair market value of any Enhanced Services provided; and/or the Enhanced Services were duplicative of services already required to be rendered. The United States and California further alleged that the payments were unlawful gifts of public funds in violation of the California Constitution.
As a result of its settlement, Dignity will pay $13.5 million to the United States and $1.5 million to the State of California. Twin Cities and Sierra Vista have agreed to pay $6.75 million to the United States and $750,000 to the State of California.
“These health care providers siphoned critical Medicaid funding for their own gain instead of using it to provide health care services to patients most in need,” said United States Attorney Martin Estrada. “These major settlements demonstrate our commitment to hold accountable health care providers that seek to exploit the Medicaid program and harm the American taxpayer.”
“When health care providers misuse Medicaid funds, they undermine the integrity of the Medicaid program and waste taxpayer funds,” said Deputy Assistant Attorney General Michael D. Granston of the Justice Department’s Civil Division. “These settlements demonstrate the Department’s continued commitment to prevent providers from inappropriately using Medicaid or other federal health care programs for their own financial gain.”
“Every day, Medi-Cal provides support for Californians in need of essential healthcare, and when companies take advantage of this system at the expense of patients, they must be held accountable,” said Attorney General Rob Bonta. “I want to express my gratitude to the United States Department of Justice and the United States Attorney’s Office in Los Angeles for their extensive efforts throughout the course of this investigation. The California Department of Justice will continue to prosecute corporations that seek to abuse the Medi-Cal system for their own benefit.”
“Bad actors who target and exploit Medicaid for unlawful profit drain the program of much-needed funds intended to support the health and safety of our nation’s individuals who need these resources the most,” stated Special Agent in Charge Timothy B. DeFrancesca of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Los Angeles Regional Office. “HHS-OIG readily applies our investigative aptitude to, with our law enforcement partners, pursue providers suspected of defrauding this and other federal health care programs.”
The civil settlements include the resolution of claims brought under the qui tam, or whistleblower, provisions of the federal False Claims Act by Julio Bordas, the former medical director of the COHS that contracted with Dignity, Twin Cities and Sierra Vista for the provision of health care services under Medi-Cal. Under the act, a private party can file an action on behalf of the United States and receive a portion of any recovery. Mr. Bordas will receive $3.9 million as his share of the federal recovery.
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. HHS-OIG and DHCS provided substantial assistance.
Assistant United States Attorney Jack D. Ross of the Civil Fraud Section and Trial Attorneys Mary Beth Hickcox-Howard and Tiffany Ho of the Civil Division’s Commercial Litigation Branch, Fraud Section handled this case.
The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare 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).
The claims resolved by the settlements are allegations only and there has been no determination of liability.
Rapper Who Boasted in Music Video About Committing COVID Fraud Sentenced to over 6 Years in Prison on Fraud, Gun and Drug CrimesRead the Press Release
LOS ANGELES – A rapper who boasted in a YouTube music video about getting rich quickly by scamming a COVID relief program was sentenced today to 77 months in federal prison.
Fontrell Antonio Baines, 33, a.k.a. “Nuke Bizzle,” of Memphis, Tennessee, was sentenced by United States District Judge Michael W. Fitzgerald, who also ordered him to pay $704,760 in restitution to the California Employment Development Department (EDD).
Today’s sentence was imposed in connection with three criminal cases. Baines pleaded guilty on July 11 to one count of mail fraud and, in a separate case, to one count of unlawful possession of a firearm and ammunition by a convicted felon. He also pleaded guilty on August 30 to possession of oxycodone with intent to distribute in a case transferred from the Western District of Tennessee. Baines has been in federal custody since his arrest in October 2020.
From July 2020 to September 2020, Baines unlawfully exploited the Pandemic Unemployment Assistance (PUA) provisions of the CARES Act to obtain unemployment insurance money – ultimately more than $700,000 – to which he was not entitled.
As the COVID-19 pandemic’s grip tightened, Congress implemented the PUA provisions to expand access to unemployment benefits to self-employed workers, independent contractors, and others who would not otherwise be eligible for them.
Baines defrauded the program to obtain unemployment benefits administered by the EDD in the names of third parties, including identity theft victims. The applications for benefits also included false statements about the work histories and in-state residences of the named applicants. Through his fraud, Baines turned the taxpayer-funded program into “his personal piggybank,” according to a sentencing memorandum filed by federal prosecutors.
The applications for these benefits listed addresses in Beverly Hills and Koreatown to which Baines had access. As a result, Baines was able to take possession of and use the debit cards that EDD pre-loaded with the unemployment benefits obtained through the fraudulent applications.
For example, Baines used the identity of a Missouri man who briefly attended school – but never worked – in California to apply for unemployment benefits. In September 2020, Baines used a debit card issued based on the fraudulent PUA claim filed in the Missouri man’s name to withdraw approximately $2,500.
Baines filed 92 fraudulent PUA claims with EDD, resulting in attempted losses to EDD and the United States Treasury of approximately $1,256,108 and actual losses of at least $704,760.
According to court documents, Baines bragged about his ability to defraud the EDD in a music video posted on YouTube and in postings to his Instagram account. In the music video called “EDD,” Baines boasts about doing “my swagger for EDD” and, holding up a stack of envelopes from EDD, getting rich by “go[ing] to the bank with a stack of these” – an apparent reference to the debit cards that came in the mail.
In addition, in October 2020 at his Hollywood Hills residence, Baines illegally possessed a semi-automatic pistol with 14 rounds of ammunition. Baines was prohibited from possessing the firearm and ammunition because of his prior felony convictions, including a conviction in 2011 in Tennessee state court for unlawful possession of a controlled substance with intent to sell and a conviction in Nevada federal court in 2014 for being a felon in possession of a firearm.
Lastly, Baines also trafficked narcotics. On January 31, 2020, at Memphis International Airport. Baines attempted to check a bag containing various controlled substances, including oxycodone, promethazine with codeine, alprazolam and more than seven pounds of marijuana.
The United States Department of Labor – Office of Inspector General; the United States Postal Inspection Service; IRS Criminal Investigation; and the California Employment Development Department investigated this matter. The United States Marshals Service, the Las Vegas Metropolitan Police Department, and the United States Attorney’s Office for the Western District of Tennessee provided substantial assistance.
Assistant United States Attorneys Ranee A. Katzenstein, Chief of the Major Frauds Section, and Alexander B. Schwab, also of the Major Frauds Section, prosecuted this case.
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 Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
O.C. Man Sentenced to 6 Years in Federal Prison for Pimping and Opening Fire on Bystanders While He Was on Supervised ReleaseRead the Press Release
SANTA ANA, California – An Irvine man has been sentenced to 72 months in federal prison for – while on supervised release for committing a prior federal felony – engaging in pimping and shooting a firearm at women on the streets of San Bernardino, the Justice Department announced today.
Coby Christopher House, 23, was sentenced late Tuesday by United States District Judge David O. Carter.
House pleaded guilty on June 21 to one count of conspiracy to use a facility in interstate commerce in aid of unlawful activity and two counts of unlawful possession of firearms and ammunition by a convicted felon.
In October 2019, while he was on supervised release for an alien smuggling conviction in San Diego federal court, House acted as a pimp, overseeing two women working in prostitution and receiving the money from their sex work. On October 10, 2019, House shot a firearm several times at other women working in prostitution who approached House’s two sex workers, who were then soliciting clients at the time. The other women were concerned that House’s women would attract the attention of law enforcement, according to court documents.
Law enforcement arrested House the following day after a two-mile, high-speed chase.
House admitted in his plea agreement to unlawfully possessing a .22-caliber revolver and a .380-caliber handgun and ammunition despite his prior felony conviction for alien smuggling.
“When he learned of a confrontation between the women working for him and other women working as prostitutes, [House] pulled out a gun and shot it many times at another person,” prosecutors wrote in a sentencing memorandum. “Though he missed, this conduct is deserving of a long stretch in federal prison.”
Olbert Maximilian Lara, 23, of Riverside, a co-defendant in this case, pleaded guilty on April 19 to one count of being an accessory after the fact for being the driver of the car when House attempted to flee from police in October 2019. Lara was sentenced to three years of probation and was fined $500.
The FBI and the San Bernardino Police Department investigated this matter.
Assistant United States Attorneys Greg Scally and Kristin Spencer of the Santa Ana Branch Office prosecuted this case.
Lawyer Michael Avenatti Sentenced to 14 Years in Federal Prison for Stealing Millions of Dollars from Clients and Tax FraudRead the Press Release
SANTA ANA, California – Suspended plaintiffs’ lawyer Michael John Avenatti was sentenced today to 168 months in federal prison for stealing millions of dollars from his clients – one of whom was a paraplegic with mental health issues – and for obstructing the IRS’s efforts to collect more than $3 million in payroll taxes from an Avenatti-owned coffee business.
Avenatti, 51, a former Newport Beach resident now in federal custody, was sentenced by United States District Judge James V. Selna, who said Avenatti “has done great evil for which he must answer.”
In imposing the 14-year sentence, Judge Selna ordered that this term of imprisonment run consecutive to sentences totaling five years previously imposed in two federal cases in the Southern District of New York.
Judge Selna also ordered Avenatti to pay $10,810,709 in restitution to four clients and to the IRS.
Today’s sentencing follows Avenatti’s entry of guilty pleas on June 16 to four counts of wire fraud and one count of endeavoring to obstruct the administration of the Internal Revenue Code. He has been a federal prisoner since on February 7, soon after he was ordered to begin serving a sentence in one of the New York cases.
“Michael Avenatti was a corrupt lawyer who claimed he was fighting for the little guy. In fact, he only cared about his own selfish interests,” said United States Attorney Martin Estrada. “He stole millions of dollars from his clients – all to finance his extravagant lifestyle that included a private jet and race cars. As a result of his illegal acts, he has lost his right to practice law in California, and now he will serve a richly deserved prison sentence.”
“Michael Avenatti violated the trust placed in him by his clients. Instead of helping his clients receive the compensation that they were owed and needed, he pocketed the money, stealing from people who were already hurting. The money was used to fuel a lavish lifestyle that had no limits,” stated Tyler Hatcher, the Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office. “While today’s sentencing concludes the government’s case against Mr. Avenatti, the enormous damage left behind will be felt by his former clients for quite some time. It is our sincere hope that his victims will take some solace in the fact that he has been held accountable for his criminal actions.”
The Wire Fraud Counts
Avenatti received money on behalf of clients into client trust accounts, misappropriated the money, and then lied to the clients about receiving the money or, in one case, claimed that the money had already been sent to the client. The four clients suffered actual losses totalling approximately $7.6 million.
“Although the details pertaining to each of the four clients underlying the charges in the indictment differ, the general pattern was the same,” according to a sentencing memorandum filed by prosecutors. “[Avenatti] would lie about the true terms of the settlement agreement he had negotiated for the client, conceal the settlement payments that the counterparty had made, secretly take and spend the settlement proceeds that belonged to the client, and lull the client into not complaining or investigating further by providing small ‘advances’ on the supposedly yet-to-be paid funds.”
According to court documents:
- In the case of Geoffrey Johnson, Avenatti represented Johnson in a lawsuit against the County of Los Angeles that alleged, among other things, Johnson became a paraplegic as a result of the county violating his constitutional rights. The county paid a $4 million settlement in January 2015, but within months Avenatti had drained the entire settlement payment from his law firm’s trust account and used portions of the settlement to finance his coffee business and pay personal expenses. Avenatti never told Johnson about the settlement agreement and terms, and he concealed from Johnson the receipt of the settlement payment from the county. Instead of giving Johnson his portion of the settlement, Avenatti gave Johnson periodic “advances” of no more than $1,900 and paid the rent for his assisted living facility to falsely reassure him that Avenatti was continuing to work on his behalf.
- Alexis Gardner obtained a $3 million settlement in a matter, which included a payment of $2.75 million in early 2017. Avenatti never provided a copy of the settlement agreement to Gardner or told her the true terms of the settlement. Upon receipt of the settlement money, Avenatti took the bulk of this money – $2.5 million – and used it to purchase his portion of a jet, while falsely telling Gardner that the settlement called for monthly payments over eight years. Avenatti gave Gardner a small “advance” for rent and made approximately 12 monthly payments, totally approximately $227,500, making them appear to come from the individual who paid the settlement, but then Avenatti stopped paying Gardner.
- Gregory Barela was to receive a $1.9 million settlement in an intellectual property dispute. Avenatti embezzled the first installment of $1.6 million in January 2018, in part by providing Barela with a bogus settlement agreement indicating that the payment was going to be made two months later. Avenatti used the money to pay expenses at his coffee business and to pay his own legal expenses.
- Michelle Phan and Long Tran hired Avenatti to negotiate a “Common Stock Repurchase Agreement” for the sale of nearly $27.5 million worth of Phan’s shares of ipsy, a company founded by Phan, and then another sale of approximately $8.15 million worth of Phan’s shares. When the first payment was made, Avenatti took his fees for the overall $35 million sale and sent the balance to Phan. But when the second stock sale was finalized and the company sent nearly $8.15 million, all of which belonged to Phan, Avenatti kept $4 million for himself and used this money to pay some of his law firm’s bankruptcy creditors, including the IRS; to provide funding for his various businesses; and to make lulling payments to Johnson, Gardner and Barela. When Phan and Tran demanded Phan’s money, Avenatti falsely told them that the stolen $4 million already had been wired to them and provided them with a wire transfer confirmation document which actually documented the transfer of an earlier $4 million payment.
“[Avenatti’s] scheme to defraud his clients was cruel – often reducing those clients to begging for needed funds and making them feel beholden to him when he ‘advanced’ or ‘loaned’ them funds that were, in fact, the clients’ own money,” prosecutors argued in the sentencing memorandum.
The Tax Count
Avenatti corruptly obstructed and impeded the IRS’s efforts to collect more than $3.2 million in unpaid payroll taxes, which includes money that he withheld from the paychecks of employees of Global Baristas US LLC, the Avenatti-owned company that operated Tully’s Coffee, and should have paid to the IRS but never did.
Avenatti obstructed the agency’s efforts to collect the monies that his company owed by making false statements to an IRS revenue officer; directing employees to stop depositing cash receipts; and changing the company name, Employer Identification Number, and bank account information listed with his credit card processing company to avoid IRS levies.
In addition, prosecutors argued in support of allegations in an indictment that:
- Avenatti failed to file individual tax returns or pay any personal income taxes for 2011 through 2017, even though he had a substantial income and lived lavishly.
- He also failed to file partnership returns or pay taxes – including payroll taxes – for his now-defunct Newport Beach-based law firm Eagan Avenatti LLP, of which he was the managing partner, for 2013 through 2017, even though the law firm received many millions of dollars during those years.
- Furthermore, Avenatti failed to file corporate tax returns or pay taxes for Avenatti & Associates, of which he was president, for 2011 through 2017, even though this entity also received substantial funds.
“[Avenatti’s] tax fraud scheme was massive, resulting in losses to the federal treasury…and harming hundreds of his employees whose payroll taxes he stole,” prosecutors noted in the sentencing memorandum.
IRS Criminal lnvestigation conducted the investigation in this matter. The Office of the United States Trustee provided assistance.
Assistant United States Attorneys Brett A. Sagel of the Santa Ana Branch Office and Ranee A. Katzenstein, Chief of the Major Frauds Section, prosecuted this case.
Los Angeles Man Found Guilty of Stealing More Than $150,000 and Attempting to Steal Nearly $1.9 Million More in COVID Business LoansRead the Press Release
LOS ANGELES – A downtown Los Angeles man was found guilty today by a jury of federal criminal charges for fraudulently obtaining more than $150,000 – and attempted to obtain an additional $1.85 million – in COVID-relief loans for several companies he claimed to own and operate.
Sean Schoepflin, 43, a.k.a. “Sean Fitzgerald,” was found guilty of two counts of wire fraud and two counts of money laundering.
According to evidence presented at his three-day trial, from April 2020 to October 2021, Schoepflin made numerous false statements to the United States Small Business Administration to secure more than $150,000 – and attempting to secure an additional $1.85 million – in Economic Injury Disaster Loans (EIDLs) for his business.
In applying for the EIDL loans, Schoepflin falsely stated that the business entity he created had several employees and more than half a million dollars in revenue, and that he would use the EIDLs for working capital for the business. Schoepflin also falsely stated on loan application that he had never been convicted of a felony.
In fact, his purported business, Capital Adventures Inc., had no employees and little to no revenue. Schoepflin used the EIDLs largely for personal expenses, and he had previously been convicted of multiple felonies.
For example, Schoepflin falsely stated in the loan application that Capital Adventures had revenues of $560,000 in a one-year period just before the pandemic. When an SBA employee sent an email to Schoepflin requesting Capital Adventures’ business tax return to show proof of the company’s existence as a business entity, Schoepflin sent an unsigned tax form that stated that Capital Adventures had gross sales or receipts of $625,112 in 2019.
In fact, Capital Adventures did not file the required IRS form for 2019 until July 2021, after it requested and was denied an increase for its EIDL. Furthermore, between February 2018 and April 2020, Capital Adventures’ bank accounts had total deposits of approximately $35,000.
United States District Judge Fernando M. Olguin scheduled a July 27 sentencing hearing, at which time Schoepflin will face a statutory maximum sentence of 20 years in federal prison for each wire fraud count and up to 10 years in federal prison for each money laundering count.
Schoepflin’s wife, Erika Leon, 45, a.k.a. “Erika Fitzgerald,” also of downtown Los Angeles, has pleaded not guilty to two counts of wire fraud in this case. Her trial is scheduled for February 21, 2023.
Schoepflin also is scheduled to go to trial on May 16, 2023 on an indictment charging him with one count of being a felon in possession of firearms and ammunition. Schoepflin allegedly possessed nine firearms and more than 2,000 rounds of ammunition despite felony convictions dating back to the late 1990s in Florida state court, including witness tampering, cocaine possession and burglary.
The FBI and the Treasury Inspector General for Tax Administration investigated this matter. The Small Business Administration’s Office of Inspector General provided substantial assistance with the investigation.
Assistant United States Attorneys Solomon Kim of the Terrorism and Export Crimes Section and Ali Moghaddas of the Major Frauds Section are prosecuting this case.
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 Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Owner of Trucking Companies Sentenced to 10 Years in Prison for Conspiracy in Fatal Tanker Explosion, Tax Evasion and COVID FraudRead the Press Release
LOS ANGELES – The owner of several Inland Empire-based trucking companies was sentenced today to 120 months in federal prison for ordering the illegal repair of a tanker that resulted in an explosion and the death of one his employees – the second time one of his welders was killed.
Carl Bradley Johansson, 64, of Newport Beach, was also sentenced for tax evasion and fraudulently obtaining approximately $954,417 in COVID-relief money while free on bond in the tanker explosion case.
Johansson was sentenced by United States District Judge Virginia A. Phillips, who also ordered Johansson to pay $1,252,979 in restitution to two banks and the IRS.
Johansson pleaded guilty in September 2021 to two felony counts in relation to the tank explosion – one count of conspiring to make illegal repairs on the cargo tanks and to defraud the United States Department of Transportation, and one count of welding without required certifications. He also pleaded guilty to one count of tax evasion, one count of conspiracy to commit bank fraud and one count of bank fraud. Johansson admitted that he committed the bank fraud offenses stemming from the PPP scam while he was on pretrial release in the tanker explosion case. Johansson has been in custody since his arrest on the PPP charges in July 2021.
Tanker Explosion Case
Johansson controlled and operated two Corona-based trucking companies -- National Distribution Services, Inc. (NDSI), which operated from about 2009 through 2015, and NDSI’s successor company, Wholesale Distribution, Inc. (WDI), which did business as Quality Services. Johansson established NDSI following a 15-month federal prison sentence he served after one of his welders was killed in another tanker explosion in 1993. Johansson created WDI to take over NDSI’s operations so he could continue to illegally operate cargo tanks that were ordered out of service after two more welding-caused explosions at NDSI in 2012 and 2014.
On May 6, 2014, NDSI management ordered workers to do welding work on a tanker that had not been fully cleaned of the crude oil inside of it. This resulted in an explosion that killed a company welder and severely injured a second worker.
For the next four years, Johansson and other employees of NDSI and WDI conspired to obstruct a federal investigation into the explosion by making multiple false statements to local, state and federal officials to conceal that NDSI had conducted illegal welding repairs, that Johansson controlled NDSI and WDI, and that the deceased and injured employees worked for him. For example, on the day of the fatal explosion, when investigators arrived at NDSI, Johansson identified himself as being a customer service representative with another company and said the welders were employed by an outside tank-repair company.
Johansson and NDSI submitted false statements to federal regulators to have the Federal Motor Carrier Safety Administration (FMCSA) rescind an Out-of-Service Order which prohibited the company from operating approximately 37 cargo tanks to haul gasoline or ethanol because the FMCSA had determined that those cargo tanks presented safety risks. Johansson signed, under oath, an affidavit that falsely claimed NDSI had never engaged in tank repairs and that his shop manager worked for an outside tank-repair company.
To circumvent the Out-of-Service Order, Johansson, at the end of 2014, converted NDSI to operate under the WDI name. WDI was a “reincarnated” or “chameleon” carrier – it had almost all the same employees and management as NDSI, and it operated out of the same warehouse, but with a new name to evade regulators. WDI continued to violate the Out-of-Service Order through early 2018 by using the prohibited cargo tanks to haul gasoline and ethanol.
As part of the conspiracy and to further conceal his control of NDSI and WDI, Johansson did not file income tax returns for the years 2012 through 2017. Johansson failed to report to the federal government at least $1,174,173 in income from the trucking companies. He used that income to pay for personal expenses – including renting a large home in Corona for at least $12,000 per month and using company accounts to make $200,000 in tuition payments at his children’s private high schools and universities.
In total, Johansson admitted to unlawfully avoiding the payment of at least $298,562 in federal income taxes from 2012 to 2017.
COVID-Relief Fraud
In April 2020, while free on bond in the explosion case, Johansson directed another trucking company he controlled, the Ontario-based Western Distribution LLC, to apply for a $436,390 PPP loan. After the loan was funded, Johansson directed Western Distribution in May and June of 2020 to immediately spend the PPP funds. Rather than use the funds to keep the company’s employees on staff, Johansson laid off most of the company’s employees, but rehired many of them in late 2020. To create the impression that Western Distribution had spent more of its PPP loan on its payroll than it did, in September 2020 Johansson moved 21 employees from a separate company that Johansson controlled – the Merced County-based Agri-comm Express Inc. – onto Western Distribution’s payroll, even though those employees never worked for Western Distribution.
In March 2021, Johansson caused Western Distribution to repeat the same fraudulent representations concerning its employee lists and payroll numbers when the company submitted a second PPP loan application, this time for $231,527. The second loan application was also approved.
The total loss in the COVID-relief fraud matter was approximately $954,417.
At today’s sentencing hearing, Judge Phillips also sentenced NDSI and WDI to one year of probation. Each company pleaded guilty in September 2021 to one count of conspiring to make illegal repairs on cargo tanks and defrauding the United States Department of Transportation. NDSI pleaded guilty to an additional count of welding without required certifications. Judge Phillips also sentenced Western Distribution to three years of probation and ordered it to pay $667,917 in restitution. In September 2021, Western Distribution pleaded guilty to one count of conspiracy to commit bank fraud and one count of bank fraud.
Enrique Garcia, 48, of Pomona, Johansson’s shop manager and co-defendant, pleaded guilty earlier this year to one count of welding without required certifications and was sentenced to 30 months in federal prison.
Donald Cameron Spicer, 71, of Fullerton, Johansson’s safety manager and co-defendant, pleaded guilty to conspiring to make illegal repairs on the cargo tanks and to defraud the United States Department of Transportation. He is scheduled to be sentenced on February 6, 2023.
The United States Department of Transportation Office of Inspector General and IRS Criminal Investigation investigated these matters.
Assistant United States Attorneys Matthew W. O’Brien and Joseph O. Johns of the Environmental and Community Safety Crimes Section prosecuted this case.
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.
Convicted Felon Who Repeatedly Attacked Planned Parenthood Clinic with BB Guns and Possessed Multiple Firearms Agrees to Plead GuiltyRead the Press Release
LOS ANGELES – In court documents filed this morning, an Inland Empire man admitted firing BB guns at the Planned Parenthood facility in Pasadena nearly a dozen times and agreed to plead guilty to violating the federal Freedom of Access to Clinic Entrances (FACE) Act.
Richard Royden Chamberlin, 54, who currently resides in Ontario, but previously maintained a residence in Altadena, also admitted that he was carrying a loaded .22-caliber handgun during one of the attacks and agreed to plead guilty to being a felon in possession of a firearm and ammunition, according to a plea agreement filed today in United States District Court.
Chamberlin acknowledged driving past the Planned Parenthood facility in Pasadena and fired his BB gun at the clinic on at least 11 occasions between June 2020 and May 2021. In his plea agreement, Chamberlin admitted that he intentionally conducted the attacks to intimidate and interfere with the clinic, its doctors, staff and patients specifically because the clinic was providing reproductive health services, including services related to the termination of pregnancies.
Beginning on June 27, 2020, Chamberlin’s attacks involved him firing BB pellets through the window of his car. The attacks caused physical damage to the clinic, including shattered windows, and also served to intimidate the staff of the clinic, Chamberlin admitted in the plea agreement.
On March 29, 2021, an employee of the clinic heard an object hit her office window, which caused her to fear for her physical safety and interfered with the performance of her job duties. The next day, at 8:30 a.m. while the clinic was open and receiving patients, defendant again drove by and fired his BB gun at the front entrance. During this attack, a patient’s support companion was seated on the front porch and was nearly hit when the BB gun pellets peppered the banners directly in front of where she was seated. No one was injured in any of the shootings.
On May 7, 2021, the Pasadena Police Department stopped Chamberlin while he was driving away from the clinic following yet another BB gun attack. At this time, Chamberlin possessed eight BB guns, including BB guns designed to look like assault rifles. On the front passenger seat of his vehicle, police found a backpack containing a .22-caliber pistol, which was loaded with 10 rounds of ammunition. In his plea agreement, Chamberlin admitted that he possessed this firearm and ammunition after being previously convicted in Arizona in 2012 of a felony offense of attempted transportation of a narcotic drug for sale.
Following his May 7, 2021, arrest, Chamberlin attempted to dispose of his remaining firearms by selling four firearms to a local consignment store and transferring ownership of eight additional firearms to a neighbor. During a subsequent search of his home, authorities recovered thousands of rounds of ammunition, gun powder, a dozen additional BB guns, a black cylinder resembling a suppressor, a Polymer 80 gun-making kit, various gun parts and multiple documents identifying and referring to Planned Parenthood.
Chamberlin agreed to plead guilty to one count of being a felon in possession of a firearm and ammunition, a felony offense that carries a statutory maximum penalty of 10 years in federal prison, and one count of forcible interference with the obtaining and provision of reproductive health services, a misdemeanor offense punishable by up to one year in prison. A date for Chamberlin to appear in court to formally enter the guilty pleas has not yet been set.
The FBI and the Pasadena Police Department conducted the investigation in this matter.
Assistant United States Attorneys Frances S. Lewis of the Public Corruption and Civil Rights Section is prosecuting this case.
Orange County Pharmacist Found Guilty of 22 Felonies for Her Role in $11 Million Scheme to Defraud the U.S. Military’s Health Care PlanRead the Press Release
LOS ANGELES – A licensed Orange County pharmacist has been found guilty by a jury of nearly two dozen federal criminal charges for her role in a health care fraud scheme in which more than 1,000 bogus prescriptions for compounded medications were filled, costing Tricare, the U.S. military’s health care plan, more than $11 million in losses, the Justice Department announced today.
Sandy Mai Trang Nguyen, 42, of Irvine, was found guilty Tuesday afternoon of 21 counts of health care fraud, and one count of obstruction of a federal audit.
Compounded drugs are tailor-made products doctors may prescribe when the Food and Drug Administration-approved alternative does not meet the health needs of a patient.
According to evidence presented at her five-day trial, Nguyen was the pharmacist-in-charge of the now-defunct Irvine Wellness Pharmacy in Irvine. From late 2014 to May 2015, Nguyen and others under her supervision filled approximately 1,150 compounded prescriptions for pain, scarring and migraines that Tricare reimbursed for tens of thousands of dollars per prescription. Nearly all of the prescriptions were sent to the pharmacy by so-called marketers who were paid kickbacks of upwards of 50% of the Tricare reimbursements.
The beneficiaries were solicited to provide their Tricare insurance information for medications they did not seek out or need, and most were never examined by a physician. The prescriptions were electronically sent from marketers or telemedicine businesses and submitted by the pharmacy for reimbursement even though Tricare rules excluded reimbursements for claims based on telemedicine visits and would not, in any event, have been authorized had Tricare known the prescriptions originated based upon the payment of kickbacks.
Nguyen was aware that the prescriptions were purportedly written by physicians in states other than where the beneficiaries lived, multiple members of the same families received the same medications, and the same prescriptions were written for members of different patient populations, including a 13-year-old boy in Chicago who got the same prescription as an 86-year-old woman in Orange County who happened to be Nguyen’s grandmother.
The pharmacy invoiced the beneficiaries to pay hundreds of dollars in required co-payments, but the beneficiaries stated that they knew nothing about co-payments and understood that the medications were fully covered by Tricare, according to trial testimony. The total co-payments due during the scheme exceeded $16,000, but the pharmacy never collected them.
Nguyen also obstructed a federal audit by providing bogus, cut-and-pasted prescriptions to cover-up Tricare’s effort to validate millions of dollars paid for the same prescriptions.
During Nguyen’s tenure as pharmacist-in-charge, Tricare paid $11,098,756 on the fraudulently submitted claims.
United States District Judge Otis D. Wright II scheduled an April 3, 2023 sentencing hearing, at which time Nguyen will face a statutory maximum sentence of 10 years in federal prison for each health care fraud count, and five years in federal prison for the audit obstruction count.
The Department of Defense, Office of Inspector General; the Defense Criminal investigative Service; the FBI; the Amtrak Office of Inspector General; IRS Criminal Investigation; the United States Department of Labor – Employee Benefits Security Administration; the California Department of Insurance; and the Office of Personnel Management, Office of Inspector General investigated this matter.
Assistant United States Attorneys Mark R. Aveis and Ali Moghaddas of the Major Frauds Section are prosecuting this case.
Murrieta Man Sentenced to 5 Years in Prison for Misusing COVID-Relief Business Loans on Personal Expenses Such as Luxury CarsRead the Press Release
LOS ANGELES – A Riverside County man was sentenced today to 60 months in federal prison for using hundreds of thousands of dollars from the Paycheck Protection Program (PPP) for personal expenses such as luxury cars after he obtained a COVID-business relief loan for more than $7 million on behalf of his pothole-repair company.
Oumar Sissoko, 59, of Murrieta, was sentenced by United States District Judge John F. Walter, who also ordered him to pay $499,827 in restitution.
On April 15, at the conclusion of a three-day trial, a jury found Sissoko guilty of four counts of wire fraud.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted in March 2020 and is designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized more than $300 billion in additional PPP funding.
Sissoko obtained a $7.25 million loan for his downtown Los Angeles-based company, Road Doctor California LLC, after submitting a PPP loan application in April 2020.
In the loan application, Sissoko claimed that Road Doctor was in the process of hiring 450 full-time employees and would have average monthly payroll expenses of $2.9 million. When he applied for the loan, Sissoko acknowledged the funds would be used to retain workers and maintain payroll, or make mortgage interest payments, lease payments and utility payments.
In the days after the PPP loan was funded on May 1, 2020, Sissoko misappropriated hundreds of thousands of dollars of the loan proceeds to use for impermissible purposes, including purchasing a Mercedes-Benz for $113,000, paying off a loan on a BMW, and buying an Apple computer for more than $5,000.
The illegal uses of the loan also included a non-refundable down payment of approximately $100,000 to purchase a company located in New Hampshire and the attempted transmission of approximately $150,000 to accounts in the African nation of Mauritania associated with a mineral-exploration company for which Sissoko purported to serve as CEO.
On March 24, a federal jury deadlocked on the charges against Sissoko and a mistrial was declared. A second trial resulted in Sissoko’s criminal conviction.
Assistant United States Attorney Carolyn S. Small of the Major Frauds Section and DOJ Trial Attorney Theodore Kneller of the Criminal Division’s Fraud Section are prosecuting this case. Assistant United States Attorney Jonathan S. Galatzan, Chief of the Asset Forfeiture and Recovery Section, is providing substantial assistance, including with the seizure and forfeiture of two luxury automobiles purchased with PPP loan funds.
Anyone with general information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Former Amtrak Employee and Her Husband Plead Guilty to Charges for Fraudulently Obtaining Nearly $1 Million in COVID Jobless ReliefRead the Press Release
LOS ANGELES – A former Amtrak employee pleaded guilty today to federal criminal charges for conspiring with her husband to steal nearly $1 million in COVID-19 pandemic-related unemployment insurance (UI) benefits and for fraudulently obtaining more than $63,000 in sickness benefits while she worked at Amtrak.
Lizette Berrios Lathon, 45, of Moreno Valley, pleaded guilty to a three-count information charging her with conspiracy to commit mail and wire fraud, aggravated identity theft, and wire fraud.
Lathon’s husband, Kenneth Andrew Lathon, 48, also of Moreno Valley, pleaded guilty to a three-count information charging him with conspiracy to commit mail and wire fraud, aggravated identity theft, and unlawful possession of a firearm by a convicted felon.
According to her plea agreement, from 2014 until the present day, Lizette Lathon, in addition to her one-time duties as a service attendant for Amtrak, operated at least three tax preparation businesses: Miracle Tax Service, which was located on Los Angeles’ Miracle Mile; Hardcore Corp., which did business as “Hardcore Taxes;” and Lathon LLC. The latter two companies were located in Moreno Valley.
Lathon and her husband took advantage of the expanded eligibility for unemployment insurance benefits made possible by the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law in 2020. The CARES Act also established the Pandemic Unemployment Assistance program, which provided additional UI benefits to qualified individuals during the COVID-19 pandemic including people who did not otherwise qualify for UI such as business owners, self-employed workers, independent contractors, and those with a limited work history.
In some instances, Lizette Lathon submitted fraudulent applications with the California Employment Development Department (EDD) for UI benefits using names, Social Security numbers and dates of birth that she obtained from former clients of her tax preparation businesses without the permission of those former clients. On the applications, she falsely asserted inflated income for the named claimants – many of whom had never lived in California – to receive the maximum benefit amount.
As a result of the fraudulent claims she filed, EDD authorized Bank of America to issue debit cards in the names of Lizette Lathon’s former clients, but the cards were mailed to addresses she and her family controlled. She and her husband then used the debit cards to make cash withdrawals at ATMs and to make purchases at retail stores.
During the conspiracy, which lasted from the spring of 2020 until March 2021, Lathon and her husband caused at least 44 fraudulent unemployment claims to be filed, resulting in losses to EDD and the United States Treasury of approximately $998,630.
Lizette Lathon, who was employed at Amtrak from 2000 to 2021, also schemed to defraud the Railroad Retirement Board (RRB) out of sickness benefit payments by filing forged and false claims that stated she was being treated by a medical professional for pain and anxiety. Through this scheme, which lasted from September 2014 to January 2020, she fraudulently obtained approximately $63,047 in sickness benefit payments.
Kenneth Lathon admitted in his plea agreement to possessing a .22-caliber rifle and 12-gauge shotgun that bore no identifiable serial number despite his criminal history, which includes felony convictions in California state court for theft, cocaine possession, and fraud.
United States District Judge Fernando M. Olguin scheduled an April 13, 2023 sentencing hearing for the defendants, at which time Lizette Lathon will face a statutory maximum sentence of 42 years in federal prison, and Kenneth Lathon will face a statutory maximum sentence of 32 years in federal prison.
This matter is being investigated by the United States Railroad Retirement Board Office of Inspector General; Amtrak Office of Inspector General; the United States Department of Labor Office of Inspector General; the United States Department of Labor Employee Benefits Security Administration; the California Employment Development Department; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Homeland Security Investigations; and the United States Postal Inspection Service.
Assistant United States Attorney Byron R. Tuyay of the Riverside Branch Office is prosecuting these cases.
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 Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Carson Man Sentenced to More Than 18 Years in Federal Prison for Making Sexually Explicit Videos of 15-Year-Old VictimRead the Press Release
LOS ANGELES – A South Bay man who – along with three other accomplices – victimized a 15-year-old girl by creating sexually explicit videos of her has been sentenced to 220 months in federal prison, the Justice Department announced today.
Leprinceton Dewon Burks, 38, of Carson, was sentenced on Monday afternoon by United States District Judge Terry J. Hatter Jr., who also placed Burks on lifetime supervised release once Burks completes his prison sentence.
In June 2021, at the conclusion of a four-day trial, a jury found Burks guilty of two counts of conspiracy to produce child pornography, two counts of production of child pornography, and one count of possession of child pornography.
From July 2011 to August 2011, Burks and three accomplices filmed the victim participating in various sex acts. Burks was visible in the videos that law enforcement recovered from his laptop computer as well as the laptop and cellphone of a co-conspirator.
“The videos show that [Burks] was an enthusiastic participant in this exploitation and when questioned by law enforcement, he said that he thought it was ‘funny,’” prosecutors argued in a sentencing memorandum.
Burks is the final defendant to be sentenced in this case. In August 2015, a federal grand jury charged Burks and three co-defendants in an indictment for sexually exploiting the victim. Each of Burks’ co-defendants pleaded guilty in 2016 to criminal charges in this case and have been sentenced to federal prison terms.
- Darrius Marques Sutton, 32, of Compton, is serving a 160-month prison sentence;
- Darius Dajohn Burks, 34, of Los Angeles, Leprinceton Burks’ brother, is serving a sentence of six years in federal prison; and
- Edwin Donnell Franklin, 35, is serving a four-year federal prison sentence.
The FBI and the Los Angeles Police Department investigated this matter.
Assistant United States Attorney Devon Myers of the Cyber and Intellectual Property Crimes Section prosecuted this case.
Santa Clarita Man Sentenced to Nearly 6½ Years in Prison for Stealing $1.7 Million from Investors via His Real Estate ‘Coupon Bond’ ScamRead the Press Release
LOS ANGELES – A Santa Clarita resident who invested in real estate and sold “coupon bonds” that promised regular interest payments on top of principal repayment was sentenced today to 77 months in federal prison for defrauding investors out of more than $1.7 million.
Matthew Skinner, 45, was sentenced by United States District Judge Percy Anderson, who also ordered him to pay $1,744,946 in restitution.
Skinner pleaded guilty on June 1 to one count of securities fraud.
In 2014, Skinner founded a company called Empire West Equity Inc. and later established another business named Simple Growth LLC. Skinner used social media platforms such as Facebook and YouTube to promote himself, falsely claiming to be an experienced and successful real estate investor with more than $200 million in deals under his belt.
After Empire West experienced financial troubles – Skinner was unable to pay his staff and investors – he established Simple Growth in 2018 and falsely told investors who purchased Simple Growth coupon bonds “that their money would be used to purchase real estate that [Skinner] and Empire West would develop and resell at a profit,” according to court documents.
Skinner did not intend to purchase, develop or resell real estate, and that he instead used investor funds to pay older investors, his employees and himself. Instead, Skinner used investor funds from those entities and accounts to pay for personal trips, his mortgage, his utility bills, cosmetic surgery, and alimony payments to his ex-wife.
Simple Growth raised approximately $1,744,946 from more than 20 investors – none of whom received any of their money back.
“Several of the victims were elderly and were seeking safe investment opportunities,” prosecutors argued in a sentencing memorandum. “Several of the victims described how [Skinner} repeatedly lied to them and made-up excuses of why he was unable to make the quarterly interest payments.”
The FBI investigated this case.
Assistant United States Attorney Jeff Mitchell of the Major Frauds Section prosecuted this case.
Former Federal Agent Sentenced to More Than 10 Years in Prison for Accepting Bribes to Help Figure Associated with Organized CrimeRead the Press Release
LOS ANGELES – A former special agent with Homeland Security Investigations (HSI) was sentenced today to 121 months in federal prison for accepting cash payments and other benefits to help an organized crime-linked person, including taking official action designed to help two foreign nationals gain entry into the United States.
Felix Cisneros Jr., 48, of Murrieta, was sentenced by United States District Judge R. Gary Klausner, who also ordered him to pay a fine of $30,000. Judge Klausner also entered a forfeiture order of $133,000 against Cisneros.
On May 3, at the conclusion of a five-day trial, a federal jury found Cisneros guilty of 30 felonies: one count of conspiracy to commit bribery of a public official, one count of bribery, 26 counts of money laundering and two counts of subscribing to a false tax return. Cisneros been in federal custody since the trial’s conclusion.
Over an 18-month period that started in September 2015, Cisneros accepted cash, checks, private jet travel, luxury hotel stays, meals and other items of value from a person identified in court documents as “Individual 1,” who was associated with a criminal organization. Cisneros received approximately $100,000 in checks and gifts from Individual 1 in 2015 and 2016.
Cisneros accepted the cash and other bribes while employed as a special agent with HSI, which is an agency within the United States Department of Homeland Security. In exchange for the bribes, Cisneros performed a series of official acts at the behest of Individual 1, including:
- Accessing a DHS database for information about a German national identified as W.R., and telling Individual 1 he removed a “hit” on W.R., “thus indicating derogatory information had been removed”;
- Placing an alert in a law enforcement database for an address associated with an illegal marijuana grow operation so Cisneros could learn of law enforcement interest and warn Individual 1;
- Obtaining an official DHS letter signed by an HSI assistant special agent in charge to allow the parole of Individual 1’s brother-in-law into the United States from Mexico, and later providing updates about the brother-in-law’s asylum application; and
- Collecting information on an associate of Individual 1 whose home had been searched by law enforcement and later providing Individual 1 with information about the investigation.
Cisneros also underreported his total income on his federal income tax returns by at least $20,000 for the year 2015 and at least $73,404 for the year 2016.
The FBI, IRS Criminal Investigation and the Department of Homeland Security’s Office of Inspector General investigated this matter.
Assistant United States Attorneys Michael J. Morse and Juan M. Rodriguez of the General Crimes Section prosecuted this case.
Compton Man Sentenced to over 9 Years in Prison for Targeting and Robbing Gay Men He Met on the Grindr Online Dating ApplicationRead the Press Release
LOS ANGELES – A Compton man was sentenced today to 111 months in federal prison for targeting and robbing Los Angeles-area gay men he met on the Grindr online dating application.
Derrick Patterson, 23, was sentenced by United States District Judge John F. Walter, who also ordered him to pay $84,195 in restitution. At today’s sentencing hearing, Judge Walter applied a hate-crime enhancement to Patterson’s sentence.
Patterson has admitted in his plea agreement to robbing five victims from June 2021 to March 2022. He targeted his victims by using Grindr, a social networking platform for gay, bisexual, transgender and queer people. Patterson met his victims at their homes or in hotel rooms under the pretense of sexual encounters. Once there, Patterson asked to use the victims’ phones.
During a July 2021 incident, Patterson entered the victim’s home under the pretense of a sexual encounter. He then asked to borrow the victim’s phone. Patterson then had sex with the victim to distract him while using the victim’s phone to transfer himself money. When the victim realized something was wrong and protested, Patterson went to the victim’s kitchen, pulled out a kitchen knife, threatened the victim, and then used the victim’s Venmo account to steal $3,950. Patterson also used the victim’s online account to pay for two Hotels.com transactions, and he used the victim’s phone to send text messages to the victim’s friends and family in Nevada to request that they send the victim money, which Patterson intended to intercept.
In February 2022, Patterson entered another victim’s residence under the pretense of a sexual encounter. Patterson asked if he could use the victim’s phone. After the victim handed Patterson the phone, the victim turned away and then heard a stun gun activating. Patterson chased the victim with the stun gun and demanded money. The victim gave $120 to Patterson, who then demanded jewelry.
After Patterson left the victim’s home, he used the phone to ask the victim’s contacts for money. Patterson also used the victim’s phone to access the victim’s Apple Pay account and open a line of credit in the victim’s name with Goldman Sachs. Patterson then went to a T-Mobile store in Los Angeles and used the Goldman Sachs credit line to purchase Apple Airpods costing approximately $273. Patterson also used the victim’s bank card to pay for a hotel room.
Patterson admitted in court documents that he assaulted one victim – against whom he used a homophobic slur – and threatened to shoot another victim during an encounter in a hotel room.
The FBI’s investigation in this matter is ongoing. The Los Angeles Police Department, the Los Angeles County Sheriff’s Department and the Beverly Hills Police Department have provided substantial assistance.
Assistant United States Attorney Jeremiah M. Levine of the Violent and Organized Crime Section prosecuted this case.