Central District of California
Press releases recorded for this federal judicial district.
Riverside County Man Pleads Guilty to Federal Criminal Charges for Fraudulently Obtaining $6.6 Million in COVID-Relief Business LoansRead the Press Release
LOS ANGELES – A Corona man pleaded guilty today to federal criminal charges in connection with a scheme to submit false loan applications that brought him more than $6.6 million in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds.
Muhammad Noor Ul Ain Atta, 39, pleaded guilty to a two-count information charging him with wire fraud and laundering of monetary instruments.
According to his plea agreement, Atta submitted 11 fraudulent PPP loan applications for seven of his shell companies. The fraudulent PPP loan applications misrepresented the number of employees and the average monthly payroll expenses of Atta’s companies, and falsely certified he would use the loan proceeds for permissible business purposes. Atta also submitted false tax and payroll documentation in support of his loan applications. In total, Atta received $6,643,540 in loan proceeds even though none of his companies were legitimate recipients of relief funds at that time. Atta then laundered loan proceeds to bank accounts in the United States and Pakistan.
The plea agreement details one PPP loan in which Atta sought $1,267,714 for a company called Envisioning Future Inc. The loan application falsely represented that Envisioning Future had 73 employees and falsely certified Envisioning Future would use the loan proceeds for permissible business purposes, including the payment of payroll and other business-related expenses. The fraudulent application filed on April 10, 2020 was supported by falsified federal tax returns and false payroll data.
About one month later, Envisioning Future received $1,267,140 in loan proceeds, and the following day Atta wired most of the money to his mother’s bank account. Then in June 2020, Atta wired $1.3 million – the majority of which came from the Envisioning Future PPP loan – to a financial institution in Islamabad, Pakistan. According to the plea agreement, the wire transfer details included a note that the wire was “family support.”
United States District Judge Percy Anderson scheduled an October 17 sentencing hearing, at which time Atta will face a statutory maximum penalty of 20 years in prison for each count.
Acting United States Attorney Stephanie S. Christensen, Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, Acting Special Agent in Charge Cory Nootnagel of the Office of the Inspector General for the Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection, Special Agent in Charge Ryan Korner of IRS Criminal Investigation, Special Agent in Charge Weston King of the Small Business Administration – Office of Inspector General, and Special Agent in Charge Rod Ammari of the Treasury Inspector General for Tax Administration made the announcement.
Assistant U.S. Attorney Adam P. Schleifer of the Major Frauds Section and Trial Attorneys Jennifer L. Bilinkas and Matthew F. Sullivan of the Justice Department’s Fraud Section are prosecuting the case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
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.
Two Orange County Men Sentenced to Federal Prison for Conning Investors Out of $1.9 Million Through Cryptocurrency OfferingRead the Press Release
SANTA ANA, California – Two Orange County men each were sentenced today to federal prison terms for conning more than 2,000 investors into purchasing a cryptocurrency that purportedly provided exclusive access to a profitable trading program, and then using most of the $1.9 million raised to line their own pockets.
Jeremy David McAlpine, 26, of Fountain Valley, was sentenced to 36 months in federal prison by United States District Judge Cormac J. Carney. In a separate hearing today, Judge Carney sentenced Zachary Michael Matar, 29, of Huntington Beach, to 30 months in federal prison. Judge Carney scheduled a September 26 restitution hearing in this case.
McAlpine and Matar each pleaded guilty in August 2021 to one count of securities fraud.
In 2017, McAlpine and Matar founded Dropil Inc., a Belize-based company operating out of Fountain Valley. Dropil provided and managed investments in digital assets including a cryptocurrency called DROPs that McAlpine and Matar developed. McAlpine and Matar were also primarily responsible for the development of Dropil’s digital asset trading program, an automated trading bot called “Dex,” which could be used exclusively with DROPs.
McAlpine and Matar induced investors to purchase DROPs by making false claims about DROPs, the functionality and profitability of Dex, and the number of investors and volume of investment in DROPs that had purportedly already been achieved and that purportedly enhanced – through the operation of supply and demand – the value of DROPs. Dex was said to provide an “expertly managed portfolio balancing algorithm [that] manages risk,” according to information published on Dropil’s website. The DROP tokens were said to “ensure privacy while also offering added value and exclusivity.” Dropil further promised that Dex’s trading would generate profits that would be distributed as additional DROP tokens every 15 days.
Beginning in late 2017, McAlpine and Matar began an unregistered offer and sale of DROPS on Dropil’s website. In January 2018, the defendants launched an initial coin offering (ICO) for the sale of DROPs, again through Dropil’s website, which continued through March 2017. Neither McAlpine, Matar nor Dropil was registered with the Securities and Exchange Commission (SEC) as a broker or dealer.
To induce investors to purchase DROPs, McAlpine and Matar made a series of false statements to investors in a “White Paper” published on Dropil’s website and on its Twitter account, promoting the cryptocurrency’s supposed success. Among other false statements, the White Paper asserted that trading with Dex would produce average annual returns of between 24% and 63% depending on the “risk profile” selected by the investor.
In response to investigative subpoenas from the SEC, the defendants manufactured fake Dex profitability reports, giving the false appearance that Dex was operational and profitable. Defendants also fabricated an investor spreadsheet for the SEC that purported to show that Dropil had successfully raised $54 million from 34,000 investors both foreign and domestic. In fact, the ICO raised under $2 million from fewer than 2,500 investors. McAlpine also provided false sworn testimony to the SEC about the amount of money raised in the ICO, as well as about Dex and its purportedly profitable trading activity.
In total, the defendants obtained approximately $1,896,657 from 2,472 investors through the sale of approximately 629 million DROPs. McAlpine and Matar used the invested money as promised to fund disbursements to themselves and their associates.
In sentencing memoranda, prosecutors argued that the defendants’ “offenses were serious and troubling: They caused significant financial harm to an extremely large number of victims and entailed efforts to derail law enforcement’s attempts to root out and address wrongdoing.”
As part of the settlement of a separate civil case brought by the SEC, Dropil Inc., McAlpine and Matar in July 2021 agreed to permanent injunctions barring further fraudulent conduct and prohibiting them from directly or indirectly participating in the offer, purchase, or sale of digital securities.
The FBI investigated this matter.
Assistant United States Attorney Ranee A. Katzenstein, Chief of the Major Frauds Section, prosecuted this case.
Former Owner of T-Mobile Retail Store in Eagle Rock Found Guilty of Committing $25 Million Scheme to Illegally Unlock CellphonesRead the Press Release
LOS ANGELES – A former owner of a T-Mobile retail store in Eagle Rock has been found guilty by a jury of 14 federal criminal charges for his $25 million scheme to enrich himself by stealing T-Mobile employee credentials and illegally accessing the company’s internal computer systems to illicitly “unlock” and “unblock” cellphones, the Justice Department announced today.
Argishti Khudaverdyan, 44, of Burbank, was found guilty of 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.
The jury returned the guilty verdict Friday evening in United States District Court.
According to evidence presented at his four-day trial, Khudaverdyan ran a multi-year scheme that illegally unlocked and unblocked cellphones, which generated approximately $25 million 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 such as unlocks247.com. 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.
Working with others in overseas call centers, Khudaverdyan also received T‑Mobile employee credentials which he then used to access T-Mobile systems to target higher-level employees by harvesting those employees’ personal identifying information and calling the T-Mobile IT Help Desk to reset the employees’ company passwords, giving him unauthorized access to the T-Mobile systems which allowed him to unlock and unblock cellphones.
All told, 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.
United States District Judge Stephen V. Wilson scheduled an October 17 sentencing hearing, at which time Khudaverdyan will face statutory maximum sentences of 20 years in federal prison for each wire fraud count, 20 years in federal prison for conspiracy to commit money laundering, 10 years in federal prison for each money laundering count, five years in federal prison for each count of intentionally accessing a computer without authorization to obtain information, five years in federal prison for the count of accessing a computer to defraud and obtain value, and a mandatory two years in federal prison for 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 December 5.
The United States Secret Service Cyber Fraud Task Force (CFTF) in Los Angeles and IRS Criminal Investigation’s Western Area Cyber Crime Unit 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 are prosecuting this case. Assistant United States Attorney Jonathan S. Galatzan, Chief of the Asset Forfeiture Section, is handling the asset forfeiture portion of this case.
Santa Clarita Valley Woman Sentenced to More Than 4 Years in Prison for Embezzling $1.7 Million Through Diversity Recruitment ScamRead the Press Release
LOS ANGELES – The former human resources manager at a Santa Clarita-based race car design and development company was sentenced today to 51 months in federal prison for scheming to defraud her then-employer out of more than $1.7 million earmarked for diversity recruitment by using two fake businesses that billed for services that were never performed.
Judith Fernandez-Adelugba, 45, of Stevenson Ranch, was sentenced by United States District Judge John F. Walter, who also ordered her to pay $1,745,964 in restitution. At today’s hearing, Judge Walter said Fernandez-Adelugba was “driven by pure greed” and that her criminal conduct had left her employer “shaken to the core.”
Fernandez-Adelugba pleaded guilty in August 2021 to one count of wire fraud. She worked as the chief human resources manager at a business identified in court documents as “Company-1,” a Santa Clarita-based company that provided a technical and operations center for high performance racing programs and specialized in the design and development of high-performance automotive parts.
Fernandez-Adelugba was responsible for the company’s diversity recruitment, which included implementing and managing programs to encourage persons from diverse gender, racial, ethnic, and other backgrounds to apply for jobs with her employer. She also had the authority to approve the payment of invoices of up to $25,000.
To assist her in the scheme, Fernandez-Adelugba recruited her father, George Fernandez, 75, of Stevenson Ranch, and Alex Lawrence Wilkison, 49, of Canyon Country, who was married to Fernandez-Adelugba’s work colleague at Company-1. George Fernandez was the president and CEO of the Stevenson Ranch-based company, Business Solutions Services (BSS). Wilkison was the registered owner of Engineering Talent Connect (ETC), a fictitious business name registered to an address in Mission Hills.
From March 2015 until her resignation from Company-1 in February 2018, Fernandez-Adelugba, her father, and Wilkison used BSS and ETC to embezzle Company-1 funds – money they used for their own personal enrichment. Participants in the scheme submitted to Company-1 fake invoices issued by BSS and ETC that requested payment for diversity recruitment-related services purportedly performed. These “services” included posting job openings, placing job-related advertisements, searching for candidates, and successfully recruiting candidates for Company-1.
Fernandez-Adelugba approved the fake invoices for payment, delivered them to Company-1’s accounting department, and followed up to request and facilitate payment of the fake invoices.
After Company-1 issued payments on the fake invoices, Fernandez-Adelugba and her co-schemers used their illicit gains for personal expenditures such as trips to Las Vegas, credit card bills and dining at restaurants.
From March 2015 to November 2017, Fernandez-Adelugba caused 150 fake invoices to be submitted to Company-1, which in turn caused it to transfer a total of $1,745,964 to the two scheme-related companies – $1,562,364 to BSS and $183,600 to ETC.
Fernandez-Adelugba paid kickbacks to her co-schemers and kept more than $1.1 million of the scheme’s ill-gotten gains, which she used for her personal benefit.
“Company-1 suffered more than just that feeling of betrayal,” prosecutors argued in a sentencing memorandum. “[Fernandez-Adelugba’s] embezzlement of funds earmarked for diversity recruitment caused Company-1 to fall behind its diversity recruiting goals. Because of [Fernandez-Adelugba’s] greed and selfishness, many worthy diverse engineers may have been denied potential careers at Company-1.”
Wilkison pleaded guilty in November 2020 to one count of wire fraud and is serving a six-month federal prison sentence. Judge Walter ordered Wilkison to pay $183,600 in restitution.
George Fernandez has agreed to pay $103,140 in restitution to Company-1 as part of a pretrial diversion agreement with federal prosecutors. A superseding information filed in September 2021 charged Fernandez with misprision of a felony for failing to report his daughter’s act of wire fraud in March 2018 despite knowing of her criminal conduct.
The FBI investigated this matter.
Assistant United States Attorney Scott Paetty of the Major Frauds Section prosecuted this case.
San Luis Obispo County Man Arrested on Federal Charges Alleging He Sold Fake Prescription Pills that Caused Fatal Fentanyl OverdoseRead the Press Release
LOS ANGELES – A Paso Robles man has been arrested on federal charges of selling counterfeit prescription pills containing fentanyl to a 19-year-old Atascadero resident who suffered a fatal overdose from the synthetic opioid, the Justice Department announced today.
Timothy Clark Wolfe, 24, was taken into custody Thursday by special agents with the Drug Enforcement Administration, and he was arraigned on the federal charges this afternoon in United States District Court in downtown Los Angeles.
A federal grand jury on July 19 charged Wolfe in a two-count indictment that accuses him of distributing fentanyl resulting in death and possession with the intent to distribute alprazolam (often sold under the brand name Xanax).
Wolfe pleaded not guilty to the charges in the indictment and a September 20 trial date was scheduled. A federal magistrate judge ordered Wolfe released on $150,000 bond.
The indictment alleges that, on March 8, 2020, Wolfe sold the victim the fentanyl-laced pills, “the use of which resulted in the death and serious bodily injury of E.V.”
During a search of Wolfe’s residence on March 9, 2020, Atascadero Police discovered the alprazolam, which the indictment alleges he intended to distribute.
The San Luis Obispo County District Attorney’s Office charged Wolfe in relation to the overdose death on May 20, 2020. The District Attorney’s Office will dismiss their state charges in light of the federal prosecution.
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 charge of distributing fentanyl resulting in death carries a mandatory minimum sentence of 20 years in federal prison and a maximum statutory penalty of life. The charge of possession with the intent to distribute alprazolam carries a maximum statutory penalty of five years in federal prison.
The DEA’s Los Angeles Field Office is investigating this matter. The Atascadero Police Department and the San Luis Obispo County District Attorney’s Office provided substantial assistance.
Assistant United States Attorneys Julia Hu of the Major Frauds Section and Jena MacCabe of the General Crimes Section are prosecuting this case.
The Centers for Disease Control and Prevention estimates that 108,642 people died as the result of a drug overdose in the United States during the one-year period ending February 2022. Synthetic opioids, such as fentanyl and its analogs, are the primary driver of the increase in drug overdose deaths. Synthetic opioids are involved in 67% of all drug overdose deaths and 89% of opioid-involved drug overdose deaths.
According to the DEA, criminal drug networks in Mexico are mass-producing illicit fentanyl and fake pills pressed with fentanyl in clandestine, unregulated labs. These fake pills are designed to look like real prescription pills, typically replicating prescription opioid medications such as oxycodone (common brand names include Oxycontin and Percocet) and hydrocodone (Vicodin); sedatives such as alprazolam; and stimulants (Adderall). The DEA warns that pills purchased outside of a licensed pharmacy are illegal, dangerous and potentially lethal. For more information, please visit www.dea.gov/onepill.
CEO of Reality TV Production Companies Sentenced to One Year in Federal Prison for Defrauding Private Lender Out of $2 MillionRead the Press Release
LOS ANGELES – The CEO of two Hollywood production companies that specialize in reality-television programming was sentenced today to 12 months and one day in federal prison for fraudulently obtaining a $2 million business loan using fabricated documents and by misrepresenting his companies’ financial circumstances.
Jonathan Lee Smith, 41, of Koreatown, was sentenced by United States District Judge John F. Walter, who also ordered Smith to pay $2 million in restitution.
Smith managed and owned two Hollywood-based production companies, Hoplite Entertainment Inc., and Hoplite Inc. To convince a private lender to fund a $2 million loan in 2020, Smith falsely represented that his two companies had accounts receivable of $3,348,000, and he submitted falsified license agreements and other forgeries to back up the claim.
Based on these and other misrepresentations, the victim lender agreed to the loan and, on September 30, 2020, transferred $1,951,416 to a Hoplite Entertainment bank account.
To convince the private lender to give him additional time to repay the loan, court documents state, Smith falsely represented that payment was imminent. He also emailed a fake record showing a $100,000 wire payment from Hoplite, Inc. to the lender. In fact, the loan was never repaid.
“[Smith] is an experienced businessman in the entertainment industry,” prosecutors argued in a sentencing memorandum. “He knew it was wrong to lie to secure a $2 million loan but did it anyway. And rather than make just one misrepresentation, [Smith] backed up his lie with counterfeit documents to show fake accounts receivable and fictitious incoming payments. The result was straightforward and predictable: [Smith’s] financial circumstances were inadequate to repay the loan he received from the private lender, and the victim has lost $2 million because of [Smith’s] false pretenses.”
The FBI investigated this matter. The United States Trustee's Los Angeles Office provided assistance.
Assistant United States Attorney Alexander B. Schwab of the Major Frauds Section prosecuted this case.
Career Armed Bank Robber Sentenced to Nearly 20 Years in Federal Prison for Latest String of 10 Heists Across Southern CaliforniaRead the Press Release
LOS ANGELES – A man who served more than two decades in state prison for a series of armed bank robberies in the 1990s was sentenced this morning to 235 months in federal prison for committing another 10 bank robberies across Southern California – a string that started only four months after he was released from custody for his prior robbery spree.
Todd Eugene Cannady, 61, who was living in Palm Springs at the time of his arrest last year, was sentenced by United States District Judge Stanley Blumenfeld Jr.
During today’s hearing, Judge Blumenfeld said it is “hard to imagine crimes that are more serious. The court has seen them, but this ranks in the higher order of seriousness.”
Cannady pleaded guilty in October 2021 to one count of armed bank robbery and one count of using a firearm during a crime of violence. These offenses relate to the July 1, 2021 robbery of a Chase Bank branch in Riverside in which Cannady used a 9mm “ghost gun” to threaten employees and force them to open teller drawers. Cannady was arrested soon after this incident by deputies with the Riverside County Sheriff’s Department, but not before he fled in a rented car, hit several vehicles during a high-speed chase, and crashed on Interstate 215.
When he pleaded guilty, Cannady admitted committing another nine bank robberies between July 2018 and March 2021 in Manhattan Beach, Century City, Rancho Mirage, Torrance, Banning and Carson. Cannady netted $757,763 during the 10 robberies.
Cannady twice robbed the same Wells Fargo Bank branch in Rancho Mirage – once in June 2019 and again in January 2020.
“Todd Eugene Cannady is a serial armed bank robber,” prosecutors wrote in a sentencing memorandum filed with the court. “From 1982 to 2021, [Cannady] committed armed robberies of individuals or banks whenever he was not incarcerated. He did so at great economic expense to individuals and institutions and great emotional expense to the tens of victims he traumatized in each robbery and at each bank. In spite of this trauma, [Cannady] seemingly took great joy in his crimes, yelling…‘John Dillinger lives!’ during a 2019 armed bank robbery.”
The FBI and the Riverside County Sheriff’s Department investigated this matter.
Assistant United States Attorney Kevin J. Butler of the Violent and Organized Crime Section prosecuted this case.
Former Long Beach Police Officer Sentenced to Nearly 6 Years in Federal Prison for Distributing Child Pornography While on DutyRead the Press Release
LOS ANGELES – A former Long Beach Police officer was sentenced today to 70 months in federal prison for distributing sexually explicit images of children, including when he was on duty.
Anthony Brown, 57, formerly of Lakewood and who now resides in Island, Kentucky, was sentenced by United States District Judge Virginia A. Phillips, who also ordered him to pay a fine of $15,000 and to be placed on lifetime supervised release once he is released from prison.
Brown pleaded guilty on March 21 to one count of distribution of child pornography.
From October 2019 through May 2020, Brown used MeWe, an internet-based messaging application, to engage in graphic sex chats with other users in which he posed as his wife and discussed encouraging fictitious minor female relatives to participate in group sex acts. While logged on and while he was on duty as a Long Beach Police Department officer, Brown distributed images of teenage and prepubescent girls engaged in sexually explicit conduct.
Brown was a Long Beach Police officer for 27 years. He left the force in 2021 after his arrest on state charges of possession and distribution of child pornography. The Los Angeles County District Attorney’s Office dismissed those charges in light of the federal case.
Homeland Security Investigations and the Long Beach Police Department investigated this matter.
Assistant United States Attorney Kathrynne N. Seiden of the General Crimes Section prosecuted this case.
Medical Device Manufacturer Biotronik Inc. Agrees to Pay $12.95 Million to Settle Allegations of Improper Payments to PhysiciansRead the Press Release
Biotronik Inc. (Biotronik), a medical device manufacturer based in Oregon, has agreed to pay $12.95 million to resolve allegations that it violated the False Claims Act by causing the submission of false claims to Medicare and Medicaid by paying kickbacks to physicians to induce their use of Biotronik’s implantable cardiac devices, such as pacemakers and defibrillators.
“Paying kickbacks to doctors to influence their selection of medical devices undermines the integrity of federal healthcare programs,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When medical devices are used in surgical procedures, patients deserve to know that their device was selected based on quality of care considerations and not on improper payments from manufacturers.”
“Kickbacks to doctors are illegal because they impose hidden costs on the health care system and they taint the doctor-patient relationship,” said Acting U.S. Attorney Stephanie S. Christensen for the Central District of California. “The resolution to this matter concludes a lengthy investigation that demonstrates our commitment to take strong action when patient care takes a backseat to generating profits.”
"Valuable taxpayer dollars that fund Medicare and Medicaid are meant to support the delivery of health care services most suitable for beneficiaries. The payment of kickbacks to medical providers to impel their use of certain devices can improperly divert those dollars and undermine the quality of care being provided to patients," said Special Agent in Charge Timothy DeFrancesca of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). "HHS-OIG remains dedicated to working with fellow law enforcement agencies to safeguard the integrity of federal health care programs and the services they cover."
The Federal Anti-Kickback Statute prohibits offering or paying anything of value to induce referrals of items or services covered by Medicare and other federally funded programs. The statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives.
The settlement announced today resolves allegations that Biotronik engaged in a kickback scheme to pay certain favored physicians to induce and reward their use of Biotronik’s pacemakers, defibrillators and other cardiac devices. In particular, Biotronik allegedly abused a new employee training program by paying physicians for an excessive number of trainings and, in some cases, for training events that either never occurred or were of little or no value to trainees. Biotronik allegedly made these payments despite concerns raised by its own compliance department, which warned that salespeople had too much influence in selecting physicians to conduct new employee training and that the training payments were being over-utilized. The settlement also resolves allegations that Biotronik violated the Anti-Kickback Statute when it paid for physicians’ holiday parties, winery tours, lavish meals with no legitimate business purpose and international business class airfare and honoraria in exchange for making brief appearances at international conferences.
Medicaid is funded jointly by the states and the federal government. The States of Arizona, California, Illinois, Missouri and Nevada paid for a portion of the Medicaid claims at issue and will receive a total of approximately $933,400 from the settlement with Biotronik.
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Jeffrey Bell and Andrew Schmid, both of whom were previously employed as independent sales representatives for Biotronik. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. Mr. Bell and Mr. Schmid will receive approximately $2.1 million as their share of the recovery in this case. The qui tam case is captioned United States ex rel. Bell, et al. v. Biotronik, Inc. et al., No. 2:18-cv-1895 (C.D. Cal.).
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Central District of California. HHS-OIG assisted in the investigation.
The matter was handled by Fraud Section Trial Attorneys Breanna Peterson and Jonathan Hoerner and Assistant U.S. Attorney Karen Paik for the Central District of California.
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 settlement are allegations only and there has been no determination of liability.
Cardiac Device Manufacturer Biotronik Inc. Agrees to Pay Nearly $13 Million to Settle Allegations of Improper Payments to DoctorsRead the Press Release
LOS ANGELES – Biotronik Inc., a medical device manufacturer based in Oregon, has agreed to pay $12.95 million to resolve allegations that it violated the False Claims Act by causing the submission of false claims to Medicare and Medicaid by paying kickbacks to physicians to induce their use of Biotronik’s implantable cardiac devices, such as pacemakers and defibrillators.
The settlement announced today resolves allegations in a “whistleblower” complaint that Biotronik engaged in a kickback scheme to pay certain favored physicians to induce and reward their use of Biotronik’s pacemakers, defibrillators and other cardiac devices. The case was partially unsealed by United States District Judge Philip S. Gutierrez and was made public on Thursday.
Biotronik allegedly abused a new employee training program by paying physicians for an excessive number of trainings and, in some cases, for training events that either never occurred or were of little or no value to trainees. Biotronik allegedly made these payments despite concerns raised by its own compliance department, which warned that salespeople had too much influence in selecting physicians to conduct new employee training and that the training payments were being over-utilized.
The settlement also resolves allegations that Biotronik violated the federal Anti-Kickback Statute when it paid for physicians’ holiday parties, winery tours, lavish meals with no legitimate business purpose, and international business class airfare and honoraria in exchange for making brief appearances at international conferences.
“Kickbacks to doctors are illegal because they impose hidden costs on the health care system and they taint the doctor-patient relationship,” said Acting United States Attorney Stephanie S. Christensen. “The resolution to this matter concludes a lengthy investigation that demonstrates our commitment to take strong action when patient care takes a backseat to generating profits.”
“Paying kickbacks to doctors to influence their selection of medical devices undermines the integrity of federal healthcare programs,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When medical devices are used in surgical procedures, patients deserve to know that their device was selected based on quality of care considerations and not on improper payments from manufacturers.”
“Valuable taxpayer dollars that fund Medicare and Medicaid are meant to support the delivery of health care services most suitable for beneficiaries. The payment of kickbacks to medical providers to impel their use of certain devices can improperly divert those dollars and undermine the quality of care being provided to patients," said Special Agent in Charge Timothy DeFrancesca of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG remains dedicated to working with fellow law enforcement agencies to safeguard the integrity of federal health care programs and the services they cover.”
The Anti-Kickback Statute prohibits offering or paying anything of value to induce referrals of items or services covered by Medicare and other federally funded programs. The statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives.
Medicaid is funded jointly by the states and the federal government. The states of Arizona, California, Illinois, Missouri and Nevada paid for a portion of the Medicaid claims at issue and will receive a total of approximately $933,400 from the settlement with Biotronik.
The civil settlement includes the resolution of claims brought under the qui tam – or whistleblower – provisions of the False Claims Act by Jeffrey Bell and Andrew Schmid, two former independent sales representatives for Biotronik. Under the qui tam provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. Mr. Bell and Mr. Schmid will receive approximately $2.1 million as their share of the recovery in this case, United States ex rel. Bell, et al. v. Biotronik, Inc. et al., CV18-1895 (C.D. Cal.).
The resolution obtained in this matter was the result of a coordinated effort between the United States Attorney’s Office in Los Angeles and the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section. HHS-OIG assisted in the investigation.
The matter was handled by Assistant United States Attorney Karen Paik of the Civil Fraud Section and Justice Department Fraud Section Trial Attorneys Breanna Peterson and Jonathan Hoerner.
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 settlement are allegations only and there has been no determination of liability.
California Man Sentenced to over 11 Years for $27 Million PPP Fraud SchemeRead the Press Release
A Southern California man was sentenced today to 135 months, the equivalent of 11 years and three months, in prison for submitting fraudulent applications seeking money from the Paycheck Protection Program (PPP), submitting false statements to a financial institution, and money laundering.
Robert Benlevi, 53, of Encino, was convicted by a federal jury of bank fraud, making false statements to a financial institution, and money laundering on March 28. According to court documents, and evidence presented at trial, Benlevi submitted 27 PPP loan applications to four banks between April and June 2020 on behalf of eight companies solely owned by Benlevi. In the applications, Benlevi sought a total of $27 million in forgivable PPP loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In his fraudulent applications, Benlevi represented that each of his companies had 100 employees and average monthly payroll of $400,000, even though he knew that the companies did not have any employees or payroll expenses.
The evidence further showed that Benlevi also submitted fabricated IRS documents falsely stating that each of the companies had an annual payroll of $4.8 million. Based on Benlevi’s fraudulent loan applications, three of Benlevi’s companies — 1Stellar Health LLC, Bestways2 Health LLC, and Joyous-Health4U LLC — obtained $3 million in PPP funds. Although Benlevi falsely represented that the funds sought through the PPP loan applications would be used for payroll and certain other business expenses, the evidence showed that he instead used them for personal expenses, including cash withdrawals, payments on his personal credit cards, transfers to other personal and business accounts he controlled, and renting an oceanfront apartment in Santa Monica.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; Acting U.S. Attorney Stephanie S. Christensen for the Central District of California; Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Acting Assistant Director in Charge Amir Ehsaei of the FBI’s Los Angeles Field Office; Special Agent in Charge Jeffrey D. Pittano of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG); and Special Agent in Charge Weston King of the SBA Office of Inspector General (SBA-OIG) Western Region made the announcement.
The FBI, SBA-OIG, and FDIC-OIG investigated the case.
Trial Attorney Justin Givens of the Criminal Division’s Fraud Section prosecuted the case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
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 via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
West L.A. Man Found Guilty of Stalking Charges for Longtime Harassment Campaign Against Female Doctors at VA FacilitiesRead the Press Release
LOS ANGELES – A federal jury today found a West Los Angeles man guilty of federal stalking charges for his harassment campaign targeting two female doctors at the West Los Angeles Veterans Affairs Medical Center, and two other female doctors working at the VA’s Loma Linda facility in San Bernardino County.
Gueorgui Hristov Pantchev, 50, was found guilty of four counts of stalking.
According to evidence presented at his five-day trial, Pantchev’s conduct with respect to two of the doctors began in 2011 with numerous threatening communications sent to West L.A. VA doctors identified in court documents as Victim C and Victim D. As a result of this harassment, Pantchev was charged by the Los Angeles County District Attorney’s Office and was convicted in 2014 of nine counts of stalking and witness intimidation.
After serving a state prison sentence, Pantchev was paroled in 2017 and he was barred from the West L.A. VA Medical Center. Pantchev then began seeking medical services at the VA’s Loma Linda facility, where he started stalking, harassing, and intimidating Victims A and B.
Notwithstanding the parole conditions that prohibited him from going to the West L.A. facility, in 2020, Pantchev sought care there and began sending harassing and intimidating communications to colleagues of Victims C and D.
Pantchev deluged Victims C and D and their colleagues with hundreds of lewd, sexually explicit, and defamatory fliers bearing large pictures of Victim C and Victim D that Pantchev repeatedly distributed around the West Los Angeles VA facility and other locations.
On the morning of Pantchev’s arrest in January 2021, he drove to Victim D’s home and her child’s elementary school and distributed more sexually explicit flyers that included the victim’s home address and contact information. During a search of Pantchev’s residence, law enforcement found more copies of the same flyers, along with printed copies of some of the letters and emails Pantchev sent to victims.
Pantchev has been in federal custody since his arrest in January 2021.
United States District Judge John F. Walter scheduled a September 26 sentencing hearing, at which time Pantchev will face a statutory maximum sentence of five years in federal prison for each count.
The FBI and the United States Department of Veterans Affairs investigated this matter.
Assistant United States Attorneys Khaldoun Shobaki and Lauren Restrepo of the Cyber and Intellectual Property Crimes Section are prosecuting this case.
Tarzana Accountant Pleads Guilty to Fraud Charge for Helping Client Fraudulently Obtain $1.2 Million COVID-Related Business LoanRead the Press Release
LOS ANGELES – A San Fernando Valley certified public accountant pleaded guilty today to a federal criminal charge for helping a long-time client fraudulently obtain a $1.2 million COVID-19 business loan by knowingly preparing a false corporate tax return on the client’s behalf.
Bernard Turk, 73, of Tarzana, pleaded guilty to one count of wire fraud, a crime that carries a statutory maximum sentence of 20 years in federal prison.
According to court documents, Turk is a certified public accountant who runs a tax preparation business in Tarzana. In February 2021, Turk helped a long-time client submit a false application for a Paycheck Protection Program (PPP) loan on behalf of the client’s company, Agency 126, a purported marketing and video production agency based in Irvine.
PPP is a government-backed loan program designed by Congress to help small businesses stay afloat and keep their workforces employed during the COVID-19 pandemic.
Specifically, Turk prepared a false federal corporate income tax return, claiming that Agency 126 paid employees $5,383,401 in wages during the 2019 tax year. Turk provided the false 2019 tax return to his client to submit to a bank to support the PPP loan sought by the client. To hide his involvement, Turk marked the false tax return “self-prepared.”
Turk admitted that both he and his client knew that Agency 126 had no employees, paid no wages, and never filed tax returns with the IRS.
The client electronically submitted the false tax return that Turk prepared to the Small Business Administration and the bank in support of Agency 126’s fraudulent PPP loan application. On the false 2019 tax return submitted to the bank, the client removed the “self-prepared” designation and replaced it with Turk as the preparer.
Relying, in part, on the false tax return, the bank and the SBA approved and funded Agency 126’s PPP loan and wired $1,212,312 to a bank account that the client controlled. For his role in the scheme, Turk was to receive a percentage of the loan proceeds when the bank forgave the loan.
United States District Judge Josephine L. Staton scheduled Turk’s sentencing hearing for October 7.
The Small Business Administration’s Office of Inspector General, Homeland Security Investigations, IRS Criminal Investigation, and the FBI is investigating this matter.
Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office is prosecuting this case.
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.
Southern California Men Plead Guilty in Scheme to Manufacture and Sell AR-15-Type ‘Ghost Guns’Read the Press Release
LOS ANGELES – Two men have pleaded guilty in a conspiracy that operated an illegal business that built and sold unserialized AR-15-type firearms – commonly referred to as “ghost guns” – capable of accepting high-capacity magazines.
The week before they were scheduled to go on trial, the two defendants each pleaded guilty Thursday to a charge of conspiracy to engage in the business of manufacturing and dealing in firearms without a license.
The two defendants who pleaded guilty are Travis Schlotterbeck, 37, of Fountain Valley, and James Bradley Vlha, 29, of Norco. The scheme was based at two Bellflower businesses controlled by Schlotterbeck called Sign Imaging and Live Fire Coatings. Neither the businesses nor the defendants had a federal firearms license to engage in the manufacture or sale of firearms.
According to court documents, Schlotterbeck and Vlha admitted that they took custom orders for AR-15-type firearms – both rifles and pistols – which they then manufactured and sold to undercover operatives with the Bureau of Alcohol, Tobacco, Firearms and Explosives. The defendants obtained the firearm parts, arranged for certain parts – including unfinished lower receivers often called “80% lowers” – to be machined for use in building completed firearms, and assembled and finished the firearms for sale without any serial numbers or manufacturer markings.
As part of the scheme that lasted from 2015 through 2017, Schlotterbeck and Vhla sold six of the ghost guns to ATF undercover agents and a confidential informant in 2015 and 2016, charging from $1,500 to $2,000 for each firearm. Both men were charged in a federal grand jury indictment filed in 2019.
In addition to the conspiracy count, Schlotterbeck also pleaded guilty to one count of selling a firearm to a convicted felon in relation to the sale of an AR-15-type rifle to the informant while being aware that the informant had previously been convicted of a felony offense.
Schlotterbeck and Vlha pleaded guilty before United States District Judge George H. Wu, who scheduled sentencing hearings for both defendants on November 17.
The conspiracy count that both defendants pleaded guilty to carries a statutory maximum penalty of five years in federal prison. The charge of selling a firearm to a convicted felon carries a maximum penalty of 10 years in prison.
The ATF conducted the investigation in this matter.
Assistant United States Attorneys Brian R. Faerstein of the Environmental and Community Safety Crimes Section and Dan G. Boyle of the Asset Forfeiture Section are prosecuting this case.
Nicaraguan Man Sentenced to More Than 11 Years in Prison for 2-Week Robbery Spree of U.S. Postal Service Mail CarriersRead the Press Release
LOS ANGELES – A Nicaraguan national illegally residing in the United States has been sentenced to 135 months in federal prison for a two-week crime spree in which he robbed five United States Postal Service (USPS) employees – and fired a handgun so close to one victim that it caused him to suffer a ruptured eardrum, the Justice Department announced today.
Elvyn Antonio Rodriguez, 22, a.k.a. Elvyn Meneses Rodriguez, a transient who has lived in various locations in the San Fernando Valley, was sentenced late Wednesday afternoon by United States District Judge Dolly M. Gee, who also ordered him to pay $2,825 in restitution to the USPS and two mail carriers.
Rodriguez pleaded guilty on March 15 to three counts of robbery of mail and property of the United States and one count of aggravated identity theft.
From April 30 until May 14, 2021, Rodriguez robbed five USPS employees in Encino, North Hills, Van Nuys and West Los Angeles, pointing a firearm at them and stealing their personal belongings, including their cell phones, credit cards and the keys to their USPS trucks. Rodriguez then used the victims’ credit cards at retailers, where he purchased various items including clothing, BB guns, a watch, a glass pipe, and gasoline.
In the fifth robbery on May 14, 2021, Rodriguez, carrying a semi-automatic firearm, approached a USPS mail carrier in West Los Angeles and demanded his wallet. When the victim refused, Rodriguez cocked his firearm. Rodriguez and the victim then struggled over the firearm. During the struggle, Rodriguez fired the weapon in close proximity to the victim’s head, leaving gunshot residue on the victim’s shoulder. Rodriguez then stole mail from the victim and fled in a stolen Chevrolet Malibu along with an accomplice. A .40-caliber casing was recovered at the robbery’s location.
As a result of the gun discharge, the victim was transported to a hospital and was treated for a ruptured ear drum.
Rodriguez, who has been in federal custody since May 2021, caused USPS a loss of at least $1,805, one victim a loss of $60 and another victim a loss of $960.
“While [Rodriguez] enriched himself at the expense of his victims, they remained traumatized and forever impacted by [his] actions,” prosecutors argued in a sentencing memorandum.
The United States Postal Inspection Service and the Los Angeles Police Department investigated this matter.
Special Assistant United States Attorney Kyle W. Kahan of the General Crimes Section prosecuted this case.
Orange County Man Prohibited from Preparing Tax Returns after Filing Returns that Fraudulently Sought over $50 Million in RefundsRead the Press Release
SANTA ANA, California – A federal judge has ordered a Buena Park man to stop preparing or helping to prepare tax returns after federal authorities determined his clients filed tax returns that claimed bogus dependents and fraudulently sought more than $50 million in tax refunds.
The judgment that became public today enjoins Jose Pineda and his business – the Anaheim-based ABK Income Tax & Travel, Inc. – from directly or indirectly acting as federal tax return preparers and other federal tax-related activities.
According to a civil complaint filed in March 2021 by the United States, between 2013 and 2020, Pineda and ABK fraudulently claimed fabricated or unqualified dependents on their customers’ tax returns, thus claiming refundable credits to which they were not entitled, including the child tax credit, the additional child tax credit and the earned income credit.
When the IRS confronted taxpayers with the false returns, they confirmed the dependents were added fictitiously and they did not qualify for the tax benefit. A majority of Pineda and ABK’s customers came from Spanish-speaking immigrant communities in Orange County. Due to their limited education, language ability and knowledge of tax or accounting matters, most of Pineda and ABK’s customers followed Pineda’s direction to certify that their tax returns were correct, even though they did not understand contents of the returns.
Pineda and ABK’s customers revealed during interviews with IRS authorities that, even when Pineda and ABK knew the IRS was disallowing erroneously claimed dependents, Pineda and ABK continued to falsely report these same dependents on their customers’ tax returns for subsequent years. According to the government’s complaint, between 2016 and 2020, Pineda and ABK prepared approximately 22,340 federal income tax returns, and 89% of those returns sought refunds – a total of approximately $51,899,961 in refunds, most of which stemmed from fraudulent deductions on those returns.
This case was handled by Assistant United States Attorney Najah Shariff of the Tax Division. The IRS’ Abusive Transactions Investigation Group conducted the investigation in this matter.
The judgment entered today on the court’s docket concludes the government’s case in United States v. Jose Pineda, individually and doing business as ABK Income Tax & Travel, and ABK Income Tax & Travel, Inc., SACV21-463. United States District Judge David O. Carter on Tuesday filed the judgment for injunction with the consent of Pineda and ABK.
Return preparer fraud remains a high priority of the IRS, and taxpayers seeking a return preparer should remain vigilant. The IRS has published tips on its website for choosing a tax preparer and has launched a free directory of federal tax preparers.
Victorville Man and Alleged Accomplice Face Federal Charges of Transporting 15-Year-Old Girl to Mexico for Illicit Sexual ActivityRead the Press Release
LOS ANGELES – A Southern California man who posed online as a teenage boy and enticed a 15-year-old girl to have a sexual relationship before bringing her to Mexico is scheduled to make his first court appearance tomorrow to face federal charges of transporting a minor with the intent to engage in criminal sexual activity.
Daniel Navarro, who sometimes posed online as “Angel,” 38, of Victorville, was named Monday night in a federal criminal complaint that also charges a woman who allegedly helped Navarro contact minors and who apparently drove Navarro and the 15-year-old girl to Tijuana on July 1, the night before the girl’s scheduled quinceañera.
Navarro and his alleged accomplice – Julie Le, 20, of Garden Grove – were arrested Sunday night pursuant to state court warrants as they entered the United States from Mexico – 10 days after allegedly bringing the victim to Mexico. Both defendants are expected to appear tomorrow in United States District Court in downtown Los Angeles.
The victim in this case – an Arizona girl identified in court documents as “A.T.” who was spending the summer in the Central Coast town of Nipomo – was rescued Monday morning from a residence in Tijuana by Mexican authorities.
According to an affidavit in support of the criminal complaint, Navarro had an online relationship with the victim for the past year. “A review of one of Navarro’s Instagram accounts, ‘dn.2021.01,’ revealed conversations between Navarro and A.T. on A.T.’s Instagram account in which Navarro professed his love for A.T. and discussed having sex with A.T. in order to impregnate her,” according to the affidavit.
The affidavit states that Navarro used social media in attempt to convince one of A.T.’s relatives to run away with him, and that Navarro tried to entice other teenage girls to send him sexual images.
On July 1, Navarro and Le entered Mexico with A.T. hidden in the backseat, according to the affidavit.
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.
The charge of transportation with intent to engage in criminal sexual activity with a minor carries a mandatory minimum sentence of 10 years in federal prison and a potential sentence of life without parole.
The FBI and the San Luis Obispo County Sheriff’s Office are investigating this matter. The San Luis Obispo County District Attorney’s Office provided substantial assistance. The FBI’s Legal Attaché in Mexico City and Mexican law enforcement authorities provided assistance during this investigation.
Assistant United States Attorney Kevin Reidy of the Violent and Organized Crime Section is prosecuting this case.
Compton Man Pleads Guilty to Federal Criminal Charges for Targeting and Robbing Gay Men He Met on the Grindr Online Dating ApplicationRead the Press Release
LOS ANGELES – A Compton man pleaded guilty today to federal criminal charges for targeting and robbing Los Angeles-area gay men he met on the Grindr online dating application.
Derrick Patterson, 23, pleaded guilty to one count of Hobbs Act robbery and one count of aggravated identity theft.
Patterson admitted in his plea agreement to robbing five victims from June 2021 to March 2022. According to his plea agreement, Patterson 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, one victim gave his phone to Patterson, who 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 during other robberies 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.
United States District Judge John F. Walter scheduled a September 19 sentencing hearing, at which time Patterson will face a statutory maximum sentence of 22 years in federal prison.
The FBI's investigation 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 is prosecuting this case.
Anyone who believes they may have been a victim or targeted by Patterson is urged to contact the FBI’s Los Angeles Field Office 24 hours a day at (310) 477-6565.
Orange County Man Pleads Guilty to Stalking Charge for Harassment Campaign Against Professional Online GamerRead the Press Release
LOS ANGELES – An Orange County man pleaded guilty today to a federal criminal charge for stalking a professional online gamer during a long-running harassment campaign.
Evan Baltierra, 29, of Trabuco Canyon, pleaded guilty to one count of stalking, a crime that carries a statutory maximum sentence of five years in federal prison.
According to his plea agreement, Baltierra met the victim, a prominent professional gamer, at a gaming convention in Anaheim in November 2019. After this meeting, Baltierra asked to meet the victim in her hometown in Canada, which made her feel uncomfortable. After the victim blocked Baltierra on various social media accounts, beginning in June 2020, Baltierra created hundreds of social media accounts to send the victim threatening messages. One message sent to the victim via Twitter in January 2021 read in part, “[t]imes ticking…waiting for the right opportunity.”
In October 2020, Baltierra hired an unknown third party through an instant messaging mobile application to create multiple photoshopped nude images of the victim that placed her face onto pornographic images. From November 2020 to March 2022, Baltierra posted the photoshopped nude images to multiple pornographic websites and internet forums. He also sent the images to the victim’s friends and family. Baltierra also posted links to the images on various social media websites and told others online to search for the victim’s name to see naked pictures of her.
The victim obtained a temporary restraining order against Baltierra in January 2021. After the protective order was served on him, Baltierra began posting the victim’s personal information – including her real name and city of residence, which were listed on the protective order – to social media websites and during her live video game streams. Baltierra also posted the victim’s Twitter handle to pornographic websites along with the photoshopped nude images he had created.
During the victim’s live streams of video games, Baltierra used multiple accounts to continually post harassing messages. Baltierra’s spamming of the victim made it impossible for her to stream herself playing video games and forced her to stop streaming in February 2021.
In June 2021, two months after Baltierra and the victim reached a settlement in which he agreed to not contact her or her family and friends in exchange for the victim dissolving the temporary restraining order, Baltierra called the victim’s local police department. In that phone call, Baltierra requested the police conduct a welfare check of the victim by lying to the police that the victim had made threats online that she was going to commit suicide. Baltierra also attempted to obtain the victim’s home address during that phone call. The police later visited the victim’s home for a welfare check.
From January 2022 to March 2022, Baltierra sent threatening messages to the victim via various social media accounts, including one messages that read, “get a casket ready.” In March 2022, Baltierra wrote a letter to the parents of the victim’s boyfriend, which stated, in part, that the situation was going to end badly for her.
Baltierra also admitted to sending the victim an unsolicited suspicious package in March 2022 that later was determined to contain a box of condoms.
United States District Judge Fernando M. Olguin scheduled an October 20 sentencing hearing in this case.
The FBI investigated this matter.
Assistant United States Attorney Jake D. Nare of the Santa Ana Branch Office is prosecuting this case.
Former Postal Service Mail Carrier Pleads Guilty to Federal Charges for Stealing Mail and Fraudulently Obtaining COVID-19 Jobless BenefitsRead the Press Release
LOS ANGELES – A former United States Postal Service (USPS) mail carrier pleaded guilty today to federal criminal charges 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, 32, of Palmdale, pleaded guilty to a two-count information charging him with mail fraud and theft of mail matter by an officer or employee.
According to his plea agreement, 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 pandemic-related unemployment benefits. Glover’s co-schemers applied for unemployment benefits from EDD 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 (PUA) and Lost Wage Assistance (LWAP) programs.
Glover admitted to abusing his position as a USPS mail carrier by providing co-schemers 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 further admitted to stealing 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.
Glover also admitted to stealing more than 10 personal and business checks payable to others and unrelated to the COVID-19 pandemic, which totaled to approximately $23,266. In relation to these checks, Glover admitted to stealing approximately 40 pieces of mail.
United States District Judge Percy Anderson scheduled a September 19 sentencing hearing, at which time Glover will face a statutory maximum sentence of 20 years in federal prison on the mail fraud count and five years in federal prison on the mail theft count.
In a related case, Travis McKenzie, 26, of Valencia, a co-schemer who lived on Glover’s mail route, is scheduled to plead guilty on July 13 to a three-count information charging him with mail fraud, mail theft, and identity theft.
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 further admitted to using 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.
Upon entering his guilty plea, McKenzie will face a statutory maximum sentence of 40 years in federal prison.
The United States Department of Labor Office of Inspector General, the United States Postal Service Office of Inspector General, the California Employment Development Department Investigations, and the Los Angeles County Sheriff’s Department investigated this matter.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office is prosecuting 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.
Jamaican Man Who Supplied Flight Attendant with 60 Pounds of Cocaine to Smuggle at LAX Sentenced to Nearly 14 Years in PrisonRead the Press Release
LOS ANGELES – A Jamaican national was sentenced today to 165 months in federal prison for supplying a JetBlue flight attendant with nearly 60 pounds of cocaine that she attempted to smuggle onboard a flight at Los Angeles International Airport.
Gaston Brown, 42, of Clarendon, Jamaica, was sentenced by United States District Judge Christina A. Snyder.
A federal grand jury indicted Brown in January 2017, charging him with two counts of conspiracy to possess and distribute cocaine, one count of unlawful use of a means of identification, one count of use of a counterfeit access device, and one count of aggravated identity theft.
At the conclusion of a four-day trial in February 2018, a jury found Brown guilty of all charges.
On six occasions between October 2015 and March 2016, Brown paid JetBlue flight attendant Marsha Gay Reynolds, 35, of Jamaica, New York, to transport cocaine and drug money across the country. Brown paid her to carry the drugs and cash in suitcases through “known crewmember” checkpoints at LAX and New York’s John F. Kennedy International Airport. As a known crewmember, Reynolds was subjected to much lighter screening at airport security checkpoints and would be able to transport the cash and cocaine without being stopped.
To evade detection by law enforcement, Brown, an illegal immigrant and convicted felon, used identities he had stolen from two mentally disabled men so he could meet Reynolds in the “sterile” area of the airport, past security. While in the airport’s sterile area, he retook possession of the drug- and cash-laden suitcases, and traveled across the country with them, undetected.
On March 18, 2016, Brown supplied approximately 27 kilograms (59.5 pounds) of cocaine to Reynolds. She then attempted to board a JetBlue flight in Terminal 4 at LAX. After showing her official badge and identification to the Transport Security Administration officer on duty at the known crewmember checkpoint, Reynolds was randomly selected for additional screening. Reynolds was then escorted to a secondary screening area. Upon arriving at this checkpoint, Reynolds dropped her luggage, removed her shoes, and fled the area, running down an upward-traveling escalator and away from TSA officers.
Reynolds eventually surrendered herself to the Drug Enforcement Administration at John F. Kennedy International Airport in New York on March 23, 2016. She remained in custody while her case was pending and ultimately pleaded guilty in December 2016 to one count of conspiracy to possess and to distribute cocaine. In April 2018, she was given credit for time served and was released. Brown was indicted for the charges in this case while in federal custody for attempting to illegally re-enter the United States in April 2016 following deportation.
This investigation was conducted by the Los Angeles International Airport Criminal Enterprise Task Force (LAACETF), an inter-agency task force based at LAX. The Task Force, which includes representatives of the FBI, the DEA, U.S. Customs and Border Protection, the Transportation Security Administration, the Los Angeles International Airport Police Department, the Los Angeles Police Department, and the Los Angeles County Sheriff’s Department. The LAACETF provides a coordinated law enforcement effort to target airport/airline internal criminal enterprises that use the aviation system to transport large amounts of illicit drugs throughout the United States and various international destinations.
Assistant United States Attorney Suria M. Bahadue of the General Crimes Section prosecuted this case.
Six Defendants Arrested on Federal Grand Jury Indictment Alleging They Fraudulently Obtained $2 Million in COVID-19 Jobless BenefitsRead the Press Release
LOS ANGELES – Law enforcement today arrested six defendants charged in a federal grand jury indictment alleging they fraudulently obtained more than $2 million in COVID-19-related unemployment insurance (UI) benefits by submitting fraudulent applications in the names of others that falsely asserted, among other things, that the claimants were salon and barbershop workers rendered jobless because of the pandemic.
The 14-count indictment, returned on June 23 and unsealed today, charges eight defendants with conspiracy to commit mail fraud, mail fraud, and aggravated identity theft. The defendants arrested today are expected to be arraigned this afternoon in United States District Court in Riverside, Los Angeles, Atlanta, and Houston, and tomorrow in Medford, Oregon. Two of the defendants are fugitives.
According to the indictment, from March 2020 to July 2021, Robert Campbell Jr., 29, of Corona, the case’s lead defendant, orchestrated a conspiracy to steal the UI benefits. Campbell and his co-conspirators, including Regjinay Tate, 28, also of Corona, allegedly used the personally identifiable information (PII) of others – including names, dates of birth, and Social Security numbers – to file fraudulent UI applications with the California Employment Development Department (EDD), which administers the state’s unemployment insurance program.
The fraudulent UI claims were federally funded through programs authorized by Congress in response to the pandemic, including the Pandemic Unemployment Assistance (PUA) and Lost Wage Assistance (LWAP) programs.
According to the indictment, many of the fraudulent claims were made on behalf of ineligible out-of-state claimants as well as on behalf of claimants ineligible for benefits because of their incarceration, including one claimant in Texas. One of the conspirators boasted about obtaining a homeless man’s PII, the indictment alleges.
Generally, the fraudulent applications falsely stated the claimants’ prior annual income at $42,000 and that they were unemployed self-employed individuals whose jobs were adversely impacted when salons and barbershop closed during the COVID-19 pandemic. The fraudulent applications listed mailing addresses with locations chosen and controlled by Campbell and his co-conspirators, the indictment alleges.
Once the fraudulent applications were approved, debit cards were then mailed to addresses under the control of Campbell and his co-conspirators. Other members of the conspiracy allegedly arranged for some of the fraudulently obtained UI benefits to be disbursed to claimants living outside of California, including in Oregon and Texas.
In total, Campbell and others allegedly caused 174 fraudulent applications to be filed with EDD, resulting in 125 fraudulent claims to be paid to 116 unique claimants, causing losses of approximately $2,091,436.
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 convicted of all charges, the defendants would face statutory maximum sentences of 30 years in federal prison on each of the conspiracy and mail fraud counts, and a mandatory two-year consecutive prison sentence on the aggravated identity theft counts.
This matter is being investigated by the United States Department of Labor – Office of Inspector General and the California Employment Development Department – Investigation Division, with assistance from Homeland Security Investigations; the United States Postal Inspection Service; the California Department of Corrections and Rehabilitation – Special Services Unit; and the United States Secret Service.
Assistant United States Attorney Adam P. Schleifer of the Major Frauds Section is prosecuting this case.
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.
Rapper Who Bragged About COVID-Related Jobless Benefits Scam Agrees to Plead Guilty to Federal Fraud and Firearm ChargesRead the Press Release
LOS ANGELES – A rapper who boasted in a YouTube music video about getting rich by committing pandemic-related unemployment benefits fraud has agreed to plead guilty to federal fraud and firearms charges, the Justice Department announced today.
Fontrell Antonio Baines, 33, a.k.a. “Nuke Bizzle,” of Memphis, Tennessee, has agreed to plead guilty to one count of mail fraud and one count of unlawful possession of a firearm and ammunition by a convicted felon.
Baines is expected to plead guilty to the charges in the coming days in United States District Court in downtown Los Angeles.
According to his plea agreement, from July 2020 to September 2020, Baines unlawfully exploited the Pandemic Unemployment Assistance (PUA) provisions of the CARES Act to obtain unemployment insurance money to which he was not entitled. 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. Baines abused the program to obtain unemployment benefits administered by the California Employment Development Department (EDD) in the names of third parties, including identity theft victims.
The applications for these benefits listed addresses to which Baines had access in Beverly Hills and Koreatown. 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 on the basis of the fraudulent PUA claim filed in the Missouri man’s name to withdraw approximately $2,500.
Baines, who has been in federal custody since his arrest in October 2020, admitted that 92 fraudulent PUA claims were filed 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 an affidavit filed with a criminal complaint in this case, 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.
Baines further admitted that in October 2020 at his Hollywood Hills residence he illegally possessed a semi-automatic pistol with 14 rounds of ammunition. Baines was prohibited from possessing the firearm because he had previously sustained felony convictions, namely 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.
Upon entering his guilty pleas, Baines will face a statutory maximum sentence of 20 years in federal prison for the mail fraud count and 10 years in federal prison for the unlawful firearm and ammunition possession count. Baines has also agreed to forfeit funds totaling $56,750 that were previously seized by law enforcement.
This matter was investigated by 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. Substantial assistance was provided by the United States Marshals Service and the Las Vegas Metropolitan Police Department.
Assistant United States Attorney Ranee A. Katzenstein, Chief of the Major Frauds Section, and Assistant United States Attorney Alexander B. Schwab, also 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.
Former Rancho Mirage Resident Sentenced to More Than 8 Years in Prison for $44 Million Fraud that Illegally Billed Insurers for Cosmetic SurgeriesRead the Press Release
LOS ANGELES – A former Coachella Valley resident whom Israel deported after she and her then-doctor husband fled there to escape criminal prosecution was sentenced today to 97 months in federal prison for her role in a conspiracy in which insurers were fraudulently billed $44 million for unnecessary cosmetic surgeries.
Linda Morrow, 70, formerly of Rancho Mirage, was sentenced by United States District Judge Josephine L. Staton, who also ordered her to pay $14,025,904 in restitution. At today’s hearing, Judge Staton remarked that Morrow’s “greed knew no bounds.”
Morrow, who has been in federal custody since July 2019, pleaded guilty on February 4 to one count of conspiracy to commit health care fraud and one count of contempt of court.
Morrow’s husband, 77-year-old David M. Morrow, was extradited by Israel in January 2020 and is currently serving a 20-year prison sentence. David Morrow pleaded guilty in 2016 and was free on bond awaiting sentencing when the couple fled to Israel. Judge Staton imposed the 20-year sentence while the Morrows were living as fugitives, finding that the intended loss from the scheme was more than $44 million. David Morrow was a doctor whose medical license was revoked in January 2018.
Linda Morrow helped her husband run the fraudulent billing scheme out of The Morrow Institute (TMI) in Rancho Mirage and was TMI’s executive director. The Morrows schemed to defraud health insurance companies by submitting bills for procedures performed at TMI that were billed as “medically necessary” – but in fact were cosmetic procedures such as “tummy tucks,” “nose jobs,” breast augmentations, and vaginal rejuvenations.
The victims included Aetna, Anthem Blue Cross, Blue Shield of California and Cigna Health Insurance. The scheme also defrauded Staples, Inc. and a self-insured group of public entities that included school districts.
“[Linda Morrow] was not simply the ‘doctor’s wife’ to a doctor who happened to commit a crime,” prosecutors wrote in a sentencing memorandum. “To the contrary, [she] was an equal partner in their fraudulent scheme, and she participated and ran multiple parts of it.”
In 2017, Linda Morrow fled the United States with her husband to avoid prosecution and failed to appear in court as ordered. In addition to helping move $4 million from domestic bank accounts to accounts in Israel, Morrow used a fraudulent Mexican passport to enter Israel and a fraudulent Guatemalan passport while living there. While living as a fugitive in Israel, Morrow applied for Israeli citizenship using a fraudulent identity.
Israel deported her in 2019.
The FBI, IRS Criminal Investigation and the California Department of Insurance conducted the investigation into the Morrows and TMI. The FBI’s Legal Attachés in Jerusalem, Mexico City, and Guatemala; the Israeli National Police; the United States Marshals Service; the United States Border Patrol’s Northern Border Coordination Center; and the Department of Justice’s Office of International Affairs provided considerable assistance in tracking down and capturing the Morrows.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office prosecuted this case. Assistant United States Attorney Robert I. Lester of the Civil Division’s Financial Litigation Section is enforcing restitution orders in this matter.
Former Head of Anaheim Chamber of Commerce Pleads Guilty to Federal Fraud, False Statement and Criminal Tax ChargesRead the Press Release
LOS ANGELES – The former president and CEO of the Anaheim Chamber of Commerce pleaded guilty today to federal criminal charges for defrauding a cannabis company, fraudulently obtaining a COVID-relief business loan worth nearly $62,000, lying to a bank while seeking a loan for a $1.5 million second home, and cheating on his taxes.
Todd Ament, 57, of Orange, pleaded guilty to two counts of wire fraud, one count of making a false statement to a financial institution, and one count of subscribing to a false tax return.
According to his plea agreement, in 2019, Ament served as president and CEO of the Anaheim Chamber of Commerce. During that time, Ament and a political consultant who was a partner at a national public relations firm, devised a scheme to divert proceeds intended for the Chamber through the PR firm and into Ament’s personal bank account.
Ament and the political consultant schemed to defraud a cannabis company that had retained the political consultant to lobby for favorable cannabis-related legislation in Anaheim. The cannabis company paid $225,000 to the Chamber with the understanding that it would have access to a task force that crafted such legislation, but at least $41,000 of that money was paid directly to Ament without those payments being disclosed to the client.
In April 2020, Ament applied to the Small Business Administration (SBA) for an Economic Injury Disaster Loan (EIDL) on behalf of his company, TA Consulting LLC, a sole proprietorship based in Big Bear City that had no substantial operations or employees. In May 2020, the SBA wired Ament $61,900 as EIDL proceeds for his business. Ament used the money to pay for various personal expenses, including at clothing stores, boat dealers and on property taxes on his home.
In December 2020, Ament lied to JPMorgan Chase by submitting a letter falsely representing that three deposits from the PR firm to Ament-controlled bank accounts – totaling $205,000 – were earned income based on services provided by TA Consulting LLC on the PR firm’s behalf. In fact, Ament knew the $205,000 represented a loan to himself and was not earned income.
Finally, Ament admitted in his plea agreement that for the tax years 2017, 2018 and 2019 he knowingly and willfully caused false tax returns to be signed and filed that did not report income he had received from various sources. For example, in July 2019, Ament signed and filed a federal tax return that reported that his gross receipts for the tax year 2018 was $0, when in fact his actual gross receipts for that year were $179,336.
In total, Ament caused a tax loss to the United States government of $249,998 for those three tax years.
United States District Judge Fernando L. Aenlle-Rocha scheduled a December 9 sentencing hearing, at which time Ament will face statutory maximum sentences of 20 years in federal prison for each wire fraud count, 30 years in federal prison for the false statement to a financial institution count, and three years’ imprisonment for the tax count.
The FBI and IRS Criminal Investigation are investigating this matter.
Assistant United States Attorneys Daniel H. Ahn, Daniel S. Lim and Melissa S. Rabbani of the Santa Ana Branch Office are prosecuting this case.
Calabasas Man Agrees to Plead Guilty to Charges for Scamming Cannabis Vaping Business Investors Out of at Least $28 MillionRead the Press Release
LOS ANGELES – A former UCLA decathlete who also competed with the Philippines national team has agreed to plead guilty to two federal criminal charges for fraudulently raising more than $37 million from investors who were told their funds would be used to finance companies marketing cannabis vape pens, the Justice Department announced today.
David Joseph Bunevacz, 53, of Calabasas, agreed to plead guilty to one count of securities fraud and one count of wire fraud, according to a plea agreement filed today in United States District Court. Both crimes carry a statutory maximum penalty of 20 years in federal prison.
Bunevacz, who has been in federal custody since his arrest in this case on April 5, is expected to plead guilty to the charges in the coming weeks.
According to his plea agreement, going back to 2010, Bunevacz created several business entities – including Holy Smokes Holdings LLC and Caesarbrutus LLC – that he claimed were involved in the cannabis industry and the sale of vape pens containing cannabis products such as CBD oil and THC.
Bunevacz falsely told at least one investor he had a longstanding relationship with a Chinese manufacturer of disposable vape pens and he obtained “raw pesticide-free oil” that was sent to a “lab that infuses the flavors into the oil with our proprietary custom process that renders the vape flavoring smooth and discrete,” according to court documents. Bunevacz also provided investors with forged documents – such as bank statements, invoices and purchase orders – to support his claims of the businesses’ success and the need for investor funds.
Instead of using the funds to finance business operations, Bunevacz misappropriated the vast majority of the funds to pay for his own opulent lifestyle, including a luxurious house in Calabasas, Las Vegas trips, jewelry, designer handbags, a lavish birthday party for his daughter, and horses.
To create the false appearance that his companies were engaged in legitimate business activities, Bunevacz registered various shell companies, including several with names similar or identical to those of legitimate cannabis businesses. To conceal his control of these shell companies and the bank accounts associated with them, Bunevacz listed other individuals, including his stepdaughter, as the corporate officers of the shell companies.
Bunevacz’s blog touts his success as a former decathlete who competed for the Philippines, and his wife and daughter appeared in a reality television show. Despite Bunevacz’s promotion of his background, Bunevacz took efforts to conceal negative information from investors, such as his 2017 felony conviction for the unlawful sale of securities, according to an affidavit submitted in support of the criminal complaint. After one investor uncovered a lawsuit against Bunevacz, Bunevacz emailed a counterfeit version of the settlement agreement to falsely make it appear that he had been paid $325,000 as part of a settlement. In reality, it was Bunevacz who had agreed to pay $325,000 to settle the claim.
Operating through his cannabis companies, Bunevacz raised between approximately $37,166,737 and $45,068,227 from more than 10 victim-investors. He admitted to causing losses of at least $28,409,112.
The FBI, the Los Angeles County Sheriff’s Department and IRS Criminal Investigation are investigating this matter. The U.S. Securities and Exchange Commission provided substantial assistance.
Assistant United States Attorney Alexander B. Schwab of the Major Frauds Section is prosecuting this case.
Justice Department Announces Enforcement Action Charging Six Individuals with Cryptocurrency Fraud Offenses in Cases Involving over $100 Million in Intended LossesRead the Press Release
LOS ANGELES – The Department of Justice, together with federal law enforcement partners, today announced criminal charges against six defendants in four separate cases for their alleged involvement in cryptocurrency-related fraud, including the largest known Non-Fungible Token (NFT) scheme charged to date, a fraudulent investment fund that purportedly traded on cryptocurrency exchanges, a global Ponzi scheme involving the sale of unregistered crypto securities, and a fraudulent initial coin offering.
“These cases serve as a crucial reminder that some con artists hide behind trendy buzzwords, but at the end of the day they are simply seeking to separate people from their money,” said U.S. Attorney Tracy L. Wilkison for the Central District of California. “We will continue to work with our law enforcement partners to educate and protect potential investors about both traditional and trendy investments.”
“The Department of Justice and our partners are dedicated to using every available tool to protect consumers and investors from fraud and manipulation,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “These indictments reflect our deep commitment to prosecuting individuals involved in cryptocurrency fraud and market manipulation.”
“Our office is committed to protecting investors from sophisticated scammers seeking to capitalize on the relative novelty of digital currency,” said U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida. “As with any emerging technology, those who invest in cryptocurrency must beware of profit-making opportunities that appear too good to be true.”
“As cryptocurrency marketplaces advance and offer new opportunities for consumers, criminals also seek ways to exploit them,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The FBI, alongside our law enforcement partners, will continue to investigate and bring those criminals to justice, and to protect the American people.”
“This investigation and prosecution exemplifies the importance of public-private partnerships,” said Executive Associate Director Steve K. Francis of Homeland Security Investigations (HSI). “As a result of our strong relationships with industry partners, HSI received information leading to this investigation and ultimate indictment. HSI will continue to investigate criminal organizations operating in emerging technologies and are proud to have worked with the Department of Justice Fraud Section to put an end to this criminal activity.”
The following charges are announced today as a part of this national enforcement action.
Crypto NFT Scheme:
United States v. Le Ahn Tuan:
Le Anh Tuan, 26, a Vietnamese national, was charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit international money laundering in the Central District of California in connection with a scheme involving the “Baller Ape” NFT. As alleged in the indictment, Tuan was involved in the Baller Ape Club, an NFT investment project that purportedly sold NFTs in the form of various cartoon figures, often including the figure of an ape. According to the indictment, shortly after the first day Baller Ape Club NFTs were publicly sold, Tuan and his co-conspirators engaged in what is known as a “rug pull,” ending the purported investment project, deleting its website, and stealing the investors’ money. Based on blockchain analytics, shortly after the rug pull, Tuan and his co-conspirators laundered investors’ funds through “chain-hopping,” a form of money laundering in which one type of coin is converted to another type and funds are moved across multiple cryptocurrency blockchains, and used decentralized cryptocurrency swap services to obscure the trail of Baller Ape investors’ stolen funds. In total, Tuan and his co-conspirators obtained approximately $2.6 million from investors. If convicted of all counts, Tuan faces up to 40 years in prison. HSI is investigating the case. Fraud Section Trial Attorneys Kevin Lowell and Tian Huang are prosecuting the case.
“HSI is always looking at new trends transnational criminal organizations are exploiting to further their illegal operations” said Acting Special Agent in Charge Selwyn Smith of HSI Baltimore. “In the Baller Ape Club case, cyber criminals used the emerging market of Non-Fungible Tokens (NFT) to prey on investors seeking to diversify their portfolios and stole $2.6 million in cryptocurrency. HSI Baltimore will continue to investigate criminal organizations operating in emerging technologies. HSI Baltimore is proud to have partnered with the Department of Justice Fraud Section.”
Crypto Ponzi and Unregistered Securities Scheme:
United States v. Emerson Pires, Flavio Goncalves, and Joshua David Nicholas:
Emerson Pires, 33, and Flavio Goncalves, 33, both of Brazil, and Joshua David Nicholas, 28, of Stuart, Florida, were each charged in the Southern District of Florida with one count of conspiracy to commit wire fraud and one count of conspiracy to commit securities fraud in connection with a global cryptocurrency-based Ponzi scheme that generated approximately $100 million from investors. Pires and Goncalves also were charged with conspiracy to commit international money laundering. The indictment alleges that Pires and Goncalves, both founders of EmpiresX, along with Nicholas, the so-called “Head Trader” for EmpiresX, fraudulently promoted EmpiresX, a cryptocurrency investment platform and unregistered securities offering, by making numerous misrepresentations regarding, among other things, a purported proprietary trading bot and fraudulently guaranteeing returns to investors and prospective investors in EmpiresX. As alleged in the indictment, blockchain analytics shows that Pires and Goncalves then laundered investors’ funds through a foreign-based cryptocurrency exchange and operated a Ponzi scheme by paying earlier investors with money obtained from later EmpiresX investors. If convicted of all counts, Pires and Goncalves face up to 45 years in prison and Nicholas faces up to 25 years in prison. FBI and HSI are investigating the case. Fraud Section Trial Attorneys Kevin Lowell and Sara Hallmark and Assistant U.S. Attorney Yisel Valdes of the U.S. Attorney’s Office for the Southern District of Florida are prosecuting the case.
Crypto Initial Coin Offering Scheme:
United States v. Michael Alan Stollery:
Michael Alan Stollery, 54, of Reseda, California, was the CEO and founder of Titanium Blockchain Infrastructure Services (TBIS), a purported cryptocurrency investment platform. Stollery was charged in an information filed in the Central District of California with one count of securities fraud for his role in a cryptocurrency fraud scheme involving TBIS’s initial coin offering, which raised approximately $21 million from investors in the United States and overseas. As alleged, in order to lure investors, Stollery falsified TBIS white papers (a document for prospective investors that typically explains how the technology underlying the cryptocurrency works and the purpose of the cryptocurrency project), planted fake testimonials on TBIS’s website, and fabricated purported business relationships with the U.S. Federal Reserve Board and dozens of prominent companies, including Apple Inc., Pfizer Inc., and The Walt Disney Company, to create the appearance of legitimacy. If convicted of all counts, Stollery faces up to 20 years in prison. The FBI and the Federal Reserve Board’s Western Region San Francisco Office are investigating the case. Fraud Section Trial Attorneys Kevin Lowell, Tian Huang, and Andrew Tyler are prosecuting the case.
“Mr. Stollery convinced victims to invest by deceiving them with calculated lies about the profit potential and by artfully creating an illusion that he was well-connected and a proven success,” said Assistant Director in Charge Kristi Johnson of the FBI’s Los Angeles Field Office. “While cryptocurrency investments can be alluring to those seeking the latest opportunity, caution is warranted as the fraud associated with decentralized money investments is pervasive.”
“Those who fraudulently misrepresent their relationship with the Federal Reserve to deceive the public in cryptocurrency or other fraud schemes will be held accountable and brought to justice,” said Acting Special Agent in Charge Cory Nootnagel of the Office of Inspector General for the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection, Western Region. “I commend our agents, their federal law enforcement partners, and the Justice Department’s Criminal Division’s Fraud Section for their hard work and persistence.”
Crypto Commodities Scheme:
United States v. David Saffron:
David Saffron, 49, of Las Vegas, Nevada, was the owner of Circle Society, a cryptocurrency investment platform. Saffron used Circle Society to solicit investors to participate in an unregistered commodity pool, which is a fund that combines investors’ contributions to trade on the futures and commodity markets. Saffron was charged in the Central District of California with one count of conspiracy to commit wire fraud, four counts of wire fraud, one count of conspiracy to commit commodities fraud, and one count of obstruction of justice. As alleged in the indictment, Saffron falsely represented to investors that he traded investors’ funds to earn profits using a trading bot that could execute over 17,000 transactions per hour on various cryptocurrency exchanges. Saffron falsely represented that his trading bot would generate between 500% to 600% returns on the amount invested. To entice investors to invest, Saffron allegedly led investor meetings at luxury homes in the Hollywood Hills and elsewhere, and traveled with a team of armed security guards in order to create the false appearance of wealth and success. In total, Saffron fraudulently raised approximately $12 million from investors. If convicted of all counts, Saffron faces up to 115 years in prison. IRS Criminal Investigation (IRS-CI) is investigating the case. Fraud Section Trial Attorneys Kevin Lowell and Theodore Kneller, and Assistant U.S. Attorney James Hughes of the U.S. Attorney’s Office for the Central District of California are prosecuting the case.
“Mr. Saffron preyed on investor interest in cryptocurrency by enticing victims with fake technology and false promises of guaranteed returns,” said Special Agent in Charge Ryan L. Korner of the IRS-CI’s Los Angeles Field Office. “In reality, Mr. Saffron was operating an illegal Ponzi scheme to defraud victim investors and used the funds for his own personal benefit. IRS-CI will pursue and root out these schemes to protect investors, preserve our commodity markets, and bring financial fraudsters to justice.”
Crypto Fraud Victims:
All investor victims of the Baller Ape Club, EmpiresX, TBIS, and Circle Society schemes are encouraged to visit the webpage https://www.justice.gov/criminal-vns/crypto-enforcement to identify themselves as potential victims and obtain more information on their rights as victims, including the ability to submit a victim impact statement.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Inland Empire Man Arrested on Indictment Alleging Conspiracy to Distribute Bulk Quantities of Methamphetamine and Firearms OffenseRead the Press Release
LOS ANGELES – A Riverside County man was arrested today on federal charges alleging he manufactured and distributed significant quantities of methamphetamine at his home laboratory – where two young children lived – and illegally possessed firearms and ammunition.
Alvaro Hector Martinez, 32, of Perris, is charged in the indictment with one count of conspiracy to distribute methamphetamine, three counts of possession of methamphetamine, one count of knowingly possessing a firearm in furtherance of a drug trafficking crime and one count of being a felon in possession of a firearm.
Martinez is expected to be arraigned this afternoon at United States District Court in downtown Los Angeles.
According to the indictment returned on June 17, a co-conspirator arranged for wholesale drug purchasers to buy large quantities of narcotics, including methamphetamine, from Martinez. Martinez and others allegedly then manufactured methamphetamine using a homemade laboratory, and used firearms to protect the drugs, the laboratory and their drug proceeds.
Martinez allegedly distributed large amounts of methamphetamine, including a March 2021 drug deal in which he transported 34 pounds (15.4 kilograms) of the drug to a buyer.
After his arrest during a March 2021 traffic stop, law enforcement executed a search warrant on Martinez’s home and found more than 17.6 pounds (8 kilograms) of methamphetamine, 12.6 pounds (5.7 kilograms) of marijuana, five gallons of methamphetamine solution, two rifles, two handguns, eight firearm magazines, 41 rounds of ammunition, tactical vests and a methamphetamine conversion laboratory, according to an affidavit filed with a criminal complaint in this case.
Along with the narcotics, drug paraphernalia and firearms, law enforcement discovered two young boys – 2 and 3 years old, the affidavit states. Child Protective Services subsequently were called to the residence.
Martinez’s criminal history includes felony convictions in Los Angeles Superior Court for grand theft and possession of a firearm by a felon, 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 beyond a reasonable doubt.
The Drug Enforcement Administration investigated this matter.
Assistant United States Attorney Gregory D. Bernstein of the Major Frauds Section is prosecuting this case.
Former Stockbroker Pleads Guilty to Charges for $3.2 Million Investment Fraud, Cheating on Taxes, Defrauding Elderly VictimRead the Press Release
SANTA ANA, California – A former licensed stockbroker pleaded guilty today to federal criminal charges for running a securities fraud scheme in which he targeted low-income Hispanic victims to obtain more than $3.2 million via false promises of high returns from construction loans, cheating on his taxes, and – in a separate scheme – conspiring to defraud an elderly man out of nearly $400,000 through a “relative-in-distress” scheme.
Robert Louis Cirillo, 61, of Chino Hills, pleaded guilty to one count of securities fraud, one count of filing a false tax return, and one count of conspiracy to commit wire fraud.
According to his plea agreement, from 2014 to 2021, Cirillo deceived more than 100 victims by lying to them that he would be investing their funds in short-term construction loans that would pay large return rates that ranged from 15% to 30% for a period of up to 90 days. As part of the scheme, Cirillo showed actual and prospective victim-investors fabricated bank statements that purported to show the investments’ growth.
In reality, Cirillo never invested the victims’ money and instead used it for his own personal expenses, including credit card payments, a trip to Las Vegas, and two automobiles – a Jeep and an Alfa Romeo.
Cirillo admitted to targeting members of the Hispanic community, many of whom were of limited means, for his fraudulent scheme. One victim invested her life savings of $20,000 in Cirillo’s scheme.
In the spring of 2021, Cirillo was part of a scheme that deceived a senior citizen into believing that his grandson had been arrested for possession of illegal narcotics, which was false. Cirillo’s co-conspirators convinced the victim to send a total of nearly $400,000 for his grandson’s “bail.” Cirillo used some of that victim’s money for his own personal benefit.
Finally, Cirillo admitted to filing false income tax returns for the years 2015, 2016 and 2017 by failing to report a total of more than $3 million in income. For example, on his 2017 federal income tax return, Cirillo reported a total income of $30,985, which failed to include more than $1.9 million in income he received from his investment fraud scheme.
Cirillo’s investment fraud resulted in a total loss of $3,237,262; his conspiracy to defraud the senior citizen resulted a total loss of $399,550; and the total tax loss incurred was $675,898.
United States District Judge David O. Carter has scheduled a September 6 sentencing hearing, at which time Cirillo will face a statutory maximum sentence of 43 years in federal prison.
The FBI and IRS Criminal Investigation investigated this matter.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office is prosecuting this case.
Real Estate Developer Found Guilty of Fraud, Bribery and Obstruction Charges for Paying $500,000 in Cash to City OfficialsRead the Press Release
LOS ANGELES – A real estate developer and one of his companies were found guilty by a jury today of federal criminal charges for providing $500,000 in cash to then-Los Angeles City Councilman José Huizar and his special assistant in exchange for their help in resolving a labor organization’s appeal of their downtown Los Angeles development project.
Dae Yong Lee, a.k.a. “David Lee,” 57, of Bel Air, and 940 Hill LLC, a Lee-controlled company, each were found guilty of three felonies: one count of honest services wire fraud, one count of bribery, and one count of falsification of records in federal investigations.
According to evidence presented at his nine-day trial, Lee, a commercial real estate developer, was the majority owner of 940 Hill LLC and was planning on building a mixed-use development located at 940 South Hill Street in downtown Los Angeles. The development was to include 14,000 square feet of commercial space and more than 200 residential units.
In August 2016, after a labor organization filed an appeal that prevented the 940 Hill project from progressing through the city’s approval process, Lee called Justin Jangwoo Kim, a Huizar fundraiser, to request Huizar’s help in dealing with the appeal. At the time, Huizar was the chairman of the city’s Planning and Land Use Management (PLUM) Committee, a body that oversaw many of the city’s most significant commercial and residential projects.
In September 2016, George Esparza, then Huizar’s special assistant, informed Kim that Huizar would not help the 940 Hill project for free and would require a financial benefit. In 2017, after several months of bribe negotiations, Lee provided cash totaling $500,000 to Kim to deliver to Huizar and Esparza, including in a liquor box.
Two years after paying the bribe, Lee and 940 Hill LLC impeded a federal criminal investigation by altering accounting and tax records to falsely categorize the $500,000 bribe as a legitimate business expenditure for resolving the labor organization appeal.
United States District Judge John F. Walter scheduled a September 19 sentencing hearing, at which time Lee will face a statutory maximum sentence of 20 years in federal prison for the honest services wire fraud count, 20 years for the obstruction count, and 10 years for the bribery count. Defendant 940 Hill LLC will face a statutory maximum fine of $1.5 million or twice the gross gain or gross loss from the offense.
Kim pleaded guilty in June 2020 to a federal bribery offense. Esparza pleaded guilty in July 2020 to one count of racketeering conspiracy. Both men are cooperating with the investigation and are scheduled to be sentenced in September.
The next scheduled trial in this case is against Shen Zhen New World I LLC, an entity owned by real estate developer Wei Huang – another defendant in the case. Both defendants are charged with bribing Huizar related to another downtown Los Angeles development project and are scheduled to go to trial on October 18. Huang remains a fugitive.
Huizar and former Los Angeles Deputy Mayor Raymond Chan are scheduled to go to trial February 21, 2023, on federal charges alleging they conspired to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act. Huizar allegedly agreed to accept at least $1.5 million in illicit financial benefits and faces dozens of additional federal criminal charges.
Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Veronica Dragalin and Cassie Palmer, also 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.
Former Cargo Handler at LAX Sentenced to One Year in Prison for Stealing Four Gold Bars Headed from Australia to New YorkRead the Press Release
LOS ANGELES – A former cargo handling company employee at Los Angeles International Airport was sentenced today to 12 months in federal prison for stealing four gold bars that were part of a larger shipment headed from Australia to New York.
Marlon Moody, 39, of South Los Angeles, was sentenced by United States District Judge Dale S. Fischer, who also ordered him to pay a fine of $7,500.
Moody pleaded guilty in July 2021 to one count of conspiracy to commit theft of an interstate or foreign shipment.
A co-defendant, Brian Benson, 36, also of South Los Angeles, also pleaded guilty in July 2021 to the same charge.
Both men worked for Alliance Ground International (AGI), a company that provided ground handling services at LAX. On the evening of April 22, 2020, a shipment of gold bars arrived at LAX on Singapore Airlines. A total of 2,000 gold bars, each weighing one kilogram and valued at approximately $56,000, were being shipped at the direction of a Canadian bank. During a stopover at LAX, the gold was offloaded and secured, but an inventory that evening showed one box containing 25 gold bars was missing.
Moody found the missing box of gold bars near the Singapore Airlines cargo warehouse on the morning of April 23, placed the box on a belt loader and drove that vehicle to a nearby location, where he removed four of the bars. Soon after, Benson arrived to pick up Moody in a company van, where they exchanged text messages about the gold bars because other employees were in the van. The two defendants later left the airport and went to a nearby parking lot, where Moody gave Benson one of the four gold bars.
The lost box with the 21 remaining gold bars was discovered by other cargo handlers later on April 23, and authorities began an investigation that ultimately led to Moody and Benson.
Moody gave one gold bar to a relative on May 4 “and directed the family member to exchange the gold bar for a vehicle and/or money,” according to court documents. Around this time, Moody buried the remaining two gold bars in the backyard of his residence.
The FBI recovered all four gold bars about two weeks after they went missing from LAX.
“[Moody] conspired to steal and actually stole $224,000 worth of gold and kept $112,000 worth for himself,” prosecutors wrote in a sentencing memorandum. “As an AGI employee, defendant was entrusted with handling cargo shipments at LAX and granted access to certain sections of the airport. [Moody] squandered that trust by stealing from those who relied on him to handle their property.”
Benson served a four-month prison sentence for the crime he committed in this case.
The FBI, the Federal Air Marshal Service, the Los Angeles Police Department, and the Los Angeles Airport Police investigated this matter.
Assistant United States Attorney Lyndsi C. Allsop of the General Crimes Section prosecuted this case.
Coachella Valley Man Sentenced to 15 Months in Prison for Role in Scheme in Which Doctors Took Bribes for Spinal Surgery ReferralsRead the Press Release
LOS ANGELES – An accountant who enabled the owner of a corrupt Long Beach hospital to pay more than $40 million in illegal kickbacks to doctors in exchange for them referring thousands of spinal surgery patients was sentenced today to 15 months in federal prison for a tax offense related to the scheme.
George William Hammer, 69, of Palm Desert, was sentenced by United States District Judge Josephine L. Staton, who also ordered Hammer to pay an $8,000 fine and forfeit $500,000 in proceeds from the scheme.
Hammer pleaded guilty in August 2018 to one count of filing a false tax return.
Hammer was the financial officer for various companies controlled by Michael D. Drobot, who owned Pacific Hospital in Long Beach. Drobot conspired with doctors, chiropractors, and marketers to pay kickbacks 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 bills for kickback tainted surgeries. To date, 22 defendants have been convicted for participating in the kickback scheme.
Beginning in 1997, Hammer supported the kickback scheme by facilitating payments to individuals receiving bribes and kickbacks pursuant to sham contracts that were used to conceal the illicit payments. Hammer falsified tax returns by characterizing the bribes as legitimate business expenses.
“Through his role at the Drobot-controlled entities, [Hammer] ensured that doctors were paid more than $40 million…in kickbacks,” prosecutors argued in a sentencing memorandum. “The scheme was too complex for Drobot to do alone. It could not have been accomplished without complicit executives like [Hammer] who furthered the scheme.”
Hammer was a salaried employee and did not directly profit from the kickbacks and bribes.
In January 2018, Drobot was sentenced to five years in federal prison for his crimes in this matter and awaits a March 2023 sentencing hearing after pleading guilty to three criminal charges for violating a court forfeiture order in the Pacific Hospital case by illegally selling his luxury cars.
The FBI, IRS Criminal Investigation, the California Department of Insurance, and the United States Postal Service Office of Inspector General investigated this matter.
Assistant United States Attorneys Joseph T. McNally and Billy Joe McLain of the Violent and Organized Crime Section and Assistant United States Attorney Victor Rodgers of the Asset Forfeiture Section prosecuted this case.
Former Adelanto Mayor Pro Tem Found Guilty of Accepting $10,000 Cash Bribe and Attempted Arson of His Own RestaurantRead the Press Release
RIVERSIDE, California – The former mayor pro tem of Adelanto has been found guilty by a jury of federal criminal charges for accepting a $10,000 cash bribe and hiring a man to burn down his restaurant so he could fraudulently collect hundreds of thousands of dollars in insurance proceeds, the Justice Department announced today.
Jermaine Wright, 46, of Riverside, was found guilty late Wednesday afternoon of one count of bribery of programs receiving federal funds and one count of attempted arson of a building affecting interstate commerce. Wright was remanded into federal custody following the verdict’s announcement.
United States District Judge Jesus G. Bernal scheduled a September 12 sentencing hearing, at which time Wright will face a mandatory minimum of five years in federal prison for the attempted arson offense and a statutory maximum sentence of 30 years in federal prison for both crimes.
According to the evidence presented at his six-day trial, in early 2017, federal investigators began a probe into possible corruption in the Adelanto, a city located in San Bernardino County. During the investigation, law enforcement used an informant who introduced Wright to two undercover FBI agents and recorded a series of conversations in which Wright discussed both plots.
In the first scheme, Wright – then an Adelanto city councilman as well as the city’s mayor pro tem – accepted a $10,000 bribe from an undercover FBI agent who told Wright he wanted his assistance in securing votes to expand the marijuana business zone, and for protection from code enforcement related to a supposed marijuana transportation business.
The man who purportedly wanted to relocate his marijuana business to Adelanto was an undercover FBI agent who told Wright that he was interested in using a property outside of the zone designated by the city for marijuana businesses. The agent specifically wanted Wright’s assistance in expanding the area where a marijuana transportation business would be permitted.
Ultimately, the informant told Wright that the undercover agent would rent a property from the informant which was outside of the approved marijuana business zone. Wright told the informant that the undercover agent would need an “exemption” that would allow the undercover operative to operate a marijuana transportation business, and that if the undercover agent wanted the exemption, then Wright wanted his “ten.”
At a meeting with the undercover agent and the informant, which took place in October 2017, Wright took a $10,000 bribe from the undercover agent. After taking the bribe, Wright confirmed that he would assist with code enforcement and votes. Wright also said he could curtail code enforcement activities against the marijuana transportation business, but it would require a “stack” – which Wright identified as $2,000 – each time Wright interceded.
In the second scheme, in August 2017, Wright sought the informant’s assistance in finding someone to burn down Fat Boyz Grill, his restaurant in Adelanto. In late September, Wright asked the informant to pass his cell phone number to the “electrician” – so named because Wright wanted the cause of the fire to appear to be an electrical problem.
Wright met the “electrician” – actually the second undercover FBI agent – on October 3, 2017 and said he wanted the fire on the following Saturday when the sprinkler system would be turned off. After Wright assured the undercover agent that his insurance policy covers everything, the “electrician” agreed to do the job for $1,500. At a meeting three days later, Wright paid the $1,500 after the undercover agent told Wright he needed more time to prepare for the job.
Wright also gave the agent a tour of the restaurant and assisted in the planning of the arson by providing a ladder for the undercover agent and discussing various tactics to ensure the planned arson would be a success.
In October 2017, the FBI executed a search warrant at Fat Boyz Grill and interviewed Wright, who confessed to hiring the undercover agent to burn down the restaurant. The next day, the informant reported to the FBI that Wright had told the informant that the FBI had approached Wright, and that Wright requested the informant’s assistance in making the undercover agent “go away.”
Wright also attempted to hatch a plot with the informant to stage an assault on Wright himself to make the FBI drop the case against him. In November 2017, Wright reported that he had been assaulted. The circumstances of the alleged assault were consistent with the staged assault that Wright discussed with the informant.
The FBI investigated the matter.
Assistant United States Attorney Sean D. Peterson of the Riverside Branch Office is prosecuting this case.
Colorado Man Sentenced to 20 Years in Prison for Taking Teenage Girl on Interstate Road Trip and Had Unlawful Relationship with HerRead the Press Release
SANTA ANA, California – A previously convicted sex offender from Colorado was sentenced today to 240 months in federal prison for taking a 15-year-old girl on a 3½-month interstate road trip that ended in Southern California, during which time he gave her methamphetamine and had an unlawful sexual relationship with her.
Kenneth Wayne Fisher, 46, of Colorado Springs, Colorado, was sentenced by United States District Judge David O. Carter, who also ordered Fisher to be placed on lifetime supervised release upon completing his prison sentence in this case.
Fisher pleaded guilty in May 2020 to one count of transportation of a minor to engage in criminal sexual activity and one count of commission of a felony offense involving a minor while required to register as a sex offender.
In February 2000, Fisher was convicted of a misdemeanor charge of sexual abuse in the second degree, thus requiring him to register as a sex offender.
On July 27, 2015, Fisher – then 39 years old – met the victim in Colorado, and she soon told him she was 15. Fisher gave the victim methamphetamine and engaged in a sexual relationship with her. Fisher transported the girl on a trip around the United States for the next 3½ months.
Between July and November 2015, Fisher and the victim traveled together through numerous states around the country – including California – and Fisher continued the unlawful sexual relationship during the trip.
Additionally, while transporting the victim, Fisher committed bank robberies in Kansas and Arkansas in August 2015. Fisher later was convicted in federal court in those states of committing the robberies. Judge Carter ordered Fisher’s 20-year prison sentence to run consecutive to his bank robbery sentence, which he is expected to complete next year.
The trip ended on November 16, 2015, because of a traffic stop in Fountain Valley. Fisher led the police on a high-speed car chase that concluded when Fisher’s vehicle ran out of gas on the 405 freeway near Seal Beach.
Law enforcement searched Fisher’s cellphone, recovered from his vehicle at the time of the traffic stop, and discovered multiple sexually explicit images of the victim.
Fisher has been in custody since his arrest on November 16, 2015.
The FBI and the Fountain Valley Police Department investigated this matter. The Colorado Springs Police Department conducted the missing persons investigation, and the California Highway Patrol assisted the Fountain Valley Police Department during the chase that culminated with Fisher’s arrest.
Assistant United States Attorney Greg Scally of the Santa Ana Branch Office prosecuted this case.
Michael Avenatti Pleads Guilty to Federal Fraud and Tax Charges That Allege He Stole Millions of Dollars from ClientsRead the Press Release
SANTA ANA, California – Michael Avenatti pleaded guilty today to five felony offenses and admitted that he engaged in a scheme to defraud four of his legal clients.
Avenatti, who has been suspended by the State Bar of California, specifically pleaded guilty to four counts of wire fraud – each related to one of four matters in which he embezzled money that should have been paid to clients – and one count of endeavoring to obstruct the administration of the Internal Revenue Code.
United States District Judge James V. Selna scheduled a sentencing hearing for September 19. As a result of today’s guilty pleas, Avenatti faces a statutory maximum sentence of 83 years in federal prison.
Avenatti admitted guilt in each of the four legal matters discussed in a federal grand jury indictment that charged him with embezzling money from clients. Avenatti admitted that he engaged in the conduct charged in the four counts of the indictment, which includes receiving money on behalf of clients into client trust accounts, misappropriating the money, and lying to the clients about receiving the money or, in one case, claiming that the money had already been sent to the client.
The charge of endeavoring to obstruct the administration of the Internal Revenue Code is one of 19 tax-related offenses in the indictment. In relation to the tax count he pleaded guilty to today, Avenatti admitted that he corruptly obstructed and impeded the IRS’s efforts to collect unpaid payroll taxes, which the government estimates amount to approximately $5 million and include payroll taxes that he been withheld from the paychecks of employees of the Avenatti-owned company that operated Tully’s Coffee.
After pleading guilty today, Avenatti still faces a total of 31 counts – six wire fraud charges, 18 tax-related charges, two counts of bank fraud related to alleged false statements he made in an attempt to obtain loans from a federally insured financial institution, one count of aggravated identity theft for misusing the name of a tax preparer in relation to the bank fraud scheme, and four counts of bankruptcy fraud related to alleged false statements he made after his law firm was forced into bankruptcy.
The government is reviewing the case to determine how it will move forward after today’s guilty pleas. In the event that the government elects to proceed on the remaining counts, Judge Selna will vacate the September 19 sentencing date.
IRS Criminal lnvestigation conducted the investigation into Avenatti. The Office of the United States Trustee provided substantial assistance.
Assistant United States Attorney Brett A. Sagel of the Santa Ana Branch Office and Ranee A. Katzenstein of the Major Frauds Section are prosecuting this case.
Two California Men Found Guilty of Federal Crimes for Participating in Massive International Fraud and Money Laundering ConspiracyRead the Press Release
LOS ANGELES – Two California men were found guilty by a jury today of federal criminal charges for participating in an extensive, long-lasting, multimillion-dollar conspiracy – much of it committed by Nigerian nationals – that perpetrated a wide variety of frauds, including business email compromise (BEC) fraud, romance scams, elder fraud and fraud using malware.
George Ugochukwu Egwumba, 47, of Cypress, and Princewell Arinze Duru, 33, of Sacramento, were found guilty of one count of conspiracy to commit money laundering and one count of conspiracy to commit wire fraud. Egwumba was found guilty of one count of aggravated identity theft. Duru was found guilty of one count of wire fraud and one count of aiding and abetting aggravated identity theft.
According to evidence presented at their seven-day trial, members of the conspiracy – many of whom were based in Nigeria – used middlemen to connect with their fellow co-conspirators located in the United States. The U.S.-based middlemen assisted in receiving and laundering the proceeds of the frauds either through U.S. bank accounts, money transmitting services such as Western Union or MoneyGram, or cryptocurrency.
In exchange, the middlemen and those who assisted with the laundering of illicit proceeds received a percentage of the fraudulently obtained funds.
At the center of the conspiracy were Valentine Iro, 33, of Carson, Chukwudi Christogunus Igbokwe, 41, of Gardena – both Nigerian citizens – and Chuks Eroha, 41, who is believed to have fled to Nigeria in 2017, shortly after the FBI executed a search warrant in this case. This trio of middlemen connected the fraudsters with the money launderers, sometimes with other middlemen in between, and often used the same bank accounts for laundering funds. Iro and Igbokwe have pleaded guilty to criminal charges in this case.
Egwumba acted as another middleman, receiving bank account information from Iro and Eroha to pass to other fraudsters, and also worked to commit fraud himself by using malware and other cybercrime tools. Egwumba exchanged text messages with Iro and Eroha, in which he asked for and received bank account information that could be used to receive stolen money.
LokiBot and NanoCore remote access trojan malware and other cybercrime tools were found on Egwumba’s computers, along with messages in which he discussed using these tools to attempt to commit fraud.
Duru helped Igbokwe and others in receiving and laundering the fraudulently obtained money, both by opening fraudulent business bank accounts and using money transmitting services and cryptocurrency wallets.
Duru registered a fraudulent business in Sacramento County and then used that company to open two business bank accounts at different banks. Duru gave the bank account information to Igbokwe so it could be used to receive fraud proceeds. One victim was deceived into depositing approximately $25,600 into one of Duru’s business bank accounts.
The conspiracy involved the laundering of at least $6 million in fraudulently obtained funds and the attempted theft of at least an additional $40 million.
United States District Judge R. Gary Klausner scheduled an October 17 hearing for these defendants, at which time both will face a statutory maximum sentence of 22 years in federal prison.
So far, prosecutors have secured 19 guilty pleas in this case. Additional defendants have been arrested in Nigeria, and others are believed to be at large.
The FBI investigated this matter. The Los Angeles County District Attorney’s Office, the Los Angeles County Sheriff’s Department, the Orange County District Attorney’s Office, and the U.S. Department of State’s Diplomatic Security Service (DSS) provided substantial assistance during the investigation.
Assistant United States Attorneys Sue Bai and Victoria Degtyareva of the Cyber and Intellectual Property Crimes Section are prosecuting this case.
The FBI in 2017 issued a report on the rise of BEC schemes, and published a recap of 2018’s Operation WireWire, which was an international effort to disrupt international BEC scams. An FBI public service announcement that warns of the dangers of BEC schemes encourages businesses to “trust but verify.”
Latin Music Company Executives Arrested on Federal Complaint Alleging Violations of U.S. Sanctions Related to Drug TraffickersRead the Press Release
LOS ANGELES – FBI agents today arrested two music business executives – including the CEO of a Latin music conglomerate – who are charged with conspiring to violate the Foreign Narcotics Kingpin Designation Act by conducting business with a Guadalajara-based concert promoter with ties to Mexican drug cartels.
Angel Del Villar, 41, of Huntington Beach, the CEO of Del Records and its subsidiary talent agency Del Entertainment; and Luca Scalisi, 56, of West Hollywood, the chief financial officer of Del Entertainment, were arrested this morning. Both men made their initial appearances this afternoon in United States District Court in downtown Los Angeles. Del Villar was ordered released on $100,000 bond and Scalisi was ordered released on $35,000 bond. Their arraignments have been scheduled for July 20.
Del Villar and Scalisi are named in a criminal complaint that accuses them of conspiracy to transact in property of specially designated narcotics traffickers in violation of the Kingpin Act.
A third defendant named in the complaint – Jesus Perez Alvear, 37, of Cuernavaca, Morelos, Mexico, a music promoter who controls Gallistica Diamante, a.k.a. Ticket Premier – is believed to be in Mexico. Perez, who promoted concerts in Mexico for Del Entertainment until March 2019, and Gallistica Diamante are listed as “Specially Designated Narcotics Traffickers” under the Kingpin Act, which prevents people in the United States from conducting business with the two entities.
The complaint alleges that on April 19, 2018, FBI agents approached a well-known musician, referred to in the complaint as Individual A, and explicitly told Individual A about Perez’s designation under the Kingpin Act and how that prohibited him from conducting business with Perez and performing concerts that Perez promoted.
On April 28, 2018, Individual A performed at a music concert which Perez organized. Del Villar’s credit card was used to pay for a private jet that brought the musician from Van Nuys Airport to the performance in Aguascalientes, Mexico, according to the complaint.
On four additional occasions in 2018 and 2019, Individual A performed at concerts in Mexico – specifically in Mexicali, Salamanca, Chiapas and San Jose Iturbide – all of which Perez promoted. Individual A acted at the direction or with the knowledge of Del Villar, Scalisi and Perez.
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 they were to be convicted of violating the Kingpin Act, Del Villar and Scalisi would face a statutory maximum sentence of 30 years in federal prison. Perez would face a statutory maximum sentence of 10 years in federal prison.
The current whereabouts of Perez are unknown, but he is believed to be residing in Mexico. Anyone with information about Perez is encouraged to contact the FBI’s Los Angeles Field Office at (310) 477-6565.
The FBI, IRS Criminal Investigation, and the Drug Enforcement Administration are investigating this matter. The Treasury Department’s Office of Foreign Assets Control provided significant assistance in this matter.
Assistant United States Attorney Benedetto Balding of the International Narcotics, Money Laundering, and Racketeering Section is prosecuting this case.
This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
Palm Springs Man Pleads Guilty to Federal Criminal Charge for Distributing Sexually Explicit Videos of Children via ZoomRead the Press Release
LOS ANGELES – A Riverside County man pleaded guilty today to a federal criminal charge for streaming sexually explicit videos of children – some of them toddlers – in a Zoom online meeting room for individuals interested in child exploitation.
Michael John Andersen, 53, of Palm Springs, pleaded guilty to one count of distribution of child pornography.
According to his plea agreement, in February 2018, Andersen, using the login name “TattdPigPS,” and other individuals logged into a Zoom meeting room that law enforcement previously identified as a place for people interested in sexually explicit images and videos of children. Within a 10-minute span, Andersen streamed three sexually explicit videos of children – two of the videos featured toddlers.
In March 2018, Andersen again logged into the same Zoom meeting room and again streamed two sexually explicit videos featuring children.
Law enforcement recorded both sessions in which Andersen posted child pornography online.
In August 2018, law enforcement executed a search warrant at Andersen’s home. Andersen admitted to law enforcement that he believed the agents were at his residence because of his activities in “pedophile or perv Zoom rooms.” He also admitted to previously streaming child pornography on Zoom.
A forensic analysis of Andersen’s digital devices, including an iPhone and iPad, revealed approximately 151 images and nine videos of child pornography.
United States District Judge Stephen V. Wilson scheduled an October 24 sentencing hearing, at which time Andersen will face a mandatory minimum sentence of five years in federal prison and a statutory maximum sentence of 20 years in federal prison.
Homeland Security Investigations investigated this matter.
Assistant United States Attorney Sonah Lee of the Riverside Branch Office is prosecuting this case.
Illinois Man Sentenced to 2 Years in Federal Prison for Operating Subscription-Based Computer Attack PlatformsRead the Press Release
LOS ANGELES – An Illinois man was sentenced today to 24 months in federal prison for running 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.
Matthew Gatrel, 33, of St. Charles, Illinois, was sentenced by United States District Judge John A. Kronstadt.
At the conclusion of a nine-day trial in September 2021, a federal jury found Gatrel guilty of one count of conspiracy to commit unauthorized impairment of a protected computer, one count of conspiracy to commit wire fraud, and one count of unauthorized impairment of a protected computer.
“Gatrel ran a criminal enterprise designed around launching hundreds of thousands of cyber-attacks on behalf of hundreds of customers,” prosecutors wrote in a sentencing memorandum. “He also provided infrastructure and resources for other cybercriminals to run their own businesses launching these same kinds of attacks. These attacks victimized wide swaths of American society and compromised computers around the world.”
Gatrel owned and operated two DDoS facilitation websites: DownThem.org and AmpNode.com. DownThem sold subscriptions allowing customers to launch DDoS attacks while AmpNode provided “bulletproof” server hosting to customers with an emphasis on “spoofing” servers that could be pre-configured with DDoS attack scripts and lists of vulnerable “attack amplifiers” used to launch simultaneous cyberattacks on victims.
Records from the DownThem service revealed more than 2,000 registered users and more than 200,000 launched attacks, including attacks on homes, schools, universities, municipal and local government websites, and financial institutions worldwide. Many AmpNode customers were themselves operating for-profit DDoS services.
Gatrel offered expert advice to customers of both services, providing guidance on the best attack methods to “down” different types of computers, specific hosting providers, or to bypass DDoS protection services. Gatrel himself often used the DownThem service to demonstrate to prospective customers the power and effectiveness of products, by attacking the customer’s intended victim and providing proof, via screenshot, that he had severed the victim’s internet connection.
Gatrel’s DownThem customers could select from a variety of different paid “subscription plans.” The subscription plans varied in cost and offered escalating attack capability, allowing customers to select different attack durations and relative attack power, as well as the ability to launch several simultaneous, or “concurrent” attacks. Once a customer entered the information necessary to launch an attack on their victim, Gatrel’s system was set up to use one or more of his own dedicated attack servers to unlawfully appropriate the resources of hundreds or thousands of other servers connected to the internet in what are called “reflected amplification attacks.”
Co-defendant Juan Martinez, 29, of Pasadena, pleaded guilty in August 2021 to one count of unauthorized impairment of a protected computer and was sentenced to five years’ probation. Martinez was one of Gatrel’s customers and became a co-administrator of the site in 2018.
The FBI’s Anchorage Field Office and its Los Angeles-based Cyber Initiative and Resource Fusion Unit investigated this matter. Akamai Technologies, Inc.; Cloudflare, Inc.; DigitalOcean, Inc.; Google, LLC; Palo Alto Networks - Unit 42; University of Cambridge Cyber Crime Centre; and Unit 221B, LLC assisted this investigation.
Assistant United States Attorney Cameron L. Schroeder, Chief of the Cyber and Intellectual Property Crime Section, and Assistant United States Attorney Adam Alexander of the District of Alaska are prosecuting this case.
Beverly Hills Man Pleads Guilty to Charge for Attempting to Hire Hitman to Murder a Woman He Briefly Dated but Later Rebuffed HimRead the Press Release
LOS ANGELES – A Beverly Hills man pleaded guilty today to a federal murder-for-hire charge for attempting to hire a hitman to kill a woman he briefly dated and who repeatedly tried to break off their relationship.
Scott Quinn Berkett, 25, pleaded guilty to one count of use of interstate facilities to commit murder-for-hire.
According to the affidavit in support of a criminal complaint in this case, Berkett met the victim online in 2020, and the woman flew to Los Angeles to meet Berkett in late October 2020. The victim, who described Berkett’s behavior as “sexually aggressive,” tried on several occasions to break off the relationship following the October trip, the affidavit states.
In April 2021, a family member, who had learned that Berkett continued to contact the victim, called and sent text messages to Berkett’s father’s phone, and, on April 20, Berkett appears to have responded saying “consider this matter closed.”
Berkett admitted in his plea agreement that, soon afterward in April 2021, he solicited and paid for murder-for-hire services via a website on the darknet that purportedly offered such services. Berkett provided the darknet group with specific directions and details about his target. As payment for the victim’s murder, Berkett send the darknet group bitcoin payments totaling approximately $13,000.
In May 2021, an undercover law enforcement officer contacted Berkett while posing as the hitman Berkett believed he had hired from the darknet group. The undercover officer sent Berkett pictures of the victim. Berkett confirmed that the pictures showed his intended victim and that he had made bitcoin payments to obtain her murder. Berkett further requested proof of her murder and made an additional $1,000 payment to the undercover officer via Western Union for her death.
United States District Judge Mark C. Scarsi scheduled a September 12 sentencing hearing, at which time Berkett will face a statutory maximum sentence of 10 years in federal prison.
The FBI investigated this matter.
Assistant United States Attorney Kathy Yu of the Violent and Organized Crime Section is prosecuting this case.
Riverside Woman Sentenced to 11 Years in Prison for Possessing and Intending to Sell More Than 1½ Pounds of MethRead the Press Release
LOS ANGELES – A Riverside woman with a lengthy criminal history, including a prior drug trafficking conviction for selling methamphetamine, was sentenced today to 132 months in federal prison for several incidents in which she possessed or sold a total of more than 1.5 pounds of methamphetamine, twice in the presence of two minor girls.
Charlene Nicole Simmons, 41, was sentenced by United States District Judge Philip S. Gutierrez, who remarked at today’s court hearing that the seriousness of her offense was “affected by the presence of minors.”
Simmons pleaded guilty in October 2021 to one count of distribution of methamphetamine.
In May 2018 in Riverside County, Simmons was driving a car and was pulled over by law enforcement. During a search of her car – in which a minor was present – law enforcement seized 113 grams (0.25 pounds) of methamphetamine. In March 2019 in Riverside County, Simmons sold 6.14 grams of methamphetamine to a buyer for $650. Later that same day, Simmons sold the buyer 450.42 grams (nearly one pound) of methamphetamine for $1,460.
In May 2019, Simmons possessed with intent to distribute 132.87 grams (0.3 pounds) of methamphetamine in a backpack when she – along with two minor girls in her car – was pulled over by law enforcement.
Simmons possessed a total of 702.53 grams (1.6 pounds) of methamphetamine.
“During the times that [Simmons] possessed with intent to distribute methamphetamine, she brought minor girls with her and at least once directed one of the minors to conceal [Simmons’] crime,” prosecutors argued in a sentencing memorandum, which describes her as “a recidivist now 10-time-felon with over two decades of criminal history.”
Prior to this case, Simmons had nine felony convictions and five misdemeanor convictions between 1999 and 2011, including a felony drug trafficking conviction for selling methamphetamine, according to court documents.
“Further, she did not just sell methamphetamine, she also sold a firearm…during a drug deal,” prosecutors said in court documents.
The Bureau of Alcohol, Tobacco, Firearms and Explosives, the Riverside Police Department, and the Riverside County District Attorney’s Office investigated this matter.
Assistant United States Attorney Eli A. Alcaraz of the Riverside Branch Office prosecuted this case.
Former TSA Officer Pleads Guilty to Criminal Charge for Attempting to Smuggle Methamphetamine Through LAXRead the Press Release
LOS ANGELES – A former Transportation Security Administration (TSA) officer pleaded guilty today to a federal criminal charge for smuggling what he believed was methamphetamine through Los Angeles International Airport in exchange for a total of $8,000 in cash.
Michael Williams, 39, of Hawthorne, pleaded guilty to one count of attempted distribution of methamphetamine.
According to his plea agreement, authorities in 2020 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.
United States District Judge Fernando L. Aenlle-Rocha scheduled a November 4 sentencing hearing, at which time Williams will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment.
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 are prosecuting this case.
Westwood Man Arrested on Indictment Alleging Scheme Offering Surety Bonds that Defrauded Clients Out of $5.2 MillionRead the Press Release
LOS ANGELES – A Westwood man was arrested today on a 27-count federal grand jury indictment alleging he defrauded victims out of more than $5 million by purporting to sell bonds for large-scale construction and other projects.
Tommy Lester Watts, 62, a.k.a. “Michael Nesbeth,” “Michael Kent,” and “Alex Mason,” was arrested at his residence this morning and is expected to be arraigned this afternoon in United States District Court in downtown Los Angeles.
Watts is charged in an indictment filed Tuesday with 13 counts of wire fraud, two counts of aggravated identity theft, eight counts of money laundering, two counts of tax evasion and two counts of willful failure to file tax returns.
According to the indictment, from September 2016 to September 2019, Watts falsely claimed to be experienced in and able to provide surety bonds and other financial guarantees for large-scale projects. Watts allegedly told victims that he would assist them in obtaining financing for their projects via his various companies, including the Sherman Oaks-based Source One Surety LLC. Watts allegedly misrepresented that any such bonds or guarantees were underwritten by well-known companies and banks, and that they were backed by assets in the millions or billions of dollars.
But Watts and his companies were not licensed to sell such bonds in California. And his claims about his experience, his clients – including governments – his underwriting, and his supporting assets were not true, the indictment alleges. To make his scheme appear legitimate, Watts allegedly hijacked the corporate filings of other companies and created fake employees and accounts for underwriters and banks.
Watts caused victims to send his companies approximately $5,205,144, the majority of which he spent on personal items such as classic and luxury cars, rent for high-end apartments, and the purchase of luxury retail goods, the indictment states.
He also allegedly laundered victim payments through accounts held in the names of corporations that were not registered and used fake taxpayer identification numbers – and then used those accounts to spend victim funds as his own. He hid this income from the IRS in tax years 2017 and 2018, in which years he failed to file any tax returns, 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 beyond a reasonable doubt.
If convicted, Watts would face a statutory maximum sentence of 20 years in federal prison for each wire fraud count, 10 years in federal prison for each money laundering count, five years in federal prison for each tax evasion count, one year in federal prison for each willful failure to file tax returns count, and a mandatory two-year consecutive prison sentence for each count of aggravated identity theft.
The FBI, Homeland Security Investigations, IRS Criminal Investigation, and the California Department of Insurance investigated this matter.
Assistant United States Attorney Kristen A. Williams of the Major Frauds Section is prosecuting this case.
Mexican National Sentenced to over 15 Years in Federal Prison for Producing Child Pornography by Coercing Minor to Film HerselfRead the Press Release
LOS ANGELES – A former Inglewood resident has been sentenced to 188 months in federal prison for the production of child pornography of a teenage girl whom he had previously sexually molested for years, the Justice Department announced today.
Jorge Coronado Gonzalez, 56, a Mexican national who was residing in Mexico during the criminal conduct, was sentenced on Wednesday by United States District Judge Dolly Gee.
After hearing an emotional statement from the victim, Judge Gee said the conduct in this case was “reprehensible,” “cruel,” and “depraved.”
Coronado Gonzalez pleaded guilty on January 11 to producing child pornography, admitting that in January 2020 he coerced and persuaded the then-16-year-old victim to film sexually explicit videos herself. Coronado Gonzalez at the time was in Mexico, where he had moved the year before.
According to court documents, including a sentencing memorandum filed by prosecutors, the victim in this case was the daughter of a close friend, and Coronado Gonzalez sexually assaulted her under threats of violence to her and her mother for approximately six years. After Coronado Gonzalez relocated to an unknown location in Mexico, he continued to exploit the victim with demands that she send him sexualized photos and videos every day – demands that were backed with threats to kill relatives who also resided in Mexico.
Coronado Gonzalez was arrested in March 2020 at Los Angeles International Airport when he returned to the United States to continue his sexual assaults on the victim. Law enforcement was alerted to the longtime molestation after Coronado Gonzalez posted one of the child pornography images to a social media platform, which led to the victim’s mother learning of the illicit conduct.
Once he completes his prison sentence, Coronado Gonzalez will remain on supervised release for the rest of his life.
The FBI investigated this matter.
Assistant United States Attorney Catharine A. Richmond of the Violent and Organized Crime Section prosecuted this case.
Former LADWP Executive Sentenced to Four Years in Federal Prison for Lying to FBI About Secret Business Relationship with LawyerRead the Press Release
LOS ANGELES – A former top-level Los Angeles Department of Water and Power (LADWP) executive was sentenced today to 48 months in federal prison for lying to the FBI about a lucrative job offer he secretly solicited and agreed to accept in exchange for providing “guarantees” of additional LADWP contract money to a lawyer who held a bribery-fueled contract with the department and also served as its special counsel.
David F. Alexander, 54, of Arcadia, was sentenced by United States District Judge Stanley Blumenfeld Jr., who also ordered Alexander to pay a fine of $50,000.
Alexander, who served as LADWP’s chief information security officer from May 2017 until February 2019, and then served as the department’s chief cyber risk officer for the next six months, pleaded guilty on February 8 to one count of making false statements to federal investigators investigating corruption at LADWP.
“At every turn, [Alexander] made clear through his actions and his words that his interests lay in his own financial future…at the cost of LADWP and its ratepayers,” prosecutors argued in a sentencing memorandum.
Beginning in 2017, Alexander developed a professional relationship with Paul O. Paradis, 58, a New York lawyer who – while secretly and simultaneously representing a ratepayer suing the department – represented LADWP in a lawsuit against PricewaterhouseCoopers (PwC), the vendor it blamed for a major billing debacle.
In 2017, Paradis created a Los Angeles-based company known as Aventador Utility Solutions LLC, which obtained a three-year, $30 million no-bid contract with LADWP to perform remediation work on the faulty billing system. Aventador – later renamed Ardent Cyber Solutions LLC – also performed certain cybersecurity-related work for LADWP.
From February 2019 to April 2019, Alexander abused his position as LADWP’s chief cyber risk officer and the vice-chair of the Cyber Security Working Group for the Southern California Public Power Authority (SCPPA) – a collective of 11 municipal utilities, including LADWP. Alexander manipulated the bidding process to unlawfully steer a $17 million contract to Ardent by influencing the composition of the scoring committee to include individuals whom he could persuade to rank Ardent favorably and by sharing his confidential scores for the SCPPA proposals with other members of the committee to persuade them to score Ardent favorably.
Alexander later met with Paradis and boasted about securing the contract for Ardent.
In June and July of 2019, Alexander further manipulated in Ardent’s favor an RFP process from LADWP for the award of a three-year, $82.5 million cybersecurity consulting services contract. Alexander was one of the RFP drafters and he solicited Paradis’s edits for the request to enhance Ardent’s ability to gain the contract over the dozen-plus other vendors.
By mid-July, Alexander solicited and agreed to accept from Paradis a future job as the chief administrative officer of Ardent, a to-be-determined executive-level annual salary, a sign-on bonus, and recompense of $60,000 per year for 30 years for his early retirement penalty from LADWP. Alexander did so, intending to be influenced and rewarded in connection with his ongoing assistance in securing the award of the multimillion-dollar LADWP cybersecurity contract to Ardent and use of his position to guarantee more than $10 million in future task orders for Ardent under the anticipated LADWP contract.
Alexander also asked for a secret Ardent email address and agreed to accept a laptop computer to communicate with Paradis and to secretly perform work for Ardent while he was employed at LADWP.
On July 22, 2019, the FBI executed search warrants at LADWP as part of its ongoing investigation into the department and the Los Angeles City Attorney’s Office. Two days later during a voluntary interview, Alexander lied to the FBI about his conversations and corrupt agreements with Paradis. On July 26, 2019, Alexander met again with the FBI and again lied, falsely stating that he had declined any employment opportunity with Ardent and that he had never provided any guarantees to Ardent or to Paradis.
Paradis pleaded guilty on January 28 to one count of bribery. He is scheduled to be sentenced on July 19.
David H. Wright, 62, of Riverside, LADWP’s former general manager, was sentenced to six years in federal prison and fined $75,000 for accepting bribes from Paradis in exchange for his official action to secure the three-year, $30 million no-bid LADWP contract for Aventador.
The FBI is investigating this matter. 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.
Assistant United States Attorneys Susan Har and Jamari Buxton of the Public Corruption and Civil Rights Section prosecuted this case.
Orange County Man Agrees to Plead Guilty to Federal Charges for Obtaining More Than $5 Million in COVID Loans for Sham CompaniesRead the Press Release
LOS ANGELES – An Orange County man has agreed to plead guilty to federal criminal charges that he fraudulently obtained more than $5 million in COVID-relief loans for three sham companies.
Raghavender Reddy Budamala, 35, of Irvine, agreed to plead guilty to one count of bank fraud and one count of money laundering in a plea agreement filed today in United States District Court. Budamala, who has agreed to forfeit his ill-gotten gains to the government, is scheduled to enter his guilty plea on June 21 before United States District Judge Otis D. Wright II.
According to his plea agreement, in 2019 Budamala formed or acquired three shell companies with no operations – Hayventure LLC, Pioneer LLC, and XC International LLC. Following the outbreak of the COVID-19 pandemic, and the enactment of federal programs designed to address the economic fallout from the pandemic, Budamala submitted to the Small Business Administration seven applications for pandemic-relief loans under the Paycheck Protection Program and Economic Injury Disaster Loan.
As part of the applications filed from April 2020 through March 2021, Budamala falsely represented to the banks administering the COVID-relief business loan programs that his companies employed dozens of individuals and earned millions of dollars in revenue, and that he needed the money for payroll and business expenses.
The listed addresses for the companies were bogus, nonexistent or residential. The states where Budamala’s companies purportedly operated have no records of those companies paying wages to any employees, and bank records for the companies reflect no significant business income or operating expenses.
The SBA and the banks funded six of the loans and disbursed $5,151,497. Budamala applied to have several of the loans forgiven and falsely represented that he had used the SBA money entirely for payroll.
Once the loans were funded, Budamala used the money to pay for personal expenses, including the purchase of a $1.2 million investment property in Eagle Rock, the purchase of a $597,585 property in Malibu, the purchase of a personal residence in Irvine, a $970,000 investment in an EB-5 Immigrant Investor Visa Program and a nearly $3 million deposit into Budamala’s personal TD Ameritrade account.
Upon entering his guilty plea, Budamala will face a statutory maximum sentence of 40 years in federal prison.
Budamala has been in federal custody since his arrest on February 23, when he attempted to abscond from the United States to Mexico via the San Ysidro border crossing. A criminal complaint was filed against him on February 24.
IRS Criminal Investigation, the FBI, and the Small Business Administration’s Office of Inspector General investigated this matter.
Assistant United States Attorney Gregory D. Bernstein of the Major Frauds Section is prosecuting this case.
In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
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.
U.K. National Sentenced to 3 Years in Prison for $8.3 Million Scam That Claimed Precious Metals Could Be Extracted from ‘Ancient Slag’Read the Press Release
LOS ANGELES – A British national was sentenced today to 36 months in federal prison for defrauding over 100 investors out of more than $8 million through a scheme that sold “ancient slag,” a mining waste byproduct that supposedly contained precious metals.
Michael Godfree, 80, a United Kingdom citizen who resides in the Mount Washington neighborhood of Los Angeles, was sentenced by United States District Judge John A. Kronstadt, who also ordered Godfree to pay $8,336,965 in restitution.
Godfree pleaded guilty in December 2021 to one count of mail fraud.
From 2011 to November 2017, Godfree schemed to defraud victim-purchasers of material he identified as “ancient slag” and “gold ore.” He was co-founder of The Minerals Acquisition Company (TMAC), a Pasadena-based outfit that offered to sell slag to victims who were told the company would be able to extract precious metals from this slag, which was generated from copper mining. TMAC sold ton-quantities of the slag with promises of refining the material and recovering precious metals. TMAC provided victims with supposedly attorney-certified “Certificates of Title” that purported to transfer ownership of the slag to victims.
Godfree fraudulently induced the victims to buy the “ancient slag” by falsely stating the “ancient slag” was valuable because it contained precious metals and a process would soon be available that could extract the precious metals supposedly in the slag.
In fact, Godfree and TMAC did not actually own most of the slag they sold, there was not a commercially viable process for extracting precious metals from the slag, and the business operation had not been endorsed by a lawyer.
Acting on Godfree’s false promises, victims sent the company money by mailing checks to the TMAC offices in Pasadena and by wiring money to accounts that Godfree controlled. Godfree used the funds to pay for his personal expenses.
In total, Godfree and TMAC caused losses of approximately $8,336,965 to the victims of their fraud.
TMAC was dissolved in 2015, but its operations were largely taken over by Precious Metals of North America Inc., another of Godfree’s companies.
“Godfree was nothing more than a glorified conman,” prosecutors wrote in a sentencing memorandum. “At bottom, [Godfree] was selling nothing more than worthless dirt (that he generally didn’t own) along with a non-existent ‘process’ to extract value from the dirt…. Unsurprisingly, not a single victim-purchaser has ever seen any return on their purchase. Instead, the money was spent on lavish goods and personal expenses for [Godfree].”
The FBI investigated this matter.
Assistant United States Attorney Bruce K. Riordan of the Violent and Organized Crime Section prosecuted this case.
Oklahoma Man Charged in Complaint Alleging He Made Bomb Threats to L.A. Schools and Threatened to Shoot Elementary School StudentsRead the Press Release
LOS ANGELES – An Oklahoma man who grew up in Los Angeles was arrested today on a federal criminal complaint alleging that he telephoned bomb threats to five Los Angeles schools, including two elementary schools, and also threatened to shoot the children as they exited one of the elementary schools.
Marcus James Buchanan, 44, of Blackwell, Oklahoma, is expected to make his initial appearance this afternoon in United States District Court in Wichita, Kansas.
Buchanan is charged with one count of making a threat through interstate commerce to damage or destroy buildings by fire or explosives.
According to an affidavit filed with the complaint, during a period of less than two hours on the morning of February 28, Buchanan called in bomb threats to two elementary schools, two middle schools, and a high school in Los Angeles. In a call to one of the elementary schools, Buchanan allegedly threatened to shoot the children as they exited the building.
On April 27 and 28, Buchanan allegedly called in additional bomb threats to two of the Los Angeles schools he previously threatened, and threatened to shoot and kill children at other schools. On the afternoon of April 27, Buchanan called an elementary school and said to a school employee, “There is a bomb at your school and we will shoot the kids when they get out of the school. That is what you get for not accepting me in ’86,” according to the affidavit. When the employee asked who was calling, Buchanan allegedly responded, “If you try to find out, I will shoot you.” After receiving the threat, the school staff notified police and placed the school on lockdown. Police searched the campus for explosives or unusual items but found none.
On April 28, Buchanan allegedly called the same school again and said there was a pipe bomb placed at the school’s address. After receiving the bomb threat, the school staff notified police and placed the school on lockdown. Police searched the campus for explosives or unusual items but found none.
That same day, Buchanan allegedly called a different elementary school and said, “Stop playing games you know who this is. I am going to shoot the school. I know the kids are there.” Afterwards, the school was placed on lockdown, but – as with all the incidents – no explosives or unusual items were found.
Phone records indicated that the threatening calls came from a number identified with Buchanan, 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, Buchanan would face a statutory maximum sentence of 10 years in federal prison.
The FBI and the Los Angeles School Police Department investigated this matter.
Assistant United States Attorney Morgan J. Cohen of the General Crimes Section is prosecuting this case.
Two Orange County Tax Preparers Charged in Long-Running Tax and Benefit Fraud Scheme Orchestrated by Corrupt Social WorkerRead the Press Release
SANTA ANA, California – Two Orange County tax preparers were arraigned today on federal charges alleging they participated in a scheme orchestrated by a corrupt social worker who stole his clients’ identities to fraudulently obtain tax refunds, welfare benefits and credit cards.
Anton Nguyen, 53, of Fountain Valley, and Rosemary Pham, 64, of Midway City, were summonsed to appear in United States District Court in Santa Ana, where this morning they pleaded not guilty to the criminal charges against them. A July 26 trial date has been scheduled for both defendants, who remain out of custody.
Nguyen and Pham were charged in separate indictments filed on May 11 with conspiracy to defraud the United States. Nguyen also is charged with three counts of making false claims against the United States for the payment of federal income tax refunds, and Pham additionally is charged with 10 counts of aiding and advising the filing of false tax returns.
Nguyen and Pham allegedly conspired with John Tran, who is believed to be either 56 or 60, of Fountain Valley, an Orange County Social Services Agency case worker from July 1994 to October 2018, who stole the Social Security numbers and other personal identifying information (PII) from his clients – many of them recent immigrants.
From August 2010 to June 2019, Tran and his co-conspirators used the stolen information to fraudulently obtain money from the federal government, the State of California, the County of Orange and financial institutions.
Nguyen, who owned and operated the Westminster-based Century Travel & Tax, and Pham, the owner and operator of Victory Tax Service in Westminster, allegedly used the stolen identities that Tran provided to create fraudulent Forms 1099-MISC purporting to show payments made to the identity theft victims by companies, including those controlled by Tran and other co-conspirators.
The defendants allegedly prepared and filed federal income tax returns using the Tran-provided stolen identities. Nguyen and Pham used the purported payments on the fraudulent Forms 1099 as income to the identify theft victims, making them appear to qualify for tax credits, including the Earned Income Tax Credit and the Child Tax Credit.
In turn, the reported payments to the identity theft victims were used by Nguyen’s and Pham’s clients to offset business revenues and reduce the taxes they owed by making it appear that the identity theft victims worked for them, according to the indictments. In exchange for the fabrication of the Forms 1099, Nguyen’s and Pham’s clients allegedly paid them a fee.
Tran and his co-conspirators filed 433 tax returns using PII belonging to other individuals, generating at least $973,153 in fraudulently obtained tax refund payments from the United States. Pham and Nguyen allegedly caused at least $1,378,092 and $4,054,802, respectively, in unpaid taxes to be incurred.
Pham also allegedly reported fraudulent Fuel Tax Credits for other taxpayers.
Indictments contain 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, Nguyen would face a statutory maximum sentence of 10 years in federal prison and Pham would face a statutory maximum sentence of eight years in federal prison.
Prior to these indictments, federal prosecutors secured seven guilty pleas to criminal charges connected to this scheme.
Tran pleaded guilty in November 2019 to conspiracy to defraud the United States with respect to claims, mail fraud and aggravated identity theft. Tran is scheduled to be sentenced on July 25, at which time he will face a statutory maximum sentence of 72 years in federal prison and a mandatory minimum sentence of two years in federal prison.
Chau Nguyen, 68, of Garden Grove; Sophie Thuy Nguyen, 47, of Westminster; Kevin Le, 56, of Anaheim Hills; Van Quach, 42, of Monterey Park; and Peter Duc Nguyen, 62, of Garden Grove, each have pleaded guilty to evasion of assessment of taxes and are scheduled to be sentenced later this year, at which time they will each face a statutory maximum sentence of five years in federal prison.
Thomas Nguyen, 61, of Santa Ana, pleaded guilty in June 2021 to one count of tax evasion. He was fined $30,000 and ordered to pay $133,796 in restitution.
IRS Criminal Investigation, with assistance from the Orange County District Attorney’s Office, investigated this matter.
Assistant United States Attorneys Bradley E. Marrett and Daniel H. Ahn of the Santa Ana Branch Office are prosecuting these cases.
San Luis Obispo Man Sentenced to Nearly 2 Years in Federal Prison for Bribing County Supervisor and Filing False Income Tax ReturnsRead the Press Release
LOS ANGELES – A San Luis Obispo man was sentenced today to 22 months in federal prison for paying a county supervisor approximately $32,000 in bribes – most of them in cash – in exchange for the supervisor’s votes and influence on other votes affecting his cannabis business interests.
Helios Raphael Dayspring, a.k.a. “Bobby Dayspring,” 36, was sentenced by United States District Judge André Birotte Jr. Dayspring has paid the restitution order of $3,438,793 to the IRS in this case.
In October 2021, Dayspring pleaded guilty to one count of bribery and one count of subscribing to a false income tax return.
Dayspring owned, operated, and had a controlling interest in multiple farms that grew cannabis in San Luis Obispo County. He also had ownership interests in businesses that sold marijuana to the public, including in Grover Beach. To further his interests in the farms that grew cannabis in San Luis Obispo County, Dayspring began paying bribes to a San Luis Obispo County supervisor in the fall of 2016 and continued doing so through November 2019.
In total, Dayspring paid the late Third District supervisor multiple bribes in cash and money orders totaling $32,000. In exchange, the supervisor voted on matters affecting Dayspring’s farms, including voting multiple times in favor of legislation that permitted Dayspring’s farms to operate before it had obtained final permitting approvals.
In addition to bribing the San Luis Obispo County supervisor, Dayspring attempted to bribe the then-mayor of Grover Beach in exchange for two dispensary licenses in that city. The attempted $100,000 bribe took place during a dinner meeting in September 2017. The mayor did not respond to the offer, and Dayspring did not end up paying the bribe.
Dayspring also substantially underreported his personal income on his federal tax returns for the years 2014 through 2018, which resulted in the IRS losing more than $3.4 million in tax revenue. For example, for the tax year 2018, Dayspring falsely reported his taxable income as $1,262,894, when in fact his income was greater than $6.5 million.
Dayspring “had one goal: build a cannabis empire,” prosecutors wrote in a sentencing memorandum. “To accomplish that goal, he would not let anything get in his way, including the law.”
The FBI and IRS Criminal Investigation investigated this matter.
Assistant United States Attorney Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section prosecuted this case.