Central District of California
Press releases recorded for this federal judicial district.
Indictment Names Six in Scheme to Provide High-Powered Firearms and Huge Quantities of Ammunition to Mexican Drug CartelRead the Press Release
LOS ANGELES – A federal grand jury indictment alleging a scheme to smuggle weapons and ammunition to one of the world’s most violent and dangerous transnational criminal organizations has led to the arrest of four defendants, the Justice Department announced today.
The arrests on January 19 are the result of Operation Semper Infidelis, a Los Angeles Strike Force investigation that targeted a domestic weapons trafficking organization that provided firearms and ammunition to the Cártel Jalisco Nueva Generación (CJNG), one of the largest and most violent drug cartels in Mexico. In conjunction with the arrests, authorities unsealed a 23-count indictment that charges six defendants with conspiring to violate federal export laws by illegally bringing the weapons and ammunition to CJNG operatives in Mexico.
The indictment alleges that a Whittier man led the gun trafficking organization that used narcotics proceeds to purchase assault rifles, hundreds of thousands of rounds of assault rifle ammunition, and numerous machine gun parts and accessories – some of which were smuggled into Mexico, mostly since the beginning of the COVID-19 pandemic.
“This case alleges a scheme to provide military-grade firepower to a major drug trafficking organization that commits unspeakable acts of violence in Mexico to further its goal of flooding the United States with dangerous and deadly narcotics,” said United States Attorney Tracy L. Wilkison. “We will continue our efforts to dismantle drug cartels by targeting their leadership and well as their soldiers, intercepting their narcotics and ill-gotten financial gains, and prosecuting those who provide the resources that allow the cartels to engage in acts of violence.”
“The defendants in this case smuggled sophisticated weaponry out of the United States to one of the most violent cartels in Mexico whose members target not only rival gangs, but innocent Mexican citizens and Mexican law enforcement,” said Kristi K Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Interdictions by our task force, coupled with this indictment, have dealt a blow to firearms trafficking groups on which this cartel relies to facilitate their violent operations.”
The indictment charges all six defendants in a conspiracy to violate export administration regulations that “restrict the export of items that could make a significant contribution to the military potential of other nations or that could be detrimental to the foreign policy or national security of the United States.” The indictment further charges five of the defendants with various attempted smuggling counts. The leader of the organization and his son are charged in a money laundering conspiracy, and two of the defendants are charged with being felons in possession of ammunition.
The six defendants named in the indictment are:
- Marco Antonio Santillan Valencia, 51, of Whittier, the alleged leader of the organization that obtained and supplied weapons, firearms parts and ammunition to the CJNG;
- Anthony Marmolejo Aguilar, 30, of Whittier, who is currently in state custody on separate charges in North Carolina;
- Marco Santillan Jr., 29, of Pahrump, Nevada, who is the son of the alleged leader of the ring and who was arrested in Oregon;
- Michael Diaz, 33, of Moreno Valley;
- Luis De Arcos, 51, of Midway City; and
- Rafael Magallon Castillo, 34, of Oceano, who is a fugitive believed to be in Mexico.
At their arraignments on January 19 in United States District Court in Los Angeles, Santillan, De Arcos and Diaz entered not guilty pleas and were ordered to stand trial in March. Santillan Jr. was ordered to appear for an arraignment in Los Angeles on February 2.
The indictment alleges that members of the Santillan gun trafficking organization obtained firearms in Oregon and Nevada, consolidated shipments in or near Pahrump and Whittier, and smuggled the prohibited items to Mexico. The organization further obtained ammunition from various states – sometimes anonymously ordering pallets of bullets – to be delivered to a stash location in Nevada.
The conspiracy, which the indictment states began no later than March 2020 and operated for about one year, also obtained thousands of rounds of .50-caliber armor piercing incendiary rounds in Arizona, consolidating them in Nevada before attempting to smuggle them into Mexico.
That indictment states that on May 26, 2020, in a Facebook message, “Santillan Jr. informed another individual that members of ‘Mencho’s cartel’ – referring to the CJNG – ‘are buying everything’ – referring to firearms and firearms parts.” Later that day, according to the indictment, Santillan Jr. sent a video of himself via Facebook holding a fanned stack of $100 bills and saying the “sale of firearms to the CJNG was profitable.”
During the Semper Infidelis investigation, authorities seized six assault rifles, over 250,000 rounds of assault rifle ammunition, over $300,000 worth of weapons parts and kits to assemble several “mini-guns” – six-barrel rotary machine guns capable of firing up to 6,000 rounds per minute.
Marmolejo, Santillan Jr. and Diaz allegedly made large purchases of .50-caliber armor piercing incendiary ammunition and .223-caliber ammunition that was to be transported to Mexico. Days later, on July 31, 2020, in operations in Pahrump and San Bernardino County, law enforcement seized firearms parts and ammunition, including well over 100,000 rounds of .223-caliber and approximately 10,000 rounds of .50-caliber armor piercing incendiary ammunition.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The charge of conspiracy to violate export administration regulations carries a statutory maximum sentence of 20 years in federal prison, while the attempted smuggling counts each carry a maximum penalty of 10 years in prison.
Since the January 19 takedown, authorities continued efforts to arrest Magallon, but they are now seeking the public’s assistance in bringing him to justice. Anyone with information about Magallon’s whereabouts is asked to contact the FBI’s Los Angeles Field Office at (310) 477-6565.
The Los Angeles Strike Force is led by the FBI, the Drug Enforcement Administration and the United States Attorney’s Office. Homeland Security Investigations, IRS Criminal Investigation, the Los Angeles Police Department and the United States Marshals Service are members of the Strike Force. The Bureau of Alcohol, Tobacco, Firearms and Explosives and the South Gate Police Department provided substantial assistance during this investigation.
Assistant United States Attorneys Benedetto L. Balding and Christopher C. Kendall of the International Narcotics, Money Laundering, and Racketeering Section are prosecuting this case.
Operation Semper Infidelis is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) Strike Force Initiative, which provides for the establishment of permanent multi-agency task force teams that work side-by-side in the same location. This co-located model enables agents from different agencies to collaborate on intelligence-driven, multi-jurisdictional operations to disrupt and dismantle the most significant drug traffickers, money launderers, gangs, and transnational criminal organizations.
South Korean National Sentenced to Two Years in Prison for Attempting to Illegally Export to Asia Poached Wild Succulent PlantsRead the Press Release
LOS ANGELES – A South Korean national was sentenced today to 24 months in federal prison for attempting to illegally export to Asia live Dudleya succulent plants worth at least $150,000 that he and his co-schemers had pulled out of the ground at remote state parks in Northern California.
Byungsu Kim, 46, was sentenced by United States District Judge George H. Wu, who also ordered him to pay $3,985 in restitution to the State of California for expenses related to replanting the stolen plants after his arrest. Kim pleaded guilty in September 2021 to one count of attempting to export plants taken in violation of state law.
On October 11, 2018, Kim and co-defendants Youngin Back, 47, and Bong Jun Kim, 46, traveled by car from Los Angeles International Airport to Crescent City, California. From October 14 to October 16, Kim and the co-defendants harvested numerous Dudleya plants from DeMartin State Beach in Klamath, California, and from Del Norte Coast Redwoods State Park.
Kim knew the taking of the Dudleya plants was unlawful. He had conducted internet searches on his smartphone for “poaching succulents” and “dudleya” and had read a press release regarding the arrest and convictions of three other Dudleya poachers.
On October 22, 2018, Kim and the co-defendants traveled from Northern California to a nursery in Vista and unloaded the Dudleya plants that they had poached during the previous week. The following day, the men traveled to Russian Gulch State Park in Mendocino County, where, wearing backpacks and using hand-held radios to communicate, they pulled additional Dudleya plants out of the ground before returning once again to the Vista nursery.
Prior to the plants’ shipment, Kim scheduled an inspection with a county agriculture official at the Vista nursery and falsely told her the government-issued certificate necessary for the plants’ exportation should list 1,397 Dudleya plants (259 pounds/117.5 kilograms) for export to South Korea and that the “place of origin” of the plants was San Diego County.
The defendants then transported the plants to a commercial exporter in Compton, to whom Kim intended to present the fraudulently obtained certificate so the Dudleya plants could be smuggled to South Korea. When the defendants left, local law enforcement executed a search warrant at the cargo shipping company and found 3,715 Dudleya plants in boxes that were labeled “Rush” and “Live Plants.” These were the plants the defendants had pulled out of the ground from public lands in Northern California.
At the time that Kim and the co-defendants engaged in the illegal conduct, they did not have a scientific permit nor a federal permit that would allow them to harvest Dudleya plants. Kim also admitted to being the scheme’s organizer.
Although California law enforcement officials had confiscated Kim’s passport following his arrest on state charges relating to his October 2018 conduct, Kim fraudulently obtained a new South Korean passport in January 2019 by falsely claiming to the South Korean Consulate in Los Angeles that he had lost his passport.
In May 2019, soon after Kim learned of the federal criminal charges pending against him in this case, he and Back fled to Mexico on foot through the Tijuana-San Ysidro border crossing. Using his fraudulently obtained passport, Kim then flew with Back from Mexico to China, and then flew from China to South Korea.
Kim was arrested in South Africa in October 2019 for charges related to a similar scheme in which he illegally collected plants from protected areas in that nation to export to South Korea. Kim pleaded guilty to the criminal charges in South Africa and was extradited to the United States in October 2020 after spending a year in custody there. He has remained in federal custody since October 2020.
“[Kim’s] willful criminal conduct in October 2019 was not an isolated event: he had carried out the same scheme repeatedly in California,” prosecutors wrote in a sentencing memorandum. “[Kim] had traveled to the United States more than 50 times since 2009. Customs records show that he was travelling for succulent-related purposes and often with tens of thousands of dollars in cash (sometimes declared, sometime not) and fake phytosanitary certificates.”
Bong Jun Kim pleaded guilty in July 2019 to one count of attempting to export plants taken in violation of state law. He served four months in federal custody and was released in October 2019 after Judge Wu imposed a sentence of time served.
Back remains a fugitive.
The California Department of Fish and Wildlife, the United States Fish and Wildlife Service, Homeland Security Investigations, U.S. Customs and Border Protection, San Diego County’s Department of Agriculture, Weights and Measures, the U.S. Department of Agriculture, and the California State Parks investigated this matter. The Justice Department’s Office of International Affairs provided significant assistance in securing the defendant’s extradition from South Africa.
Assistant United States Attorneys Matthew W. O’Brien and Dennis Mitchell of the Environmental and Community Safety Crimes Section prosecuted this case.
Baldwin Hills Man Pleads Guilty to Criminal Charge for Fraudulently Obtaining Luxury Cars from Victims Who Wanted Out of Their LeasesRead the Press Release
LOS ANGELES – A Baldwin Hills man pleaded guilty today to a federal criminal charge for conning victims nationwide into giving him their high-end and exotic vehicles with bogus promises he would find other people to take over their car leases.
Geoffrey Eldridge Hull, 41, pleaded guilty to one count of wire fraud.
According to his plea agreement, from April 2016 to November 2019, Hull marketed himself and his companies as being able to find people to take over leases for high-end and exotic car – such as Bentleys, Ferraris and Maseratis – from individuals no longer wishing to continue those leases. Despite assuring victims that his venture was successful, Hull and his companies did not find people to take over these leases.
Hull agreed to cover monthly lease payments and promised leaseholders that he would quickly find credit-qualified buyers to legally assume the lease through the original finance company. Hull used a longtime friend and business associate to vouch for the quality of the program.
In fact, Hull offered the luxury cars for rent and passed little of the rent money to the original leaseholders, who were still responsible for lease payments. Furthermore, Hull made few, if any, timely car lease payments.
Hull ignored victims’ requests for the return of their vehicles, prompting some to make stolen car reports to law enforcement agencies. When some victims’ cars were returned after law enforcement seizures, repossession and other means, the cars were often damaged, had incurred toll and parking violations, or had been driven over the allotted mileage.
When victims posted negative reviews online about Hull and his company, Hull would change his company name and resume the scheme. The company names Hull used to operate his scheme included Exotic Lease Transfer, Luxe Lease Transfer, Shift Lease, Veer Lease, Torque Transfer, Haven Transfer, Early Lease, and Open Lease Transfer. Hull, who has three prior convictions for grand theft auto, also used a series of aliases as part of the scheme, including “Geoff Eldredge,” “Geoff Eldridge,” “Jefrii Eldridge,” “Geoffrey Hulle,” “Jeff Bluthenthal,” and “Jeff H.”
In total, Hull defrauded at least 128 individuals and caused an actual loss of at least $1,560,321.
United States District Judge Fernando M. Olguin has scheduled a May 26 sentencing hearing, at which time Hull will face a statutory maximum sentence of 20 years in federal prison.
Homeland Security Investigations investigated this matter.
Assistant United States Attorney Carolyn S. Small of the Major Frauds Section is prosecuting this case.
Ex-Pro Skateboarder Sentenced to over 8 Years in Prison for Selling Methamphetamine and Laundering Bitcoin Drug ProceedsRead the Press Release
SANTA ANA, California – A former professional skateboarder was sentenced today to 97 months in federal prison for selling nearly two pounds of methamphetamine and laundering Bitcoin for the dark-web operations of other drug traffickers.
Evan Jaime Hernandez, 35, of Long Beach, was sentenced by United States District Judge David O. Carter.
Hernandez pleaded guilty in June 2021 to one count of distribution of methamphetamine and one count of laundering of monetary instruments.
According to court documents, from at least March 2018 to March 2019, Hernandez distributed narcotics, conspiring with drug dealers to distribute the controlled substances over one of the world’s largest dark-net marketplaces.
Hernandez not only supplied drugs that were sold over the dark-net by drug dealers such as William Glarner IV, 36, of Irvine, but he also distributed drugs on his own. Glarner pleaded guilty in June 2019 to one count of possession with intent to distribute methamphetamine and is serving a 10-year prison sentence for that offense.
In March 2018, Hernandez sold approximately 895 grams (1.97 pounds) of methamphetamine for $5,000 to an individual whom he thought was a money launderer, but who was working with federal law enforcement at the time.
Hernandez also was responsible for laundering Bitcoin for dark-net drug trafficking operations. Hernandez utilized the services of an individual – the same one working with law enforcement – to exchange Bitcoin into cash. Hernandez conducted four Bitcoin-to-cash transactions with the individual, including the exchange of approximately 7.95 Bitcoin for $50,000 in September 2018. By using cryptocurrency and an unlicensed exchanger to liquidate the proceeds, Hernandez intended to conceal the source and ownership of the drug proceeds.
In total, Hernandez conducted four Bitcoin-to-cash exchanges that totaled approximately $171,300.
In March 2019, law enforcement conducted a search warrant of a location controlled by one of Hernandez’s drug dealing associates, where agents found 10 vacuum-sealed bags in United States Postal Service and Federal Express envelopes, as well as four separate vacuum-sealed bags and one gallon-size freezer bag. During this search, agents recovered approximately 6.7 kilograms (14.8 pounds) of methamphetamine that Hernandez distributed and which would have been used to fill orders placed on the dark-net.
“[Hernandez] was involved in a highly sophisticated drug trafficking operation, where he personally took on various roles to ensure its success: obtaining multiple types of narcotics, selling them directly to customers, and laundering money on the backend in a sophisticated manner,” prosecutors wrote in a sentencing memorandum.
Hernandez has been ordered to forfeit to the government a 2010 Mercedes-Benz, approximately $35,000 in cash, and various watches, necklaces, rings and other jewelry.
Homeland Security Investigations investigated this matter. The Costa Mesa Police Department, the La Habra Police Department, the Brea Police Department and the Cypress Police Department assisted with the investigation.
Assistant United States Attorney Kathy Yu of the Violent and Organized Crime Section prosecuted this case.
Three Gang Members and One Gang Associate Charged with Federal Racketeering Offense in Robbery and Fatal Shooting of LAPD OfficerRead the Press Release
LOS ANGELES – Federal prosecutors this evening filed a criminal complaint charging three members and an associate of a Los Angeles street gang with violating a federal racketeering statute for their roles in the robbery and fatal shooting earlier this week of Los Angeles Police Officer Fernando Arroyos.
The criminal complaint alleges that two of the defendants confronted Arroyos and his girlfriend on the night of January 10, stole items from them, and then shot Arroyos, who died soon after suffering a single gunshot wound.
The complaint charges the four defendants with violent crime in aid of racketeering (VICAR), whereby the defendants, as consideration for the receipt of anything of value of the Florencia 13 (F13) gang, and to increase and maintain position within F13, murdered Arroyos. F13 is a large, multi-generational street gang that previously has been the subject of federal prosecutions, including two large racketeering cases.
The defendants in this case were taken into custody on Wednesday by investigators with the Los Angeles County Sheriff’s Department. Those defendants are expected to be transferred to federal custody Friday morning and to make their initial court appearances Friday afternoon in United States District Court.
The defendants charged today are:
- Luis Alfredo De La Rosa Rios, 29, an F13 member also known as “Lil J”;
- Ernesto Cisneros, 22, an F13 member also known as “Gonzo”;
- Jesse Contreras, 34, an F13 member who claimed a moniker of “Skinny Jack,” but who also may be known as “Flaco”; and
- Haylee Marie Grisham, 18, who is Rios’ girlfriend.
The VICAR charge carries a potential death penalty – and minimum sentence of life in federal prison without the possibility of parole – because Officer Arroyos allegedly was murdered during the robbery.
According to the affidavit in support of the criminal complaint, Arroyos – who is identified in the affidavit as “F.A.” – and his girlfriend were looking at a home potentially to purchase on East 87th Street in Los Angeles when a black pickup truck arrived. Rios and Cisneros confronted the victims, pointing guns and removing property from both, including chains from Arroyos’ neck.
“At some point after Cisneros removed victim F.A.’s chains, victim F.A. and the two suspects exchanged gunfire,” the affidavit states. “Victim F.A. ran toward an alley where he collapsed and the two suspects fled.”
Investigators have obtained surveillance video showing the black pickup arriving at a residence near the shooting, where Contreras is seen exiting the vehicle and helping an apparently injured Cisneros out of the truck, the affidavit states. All four defendants were in the vehicle and allegedly were at the scene of the robbery and shooting.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The Los Angeles County Sheriff’s Department, with assistance from the FBI, is conducting the investigation in this matter.
Assistant United States Attorneys Joanna Curtis, Chief of the Violent and Organized Crime Section; Kathy Yu of the Violent and Organized Crime Section; and Christopher Kendall of the International Narcotics, Money Laundering, and Racketeering Section are prosecuting this case.
Authorities Seek Two Fugitives Named in New Indictment Alleging Illegal Money Transfer Business Linked to Romance ScamsRead the Press Release
LOS ANGELES – A federal grand jury indictment returned this week charges two Chinese nationals with operating an illegal money transfer business that moved funds from the China to the United States, in some cases using proceeds of romance scams to provide money to their U.S.-based customers.
A four-count superseding indictment filed Wednesday charges two people currently being sought by the FBI. The new indictment, which supersedes an indictment filed in 2018, charges both defendants with conspiracy to operate an unlicensed money transmitting business and witness tampering offenses.
The defendants in this case are Dianwei Wang, 31, and Zhili “Ethan” Song, 36, both of whom previously resided in West Covina. Wang and Song are fugitives.
Wang and Song allegedly operated an “informal value transfer system” (IVTS), which the indictment describes as “a network of people who would receive funds from a customer in one location for the purpose of making roughly equivalent funds available (minus a fee) to the customer in another location, often in a different country.” An IVTS can be known by various names, including “fei ch’ien” in China and “hawala” in the Middle East.
As part of the scheme alleged in the indictment, Wang and Song told their IVTS customers to deposit money into Chinese bank accounts they controlled or had access to with a promise that the money – minus their fee – would be deposited into accounts their customers designated in the United States.
Over the course of about eight months in 2017, Wang and Song transferred or attempted to transfer approximately $2 million from China to the United States for their IVTS customers, the indictment states.
“To fulfill their agreements to provide U.S. dollar-denominated funds to the IVTS customers in the United States, defendants Wang and Song would use funds they obtained from third parties, including romance scam victims,” according to the indictment.
Wang allegedly directed people associated with the online scammers to send him checks or wire him funds derived from romance scam victims, most of whom were older adults. In some cases, Wang allegedly directed the people associated with scammers to have victims send checks directly to him.
Over a six-month period in 2017, in 22 transactions detailed in the indictment, Wang and Song caused romance scam victims to send nearly $1.1 million to them or to their IVTS customers.
Wang and Song also allegedly lied to the FBI in late 2017 when they were asked about wire transfers to a Chinese national residing in Southern California. Both defendants are charged with conspiracy to obstruct justice for telling the third Chinese national to falsely tell the FBI that she was buying a house with Wang as a way of explaining the wire transfers and supporting their own false statements to FBI agents. Counts three and four in the indictment separately charge Wang and Song with witness tampering.
More than $450,000 in funds seized from accounts associated with the third Chinese national are the subject of a pending civil asset forfeiture proceeding.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The charge of conspiracy to operate an unlicensed money transmitting business carries a statutory maximum sentence of five years in federal prison. The obstruction of justice and witness tampering charges each carry a maximum penalty of 20 years in federal prison.
The FBI previously seized approximately $1.9 million from accounts controlled by Wang, Song and other Chinese nationals. No claims were made on approximately $376,000 seized from Wang’s accounts, and that money has been forfeited to the United States. The United States intends to seek forfeiture of the remaining funds.
The FBI is investigating this matter.
Anyone with information concerning the whereabout of Wang or Song should call their local FBI office, or the nearest U.S. embassy or consulate. In Los Angeles, the FBI can be reached at (310) 477-6565.
Romance scams occur when a criminal adopts a fake online identity to gain a victim’s affection and trust. The scammer then uses the illusion of a romantic or close relationship to manipulate and/or steal from the victim. Some romance scam victims become witting or unwitting participants in other scams, by agreeing to receive money into their accounts and transfer the money to third parties as directed by their scammer contact. Never send money to, or receive and transfer money for, anyone who has only communicated with you online or by phone. If you or someone close to you may be caught in a romance scam, stop sending money and report the activity to the Internet Crime Complaint Center (www.ic3.gov) or the FBI.
Assistant United States Attorney Monica E. Tait of the Major Frauds Section is prosecuting the criminal case, and Assistant United States Attorney Katharine Schonbachler of the Asset Forfeiture Section is handling the forfeiture matters.
Former Los Angeles City Attorney’s Official in Charge of Civil Litigation Agrees to Plead Guilty to Extortion ChargeRead the Press Release
INFORMATION
PLEA AGREEMENTLOS ANGELES – A former senior official at the Los Angeles City Attorney’s Office has agreed to plead guilty to a federal charge for threatening to fire a plaintiffs’ attorney from a lucrative special counsel job with the city unless the attorney paid a substantial extortion demand from a former employee who was threatening to expose the city’s collusive litigation over its faulty water-and-power billing system, the Justice Department announced today.
Thomas H. Peters, 55, of Pacific Palisades, agreed to plead guilty to a one-count information charging him with aiding and abetting extortion, a crime that carries a statutory maximum sentence of 20 years in federal prison.
The information and plea agreement were filed today in United States District Court. Peters is expected to make his initial court appearance on February 7.
This is the fourth plea agreement federal prosecutors have filed in relation to the ongoing investigation concerning corruption and collusion involving the Los Angeles Department of Water and Power (LADWP) and the Los Angeles City Attorney’s Office. Peters is cooperating with the investigation.
Peters served as the chief of the Civil Litigation Branch of the Los Angeles City Attorney’s Office from February 2014 to March 2019. By December 2014, the city and LADWP were facing multiple class-action lawsuits over the flawed rollout of a new billing system during the previous year.
Also in December 2014, the City Attorney’s Office hired Paul O. Paradis, 58, a New York-based lawyer, and Paul R. Kiesel, a Beverly Hills plaintiffs’ attorney, as special counsel to represent the city in an anticipated lawsuit against PricewaterhouseCoopers (PwC), the vendor the city blamed for the billing system debacle in which thousands of ratepayers were massively overcharged, while others were significantly undercharged, resulting in financial losses to the city and LADWP.
The city’s lawsuit, filed in March 2015, alleged that PwC caused hundreds of millions of dollars in damages due to the faulty billing system. The city agreed to pay Paradis and Kiesel 19.9 percent of any recovery in the litigation, meaning the two lawyers stood to gain tens of millions of dollars in attorneys’ fees from the case.
Around this time, Paradis simultaneously was representing Antwon Jones, an LADWP ratepayer suing the city and the department for billing overcharges he incurred from the billing system debacle. By January 2015, members of the City Attorney’s Office were aware that Paradis was simultaneously representing both the city and Jones.
In April 2015, an Ohio attorney whom Paradis had enlisted to purportedly represent Jones filed a Paradis-drafted lawsuit against the city and LADWP. Paradis secretly agreed to accept – and eventually did accept – an illegal kickback of nearly $2.2 million for steering the lawsuit to the Ohio attorney. Paradis has agreed to plead guilty to a bribery charge for this offense.
By the spring of 2015, Peters was informed by a senior City Attorney’s Office official that Jones v. City was a friendly lawsuit intended as a vehicle for the city to settle globally and on its desired terms all claims related to the LADWP billing debacle, that Paradis had referred the case to the Ohio attorney for that purpose, and that the senior City Attorney official had directed and authorized this strategy before the complaint was filed.
Despite objections in an internal email in August 2015 from the city’s class action counsel that a proposed $13 million attorney fee award was unjustifiably high because, in part, the Ohio attorney had done “little demonstrative work to advance the interests of the class,” the city agreed to the fee proposal.
In July 2017, a Los Angeles Superior Court judge issued a final approval of the $67 million settlement agreed to by the parties in Jones v. City, including approximately $19 million in plaintiffs’ attorney fees.
According to the plea agreement filed today, on November 16, 2017, Peters learned from Paradis that a former long-time employee of Kiesel’s – identified in court documents as “Person A” – had stolen or improperly retained from Kiesel’s law firm certain documents that would show the city’s undisclosed collusion with the Ohio attorney in the Jones v. City lawsuit. Person A had threatened to reveal the documents if Kiesel did not pay her to return them.
Peters, who knew Person A from when they worked together at Kiesel’s law firm, understood that she had demanded payment of more than $1 million. Person A also threatened to appear at the next hearing in the City v. PwC case – scheduled for December 4, 2017 – in which the court was set to hear arguments on PwC’s motion to compel the city to produce the Jones v. PwC draft complaint. Peters knew that this document would lead PwC to discover the undisclosed collusive origins of the Jones v. City case, which would be damaging both to the city’s litigation position and to the reputation of the City Attorney’s Office.
On November 17, 2017, Peters met with Kiesel, Paradis and Paradis’ law partner to discuss Person A’s threats. Kiesel complained that Person A’s threats and demands constituted extortion and expressed reluctance to pay her. During this meeting, Peters ordered Kiesel to pay Person A’s monetary demands – if necessary – or potentially be fired as the city’s special counsel in the PwC litigation. Peters did not have the direct authority to fire Kiesel.
By the time of the November 17, 2017 meeting, Kiesel and his law firm had invested thousands of hours of uncompensated labor into City v. PwC. Additionally, Kiesel had borne more than $30,000 in non-labor costs on behalf of the city for the PwC litigation.
On December 1, 2017, Peters met with other senior members of the City Attorney’s Office and updated them on the status of Person A’s threats. The update included the fact that Kiesel had unsuccessfully attempted to negotiate with Person A at LADWP headquarters, and the fact that Person A had threatened to appear at the City v. PwC hearing the following Monday and reveal the documents showing the city’s collusion. Among other things, Peters conveyed that Kiesel had described Person A’s threats as “extortion.” Peters was directed to take care of the situation, and he agreed to do so.
After the December 1, 2017 meeting, Peters sent a text message to Paradis advising that senior leadership at the City Attorney’s Office was “not firing anyone at this point” – meaning that a decision to seek termination of the special counsel contract had not been made at the meeting – but warning that others were concerned about “the prospect of a sideshow” if Person A made good on her threat to appear in court the following Monday and reveal the documents showing the city’s collusion.
On December 4, 2017, Peters, Kiesel, Paradis and Paradis’ law partner, along with a friend of Kiesel’s who knew Person A, attended the hearing in City v. PwC. Person A appeared at the December 4 hearing and attempted to give documents to a court employee, who advised Person A that the court would not accept documents from a non-party. Person A approached the lead counsel for PwC with the documents, stating that she had information that could help PwC’s case. PwC’s counsel exchanged business cards with Person A and asked her to call him.
Kiesel’s friend – acting at Kiesel’s direction – then approached Person A and asked to reinitiate negotiations of her monetary demands to Kiesel.
After the hearing, Peters, Kiesel, Paradis and Paradis’ law partner met in Peters’ office, where Peters reiterated that Kiesel needed to pay Person A’s monetary demands to obtain the return of the documents, or he would be fired, which would mean significant financial losses to Kiesel and his law firm.
On the evening of December 4, 2017, Person A, Kiesel and Kiesel’s friend met at a restaurant and further discussed Person A’s demands. At the dinner, Kiesel agreed to pay $800,000 to Person A to prevent her from releasing the documents.
At approximately 9:15 p.m. on December 4, 2017, via text message, Kiesel informed Peters of the terms of the agreement reached with Person A, including that Kiesel would pay Person A $800,000 and that Person A would return the documents to Kiesel. Peters replied to Kiesel later that night, stating, “Good job,” and directing Kiesel to ensure that there was a strong confidentiality agreement with Person A regarding the $800,000 payment and the documents.
In May 2019, after Peters had resigned from the City Attorney’s Office, he received an inquiry from that office asking what he recalled about the 2017 payment to Person A. Understanding that the City Attorney’s Office was probing whether Peters would, if asked by someone outside the city, reveal the extortion or the underlying collusion, Peters falsely replied that the matter had only involved an employment dispute.
According to his plea agreement, Peters conveyed that he would continue to conceal the extortion and collusion by intentionally omitting from his reply that the “settlement” had involved Kiesel paying Person A $800,000 in extortion money to conceal the city’s collusion, that Peters had directed Kiesel to satisfy Person A’s monetary demands or be fired as special counsel, and that Peters had discussed the situation with and received direction from senior members of the City Attorney’s Office.
In addition to Peters and Paradis, prosecutors have secured plea agreements from David H. Wright, 62, of Riverside, LADWP’s former general manager, and David F. Alexander, 54, of Arcadia, a former senior cyber official at LADWP, stemming from corruption at the department.
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 Melissa Mills, Jamari Buxton and Susan Har of the Public Corruption and Civil Rights Section are prosecuting this case.
Montebello Man Sentenced to More Than 33 Years in Prison for Causing Fentanyl Overdose that Resulted in Woman’s DeathRead the Press Release
LOS ANGELES – A Montebello man who provided a lethal dose of fentanyl to a victim was sentenced today to 400 months in federal prison.
Edwin Oliva, 30, was sentenced by United States District Judge André Birotte Jr.
Oliva pleaded guilty in September 2021 to one count of distribution of fentanyl resulting in death and one count of possession with intent to distribute heroin. He has been in federal custody since March 2019.
During the early hours of February 28, 2019, Oliva gave the victim a line of drugs to snort and did not tell her the substance was fentanyl – a powerful synthetic opioid. Believing the substance to be cocaine, the victim ingested the drug, which resulted in a fatal overdose.
Oliva did not call 911 or otherwise seek medical care for the victim until nearly six hours after texting a friend that the victim was not breathing.
In the nearly six hours between when Oliva learned that the victim was not breathing and when he ultimately called 911, he cleaned his apartment, removing the fentanyl and other evidence of drug trafficking. He placed these items in the trunk of his significant other’s car and then drove away from the apartment in attempt to hide it from law enforcement.
Later that day, Montebello Police officers executed a search warrant on the car and discovered 1.9 kilograms (4.2 pounds) of heroin, 21 grams of fentanyl, 1.4 kilograms (3.2 pounds) of marijuana, 0.4 grams of methamphetamine, drug paraphernalia, a loaded .45-caliber semiautomatic pistol, a blue flip phone he used to conduct drug transactions, and a notebook he used as a pay/owe ledger.
While in custody in March 2019, Oliva directed his significant other to destroy evidence in the case, and he also directed her to tell law enforcement that the blue flip phone was a play phone for their children.
The Drug Enforcement Administration and the Montebello Police Department investigated this matter.
Assistant United States Attorneys Maria Jhai and Kathrynne Seiden of the General Crimes Section prosecuted this case.
Huntington Park Man Sentenced to 21 Years in Prison for Armed Robbery Spree Targeting Southland Trader Joe’s Grocery StoresRead the Press Release
LOS ANGELES – A Huntington Park man was sentenced this morning to 252 months in federal prison for committing 21 armed robberies and attempted armed robberies of Trader Joe’s grocery stores throughout Southern California during a three-month crime spree.
Gregory Johnson, 44, was sentenced by United States District Judge Virginia A. Phillips for the robberies in which Johnson used a semi-automatic handgun to terrorize store employees and customers.
Johnson pleaded guilty in May 2021 to one count of interference with commerce by robbery (Hobbs Act) and one count of brandishing a firearm in furtherance of a crime of violence. Johnson admitted he committed armed robberies of Trader Joe’s grocery stories between August 28 and December 4, 2020 in Eagle Rock, Sherman Oaks, Chatsworth, Glendale, Pasadena, Monrovia, San Dimas, Culver City, Manhattan Beach, Rancho Palos Verdes, Cerritos, Brea, Santa Ana, Agoura Hills, Tustin and Irvine. He also attempted to rob Trader Joe’s stores in Simi Valley and Corona. After Johnson robbed the stores in Rancho Palos Verdes and Brea, he returned weeks later to rob them again.
On December 4, 2020, Johnson and his son, Gregory Eric Johnson, 20, of South Los Angeles, were arrested after a witness gave law enforcement a description of the Johnsons’ getaway car and its license plate, according to court documents. After stopping the vehicle, law enforcement recovered Johnson’s gun and other items from the vehicle.
“The violent, terroristic nature of [Johnson’s] criminal conduct cannot be overstated,” prosecutors wrote in a sentencing memorandum. “[Johnson] repeatedly brandished and used a firearm to control and instill fear in innocent civilians. These crimes terrorized the businesses’ employees and customers. These crimes have a lasting impact of emotional trauma on the victims.”
Prosecutors further noted defendant’s “serious and violent criminal history,” including a prior armed robbery conviction in 2000 for robbing a Trader Joe’s store that resulted in a 12-year sentence. Johnson was on probation in several other cases when he committed Trader Joe’s armed robbery spree.
Gregory Eric Johnson was sentenced in December 2021 to two years in federal prison for his role in his father’s crime spree. He pleaded guilty in March 2021 to a two-count information charging him with interference with commerce by robbery for robbing Trader Joe’s stores in Chatsworth and Chino Hills in December 2020.
The FBI; the Los Angeles County Sheriff’s Department; and the Bureau of Alcohol, Tobacco, Firearms and Explosives investigated this matter.
Assistant United States Attorneys Jeffrey M. Chemerinsky and Joseph D. Axelrad of the Violent and Organized Crime Section prosecuted this case.
New Jersey Man Charged with Fraudulently Obtaining and Selling Three Tom Brady Super Bowl Rings, One of Which Sold for $337,000Read the Press Release
LOS ANGELES – Federal prosecutors today filed fraud charges against a New Jersey man who allegedly posed as a former player for the New England Patriots, which allowed him to purchase family versions of the team’s 2016 Super Bowl championship ring – supposedly as gifts to relatives of quarterback Tom Brady – one of which was sold at auction for more than $337,000.
Scott V. Spina Jr., 24, of Roseland, New Jersey, was charged today with one count of mail fraud, three counts of wire fraud and one count of aggravated identity theft in the scheme that allowed him to purchase three Super Bowl rings engraved with the name “Brady” on them and offer them for sale with the false claim that Tom Brady had given the rings to relatives.
In a plea agreement filed today in United States District Court, Spina agreed to plead guilty to the five felony offenses.
Court documents detail the fraudulent conduct that started in 2017 when Spina purchased a Super Bowl LI ring awarded to a Patriots player who subsequently left the team. Spina, who bilked the former player by paying for the ring with at least one bad check, sold the ring soon after for $63,000 to a well-known broker of championship rings.
When Spina obtained the player ring, he also received the information that allowed the former player to purchase Super Bowl rings for family and friends that are slightly smaller than the player rings. “Spina then called the Ring Company, fraudulently identified himself as [the former player], and started ordering three family and friend Super Bowl LI rings with the name ‘Brady’ engraved on each one, which he falsely represented were gifts for the baby of quarterback Tom Brady,” according to the criminal information filed today. “The rings were at no time authorized by Tom Brady. Defendant Spina intended to obtain the three rings by fraud and to sell them at a substantial profit.”
Spina entered into an agreement with the Orange County man who purchased the player’s Super Bowl ring to sell him the three family rings that Spina now claimed Brady had given to his nephews. After agreeing to buy the three rings for $81,500 – nearly three times what Spina paid for the rings – the buyer started to believe that Brady did not have nephews, and he tried to withdraw from the deal. The same day that the buyer tried to back out, and the same day that Spina actually received the rings in November 2017, Spina immediately sold them to an auction house for $100,000. During an auction in February 2018, one of the family rings was sold for $337,219.
In his plea agreement, Spina admitted that he defrauded the Orange County ring broker when he falsely claimed that the rings “were ordered for Tom Brady directly from [the Ring Company] for select family members.” Spina also admitted that he defrauded this victim in relation to three wire transfers for the deposit on the family rings. Spina further admitted he committed identity theft when he posed as the former Patriot to purchase the rings.
Spina has agreed to make his first appearance in this case in federal court in Los Angeles on January 31.
Once he formally enters the guilty pleas, Spina will face a statutory maximum penalty of 92 years in federal prison, but the actual sentence will likely be substantially less once a federal judge considers the United States Sentencing Guidelines and other statutory factors.
As part of the plea agreement, Spina agreed to pay restitution to the former Patriots player who sold his Super Bowl ring and other memorabilia.
The FBI’s Art Crime Team investigated this matter.
Assistant United States Attorney Erik M. Silber of the Environmental and Community Safety Crimes Section is prosecuting this case.
College Football Player Arrested on Federal Charges of Orchestrating Fraudulent Scheme to Obtain COVID-Related Jobless BenefitsRead the Press Release
LOS ANGELES – A college football player was taken into custody this morning on federal charges alleging he orchestrated a scheme that fraudulently sought hundreds of thousands of dollars in COVID-related unemployment benefits.
Abdul-Malik McClain, 22, who currently attends school in Jackson, Mississippi, surrendered to federal law enforcement this morning in Los Angeles before being arraigned this afternoon in United States District Court.
A federal grand jury indictment returned on December 16 and unsealed this afternoon charges McClain with 10 counts of mail fraud and two counts of aggravated identity theft. McClain, who was residing in Los Angeles in 2020 during the alleged scheme, pleaded not guilty to the charges against him and was ordered released on a $20,000 bond.
According to the indictment, while a member of his university’s football team, McClain organized and assisted a group of other football players in filing fraudulent claims for unemployment benefits, including under the Pandemic Unemployment Assistance (PUA) program established by Congress in response to the pandemic’s economic fallout. The indictment alleges that the claims – which were filed with the California Employment Development Department (EDD), the administrator of the state’s unemployment insurance (UI) benefit program – contained false information about the football players’ supposed prior employment, pandemic-related job loss, and job-seeking efforts in California.
The indictment alleges that the false statements in the UI applications led EDD to authorize Bank of America to mail debit cards to the football players. Those debit cards were loaded with at least hundreds of dollars, and sometimes thousands of dollars, in unemployment benefits, which the recipients used to make cash withdrawals at ATMs and to fund personal expenses. In some cases, McClain sought and obtained a cut for helping others file fraudulent UI applications.
McClain and his co-schemers also allegedly filed applications in their own names, in the names of other friends and associates, and in the names of identity theft victims. According to the indictment, these claims also falsely stated that the claimants were self-employed workers, including athletic trainers and tutors, who had lost work in California as a result of the pandemic. These allegedly false claims also induced EDD to authorize Bank of America to issue debit cards in the names of the claimants. The indictment alleges that McClain and his co-schemers caused those cards to be mailed to addresses where they could collect the mail.
McClain allegedly caused at least three dozen fraudulent applications to be filed with EDD during the summer of 2020. According to the indictment, those fraudulent applications sought at least $903,688 in PUA benefits and led the EDD to pay out at least $227,736.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
During today’s arraignment, McClain was ordered to stand trial on February 15.
Each mail fraud count carries a statutory maximum sentence of 20 years in federal prison. The aggravated identity theft counts carry a two-year mandatory prison sentence consecutive to any sentence imposed on the mail fraud counts.
The FBI; the U.S. Department of Labor, Office of Inspector General; the Federal Deposit Insurance Corporation, Office of Inspector General; the U.S. Treasury Inspector General for Tax Administration; and the Social Security Administration, Office of Inspector General investigated this matter. The university, called “University 1” in the indictment, cooperated in this investigation.
Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section is prosecuting this case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. More information on the Justice Department’s response to the pandemic may be found here.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it to the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF online Complaint Form.
Riverside Man Arrested on Federal Charges Alleging He Sold Fentanyl-Laced Pills that Led to Student’s Fatal OverdoseRead the Press Release
RIVERSIDE, California – Authorities this morning arrested a Riverside man who allegedly sold counterfeit oxycodone pills containing fentanyl that caused the fatal overdose of a college student who was visiting her family for the holidays two years ago.
Brandon Michael McDowell, 22, was arrested at his residence without incident, and he is scheduled to be arraigned this afternoon in United States District Court in Riverside.
McDowell was named in a grand jury indictment filed Wednesday that charges him with one count of distributing fentanyl resulting in death. The fentanyl-distribution charge carries a mandatory minimum sentence of 20 years in federal prison and a maximum possible sentence of life without parole.
McDowell allegedly distributed fentanyl in the form of counterfeit oxycodone M30 pills on December 22, 2019. The 19-year-old victim in this case, who is identified in the indictment as “A.C.,” died after ingesting the drug at her Temecula home. Investigators believe she crushed at least one of the pills and snorted the drug shortly before succumbing to the powerful opioid in the pills.
The investigation by the Drug Enforcement Administration, the Riverside County Sheriff’s Department, Homeland Security Investigations and the Riverside County District Attorney’s Office found evidence that the victim ordered the pills from McDowell on Snapchat.
“This is another incredibly sad case that demonstrates the deadly threat of fentanyl that is now seen in a wide array of drugs sold on the street,” said United States Attorney Tracy L. Wilkison. “My office and our law enforcement partners will continue to investigate fatal overdose cases to identify and bring to justice every individual involved in the trafficking of fentanyl.”
Assistant United States Attorney John Balla and Special Assistant United States Attorney Stephen Merrill of the Riverside Branch Office are prosecuting this case. SAUSA Merrill is a Riverside County deputy district attorney assigned by his office to work with the Justice Department.
“The Riverside County DA’s Office is grateful for the hard work of the U.S. Attorney’s Office in this collaborative effort with our federal partners to get justice for the victim in this case,” said Riverside County District Attorney Mike Hestrin.
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.
San Pedro Train Engineer Pleads Guilty to Terrorism Charge for Intentionally Derailing Locomotive Near U.S. Navy Hospital ShipRead the Press Release
LOS ANGELES – A train engineer at the Port of Los Angeles pleaded guilty today to a federal criminal charge for running a locomotive at full speed off the end of railroad tracks near a United States Navy hospital ship that was deployed to provide medical relief during the early months of the COVID-19 pandemic.
Eduardo Moreno, 45, of San Pedro, pleaded guilty to one count of committing a terrorist attack and other violence against railroad carriers and mass transportation systems.
According to his plea agreement, on March 31, 2020, Moreno drove a train at high speed, did not slow down near the end of the railroad track, and intentionally derailed the train off the tracks near the United States Naval Ship Mercy – a hospital ship then docked in the Port of Los Angeles.
No one was injured in the incident, and the Mercy was not harmed or damaged, according to court documents. The incident resulted in the train leaking a substantial amount of fuel, which required clean up by fire and other hazardous materials personnel.
Moreno admitted in his plea agreement that he caused approximately $700,000 in damages because of the derailment.
In his first interview with the Los Angeles Port Police, Moreno acknowledged that he “did it,” saying that he was suspicious of the Mercy and believed it had an alternate purpose related to COVID-19 or a government takeover, according to an affidavit filed with a criminal complaint in this case. Moreno stated that he acted alone and had not pre-planned the attempted attack. While admitting to intentionally derailing and crashing the train, he said he knew it would bring media attention and “people could see for themselves,” referring to the Mercy, according to the affidavit.
In a second interview with FBI agents, Moreno stated that “he did it out of the desire to ‘wake people up,’” according to the affidavit. “Moreno stated that he thought that the Mercy was suspicious and did not believe ‘the ship is what they say it’s for.’”
United States District Judge Philip S. Gutierrez has scheduled a March 11, 2022 sentencing hearing, at which time Moreno will face a statutory maximum sentence of 20 years in federal prison.
The FBI’s Joint Terrorism Task Force and the Port of Los Angeles Police investigated this matter.
Assistant United States Attorneys Reema M. El-Amamy and Christine M. Ro of the Terrorism and Export Crimes Section and Trial Attorney Taryn Meeks of the Department of Justice’s Counterterrorism Section are prosecuting this case.
Los Angeles Man Pleads Guilty to Fraud Charge for $8.3 Million Scam that Claimed Precious Metals Could Be Extracted from ‘Ancient Slag’Read the Press Release
LOS ANGELES – A resident of the Mount Washington neighborhood of Los Angeles pleaded guilty today to defrauding more than 100 investors out of approximately $8.3 million through a scheme that sold “ancient slag,” a mining waste byproduct that supposedly contained precious metals.
Michael Godfree, 80, pleaded guilty to one count of mail fraud.
According to his plea agreement, from 2011 to November 2017, Godfree schemed to defraud victim-purchasers of material he identified as “ancient slag and “gold ore.”
Godfree 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 representing and promising that the “ancient slag” TMAC was selling was valuable because it contained precious metals and a process would soon be finalized and 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 caused losses of approximately $8,336,965 to his victims.
TMAC was dissolved in 2015, but its operations were largely taken over by Precious Metals of North America Inc., another of Godfree’s companies.
United States District Judge John A. Kronstadt has scheduled a May 12, 2022 sentencing hearing, at which time Godfree will face a statutory maximum sentence of 20 years in federal prison.
The FBI investigated this matter.
Assistant United States Attorneys Joseph D. Axelrad of the Violent and Organized Crime Section and Poonam G. Kumar of the Major Frauds Section are prosecuting this case.
Justice Department Announces Series of Cases to Combat Addiction Treatment Kickback Schemes in Orange CountyRead the Press Release
SANTA ANA, California – Over the past 10 months, the Department of Justice has filed criminal charges against 10 defendants – four of whom were taken into custody today – for kickback schemes at substance abuse treatment facilities in Orange County.
The defendants in these cases charged as a result of The Sober Homes Initiative are substance abuse facility owners and patient recruiters who allegedly, among other things, provided kickback payments for the referral of patients to substance abuse treatment facilities, recovery homes or laboratories. These facility owners allegedly assigned a value to patients depending on the type of insurance the patients had, and then paid patient recruiters kickbacks for each patient the recruiters referred to their addiction treatment facilities. The recruiters allegedly received recurring payments for each month the patients continued to receive purported services from the facilities.
“Driven by greed, dishonest operators of substance abuse treatment centers have invaded Southern California, but a coalition of law enforcement entities have responded forcefully,” said U.S. Attorney Tracy L. Wilkison. “These corrupt individuals pay illegal kickbacks to obtain insured patients whose health plans pay generous benefits intended to cover legitimate treatments and tests. While many recovery facilities offer much-needed services to addicts, those targeted in this sweep take advantage of our nation’s opioid crisis by fueling a patient-selling network more interested in generating profits than giving help to vulnerable people.”
“These cases reflect the continued efforts of the Department of Justice to combat fraud by substance abuse treatment facilities and patient recruiters,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “These schemes take advantage of vulnerable members of our society – addiction patients seeking help. These cases illustrate, the government’s commitment to protecting patients and prosecuting those who try to victimize them.”
“Fraudulent kickbacks in the substance abuse treatment field create perverse incentives for patient recruiters that oftentimes leave addicts in a toxic cycle of drug use and treatment,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI is committed to fighting fraud in the healthcare system so that those struggling with addiction can find legitimate care and encourages patients and employees to report kickback schemes.”
“It is unconscionable when owners and operators of substance abuse facilities abuse the systems designed to help patients recover from addiction,” said Special Agent in Charge Amy K. Parker of the Office of Personnel Management Office of the Inspector General (OPM-OIG). “We are extremely proud of our dedicated staff and federal law enforcement partner’s commitment to pursuing improper and illegal conduct that places vulnerable health care consumers at risk.”
“The suspects in this case specifically targeted vulnerable individuals in recovery and sold them as a commodity with no concern for their health or wellbeing,” said California Insurance Commissioner Ricardo Lara. “Receiving kickbacks for patient referrals endangers lives and has no place in our health care system.”
Cases charged as a result of The Sober Homes Initiative
- Nick Roshdieh, 51, of Aliso Viejo, and Vincent Bindi, 66, of Laguna Nigel, who owned Crest Recovery LLC (dba Truvida Recovery), were arrested this morning on charges contained in an indictment that allege conspiracy to pay and receive kickbacks for referrals to clinical treatment facilities and paying kickbacks for referrals to clinical treatment facilities.
- Donald Vawter, 30, of Rancho Santa Margarita, an employee of Truvida, was also taken into custody today and was charged in the indictment with conspiring to pay and receive kickbacks for referrals to a substance abuse treatment facility and paying kickbacks for referrals to a substance abuse treatment facility.
- Michael Hislop, 56, of Boston, Massachusetts, a patient recruiter, also was taken into custody today pursuant to charges in the same indictment that allege conspiracy to offer and pay kickbacks for referrals to a substance abuse treatment facility and receiving kickbacks for referrals to a substance abuse treatment facility.
If convicted, Roshdieh and Bindi would face a maximum total penalty of 65 years in prison, and Vawter and Hislop would face a maximum total penalty of 35 years in prison.
This case is being prosecuted by Assistant U.S. Attorney Gina Kong of the Santa Ana Branch Office and Trial Attorney Alexandra Michael of the Los Angeles Strike Force.
- Casey Mahoney, 45, of Los Angeles, and Joseph Parkinson, 32, formerly of Costa Mesa, were indicted in October in a multimillion-dollar addiction treatment kickback scheme. According to court documents, Mahoney controlled Healing Path Detox LLC and Get Real Recovery Inc., addiction treatment facilities in Orange County, and allegedly paid approximately $2.7 million in kickbacks paid to Parkinson and other patient recruiters in exchange for addiction treatment patient referrals.
Mahoney is charged with conspiracy to pay and receive kickbacks for referrals to clinical treatment facilities, paying kickbacks for referrals to clinical treatment facilities, and money laundering for fraudulently transferring kickback funds to an account held in the name of a patient broker’s mother. Parkinson, a patient recruiter, was charged with conspiracy to pay and receive kickbacks for referrals to clinical treatment facilities, receiving kickbacks for referrals to clinical treatment facilities, currency structuring, and possession with intent to distribute fentanyl.
If convicted, Mahoney would face a maximum total penalty of 35 years in prison, and Parkinson would face a maximum total penalty of 165 years in prison.
- Darius Moore, 28, formerly of Santa Ana, was charged by complaint on March 29, and later by indictment on April 28, with conspiracy to pay and receive kickbacks for referrals to clinical treatment facilities and receiving kickbacks for referrals to clinical treatment facilities. According to court documents, Moore, a patient recruiter, referred patients to multiple addiction treatment facilities in Orange County in exchange for kickback payments from the facilities. Moore allegedly received not less than $488,500 in kickbacks in exchange for his referral of patients for purported addiction treatment services.
Moore pleaded guilty on December 10 to one count of conspiracy to pay and receive kickbacks for referrals to clinical treatment facilities and one count of receiving kickbacks for referrals to clinical treatment facilities. He is scheduled to be sentenced on May 13, 2022, at which time he will face a statutory maximum penalty of 15 years in prison.
- Adrian Gonzalez, 37, of Laguna Hills, was charged by information on June 25, with paying kickbacks for referrals to clinical treatment facilities. According to court documents, Gonzalez controlled Stone Ridge Recovery Inc. and Landmark Recovery LLC, addiction treatment facilities in Orange County, and paid at least $1,080,000 in kickbacks to patient recruiters for the referral of addiction treatment patients to Gonzalez’s facilities.
Gonzalez pleaded guilty on August 6 to paying kickbacks for referrals to clinical treatment facilities. He is scheduled to be sentenced on Jan. 28, 2022, at which time he will face a maximum penalty of 10 years in prison.
- Dorian Ballough, 30, formerly of Costa Mesa, was charged by information on July 30 with conspiracy to pay and receive kickbacks for referrals to clinical treatment facilities and receiving kickbacks for referrals to clinical treatment facilities. According to court documents, Ballough acted as a patient recruiter for multiple addiction treatment facilities in Orange County, for which Ballough was paid at least $1.8 million in kickbacks in exchange for his referral of patients for purported addiction treatment services.
Ballough pleaded guilty on November 12 to one count of conspiracy to pay and receive kickbacks for referrals to clinical treatment facilities and one count of receiving kickbacks for referrals to clinical treatment facilities. He is scheduled to be sentenced on April 8, 2022, and faces a maximum total penalty of 15 years in prison.
- Kyle Reed, 29, formerly of Huntington Beach, was charged by information on July 30, with conspiracy to pay and receive kickbacks for referrals to clinical treatment facilities and receiving kickbacks for referrals to clinical treatment facilities. According to court documents, the charges relate to Reed’s role as a patient recruiter for multiple addiction treatment facilities in Orange County, for which Reed was paid at least $604,474 in kickbacks in exchange for his referral of patients for purported addiction treatment services.
Reed pleaded guilty on November 19 to one count of conspiracy to pay and receive kickbacks for referrals to clinical treatment facilities and one count of receiving kickbacks for referrals to clinical treatment facilities. He is scheduled to be sentenced on May 6, 2022, and faces a maximum total penalty of 15 years in prison.
All of the cases, with the exception of the Truvida-related matter, are being prosecuted by Assistant U.S. Attorney Benjamin Barron, Chief of the Santa Ana Branch Office, and Trial Attorney Justin Givens of the Los Angeles Strike Force.
A federal district court judge will determine any sentence for the defendants after considering the U.S. Sentencing Guidelines and other statutory factors.
The Sober Homes Initiative in Southern California is led by the United States Attorney’s Office and the Health Care Fraud Unit’s Los Angeles Strike Force of the Criminal Division’s Fraud Section. The initiative was coordinated by Assistant United States Attorney Benjamin Barron and Assistant Chief Niall O’Donnell of the Health Care Fraud Unit.
The FBI’s Los Angeles Field Office, OPM-OIG, and the California Department of Insurance are investigating the cases announced today.
An indictment contains allegations, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Former West Hollywood Doctor and Company Associated with 1-800-GET-THIN Guilty of Massive Fraud Against Health InsurersRead the Press Release
LOS ANGELES – A former doctor and his company were found guilty today by a federal jury of scheming to defraud private insurance companies and the Tricare health care program for military service members by fraudulently submitting an estimated $355 million in claims related to the 1-800-GET-THIN Lap-Band surgery business.
Julian Omidi, 53, of West Hollywood, and an Omidi-controlled Beverly Hills-based company, Surgery Center Management LLC (SCM), were found guilty of 28 counts of wire fraud and three counts of mail fraud. Omidi also was found guilty of two counts of making false statements relating to health care matters, one count of aggravated identity theft and two counts of money laundering. Omidi and SCM were found guilty of one count of conspiracy to commit money laundering.
According to evidence presented at his three-month trial, Omidi, a physician whose license was revoked in 2009, controlled, in part, the GET THIN network of entities, including SCM, that focused on the promotion and performance of Lap-Band weight-loss surgeries. Omidi established procedures requiring prospective Lap-Band patients – even those with insurance plans he knew would never cover Lap-Band surgery – to have at least one sleep study, and employees were incentivized with commissions to make sure the studies occurred.
Omidi used the sleep studies to find a reason – the “co-morbidity” of obstructive sleep apnea – that GET THIN would use to convince the patient’s insurance company to pre-approve the Lap-Band procedure.
After patients underwent sleep studies – irrespective of whether any doctor had ever determined the study was medically necessary – GET THIN employees, acting at Omidi’s direction, often falsified the results. Omidi then used the falsified sleep study results in support of GET THIN’s pre-authorization requests for Lap-Band surgery.
Relying on the false sleep studies – as well as other false information, including patients’ weights – insurance companies authorized payment for some of the proposed Lap-Band surgeries. GET THIN received an estimated $41 million for the Lap-Band procedures.
Even if the insurance company did not authorize the surgery, GET THIN still was able to submit bills for approximately $15,000 for each sleep study, receiving an estimated $27 million in payments for these claims. The insurance payments were deposited into bank accounts associated with the GET THIN entities.
The victim health care benefit programs include Tricare, Anthem Blue Cross, UnitedHealthcare, Aetna, Health Net, Operating Engineers Health and Welfare Trust Fund, and others.
Prosecutors estimate Omidi’s total fraudulent billings at approximately $355 million.
United States District Judge Dolly M. Gee has scheduled an April 6, 2022 sentencing hearing, at which time Omidi will face a statutory maximum sentence of 20 years in federal prison for each of the mail fraud, wire fraud, and money laundering counts, as well as a mandatory consecutive two-year sentence for aggravated identity theft.
In 2014, the government seized more than $110 million in funds and securities from accounts held by individuals and entities involved in the criminal scheme, including Omidi. The government is seeking forfeiture of some or all those funds in the criminal case, and intends to pursue civil forfeiture of some or all of the assets.
The criminal case against corporate defendant Independent Medical Services Inc., another company controlled in part by Omidi, has been severed from this litigation and stayed.
Co-defendant Dr. Mirali Zarrabi, 59, of Beverly Hills, was acquitted of all charges.
The U.S. Food and Drug Administration, Office of Criminal Investigations; the FBI; the Defense Criminal Investigative Service; IRS Criminal Investigation; and the California Department of Insurance investigated this matter.
Assistant United States Attorneys Kristen A. Williams, Ali Moghaddas, David H. Chao of the Major Frauds Section, David C. Lachman of the General Crimes Section, and James E. Dochterman of the Asset Forfeiture Section are prosecuting this case.
Three Companies Face Charges of Negligent Conduct During Offshore Oil Leak that Damaged Southern California CoastlineRead the Press Release
LOS ANGELES – A federal grand jury today accused three companies with illegally discharging oil during a pipeline break in early October by acting negligently in at least six ways, including failing to properly respond to eight separate leak alarms over the span of more than 13 hours and improperly restarting the pipeline that had been shut down following the leak alarms.
An indictment filed this afternoon charges the companies that own and operate the 17-mile-long San Pedro Bay Pipeline with one misdemeanor count of negligent discharge of oil. The charged defendants are Amplify Energy Corp.; Beta Operating Co. LLC (a wholly owned subsidiary of Amplify doing business as Beta Offshore); and San Pedro Bay Pipeline Co. (a wholly owned subsidiary of Amplify).
The pipeline, which was used to transfer crude oil from several offshore facilities to a processing plant in Long Beach, began leaking on the afternoon of October 1, but the defendants allegedly continued to operate the damaged pipeline, on and off, until the next morning. As a result of the allegedly negligent conduct, what is estimated to be about 25,000 gallons of crude oil were discharged from a point approximately 4.7 miles west of Huntington Beach from a crack in the 16-inch pipeline.
The indictment alleges that the defendants acted negligently by:
- Failing to properly respond to eight alarms from an automated leak detection system that were activated between 4:10 p.m. on October 1 until the final alarm at 5:28 a.m. the following day;
- Shutting down and then restarting the pipeline five times after the first five alarms were triggered on October 1, resulting in oil flowing through the damaged pipeline for a cumulative period of more than three hours;
- Despite the sixth and seventh alarms, pumping oil for three additional hours late on October 1 into the early morning hours of October 2 while a manual leak test was performed;
- Despite the eighth alarm, operating the pipeline for nearly one hour in the predawn hours of October 2 after a boat they contacted failed to see discharged oil in the middle of the night;
- Operating the pipeline with crewmembers who had not been sufficiently trained on the automated leak detection system; and
- Operating the pipeline with an understaffed and fatigued crew.
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.
For a corporate defendant, the charge of negligently discharging oil carries a statutory maximum penalty of five years of probation, as well as fines that potentially could total millions of dollars.
The Coast Guard Investigative Service; the U.S. Department of Transportation, Office of Inspector General; the U.S. Environmental Protection Agency, Criminal Investigation Division; and the FBI are investigating the oil leak.
Assistant United States Attorneys Matthew O’Brien and Brian Faerstein of the Environmental and Community Safety Crimes Section are prosecuting this case.
Former Financial Advisor Sentenced to 14 Years in Federal Prison for $12 Million Fraud that Caused Clients to Lose Retirement SavingsRead the Press Release
LOS ANGELES – A former financial advisor with a lengthy disciplinary history was sentenced today to 168 months in federal prison for a real estate investment con that caused his clients – many of them elderly people who had invested their retirement savings – to lose more than $12 million.
Paul Ricky Mata, 58, a former resident of Upland who now lives in Oceanside, was sentenced by United States District Judge R. Gary Klausner, who also ordered him to pay $12,560,385 in restitution to his victims. Mata was remanded into federal custody at the hearing’s conclusion.
On July 19, Mata pleaded guilty to 17 felonies: 11 counts of mail fraud, three counts of wire fraud, one count of making a false statement in a bankruptcy proceeding, one count of concealing assets in bankruptcy, and one count of making a false oath and accounts in bankruptcy.
From August 2008 to September 2015, Mata caused victims to invest in several of his businesses, including Secured Capital, Logos Real Estate, and other ventures. Mata failed to disclose his disciplinary history to his victims, including disciplinary actions taken against him by the states of Nevada and California, a one-year suspension and $10,000 fine imposed by the Financial Industry Regulatory Authority (FINRA), and a three-year suspension by the Certified Financial Planner (CFP) Board stemming from various forms of misconduct, including omitting material facts necessary to make other statements not misleading.
Mata induced his victims to invest their money in Secured Capital, a real estate investment program that purportedly invested in “government-backed tax liens,” “asset-backed deed certificates,” and distressed commercial and residential properties. Mata guaranteed investors that Secured Capital’s investment return generated annual rates of 5 percent to 10 percent, when in fact, investments in Secured Capital had significant loss risks and did not make a profit from 2011 onward.
Instead of properly investing his clients’ money, Mata used Secured Capital investor funds to pay his personal expenses, including a $197,000 down payment on his personal residence in Upland, loans to himself and to other entities he created, and $370,000 that was transferred into his personal bank accounts.
“It was not simply that [Mata] was an investment advisor to his victims,” prosecutors argued in a sentencing memorandum. “It was that, for many of them, he met them through church. He prayed with them, professed to share values and beliefs with them, and he acted like they were his friends. Moreover, many of his victims are currently retired, and/or were in the process of retiring when [Mata] advised them to enter into his risky investments based on false pretenses.”
Mata also made false statements on bankruptcy court documents in October 2016, including that he had not used any business names during the previous eight years, and that he had not filed for bankruptcy protection within the previous eight years. In fact, Mata had previously filed for bankruptcy in June 2010.
During the bankruptcy proceeding, Mata fraudulently concealed his personal property – including a 2008 Mini Cooper automobile and a 2001 Jeep – from the government and from his creditors.
At a bankruptcy hearing in November 2016, Mata lied when he denied that he had transferred anything to family or friends during the previous four years. In fact, in October 2016, Mata transferred the 2008 Mini Cooper to his daughter, and, in August 2016, he transferred his Upland home to his wife.
In 2015, the United States Securities and Exchange Commission filed a civil action against Mata and two business associates, alleging that they operated the real estate scam. Later that year, the SEC obtained a judgment against Mata that enjoined him from violating securities laws and ordered him to pay $11,748,831. That same year, the California Department of Business Oversight obtained a permanent injunction against Mata, as well as a $14 million restitution order and $6.3 million in civil penalties.
The FBI investigated this matter. The Office of the United States Trustee provided assistance.
Assistant United States Attorney Sean D. Peterson of the Riverside Branch Office prosecuted this case.
Ex-LADWP Executive Agrees to Plead Guilty to Lying to FBI About Agreeing to Accept Job in Exchange for ‘Guarantees’ to ContractorRead the Press Release
INFORMATION
PLEA AGREEMENTLOS ANGELES – A former Los Angeles Department of Water and Power (LADWP) executive has agreed to plead guilty to a federal criminal charge 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, the Justice Department announced today.
David F. Alexander, 54, of Arcadia, agreed to plead guilty to one felony charge of making false statements, a crime that carries a statutory maximum sentence of five years in federal prison.
A one-count information charging Alexander and his plea agreement were both filed today in United States District Court. Alexander is expected to make his initial court appearance in the coming weeks.
According to his plea agreement, Alexander was LADWP’s chief information security officer from May 2017 until February 2019, and then he served as the department’s chief cyber risk officer for the next six months.
Beginning in 2017, Alexander developed a professional relationship with Paul O. Paradis, 58, a New York lawyer who represented LADWP in a lawsuit against PricewaterhouseCoopers (PwC), the vendor it blamed for a major billing debacle. In 2017, Paradis created a downtown 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 also performed certain cybersecurity-related work for LADWP.
In March 2019, Paradis – who simultaneously had represented a ratepayer suing LADWP while he represented the department itself – resigned as special counsel for LADWP’s billing lawsuit and, later that month, purportedly sold Aventador to an employee. Aventador then changed its name to Ardent Cyber Solutions LLC, and Paradis was to have no financial interest in or control over the Aventador or its successor company.
In February 2019, the Southern California Public Power Authority (SCPPA) – a collective of 11 municipal utilities, including LADWP – issued a request for proposal (RFP) for a cybersecurity services contract at the request of LADWP’s then-general manager, David H. Wright. Alexander, the RFP’s primary drafter, was one of four members of the scoring committee for the SCPPA RFP, which was responsible for presenting its scores and recommendations to the SCPPA’s Cybersecurity Working Group.
Alexander knew the SCPPA RFP process was intended to be a competitive, neutral and transparent process. But he manipulated that process with the goal of securing future cybersecurity work for Aventador, and, later, Ardent.
From late February 2019 to April 2019, Alexander used his position as the LADWP chief cyber risk officer and the vice-chair of the SCPPA’s Cyber Security Working Group to influence the composition of the scoring committee to include individuals whom he could persuade to rank Ardent favorably and shared his confidential scores for the SCPPA proposals with other members of the committee to persuade them to score Ardent favorably.
On April 5, 2019, the SCPPA Cybersecurity Working Group informed Ardent that it would recommend Ardent for the SCPPA contract. Later that day, Alexander met with Paradis, who by that time was covertly cooperating with the FBI. During that meeting, Alexander told Paradis that he had used the SCPPA bidding process to get LADWP’s “desired outcome,” that is, a contract with Ardent, but in a manner that falsely appeared “completely transparent.” Alexander also boasted that he was the one who had secured the contract for Ardent, informing Paradis, “that was me driving it.”
On April 18, 2019, the SCPPA Board approved a multi-award contract for Ardent and two other vendors valued at a total of approximately $17 million.
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 drafts to enhance Ardent’s ability to gain the contract over the dozen-plus other vendors.
On July 9, 2019, Paradis told Alexander, via text message, that after he submitted the Ardent proposal, “it will be up to you to ‘manage’ the evaluators the same way you did for the SCPAA [sic] process so that we get the correct result... [winking face emoji].” Alexander responded via text message, “I know my job [crying-laughing emoji].”
During a meeting in mid-July 2019, Alexander told Paradis that, in violation of his obligation to keep his scores strictly confidential, he provided his score sheet to two other evaluators to influence them to give Ardent a high score. At this lunch meeting, Alexander informed Paradis that he was interested in working at Ardent as its business manager.
By the end of that week, 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 a multimillion-dollar LADWP 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 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 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 has agreed to plead guilty to a bribery charge for accepting an illicit kickback of nearly $2.2 million for getting another attorney to purportedly represent his ratepayer client in a collusive lawsuit against LADWP related to the billing debacle. Paradis is cooperating with the ongoing investigation into the collusive litigation and corruption at LADWP. Paradis is expected to make his initial court appearance on December 16.
Wright, LADWP’s former general manager, has agreed to plead guilty to a federal criminal charge for accepting bribes from Paradis in exchange for his official action to secure a three-year, $30 million no-bid LADWP contract for Aventador. His change-of-plea hearing is expected to occur in the coming weeks.
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 Melissa Mills, Jamari Buxton and Susan Har of the Public Corruption and Civil Rights Section are prosecuting this case.
Rialto Man Who Committed $2.4 Million Bank Fraud by Compromising Hundreds of Accounts Sentenced to More Than 4 Years in Federal PrisonRead the Press Release
LOS ANGELES – A San Bernardino County man was sentenced today to 51 months in federal prison for causing more than $2.4 million in losses to Wells Fargo & Co. by orchestrating a scheme in which he gained control of hundreds of other people’s checking accounts to make phony fraud loss claims.
Steven Michael Banks Hubbard Jr., 38, of Rialto, was sentenced by United States District Judge Christina A. Snyder, who also ordered him to pay $2.4 million in restitution.
Hubbard pleaded guilty on June 28 to one count of bank fraud and one count of aggravated identity theft.
From May 2015 to July 2019, Hubbard executed his scheme, first by obtaining control of the checking accounts from the account holders, sometimes using a third party to do so. Hubbard then would deposit money – typically approximately $2,000 – into the account. Typically on the same day or shortly after the deposit, Hubbard withdrew the money from an ATM and also had third parties make purchases from that account. Then, posing as the account holder, he called Wells Fargo to report that the funds had been withdrawn and the purchases made, without authorization.
Relying on Hubbard’s representations that the cash withdrawals and purchases were unauthorized, Wells Fargo granted a provisional credit of funds into the checking account. Once Wells Fargo deposited the provisional credit into the account, Hubbard allegedly immediately withdrew that money as well. In some instances, Hubbard repeated the scheme on the same account until Wells Fargo closed the account due to fraudulent activity.
Hubbard caused more than $2.4 million in losses to Wells Fargo and involved more than 900 bank accounts in this criminal activity. The bank reported Hubbard’s “bust-out” scheme to law enforcement.
“[Hubbard] engaged in a well-developed, but not particularly sophisticated, scheme to defraud over $2.4 million from Wells Fargo,” prosecutors wrote in a sentencing memorandum. “He exploited a policy intended to help real fraud victims obtain immediate relief.”
The FBI investigated this matter with assistance from the United States Secret Service, the Rialto Police Department and investigators from Wells Fargo.
Assistant United States Attorney Jerry C. Yang, Chief of the Riverside Branch Office, prosecuted this case.
Monsanto Agrees to Plead Guilty to Illegally Using Pesticide at Corn Growing Fields in Hawaii and to Pay Additional $12 MillionRead the Press Release
LOS ANGELES – In court documents filed today in Hawaii, Monsanto Company agreed to plead guilty to 30 environmental crimes related to the use of a pesticide on corn fields in Hawaii, and the company further agreed to plead guilty to two other charges related to the storage of a banned pesticide that were the subject of a 2019 Deferred Prosecution Agreement (DPA).
Monsanto admitted in a plea agreement filed today that it committed 30 misdemeanor crimes related to the use of a glufosinate ammonium-based product sold under the brand name Forfeit 280. After using the product in 2020 on corn fields on Oahu, Monsanto allowed workers to enter the fields during a six-day “restricted-entry interval” (REI) after the product was applied.
The plea agreement calls for Monsanto to serve three years of probation, pay a total of $12 million and continue for another three years a comprehensive environmental compliance program that includes third-party auditor.
As a result of the conduct in which Monsanto allowed workers on 30 occasions to enter fields sprayed with Forfeit 280 during the REI, the company violated a 2019 DPA related to the storage of a banned pesticide. According to the documents filed today, Monsanto will plead guilty to two felony charges filed in 2019 that the government would have dismissed if the company had complied with federal law. In conjunction with the DPA related to the two felony charges of illegally storing an acute hazardous waste, Monsanto pleaded guilty in early 2020 to a misdemeanor offense of unlawfully spraying a banned pesticide – specifically methyl parathion, the active ingredient in Penncap-M – on research crops at one of its facilities on Maui.
“Monsanto is a serial violator of federal environmental laws,” said United States Attorney Tracy L. Wilkison. “The company repeatedly violated laws related to highly regulated chemicals, exposing people to pesticides that can cause serious health problems.”
“The defendant in this case failed to follow regulations governing the storage of hazardous wastes and the application of pesticides, putting people and the environment at risk,” said Scot Adair, Special Agent in Charge of the Environmental Protection Agency’s criminal enforcement program in Hawaii. “Today’s plea agreement shows that EPA will hold responsible those who violate laws designed to protect communities from exposure to hazardous chemicals.”
In the new case filed today, Monsanto admitted that “due to a lack of oversight and supervision by Monsanto,” its workers violated a change to the REI period after the spraying of Forfeit 280 “by entering the fields 30 times to perform field-corn scouting within six days of spraying.” (“Corn scouting” consists of checking the corn for things such as weeds, insects and disease.) The REI change for Forfeit 280 – which was extended from 12 hours to six days – was part of an industry-wide change for products containing glufosinate ammonium prompted by an EPA decision in late 2016.
Monsanto admitted that it violated the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), which regulates the registration, sale, distribution and use of pesticides, by failing to comply with Forfeit 280’s labeling. The label for Forfeit 280 stated: “It is a violation of Federal law to use Forfeit 280 in a manner inconsistent with its label.” Monsanto illegally used Forfeit 280 on Oahu facilities known as Lower Kunia and Haleiwa.
In the 2019 case related to Penncap-M, Monsanto pleaded guilty to a misdemeanor offense of unlawfully spraying the banned pesticide on corn seed and research crops at its Valley Farm facility on Maui in 2014. Monsanto admitted using Penncap-M in violation of FIFRA, even though the company knew its use was prohibited after 2013 pursuant to a “cancellation order” issued by the EPA. The company further admitted that, after the 2014 spraying, it told employees to re-enter the sprayed fields seven days later – even though Monsanto knew that workers should have been prohibited from entering the area for 31 days.
The felony offenses covered by the DPA – the two charges to which Monsanto will plead guilty – are the unlawful storage of an acute hazardous waste in violation of the Resource Conservation and Recovery Act (RCRA). Penncap-M was a “restricted use pesticide” that could not be purchased or used by the public, and it could only be used by a certified applicator because of the possible adverse effects to the environment and injury to applicators or bystanders that could result.
From March 2013 through August 2014, even though the pesticide was on the company’s lists of chemicals that needed disposal, Monsanto stored 160 pounds of Penncap-M hazardous waste at a facility on Molokai, which made Monsanto a “Large Quantity Generator” of hazardous waste under RCRA. “Monsanto knew that Penncap-M had the substantial potential to be harmful to others and to the environment,” it admitted in the documents filed today.
In addition to spraying the banned pesticide at one of its three facilities on Maui, Monsanto also stored a total of 111 gallons of Penncap-M at Valley Farm and two other sites known as Maalaea and Piilani. Just like on Molokai, the storage of Penncap-M at the three Maui sites made Monsanto a “Large Quantity Generator” of acute hazardous waste at the three locations, according to court documents.
Furthermore, when it transported Penncap-M to its Valley Farm site in 2014, the company violated federal law when it failed to use a proper shipping manifest to identify the hazardous material and when it failed to obtain a permit to accept hazardous waste at that site.
In relation to the DPA and the prior guilty plea, Monsanto paid $10.2 million – a $6 million criminal fine under the DPA, a $200,000 fine for the FIFRA offense, and $4 million in community service payments to Hawaiian government entities.
In the plea agreement filed today, Monsanto agreed to pay another $6 million criminal fine, as well as an addition $6 million in community service payments. Four Hawaiian agencies will receive $1.5 million payments:
- The Department of Agriculture, Pesticide Use Revolving Fund – Pesticide Disposal Program/Pesticide Safety Training;
- the Department of the Attorney General, Criminal Justice/Investigations Division;
- the Department of Health, Environmental Management Division, to support environmental-health programs; and
- the Department of Land and Natural Resources, Division of Aquatic Resources.
As a result of the two actions taken by the Justice Department, Monsanto has agreed to pay a total of $22.2 million for the two RCRA felonies and the 31 FIFRA misdemeanor offenses.
Monsanto has agreed to have representatives appear in United States District Court in the near future to enter guilty pleas to a total of 32 offenses.
The sentence detailed in the court documents today are subject to the approval of United States District Judge J. Michael Seabright.
This case is the result of an investigation by the U.S. Environmental Protection Agency, Criminal Investigation Division.
This matter is being prosecuted by Assistant United States Attorneys Erik M. Silber and Dennis Mitchell of the Environmental and Community Safety Crimes Section and Mark A. Williams, Chief of the Environmental and Community Safety Crimes Section. In this case, these prosecutors are acting as special attorneys appointed by the Attorney General pursuant to 28 U.S.C. § 515. The United States Attorney’s Office for the District of Hawaii was recused from this investigation.
Six Mexican Nationals Charged with Participating in Cross-Border Kidnap-for-Ransom Conspiracy Responsible for Six MurdersRead the Press Release
LOS ANGELES – A federal grand jury today returned an indictment against six members of a Tijuana, Mexico-based hostage-taking organization that allegedly kidnapped nine victims and murdered six of them – including three United States citizens – some of them after their families paid ransom for their release.
The five-count indictment charges all six defendants with one count of conspiracy to commit hostage taking resulting in death, one count of conspiracy to commit extortion, and one count of extortion. The charged defendants, all Mexican nationals, are:
- German Garcia Yera Hernandez, 37, the indictment’s lead defendant and the alleged ringleader of the hostage-for-ransom organization;
- Gilberto Omar Avila Lopez, 27, a.k.a. “Luis Enrique Avila Moreno” and “Omar;”
- Aylin Estrada Reyes, 24;
- Joel Eduardo Mascorro Delgado, 22;
- Victoria Camila Espinoza Ballardo, 22; and
- Oscar Bautista Valencia, 30
Yera, Lopez and Ballardo each face an additional count of hostage taking resulting in death and extortion. All six defendants are in custody in Mexico facing charges filed by authorities there.
According to the indictment, from January 2020 to April 2020, Yera led the hostage-taking organization that extorted money from victims by taking hostage and holding for ransom United States nationals and Mexican nationals with relatives in the United States.
The hostage-taking group generally lured their victims into meetings under false pretenses and took them hostage, the indictment states. The group allegedly held the victims at gunpoint, tied them up, and often brutally beat them. Members of the group then called victims’ family members in the United States and demanded money and vehicles as ransom in return for the release of their loved ones, according to the indictment. If victims did not have family members who could pay ransom, they were murdered, as happened with what the indictment calls “Victim A,” “Victim B” and “Victim I.”
In other instances outlined in the indictment in which ransoms were paid, Yera and other conspirators allegedly killed the victims to protect the conspiracy. Other members of the organization traveled from Mexico into the United States to locations selected by Yera and others to collect the ransom payments made by the victims’ family members. For example, on March 28, 2020, a co-conspirator traveled to collect ransom payment on Yera’s behalf at a McDonald’s in San Ysidro. After the murder of this victim, the indictment alleges that Yera sent Lopez a message depicting a large amount of cash and wrote “this was good job done.”
On April 11, 2020, Yera and co-conspirators allegedly orchestrated the hostage taking of a victim identified in court documents as “Victim E,” a United States national who resided in Norwalk and who was at the time visiting a family member in Tijuana. Victim E was forced to call his mother, say he was in trouble and instruct her to call an individual to pay $25,000 for his release. The victim’s mother struggled to obtain the ransom money but agreed to pay the hostage takers $1,000 and Victim E’s vehicle in exchange for Victim E’s release and met up with a ransom collector in Norwalk on April 13, 2020 – the same day Victim E was murdered. His body was recovered in Mexico the next day.
On April 22, 2020, a Pasadena woman called law enforcement to report a family member, identified in the indictment as “Victim H,” had been kidnapped in Mexico with a ransom demand of $20,000. One of the kidnappers, calling from a Mexican phone number, informed the victim’s family that a woman would pick up the ransom money at a Food 4 Less parking lot in Lynwood. That same day, law enforcement in Mexico rescued the victim, who was being held hostage at a Tijuana hotel.
If convicted of all charges, the defendants would face a mandatory sentence of life imprisonment or the death penalty.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The FBI is investigating this matter and believes there may be victims who have not yet been identified. The FBI asks that anyone contacted by the defendants relative to a kidnapping or a ransom payment call the FBI’s Los Angeles Field Office at (310) 477-6565.
Assistant United States Attorneys Jeffrey M. Chemerinsky and Joseph D. Axelrad of the Violent and Organized Crime Section are prosecuting this case.
Los Angeles Fashion District Company Owner Sentenced to One Year in Prison for Committing Customs Violations and Tax OffensesRead the Press Release
LOS ANGELES – The owner of a garment wholesaling company in the Fashion District of downtown Los Angeles was sentenced today to 12 months and one day in federal prison for scheming to undervalue imported garments and avoid paying millions of dollars in duties to the United States, failing to report millions of dollars in income on tax returns, and failing to report large cash transactions to the federal government.
Sang Bum “Ed” Noh, 67, of Bel-Air, who owns Ambiance Apparel, was sentenced by United States District Judge Virginia A. Phillips.
Ambiance Apparel – the operating name for two corporations, Ambiance U.S.A. Inc. and Apparel Line U.S.A. Inc. – pleaded guilty in October 2020 to eight criminal counts, including conspiracy, money laundering and customs offenses, was sentenced to a term of five years’ probation and has been ordered to implement an effective anti-money laundering compliance and ethics program with an outside compliance monitor. There is a restitution order in this case for $35,227,855, a forfeiture money judgment of $81,564,856, and the additional forfeiture of $1,104,997 previously seized by law enforcement.
Court documents outline separate schemes involving Ambiance and Noh, which came to an end in September 2014 when law enforcement authorities executed dozens of search warrants as part of an investigation into money laundering and other crimes at Fashion District businesses.
Noh “made defrauding the United States a significant revenue stream for Ambiance, appropriating approximately $35,227,855.45 from U.S. Customs and Border Protection and the Internal Revenue Service in less than four years,” prosecutors argued in a sentencing memorandum. “While [Noh] was cheating the United States and facilitating money laundering [by failing to file Forms 8300], he enjoyed a house in Bel Air, bought luxury cars, and squirreled away bundles of cash worth $35 million in shoeboxes and garbage bags.”
In the customs fraud scheme, Ambiance imported clothing from Asian countries and submitted fraudulent invoices to U.S. Customs and Border Protection (CBP) that undervalued the shipments and allowed Ambiance to avoid paying the full amount of tariffs owed on the imports.
At Noh’s direction, the Asian manufacturers prepared two invoices for the clothing ordered by Ambiance – one that usually reflected 60 to 70 percent of the actual price and was paid by letter of credit, and one that reflected the balance of the actual price and was paid by wire transfer.
The first invoice, which stated only 60 to 70 percent of the shipment’s value, was fraudulently submitted to CBP and was used to calculate the tariffs due on the imports. As a result of this scheme, over the course of just over 4½ years, Ambiance undervalued imports by about $82.6 million and failed to pay more than $17.1 million in tariffs.
Ambiance also failed to file reports with the Secretary of the Treasury that documented cash transactions of more than $10,000. Ambiance employees received approximately 364 payments of more than $10,000 over a two-year period – which totaled more than $11.1 million – and the company failed to file a single Form 8300 to alert federal authorities to the cash transactions.
In conjunction with transactions made at Ambiance’s storefront, Ambiance used two sets of books to record sales, one of which documented only cash transactions and was not reported to Ambiance’s outside accountants. Noh also directed some of the second set of transactions to be underreported to the accountants. The lower sales figures were reported on 2011 and 2012 tax returns filed by Noh. Noh failed to report income for those two years and owed the IRS a total more than $16.8 million, which includes unpaid taxes, penalties and interest.
The $16,806,412 Noh owed to the IRS and the $18,421,443 he owed to CBP have been provided to the court from seized funds.
The case against Ambiance and Noh was investigated by Homeland Security Investigations, IRS Criminal Investigation, U.S. Customs and Border Protection, LA IMPACT, the Long Beach Police Department, the Los Angeles Police Department, the Gardena Police Department, and the West Covina Police Department.
Assistant United States Attorney Scott D. Dubois of the International Narcotics, Money Laundering and Racketeering Section prosecuted this case. Assistant United States Attorney Jonathan S. Galatzan, Chief of the Asset Forfeiture Section, handled the asset forfeiture portion of this case.
Former Head of LADWP Agrees to Plead Guilty to Bribery ChargeRead the Press Release
INFORMATION
PLEA AGREEMENTLOS ANGELES – The former general manager of the Los Angeles Department of Water and Power (LADWP) has agreed to plead guilty to a federal criminal charge for accepting bribes from a lawyer in exchange for his official action to secure a three-year, $30 million no-bid LADWP contract for the lawyer’s company, the Justice Department announced today.
David H. Wright, 62, of Riverside, agreed to plead guilty to a one-count information charging him with bribery, a crime that carries a statutory maximum sentence of 10 years in federal prison. In the plea agreement, Wright also admitted he participated in several other corrupt schemes while the head of LADWP.
The information and Wright’s plea agreement were filed today in United States District Court. Wright is expected to make his initial appearance in this case on December 10.
According to his plea agreement, Wright served as LADWP’s general manager from September 2016 until July 2019, when he resigned at the direction of the mayor of Los Angeles. In this role, Wright was the chief executive of the largest municipal utility in the United States.
During 2016 and 2017, Wright developed a relationship with Paul O. Paradis, 58, of Scottsdale, Arizona, a lawyer appointed by the Los Angeles City Attorney’s Office to represent LADWP in a lawsuit in which the department blamed the vendor of its billing system for the misbilling of hundreds of thousands of ratepayers. Paradis and his New York-based law firm also held a $6 million LADWP contract to provide project management services in connection with the department’s remediation of the faulty billing system.
Paradis has agreed to plead guilty to a bribery charge for accepting an illicit kickback of nearly $2.2 million for getting another attorney to purportedly represent his ratepayer client in a collusive lawsuit against LADWP related to the billing debacle. Paradis is cooperating with the ongoing investigation into the collusive litigation and corruption at LADWP. Paradis is expected to make his initial court appearance on December 16.
By early 2017, Wright and Paradis agreed that — in exchange for Wright’s support of a “no-bid” $30 million contract for Paradis’s downtown Los Angeles-based company Aventador Utility Services LLC — Paradis would give Wright a million-dollar-per-year job as Aventador’s CEO and a luxury company car once Wright retired from LADWP.
In exchange, Wright lobbied members of the LADWP board of directors to persuade them to vote in favor of the contract for Aventador, whose company name was taken from a model of Lamborghini sports car. He also drafted a letter to the LADWP board touting the purpose of the contract and the company’s capabilities and explaining why the contract had to be granted on a no-bid basis, rather than allowing competitive bids from other companies. Wright enlisted the help of LADWP employees, including other senior executives, to support the Aventador contract, and he prepared an oral and written presentation to the LADWP board urging the contract’s approval.
In his public presentation to the LADWP board, Wright cited to a report from a court-appointed independent monitor overseeing the ratepayer settlement and warned that LADWP could not meet its court-ordered obligations unless it contracted with Aventador. Wright did not inform the LADWP board that the independent monitor’s report had been secretly ghostwritten by Paradis, a fact that Wright knew because he had planned it with Paradis.
At the time it approved the $30 million no-bid contract in June 2017, the LADWP board was also not informed of Wright’s agreement with Paradis to take a lucrative job as Aventador’s CEO upon retiring from LADWP.
After the awarding of the contract, through early 2019, Wright continued to collaborate with Paradis to build and market Aventador and to seek additional lucrative business opportunities for it — and thus for Wright and Paradis — both inside and outside LADWP. For example, Wright directed Paradis to draft an LADWP settlement agreement in a way that would create future business opportunities for the company. Wright also told Paradis that they should do “the minimal possible” with respect to the LADWP billing system upgrade so that the project would not need to occupy Wright’s attention during his remaining tenure. Beyond LADWP, Wright used his position as LADWP’s general manager to advertise Aventador's services at industry events and in meetings and discussions with other industry officials and executives.
In May 2018, Wright and Paradis met with executives from a global company providing cybersecurity training services, identified in court documents as “Cyber Company.” Wright and Paradis invested in a Cyber Company franchise in Los Angeles in which they each would have an ownership interest. They further agreed that Wright would use his position and influence as general manager to convince the LADWP Board to authorize the department’s purchase of $15 million in services from their Cyber Company franchise, which secretly would benefit both Wright and Paradis financially.
By March 2019, Paradis had been forced to resign from his role as special counsel to the City Attorney’s Office. Around this time, the LADWP board voted to terminate Aventador’s contract, but agreed to retain the company’s services if Paradis sold his stake in the company and disavowed any interest in the company, which Paradis purported to do. In late March 2019, after Paradis sold the company to an employee, Aventador officially changed its name to Ardent Cyber Solutions LLC.
In late March 2019, after Paradis had begun covertly cooperating with the FBI, Wright met with Paradis at Wright’s home and directed Paradis to destroy their incriminating text messages and emails from Wright’s cell phone and Apple iCloud account, and to take back an Aventador laptop and wipe it clean. Wright told Paradis that he had already gone through his office at LADWP and destroyed all incriminating physical evidence.
At this meeting, Wright also told Paradis that he still wanted to continue their secret plans, stating that he felt that his future had been “resurrected” by the opportunity to further their corrupt scheme. Wright cautioned that they would need to create a new company, which they referred to as “Newco,” to replace Aventador and its successor Ardent, because those companies were tarnished because of bad publicity. The two men continued to contact and meet one another in private. Due to Wright’s fears that their corrupt communications would be detected, they orchestrated a clandestine dead-drop maneuver for Paradis to deliver Wright’s wiped cell phone and a “burner” cell phone for Wright’s use so that they could communicate in secret.
In April 2019, Wright used his position to urge the LADWP board to support the award of a new cybersecurity contract to Ardent for more than $10 million. Wright again did not inform the board of his secret arrangement with Paradis, which by then included their agreement that Wright would receive a “substantial sign-on bonus” of $600,000 or $1.2 million, as well as an increase in his ownership of their company, in addition to a previously agreed-to $1 million annual salary and luxury car.
In May 2019, Wright suggested to Paradis that he remain in his role as LADWP general manager for a few more months so he could help ensure that Ardent secured yet another contract from the department. Understanding that he could not legally receive payment from Ardent while he was still employed by LADWP, Wright suggested that he could secretly begin working for Ardent before his retirement and then later be compensated by “some retroactive money” for those services. In proposing this illicit payment arrangement, Wright referred to Paradis as his “ATM.”
Wright admitted in his plea agreement that he deprived LADWP and its ratepayers of their right to his honest services and violated the fiduciary duty that he, as general manager, owed to LADWP and its ratepayers. Wright further admitted that he lied to federal investigators in June 2019 when he told them that he did not have any financial or business interest – including future interests – in any company in which Paradis was associated. Wright also admitted that he destroyed evidence with the intent to obstruct the federal investigation.
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 Melissa Mills, Jamari Buxton, and Susan Har of the Public Corruption and Civil Rights Section are prosecuting this case.
Pomona Parolee Sentenced to Nearly Three Years in Federal Prison for Stealing Humvee from Army Reserve Center in UplandRead the Press Release
LOS ANGELES – A Pomona man was sentenced today to 34 months in federal prison for stealing a military Humvee from the Army Reserve Center in Upland and then briefly leading police on a chase through a neighborhood.
Armando Garcia, 30, was sentenced by United States District Judge John A. Kronstadt. Garcia pleaded guilty on August 19 to one count of theft of government property. At the time of the offense, Garcia was on parole after being convicted in 2019 in state court on theft and burglary charges.
On November 9, 2020, Garcia stole a militarized High Mobility Multipurpose Wheeled Vehicle – commonly known as a Humvee – that had been secured by a padlock at the Reserve Center in Upland.
Soon after Garcia drove off with the semi-armored combat vehicle with a turret mount, Pomona Police officers saw the Humvee and attempted to make a traffic stop of the unlicensed vehicle.
“[Garcia] fled, leading the officers on a roughly four-minute high-speed chase during which [Garcia] drove on the wrong side of the road, blew through multiple red lights and stops signs, swerved across the road, and drove through several narrow alleys before ultimately giving up,” prosecutors wrote in a sentencing memorandum.
Garcia stopped the Humvee in front of a home on a residential street in Pomona and was arrested at the scene.
Inside the Humvee, police found a large pair of bolt cutters and an Army-approved padlock that appeared to have been cut, according to court documents that note the padlock had secured a steel wire put in place to prevent the turning of the steering wheel.
The FBI’s San Gabriel Valley Safe Streets Task Force investigated this matter. The Pomona Police Department is the sponsoring agency of the Task Force and has hosted the task force since its inception in 2008.
Assistant United States Attorney Juan M. Rodríguez of the General Crimes Section prosecuted this case.
Santa Ana Man Pleads Guilty to Deliberately Aiming Laser Pointer Beam at In-Flight Orange County Sheriff’s Department HelicopterRead the Press Release
LOS ANGELES – A Santa Ana man pleaded guilty today to a federal criminal charge for intentionally aiming a laser pointer’s beam at an in-flight Orange County Sheriff’s Department helicopter, which blinded the crew for several seconds.
Eric Jayson Suarez, 47, pleaded guilty to one count of aiming a laser pointer at an aircraft.
According to his plea agreement, on the evening of April 13, 2020, an Orange County Sheriff’s Department helicopter was flying above the intersection of Bristol and First streets in Santa Ana. Suarez, sitting alone in his car that was parked approximately 20 blocks away, saw the helicopter in flight, intentionally pointed a high-intensity green laser beam at the aircraft and struck the cockpit at least four times with his laser pointer’s beam.
Suarez’s laser beam blinded the helicopter’s pilot and tactical flight officer for several seconds, impacting their ability to see the ground and to detect hazards and jeopardizing the safety of the flight crew, the helicopter, other nearby aircraft, and individuals on the ground.
Law enforcement determined Suarez’s location and followed him to a retail shopping center in Santa Ana. Shortly before officers stopped Suarez’s car in a parking lot, Suarez threw his laser pointer out the car’s window. Law enforcement later recovered the laser pointer, approximately 50 feet from where they stopped Suarez’s car.
In February 2015, Suarez was convicted in Orange County Superior Court of unlawful discharge of a laser at an occupied aircraft. In March 2020, law enforcement officers responded to a report of a green laser beam that shone from Suarez’s backyard and struck a helicopter approximately eight times. That night, an officer warned Suarez that it would be “disastrous” because it could blind the pilot and cause the aircraft to crash, the plea agreement states.
United States District Judge Stephen V. Wilson has scheduled a March 7, 2022 sentencing hearing, at which time Suarez will face a statutory maximum sentence of five years in federal prison.
The FBI, the Orange County Sheriff’s Department, and the Santa Ana Police Department investigated this matter.
Assistant United States Attorney Varun Behl of the General Crimes Section is prosecuting this case.
Former South Bay Executive Sentenced to Nearly Three Years in Federal Prison for Insider Trading and Securities FraudRead the Press Release
LOS ANGELES – A former executive at a Hawthorne-based company was sentenced today to 35 months in federal prison for trading in options contracts using inside company information and illegally purchasing shares of a company his employer had targeted for acquisition.
Mark A. Loman, 60, of Hermosa Beach, was sentenced by United States District Judge Dale S. Fischer, who said Loman had “betrayed his employer and the market” and had been motivated by greed. Judge Fisher also ordered Loman to pay a $600,000 fine.
At the conclusion of a 10-day trial, a jury on September 2 found Loman guilty of four counts of securities fraud and four counts of insider trading.
Loman was a vice president of finance and the corporate controller for OSI Systems Inc., a publicly traded security, health care and electronics manufacturing company, from 2006 until 2018. In these roles, Loman had advance knowledge of OSI’s revenue and earnings and, as corporate controller, was responsible for compiling and internally reporting the company’s confidential financial results.
In December 2015, Loman received confidential information that OSI was financially underperforming and would fall far short of its earnings and revenue forecast for its second quarter of its fiscal year 2016. Acting on this information in December 2015, Loman purchased a series of options contracts with the intent of profiting when OSI’s stock price fell.
On January 27, 2016, OSI announced its disappointing second-quarter earnings, and lowered its sales and earnings guidance for the remainder of its fiscal year. On the day of this announcement, OSI shares plunged approximately 30 percent in value from their previous closing day price. As a result, Loman gained approximately $355,000 in illegal profits from this scheme.
In March 2016, Loman misused nonpublic information by purchasing stock of American Science & Engineering Inc., a Billerica, Massachusetts-based manufacturer of security screening equipment that OSI had targeted for acquisition. Once OSI publicly announced in June 2016 its agreement to acquire AS&E, Loman immediately sold his shares in AS&E and made approximately $120,000 in illegal gains. In September 2016, OSI formally acquired AS&E for approximately $270 million.
Loman made a total of approximately $475,000 in illicit gains through this scheme.
“[Loman] engaged in a troubling pattern of conduct that involved leveraging his privileged position as a trusted, corporate insider to use confidential, sensitive financial information that he possessed to bet against his own company in a series of sophisticated stock trades conducted in a brokerage account that was hidden from view from his employer,” prosecutors argued in a sentencing memorandum.
In July 2019, the Securities and Exchange Commission filed a lawsuit against Loman, charging him with insider trading. Trial is scheduled for that lawsuit in April 2022.
The FBI investigated this matter.
Assistant United States Attorneys Scott Paetty and Karen E. Escalante of the Major Frauds Section prosecuted this case.
Ex-L.A. Special Counsel Agrees to Plead Guilty to Accepting Nearly $2.2 Million Kickback for Arranging Collusive Lawsuit Against LADWPRead the Press Release
INFORMATION PLEA AGREEMENTLOS ANGELES – A New York City lawyer, who simultaneously represented the Los Angeles Department of Water and Power (LADWP) and a ratepayer suing it in the wake of the department’s billing debacle, has agreed to plead guilty to a bribery charge for accepting an illegal payment of nearly $2.2 million for getting another attorney to purportedly represent his ratepayer client in a collusive lawsuit against LADWP, the Justice Department announced today.
Paul O. Paradis, 58, of Scottsdale, Arizona, who ran the Manhattan-based Paradis Law Group, agreed to plead guilty to a single-count information charging him with bribery. In his plea agreement, Paradis also admitted to additional bribery schemes involving high-level LADWP officials. Both the information and the plea agreement were filed today in United States District Court. Paradis is cooperating with the federal criminal investigation, which is ongoing.
According to the court documents, LADWP in 2013 implemented a new billing system that it had procured from an outside vendor, PricewaterhouseCoopers (PwC). After LADWP implemented the new system, hundreds of thousands of LADWP ratepayers received massively inflated and otherwise inaccurate utility bills. Soon afterward, the city and LADWP faced multiple class-action lawsuits filed by ratepayers alleging harm resulting from the faulty billing system.
In December 2014, the Los Angeles City Attorney’s Office retained Paradis and Paul R. Kiesel, a Beverly Hills-based lawyer, as special counsel to represent the city in an affirmative lawsuit against PwC. Kiesel is cooperating with the investigation and is not charged with any wrongdoing.
When Paradis began representing the city as special counsel in the PwC litigation, the Los Angeles City Attorney’s Office was aware that he was already representing Antwon Jones, a ratepayer who had a claim against LADWP arising from billing overcharges. Jones was unaware that his lawyer, Paradis, also represented his intended adversary.
At a February 2015 meeting with at least one senior member of the City Attorney’s Office, Paradis and Kiesel were authorized and directed to find counsel that would be friendly to the city to supposedly represent Jones in a class-action lawsuit against the city. Pursuant to this strategy, the forthcoming Jones v. City of Los Angeles lawsuit would be used as a vehicle to settle all existing LADWP-billing-related claims against the city on the city’s desired terms.
Soon thereafter, Paradis recruited a lawyer identified in court documents as “Ohio Attorney” to supposedly represent Jones in a lawsuit against the city. Paradis told Ohio Attorney that the city wanted the lawsuit to be “pre-settled” on the city’s desired terms, and that Paradis would do all or most of Ohio Attorney’s substantive work on the case. In exchange, Paradis and Ohio Attorney agreed that Paradis would receive 20 percent of Ohio Attorney’s fees in the Jones v. City case as a secret kickback.
In March 2015, the city sued PwC in a lawsuit that generally alleged that PwC was responsible for LADWP’s billing debacle, claiming that the firm had caused the city hundreds of millions of dollars in damages. Paradis and Kiesel represented the city in that lawsuit until March 2019. The city in September 2019 dismissed its lawsuit against PwC.
Also in March 2015, Paradis used nonpublic information provided to him by members of the City Attorney’s Office and LADWP to draft a detailed complaint for a class-action lawsuit against the city with Jones as the named class representative. Later that month, Paradis provided the draft Jones v. City complaint to Ohio Attorney for filing. Ohio Attorney filed the Paradis-drafted lawsuit in April 2015.
In June and July of 2015, Paradis and others working on the city’s behalf in the Jones lawsuit participated in four confidential mediation sessions with Ohio Attorney, who purportedly represented Jones. At the close of the final mediation session, the mediator issued a proposal that would cap plaintiff attorneys’ fees at $13 million – a figure that raised an objection from another lawyer representing the city, who complained in an internal email that the amount was unjustifiably high because, in part, Ohio Attorney had done “little demonstrative work to advance the interests of the class.” Notwithstanding that objection, the city agreed to the fee proposal.
In July 2017, a Los Angeles Superior Court judge issued a final approval of the $67 million settlement agreed to by the parties in Jones v. City, including approximately $19 million in plaintiffs’ attorney fees.
Pursuant to the settlement agreement, the city sent a check to Ohio Attorney in the amount of approximately $19,241,003. After disbursing some of those funds in accordance with the terms of the settlement agreement, Ohio Attorney and his law firm retained approximately $10.3 million in attorney fees.
Ohio Attorney then secretly paid $2,175,000 to Paradis, disguising the kickback as a real estate investment, and funneling it through shell companies that Paradis and Ohio Attorney had set up exclusively for the purpose of transmitting and concealing the illicit payment.
As part of his plea agreement, Paradis also admitted to giving bribes to multiple LADWP officials, including an LADWP general manager and an LADWP Board member, in exchange for their help in securing a three-year, $30 million no-bid contract with LADWP in June 2017 for Paradis’s downtown Los Angeles-based cyber-services company, Aventador Utility Solutions.
At the time it approved the no-bid contract, the LADWP Board was not informed that Paradis had ghostwritten a May 2017 independent monitor report on the Jones v. City settlement on which LADWP based its decision. The Paradis-written report claimed that LADWP could not meet its obligations under the Jones v. City settlement agreement unless it contracted with Aventador. The LADWP Board also was unaware that the then-LADWP general manager advocating for the award of the $30 million no-bid contract to Paradis’s company had secretly agreed to become its CEO with an annual salary of $1 million and a luxury company car.
Paradis is expected to make his initial court appearance in the coming weeks.
The FBI is investigating this matter.
Assistant United States Attorneys Melissa Mills, Jamari Buxton and Susan Har of the Public Corruption and Civil Rights Section are prosecuting this case.
San Bernardino County Man Found Guilty of Federal Charges for Paying for Sex from Underage Girl He Met on InternetRead the Press Release
RIVERSIDE, California – A San Bernardino County man has been found guilty of criminal charges for paying a teenager he met on the internet to have sex with him on two occasions, the Justice Department announced today.
Jason Dee Taylor, 41, of Fontana, was found guilty of one count of sex trafficking of a minor and one count of enticement of a minor to engage in criminal sexual activity. A federal jury returned the verdict on Friday afternoon.
According to the evidence presented at his four-day trial, Taylor contacted the victim on a public website. They exchanged messages through that website’s messenger feature and then switched to communicating via Instagram messenger.
Although she initially represented that she was 19 years old, the victim told defendant almost immediately that she was 16, even though she was 15 years old at the time. In response, Taylor wrote her, “I’ll be honest. I like your age, it’s kinda hot.”
Twice in April 2020, Taylor drove to Santa Barbara County, picked up the victim, took her to a hotel, and paid her a total of $600 for sex.
That same month, the victim’s family friend, whose phone she used to communicate with Taylor, found the messages between Taylor and the victim. When a member of the victim’s family sent Taylor a message informing him that they were going to report him to law enforcement, Taylor deleted his Instagram account, but not before the family friend had taken screenshots of the incriminating communications.
United States District Judge Jesus G. Bernal has scheduled a February 7, 2022 sentencing hearing, at which time Taylor will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment.
The FBI investigated this matter, with the assistance of the Guadalupe Police Department, the Santa Maria Police Department, and the Fontana Police Department.
Assistant United States Attorney Sonah Lee of the Riverside Branch Office is prosecuting this case.
Lakewood Man Arrested on Federal Complaint Alleging He Threatened to Bomb SBA Offices and Assault Agency EmployeesRead the Press Release
LOS ANGELES – A Lakewood man was arrested on a federal criminal complaint filed today alleging he threatened to bomb Small Business Administration (SBA) offices and then, the following year, assault SBA employees in response to his inability to obtain COVID-19 emergency business loans.
Christopher Joseph Antoun, 29, was arrested Saturday on a complaint charging him with one count of making threats by interstate communication. He made his initial appearance this afternoon in United States District Court in downtown Los Angeles, where he was ordered jailed without bond. His arraignment is scheduled for December 10.
According to an affidavit filed with the complaint, Antoun owns Federal Student Loan Consulting LLC, a company he runs out of his Lakewood residence. In early 2020, Antoun attempted to obtain a COVID-19 Emergency Injury Disaster Loan (EIDL). These loans provide accessible and borrower-friendly capital to small businesses impacted by the COVID-19 pandemic.
On May 3, 2020, after he failed to receive approval for an EIDL loan or an advance from the SBA, Antoun allegedly sent an email to an SBA-monitored email account and wrote, in part, “IT GOES INTO MY BANK ACCOUNT TONIGHT OR I START BOMBING EVERY LOCATION OWNED BY THE SBA.” An SBA loan officer in Texas received Antoun’s email and contacted law enforcement, according to the affidavit.
Law enforcement visited Antoun at his residence, where he said he was high on marijuana and drunk on alcohol when he sent the threatening email and had no intent of carrying out the threat, and law enforcement later gave him a warning, according to the affidavit.
During the summer and fall of 2021, Antoun again attempted to obtain SBA-backed loans and loan advances. Following difficulty in obtaining the loans and advances, Antoun on November 19 allegedly sent an email to several SBA employees. In that email, Antoun threatened to walk into the SBA’s Los Angeles district office “with my nice shiny bat” and “start beating the skulls of SBA staff in. Once the police or whoever it is eventually stops me im [sic] going to go to jail,” the affidavit states.
If convicted, Antoun would face a statutory maximum sentence of five years in federal prison.
A 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 United States Department of Homeland Security’s Federal Protective Service investigated this matter.
Assistant United States Attorney Jason C. Pang of the International Narcotics, Money Laundering, and Racketeering Section is prosecuting this case.
Ontario Man Who Ran Multimillion-Dollar Unlicensed Bitcoin Exchange Business Sentenced to 3 Years in Federal PrisonRead the Press Release
SANTA ANA, California – A San Bernardino County man was sentenced today to 36 months in federal prison for operating an unlicensed business that exchanged at least $13 million in Bitcoin and cash, often for drug traffickers.
Hugo Sergio Mejia, 50, of Ontario, was sentenced by United States District Judge Cormac J. Carney. Mejia pleaded guilty on July 1 to one count of operating an unlicensed money transmitting business and one count of money laundering.
From May 2018 to September 2020, Mejia operated a virtual currency business that exchanged Bitcoin for cash, and vice versa, charging commissions for these transactions. Mejia never registered his business with the Financial Crimes Enforcement Network, a bureau with the United States Department of the Treasury that collects and analyzes information to combat financial crimes, including money laundering.
During the nearly 2½-year period, according to the plea agreement, Mejia exchanged at least $13 million.
Mejia also established companies to mask his true activity, including Worldwide Secure Communications LLC, World Secure Data, and The HODL Group LLC. Mejia advertised his business online and was referred to customers by word of mouth, communicating with them via encrypted messaging services and meeting them in person at coffee shops.
On several occasions between May 2019 and March 2020, Mejia met with a client, who was working with law enforcement, to exchange Bitcoin for tens of thousands of dollars in cash. On March 12, 2020, Mejia met with the client at a coffee shop in Irvine and facilitated the exchange of 14.273 Bitcoin for $82,150 in cash plus fees. During this meeting, the client informed Mejia that his primary customer was a methamphetamine buyer in Australia who purchased methamphetamine every four to six weeks and sold it in Australia for five times more than the average price in the United States.
Mejia and the client who was working with law enforcement conducted five Bitcoin-cash transactions that cumulatively exceeded $250,000.
“[Mejia] knew about the applicable regulations governing his money exchange business and purposefully flouted them,” prosecutors wrote in a sentencing memorandum. “That is because [Mejia] structured his money exchange business with the intent to establish an anonymous conduit for money laundering of drug trafficking proceeds.”
As part of his plea agreement with the government, Mejia agreed to forfeit all assets derived from the illegal conduct, including $233,987 in cash seized from residences in Santa Ana and Ontario, silver coins and bars, and approximately $95,587 in various cryptocurrency seized.
IRS Criminal Investigation and Homeland Security Investigations investigated this matter and received assistance from the Costa Mesa Police Department.
Assistant United States Attorney Jason C. Pang of the International Narcotics, Money Laundering and Racketeering Section prosecuted this case. Assistant United States Attorney Brett A. Whittlesey of the Asset Forfeiture Section handled the asset forfeiture portion of this case.
Federal Grand Jury Issues New Indictment Against Leaders of Philippines-Based Church that Alleges Sex Trafficking SchemeRead the Press Release
SANTA ANA, California – A superseding indictment unsealed today charges the founder of a Philippines-based church and two top administrators of orchestrating a sex trafficking operation that coerced girls and young women to have sex with the church’s leader under threats of “eternal damnation.”
The superseding indictment expands on allegations made early last year against three Los Angeles-based administrators of the church, which is known as the Kingdom of Jesus Christ, The Name Above Every Name (KOJC). The nine defendants named in the 42-count superseding indictment are charged with participating in a labor trafficking scheme that brought church members to the United States, via fraudulently obtained visas, and forced the members to solicit donations for a bogus charity – the Glendale-based Children’s Joy Foundation (CJF) – donations that actually were used to finance church operations and the lavish lifestyles of its leaders. Members who proved successful at soliciting for the KOJC allegedly were forced to enter into sham marriages or obtain fraudulent student visas to continue soliciting in the United States year-round.
The superseding indictment, which was returned by a federal grand jury on November 10, expands the scope of the 2020 indictment by adding six new defendants, including the KOJC’s leader, Apollo Carreon Quiboloy, who was referred to as “The Appointed Son of God.”
Three of the new defendants were arrested today by federal authorities. The remaining three, including Quiboloy, are believed to be in the Philippines.
The defendants charged in the superseding indictment are:
- Quiboloy, believed to be 71, whose primary residence is a KOJC compound in Davao City, Philippines, but who also maintained large residences in Calabasas, California; Las Vegas, Nevada; and Kapolei, Hawaii;
- Teresita Tolibas Dandan, also known as “Tessie” and “Sis Ting,” 59, of Davao City, the “international administrator” who was one of the top overseers of KOJC and CJF operations in the United States;
- Helen Panilag, 56, of Davao City, the one-time top KOJC administrator in the U.S., who oversaw the collection of financial data from KOJC operations around the globe;
- Felina Salinas, also known as “Sis Eng Eng,” 50, of Kapolei, Hawaii, who allegedly was responsible for collecting and securing passports and other documents from KOJC workers in Hawaii, as well as directing funds solicited to church members to church officials in the Philippines (arrested today);
- Guia Cabactulan, 61, the lead KOJC administrator in the United States who operated the KOJC compound in Van Nuys (charged in original indictment);
- Marissa Duenas, 43, a Van Nuys-based administrator who handled fraudulent immigration documents for workers (charged in original indictment);
- Amanda Estopare, 50, another Van Nuys-based administrator who was in charge of tracking and reporting the money raised in the U.S. to KOJC officials in the Philippines (charged in original indictment);
- Bettina Padilla Roces, also known as “Kuki,” 48, a fourth administrator who allegedly handled financial matters (arrested today in Reseda); and
- Maria De Leon, 72, a resident of the Koreatown neighborhood of Los Angeles, the owner of Liberty Legal Document Services, who allegedly processed fraudulent marriages and immigration-related documents for KOJC workers (arrested today at her residence).
The three arrested today are expected to make their initial appearances this afternoon in United States District Court in Los Angeles and Honolulu.
The superseding indictment charges Quiboloy, Dandan and Salinas with participating in a conspiracy to engage in sex trafficking by force, fraud and coercion, as well as the sex trafficking of children. These three defendants allegedly recruited females ranging from approximately 12 to 25 years of age to work as personal assistants, or “pastorals,” for Quiboloy. The indictment states that the victims prepared Quiboloy’s meals, cleaned his residences, gave him massages and were required to have sex with Quiboloy in what the pastorals called “night duty.” The indictment specifically mentions five female victims, three of whom were minors when the alleged sex trafficking began.
“Defendant Quiboloy and other KOJC administrators coerced pastorals into performing ‘night duty’ – that is, sex – with defendant Quiboloy under the threat of physical and verbal abuse and eternal damnation by defendant Quiboloy and other KOJC administrators,” the indictment alleges. “Defendant Quiboloy and other KOJC administrators told pastorals that performing ‘night duty’ was ‘God’s will’ and a privilege, as well as a necessary demonstration of the pastoral’s commitment to give her body to defendant Quiboloy as ‘The Appointed Son of God.’”
The indictment alleges the sex trafficking scheme started no later than 2002 and continued to at least 2018, during which time Quiboloy and his top administrators caused the victims to engage in commercial sex acts by ordering female victims, including the minor victims, to have sex with defendant Quiboloy on a schedule determined by the church leader and others, including Dandan. The victims who were obedient were rewarded with “good food, luxurious hotel rooms, trips to tourist spots, and yearly cash payments that were based on performance” – which were paid for with money solicited by KOJC workers in the United States, according to the indictment.
As part of the alleged scheme, the three defendants told female victims who expressed hesitation at night duty “that they had the devil in them and risked eternal damnation.” Furthermore, Quiboloy would threaten and physically abuse victims who attempted to leave KOJC or were not available to perform night duty, according to the indictment, which also alleges Quiboloy would physically abuse victims for communicating with other men or engaging in other behavior that upset him because he considered such conduct adultery and a sin.
Victims who managed to escape KOJC suffered retaliation in the form of threats, harassment and allegations of criminal misconduct, according to the indictment. “Defendant Quiboloy would give sermons, broadcasted to KOJC members around the world, in which he would allege that victims who escaped had engaged in criminal conduct and sexually promiscuous activity, and therefore faced eternal damnation, in order to discourage other victims from leaving, retaliate against and discredit the victims, and conceal the sexual activity between defendant Quiboloy and the victims,” the indictment states.
Quiboloy, Dandan and Salinas are charged in count one of the superseding indictment, which alleges the sex trafficking conspiracy. Each defendant is charged in at least three of five substantive counts of sex trafficking by force, fraud and coercion.
The superseding indictment also outlines KOJC’s nationwide soliciting operations, which allegedly gave rise to additional criminal conduct, including forced labor, labor trafficking, document servitude, marriage fraud and money laundering.
Under Quiboloy’s direction, KOJC administrators allegedly brought workers from the Philippines to the United States and confiscated all forms of identification before forcing the workers to spend long hours illegally soliciting money for KOJC outside of businesses across the United States. While KOJC workers told potential donors their money would be used by CJF to help impoverished children, the money was actually used to directly finance KOJC operations and the lavish lifestyle of KOJC leaders, including Quiboloy, according to the indictment.
“KOJC administrators maintained the legal immigration status of workers who proved capable of meeting daily cash solicitation quotas by fraudulently obtaining student visas for such workers or by forcing them to enter into sham marriages with other KOJC workers who had already obtained United States citizenship,” the indictment states.
Some of the workers were moved around the United States to solicit donations as CJF “volunteers,” who were also called Full Time Miracle Workers, according to the indictment, which alleges these “workers fundraised for KOJC nearly every day, year-round, working very long hours, and often sleeping in cars overnight.”
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 sex trafficking conspiracy charge alleged in the indictment carries a statutory maximum penalty of life in federal prison. The five substantive sex trafficking charges each carry a mandatory minimum penalty of 15 years in federal prison and a potential sentence of life. The additional fraud, cash smuggling and money laundering offenses in the indictment carry statutory maximum penalties ranging from five to 20 years in federal prison.
As part of the ongoing investigation, the FBI is encouraging potential victims or anyone with information about KOJC activities to contact investigators. Those with information are asked to call the FBI’s Los Angeles Field Office at (310) 477-6565. Individuals may also contact the FBI through its website at https://www.fbi.gov/tips.
The ongoing investigation into KOJC is being led by the FBI, which is receiving substantial assistance from Homeland Security Investigations, U.S. Citizenship and Immigration Service’s Fraud Detection and National Security Unit, the U.S. Department of State’s Diplomatic Security Service, and IRS Criminal Investigation.
Assistant United States Attorneys Daniel H. Ahn, Jake D. Nare and Benjamin D. Lichtman of the Santa Ana Branch Office, along with Special Assistant United States Attorney Angela C. Makabali of the General Crimes Section, are prosecuting this case. Assistant United States Attorney Katharine Schonbachler of the Asset Forfeiture Section is also working on the matter.
Controller for Anaheim-Based Companies Charged in Federal Grand Jury Indictment that Alleges $3 Million EmbezzlementRead the Press Release
SANTA ANA, California – A federal grand jury today returned a 15-count indictment that accuses the former controller for two Anaheim-based companies of embezzling more than $3 million by directing the transfer of company funds to bank accounts that she controlled.
Rosalba Meza, also known as “Rosalba Sceville,” 47, of Coto de Caza, who was arrested earlier this month pursuant to a criminal complaint filed by prosecutors, is scheduled to be arraigned on the indictment on November 29 in United States District Court.
From May 2017 through the end of 2019, Meza allegedly made unauthorized transfers – currently estimated to total $3,071,880 – from bank accounts belonging to Trilogy Plumbing, Inc. and a related company called Matrix Management, LLC.
In February 2019, Meza told executives their companies did not have funds to meet payroll obligations and failed to inform the executives that she had been embezzling from the companies, the indictment alleges. Several months later, while the companies were the subject of an IRS enforcement action because of unpaid payroll taxes, Meza falsely told the executives that she did not pay the quarterly payroll taxes because she instead had used those funds to pay employees, according to the indictment.
The indictment alleges that, once the funds were transferred to her accounts, Meza used the stolen money to make approximately $292,137 in cash withdrawals at bank branches and more than $1 million in withdrawals at ATMs in the United States and Mexico. Meza also allegedly wired approximately $870,209 to bank accounts in Mexico owned by a family member and another $250,000 in transfers to other family members and friends.
The indictment also alleges that Meza filed tax returns for the years 2017 through 2019 that failed to report as income the embezzled funds.
The indictment charges Meza with eight counts of wire fraud, four counts of money laundering and three counts of subscribing to a false tax return. The wire fraud charges carry a statutory maximum penalty of 20 years in federal prison, while the money laundering and tax counts carry potential penalties of 10 years and three years, respectively.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The FBI and IRS Criminal Investigation are conducting the investigation in this matter.
Special Assistant United States Attorney Ryan G. Adams of the Santa Ana Branch Office is prosecuting this case.
Three Florida Residents Sentenced to Federal Prison for Fraudulently Obtaining Unemployment Benefits from State of CaliforniaRead the Press Release
LOS ANGELES – Three women from South Florida have been sentenced to federal prison for participating in a scheme that defrauded the California Employment Development Department (EDD) by filing fraudulent claims for unemployment benefits in the names of California identity theft victims, the Justice Department announced today.
Bonia Bon and Bonize Bon, who are 32-year-old twin sisters residing in North Miami, and Eldia Dieujuste, 32, of Miami, each were sentenced Monday afternoon to one year and one day in federal prison. United States District Judge Christina A. Snyder also ordered the defendants to pay $104,570 in restitution to EDD.
The Bons and Dieujuste each pleaded guilty last year to mail fraud in connection with their scheme to defraud EDD. In a sentencing memorandum filed with the court, prosecutors noted that the Bons and Dieujuste stole “monies that were intended to be used to help persons who had lost their jobs through no fault of their own” by exploiting “the mechanisms put in place by EDD to help unemployed workers more easily apply for these benefits – for example, on-line applications and rapid processing of applications.”
From January 2018 through June 2019, the Bons and Dieujuste used the personal information of California residents to file 34 fraudulent claims seeking at least $494,190 in unemployment benefits. The Bons and Dieujuste provided their own home addresses in Florida as the mailing addresses for the benefits, which caused the debit cards that allowed access to $104,570 in unemployment benefits to be mailed to them. ATM surveillance photos captured images of the Bons and Dieujuste using the fraudulently obtained debit cards to withdraw the unemployment benefits in cash.
A fourth South Florida resident, Gregory Bon, 29, of Miami, brother of the Bon twins, faces conspiracy and mail fraud charges in this scheme. He has pleaded not guilty and is scheduled to go on trial on December 14 before Judge Snyder.
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 Department of Labor – Office of the Inspector General, EDD’s Investigations Division, Homeland Security Investigations, the United States Postal Inspection Service, and the United States Secret Service investigated this matter.
Assistant United States Attorney Ranee A. Katzenstein, Chief of the Major Frauds Section, prosecuted this case.
Seven Members of Los Angeles-Based Fraud Ring Sentenced for Multimillion-Dollar COVID-19 Relief SchemeRead the Press Release
Seven members of a Los Angeles-based fraud ring were sentenced for a scheme to fraudulently obtain more than $20 million in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) COVID-19 relief funds.
On Nov. 15, Judge Stephen V. Wilson of the U.S. District Court for the Central District of California sentenced Richard Ayvazyan, 43, to 17 years in prison; Marietta Terabelian, 37, to six years in prison; and Artur Ayvazyan, 41, to five years in prison, all of Encino, for engaging in the scheme.
Previously, Judge Wilson sentenced Manuk Grigoryan, 28, of Sun Valley, to six years in prison on Oct. 25; Edvard Paronyan, 41, of Granada Hills, to 30 months in prison on Sept. 27; Vahe Dadyan, 42, of Glendale, to one year and one day in prison on Oct. 18; and Arman Hayrapetyan, 39, of Glendale, to 10 months of probation on Oct. 18. Tamara Dadyan, 42, of Encino, is scheduled to be sentenced on Dec. 6.
According to court documents and evidence presented at a June 2021 trial, the defendants used dozens of fake, stolen, or synthetic identities — including names belonging to elderly or deceased people and foreign exchange students who briefly visited the United States years ago and never returned — to submit fraudulent applications for approximately 150 PPP and EIDL loans. In support of the fraudulent loan applications, the defendants also submitted false and fictitious documents to lenders and the Small Business Administration (SBA), including fake identity documents, tax documents, and payroll records. The defendants then used the fraudulently obtained funds as down payments on luxury homes in Tarzana, Glendale, and Palm Desert. They also used the funds to buy gold coins, diamonds, jewelry, luxury watches, fine imported furnishings, designer handbags, clothing, and a Harley-Davidson motorcycle. The conspirators sought to fraudulently obtain more than $20 million in COVID-19 relief funds.
“The defendants engaged in a scheme to steal critical relief funds intended to assist small businesses during the pandemic,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “This case, involving an egregious example of pandemic relief fraud, was the first in the country to go to trial. The Department of Justice, along with our law enforcement partners, will continue to use every available tool to combat and prevent criminals from exploiting national emergencies for their personal benefit.”
“The defendants used the COVID-19 crisis to steal millions of dollars in much-needed government aid intended for people and businesses suffering from the economic effects of the worst pandemic in a century,” said U.S. Attorney Tracy L. Wilkison for the Central District of California. “These sentences reflect our office’s determination to root out and punish wrongdoers who use national emergencies to defraud the government and the American taxpayer.”
“The defendants in this case flagrantly defrauded government aid programs at the expense of struggling small businesses, and then used the illicit funds on luxuries for themselves,” said Acting Assistant Director Jay Greenberg of the FBI’s Criminal Investigative Division. “This sentencing demonstrates the steadfast work of the FBI and our partners in bringing to justice individuals who use national emergencies as an opportunity for criminal activity.”
“Conspiring to rob victims of their identities and subsequently, taxpayer funds vital to the survival of the nation’s small businesses will be met with justice,” said SBA Inspector General Hannibal “Mike” Ware. “The Office of Inspector General (OIG) will work tirelessly with its law enforcement partners to unmask those responsible. I want to thank the Department of Justice and our law enforcement partners for their dedication and pursuit of justice.”
“This criminal syndicate pilfered millions of dollars in COVID-19 relief funds that were intended to aid small businesses during this unprecedented pandemic,” said Special Agent in Charge Ryan L. Korner of the IRS-Criminal Investigation, Los Angeles Field Office. “When our nation was at its most vulnerable, these individuals thought only about lining their own pockets. These sentences reflect the seriousness of these crime. The IRS and our law enforcement partners will continue to pursue these deplorable frauds and put the perpetrators in prison where they belong.”
“The Office of Inspector General is proud to work with our partners in law enforcement to prevent, detect, and deter attempts to perpetrate fraud in the Federal Home Loan Bank System and steal the assistance intended for small business owners and employees under this important part of the CARES Act,” said Special Agent in Charge Jay N. Johnson of the Federal Housing Finance Agency, Office of Inspector General’s Western Region. “The fact that the team was able to investigate this case during the height of the pandemic, at great risk to themselves and their loved ones, is a testament to their commitment to this country and federal service.”
Defendants Richard Ayvazyan, Terabelian, Artur Ayvazyan, and Vahe Dadyan were convicted after a jury trial on June 25. Prior to the verdict, Grigoryan pleaded guilty on June 7 to one count of bank fraud and one count of aggravated identity theft; Paronyan pleaded guilty on June 11 to one count of wire fraud; and Hayrapetyan pleaded guilty on June 21 to one count of conspiracy to commit money laundering. Tamara Dadyan pleaded guilty on June 14 to one count of conspiracy to commit wire fraud and bank fraud, one count of conspiracy to commit money laundering, and one count of aggravated identity theft but has since moved to withdraw her plea. That motion is still pending.
Richard Ayvazyan and Terabelian absconded prior to sentencing and were sentenced by Judge Wilson in absentia. They remain fugitives. The FBI is offering a reward of up to $20,000 for information leading to the arrest of Ayvazyan and Terabelian.
Trial Attorney Christopher Fenton of the Justice Department’s Fraud Section and Assistant U.S. Attorneys Scott Paetty, Brian Faerstein, and Catherine Ahn of the Central District of California are prosecuting the case. Assistant U.S. Attorney Dan Boyle of the Central District of California is handling forfeiture.
The Fraud Section leads the Criminal Division’s prosecution of fraud schemes that exploit the PPP. Since the inception of the CARES Act, the Fraud Section has prosecuted over 150 defendants in more than 95 criminal cases and has seized over $75 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at https://www.justice.gov/criminal-fraud/ppp-fraud.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
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.
San Fernando Valley Family Members Sentenced to Years in Prison for Fraudulently Obtaining Tens of Millions of Dollars in COVID ReliefRead the Press Release
LOS ANGELES – Three members of a San Fernando Valley family have been sentenced – two of them in absentia after they fled justice following their convictions at trial – to years in federal prison for scheming to fraudulently obtain more than $20 million in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) COVID-19 relief funds.
On Monday, United States District Judge Stephen V. Wilson handed down prison sentences to the Encino residents:
- Richard Ayvazyan, 43, who was ordered to serve 17 years;
- Marietta Terabelian, 37, Richard Ayvazyan’s wife, who was sentenced to six years; and
- Artur Ayvazyan, 41, Richard Ayvazyan’s brother, who was ordered to serve five years in federal prison.
At Monday’s sentencing hearing, Judge Wilson said he could not recall a fraud case conducted in such a “callous, intentional way without any regard for the law.” Judge Wilson further described Richard Ayvazyan as “an endemic, cold-hearted fraudster with no regard for the law” and someone who “views fraud as an achievement.”
“The defendants used the COVID-19 crisis to steal millions of dollars in much-needed government aid intended for people and businesses suffering from the economic effects of the worst pandemic in a century,” said United States Attorney Tracy L. Wilkison. “These sentences reflect our office’s determination to root out and punish wrongdoers who use national emergencies to defraud the government and the American taxpayer.”
“The defendants engaged in a scheme to steal critical relief funds intended to assist small businesses during the pandemic,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “This case, involving an egregious example of pandemic relief fraud, was the first in the country to go to trial. The Department of Justice, along with our law enforcement partners, will continue to use every available tool to combat and prevent criminals from exploiting national emergencies for their personal benefit.”
“The defendants lived a lavish lifestyle by defrauding the government at the expense of small businesses and American taxpayers already facing financial and pandemic-related hardship," said Kristi K. Johnson, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The FBI is actively investigating the whereabouts of fugitives Terabelian and Ayvazyan and will pursue them until they are taken into custody to pay for their crimes.”
The FBI is offering a reward of up to $20,000 for information leading to the arrest of Richard Ayvazyan and Terabelian, who allegedly cut their tracking bracelets on August 29 and went on the run while awaiting sentencing in this case. Judge Wilson sentenced them in absentia, and they remain fugitives from justice.
At the end of an eight-day trial, a federal jury on June 25 found Richard Ayvazyan, Terabelian, and Artur Ayvazyan guilty of one count of conspiracy to commit bank fraud and wire fraud, 11 counts of wire fraud, eight counts of bank fraud and one count of conspiracy to commit money laundering. Richard Ayvazyan and his brother were also convicted of aggravated identity theft.
On June 28, the jury further found that Richard Ayvazyan and Terabelian must forfeit bank accounts, jewelry, watches, gold coins, three residential properties and approximately $450,000 in cash.
Judge Wilson previously sentenced four defendants in this case:
- Manuk Grigoryan, 28, of Sun Valley, was sentenced on October 25 to six years in prison;
- Edvard Paronyan, 41, of Granada Hills, was sentenced on September 27 to 30 months in prison;
- Vahe Dadyan, 42, of Glendale, was sentenced on October 18 to 12 months and one day in prison; and
- Arman Hayrapetyan, 39, of Glendale, was ordered on October 18 to serve 10 months of probation.
Tamara Dadyan, 42, of Encino, is scheduled to be sentenced on December 6, but Judge Wilson has not yet ruled on a motion to withdraw her guilty plea.
According to court documents and evidence presented at trial, the defendants used dozens of fake, stolen or synthetic identities – including names belonging to elderly or deceased people and foreign exchange students who briefly visited the United States years ago and never returned – to submit fraudulent applications for approximately 150 PPP and EIDL loans. In support of the fraudulent loan applications, the defendants also submitted false and fictitious documents to lenders and the Small Business Administration (SBA), including fake identity documents, tax documents and payroll records. The defendants then used the fraudulently obtained funds as down payments on luxury homes in Tarzana, Glendale and Palm Desert. They also used the funds to buy gold coins, diamonds, jewelry, luxury watches, fine imported furnishings, designer handbags, clothing and a Harley-Davidson motorcycle. The conspirators sought to fraudulently obtain more than $20 million in COVID-19 relief funds.
“This criminal syndicate pilfered millions of dollars in COVID-19 relief funds that were intended to aid small businesses during this unprecedented pandemic,” said Special Agent in Charge Ryan L. Korner of the IRS-Criminal Investigation, Los Angeles Field Office. “When our nation was at its most vulnerable, these individuals thought only about lining their own pockets. These sentences reflect the seriousness of these crime. The IRS and our law enforcement partners will continue to pursue these deplorable frauds and put the perpetrators in prison where they belong.”
“Conspiring to rob victims of their identities and subsequently, taxpayer funds vital to the survival of the nation’s small businesses will be met with justice,” said SBA Inspector General Hannibal “Mike” Ware. “OIG will work tirelessly with its law enforcement partners to unmask those responsible. I want to thank the Department of Justice and our law enforcement partners for their dedication and pursuit of justice.”
“The Office of Inspector General is proud to work with our partners in law enforcement to prevent, detect, and deter attempts to perpetrate fraud in the Federal Home Loan Bank System and steal the assistance intended for small business owners and employees under this important part of the CARES Act,” said Special Agent in Charge Jay N. Johnson of the Federal Housing Finance Agency, Office of Inspector General’s Western Region. “The fact that the team was able to investigate this case during the height of the pandemic, at great risk to themselves and their loved ones, is a testament to their commitment to this country and federal service.”
The FBI, IRS Criminal Investigation, the Small Business Administration’s Office of Inspector General, and the Federal Housing Finance Agency Office of Inspector General investigated this matter.
Assistant United States Attorneys Scott Paetty and Catherine S. Ahn of the Major Frauds Section, Assistant United States Attorney Brian R. Faerstein of the Environmental and Community Safety Crimes Section, Assistant United States Attorney Daniel G. Boyle of the Asset Forfeiture Section, and Trial Attorney Christopher Fenton of the Fraud Section of the Justice Department’s Criminal Division are prosecuting this case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. 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.
Former Realtor Sentenced to 4 Years in Federal Prison for Running Nearly $4 Million Fraud that Scammed Distressed HomeownersRead the Press Release
LOS ANGELES – A former realtor and longtime fugitive was sentenced today to 48 months in federal prison for scheming to defraud distressed homeowners out of nearly $4 million by falsely promising them help with their mortgages, but instead pocketing their money, causing many victims to lose their homes.
Ernesto Diaz, 66, a former realtor and former El Monte resident, was sentenced by United States District Judge Stephen V. Wilson, who also ordered Diaz to pay $3,061,159 in restitution to his victims.
At the conclusion of a three-day trial, a federal jury on September 13 found Diaz guilty of one count of conspiracy, two counts of mail fraud affecting a financial institution, and one count of mail fraud. The jury acquitted him on one mail fraud count.
Diaz, who fled to Mexico after entering into a plea agreement in this case in 2012, pleaded guilty on September 9 to a separate count of failure to appear in court while released on bond. He was a fugitive for seven years until the FBI arrested him in October 2019. A federal grand jury in February 2020 returned a superseding indictment against him, which led to this year’s trial.
According to evidence presented at his trial, from March 2010 to March 2011, Diaz and co-defendant Maria Marcella Gonzalez, 51, of Whittier, ran a fraudulent mortgage-elimination program that operated in Montebello under the names “Crown Point Education Inc.” and “Crown Point Inc.” Diaz and Gonzalez advertised to distressed homeowners that the Crown Point program could eliminate whatever balance existed on their mortgages.
Several homeowners testified at trial that they had fallen behind on their mortgage payments during the financial crisis of 2007-08 because of workplace injuries, medical bills and other personal circumstances. In exchange, the homeowners paid Crown Point thousands of dollars for its services, typically with a partial payment demanded at the program’s inception, followed by monthly fees.
Diaz and Gonzalez offered seminars describing the Crown Point program to prospective customers but refused to specify – citing the need to protect the company’s proprietary information – how they purportedly eliminated existing mortgages.
At the seminars, Diaz and Gonzalez guaranteed that the Crown Point program would be successful and had cleared the mortgage problems of past customers. Diaz and Gonzalez also met personally with customers and prospective customers to make similar promises of success, assuage concerns of customers who had seen no signs of success, and demand additional payments. Diaz and Gonzalez often counseled customers to cease mortgage payments to their lenders altogether and to pay Crown Point instead.
After clients signed up for the program and paid a fee – usually $15,000 per property – Diaz and Gonzalez directed others to mail packets of information to the clients’ lenders that falsely asserted that the client’s mortgages were invalid and that mortgages would be extinguished if the lenders did not respond. Many of the mailed documents were notarized to create the appearance of legitimacy, at times using the notary stamp of Diaz’s own sister without her knowledge or consent.
In fact, Crown Point had no success in eliminating customer mortgage debt and many customers – including Diaz’s brother – lost their homes.
One integral part of the scheme involved the filing of unauthorized bankruptcy petitions to delay the foreclosure process, leaving victims with the impression that the Crown Point program was working and inducing them to continue making payments, but damaging clients’ credit ratings in the process.
“Many, though not all, of [Diaz’s] victims could have qualified for loan modifications or legitimate foreclosure forbearance programs to save their homes but, in reliance on [Diaz’s] lies, were never able to avail themselves of these options,” prosecutors wrote in a sentencing memorandum.
Gonzalez pleaded guilty in July 2015 to a two-count superseding information charging her with making a false statement in a bankruptcy declaration. Judge Wilson sentenced her to 70 months in federal prison.
The FBI investigated this matter.
Assistant United States Attorneys Alexander B. Schwab of the Major Frauds Section and Julia Hu of the General Crimes Section prosecuted this case.
Two L.A.-Area Men Found Guilty of Federal Charges for Collecting Ransom Proceeds for Cross-Border Kidnapping ConspiracyRead the Press Release
LOS ANGELES – A federal jury today found two Los Angeles-area men guilty of collecting ransom payments for a criminal conspiracy in which multiple victims were kidnapped near the United States-Mexico border.
Edgar Adrian Hernandez Lemus, 23, of the Central-Alameda neighborhood in Los Angeles, was found guilty of one count of conspiracy and two counts of receiving money from a ransom demand for the release of a kidnapped person. Junior Almendarez Martinez, 23, of Watts, was found guilty of two counts of receiving money from a ransom demand for the release of a kidnapped person.
According to evidence presented at their three-day trial, the kidnapping incidents targeted victims who either were waiting or attempting to cross the border from Mexico into the United States. In each incident, the kidnappers offered to assist in smuggling the victims across the border from Mexico, but instead would hold them for ransom. The kidnappers insisted on ransom payments from the victim’s family members to release the victims.
From March 29 to June 1, 2021, the kidnappers used specific sections at Walmart and other stores in Southern California to meet with the family members to collect the ransom payments. After the payments were made, however, the kidnappers demanded additional money rather than releasing the victims.
Lemus and Almendarez traveled to these stores to pick up ransom payments from the family members of the kidnapped victims. During many of the ransom pickups, the family members of the kidnapped victims remained on the phone with members of the conspiracy who would direct them towards Lemus – who was often on the phone during the ransom pickups. At these stores, Lemus and Almendarez would enter and collect, or attempt to collect, ransom payments from kidnapped victims’ family members. The ransom payments picked up by defendants ranged from $12,000 to $30,000 in cash.
After the ransom pickups, Lemus and Almendarez would use Uber to transport the money, before eventually sending money to co-conspirators in Mexico via MoneyGram. The victims later were assaulted, drugged and released.
United States District Judge John F. Walter has scheduled a January 10, 2022 sentencing hearing, at which time Lemus will face a statutory maximum sentence of 11 years in federal prison and Almendarez will face a statutory maximum sentence of eight years in federal prison.
A co-defendant and fellow ransom collector, Francisco Javier Hernandez Martinez, 21, of the Central-Alameda neighborhood in Los Angeles, pleaded guilty on September 7 to one count of conspiracy. He faces a statutory maximum sentence of five years in federal prison at his sentencing hearing, which is scheduled for November 29.
The FBI investigated this matter. The South Gate Police Department and the Santa Barbara County Sheriff’s Office provided substantial assistance.
Assistant United States Attorneys Jeffrey M. Chemerinsky and Joseph D. Axelrad of the Violent and Organized Crime Section are prosecuting this case.
Santa Clarita Man Sentenced to More Than 4 Years in Prison for Scheming to Fraudulently Obtain $1.8 Million in COVID-Relief FundsRead the Press Release
LOS ANGELES – A Santa Clarita Valley man was sentenced today to 51 months in federal prison for scheming to fraudulently obtain approximately $1.8 million in COVID-19 relief guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) program and the Paycheck Protection Program (PPP).
Hassan Kanyike, 30, of Santa Clarita, was sentenced by United States District Judge Virginia A. Phillips, who also ordered him to pay a $20,000 fine and $1,302,550 in restitution to the SBA and four victim lenders. Kanyike pleaded guilty on March 29 to one count of wire fraud.
From April 2020 to June 2020, Kanyike submitted six fraudulent PPP loan applications and two fraudulent EIDL applications. The applications sought funds to purportedly pay the salaries of employees whom he claimed worked for two of his businesses. Kanyike successfully obtained approximately $1 million through four PPP loans, and another $300,000 through two EIDL loans.
In support of the fraudulent PPP loan applications, Kanyike submitted fake federal tax filings and payroll reports for a used-car business, the Van Nuys-based Falcon Motors. For example, in one loan application, Kanyike falsely claimed the business had 26 employees and an average monthly payroll of $168,000, and he submitted a fabricated IRS tax form claiming Falcon Motors had paid $2,022,300 to employees in 2019.
In reality, Falcon Motors had no employees on payroll. Kanyike further admitted that he obtained additional Employer Identification Numbers from the IRS in April and May 2020 so he could apply for multiple loans for the same used-car business. Kanyike then used a substantial portion of the PPP loan proceeds for his own personal benefit.
Kanyike schemed to fraudulently obtain eight loans totaling approximately $1.8 million, of which six loans worth a total of $1,302,550 were approved.
At the time of his arrest in December 2020, Kanyike had transferred approximately $762,000 to Uganda, his country of citizenship, from one of the business accounts that had received the loan proceeds, in violation of the terms of the PPP and EIDL program.
Homeland Security Investigations and the Treasury Inspector General for Tax Administration investigated the case.
Assistant United States Attorney Richard E. Robinson of the Major Frauds Section and Assistant Chief William Johnston of the Criminal Division’s Fraud Section at the Department of Justice prosecuted this case.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Pasadena Man Who Cyberstalked and Made Threats to Injure, Rape and Kill Sentenced to More Than 3 Years in Federal PrisonRead the Press Release
LOS ANGELES – A British national was sentenced today to 37 months in federal prison for making a series of graphic online threats to harm, rape and kill.
Samuel Trelawney Hughes, 33, of Pasadena, was sentenced by United States District Judge Dale S. Fischer, who described his conduct as “horrendous.” Hughes pleaded guilty in October 2020 to one count of stalking, one count of witness tampering and one count of making threats by interstate communication.
From May 2019 to June 2020, Hughes stalked and sent anonymous threatening communications to multiple victims, according to court documents. For example, in October 2019, after one victim reported prior threats from Hughes to law enforcement authorities, Hughes sent the victim an email stating in part: “someone I can guarantee will come out and first bash you[r] head in, rape you slash your throat and burn your car and house.”
Hughes’ conduct often followed a pattern. He would meet a victim – usually a woman – at a networking event or through his employment. After the event or after having been employed for a period, he would communicate with the victim from an email or social media account, seeking further social interaction with the victim or inviting the victim to meet him at a future date in a one-on-one setting. When the victim would not reciprocate [Hughes’] desire for further social interaction and would indicate that she or he no longer wished to interact with him, he would then send anonymous threats to the victim, often from anonymous online accounts he used and created to disguise his identity.
He sent the threatening communications via numerous email and social media accounts, as well as through the U.S. mail. The messages sent to the victims were direct, graphic and disturbing in nature, and they contained threats to injure, rape and kill victims.
After being contacted by both federal and state law enforcement officers on multiple occasions regarding the threatening communications, Hughes continued to send electronic communications and letters threatening to injure, rape and kill victims who had reported his threats to law enforcement. In his communications to some victims, Hughes threatened that contacting the police would lead to the injury or death of the victim or the victims’ family members.
“[Hughes] used his computer skills to terrorize these victims and their families with harassment and death threats from anonymized accounts,” prosecutors argued in a sentencing memorandum. “His use of anonymizing techniques and planning allowed him to avoid identification – and punishment – for months while he continued his online harassment campaigns. [Hughes’] conduct traumatized the victims, putting many in fear for their lives and the lives of family members. Some feared going to work or even leaving their homes.”
The FBI investigated this matter.
Assistant United States Attorney Lauren Restrepo of the Cyber and Intellectual Property Crime Section prosecuted this case.
South Bay Man Sentenced to over 8 Years in Prison for Movie Investment Scam and for Fraudulently Selling House Bought with Illicit ProceedsRead the Press Release
LOS ANGELES – A South Bay man was sentenced today to 97 months in federal prison for defrauding Asian investment firms out of $14 million by falsely claiming the money would be used to produce a feature film distributed by Netflix, then, while out on bond, illegally selling the Manhattan Beach house he purchased with his ill-gotten gains by forging the signatures of his victims’ lawyers.
Adam Joiner, 43, of Manhattan Beach, was sentenced by United States District Judge André Birotte Jr., who also ordered him to pay $14 million in restitution. Joiner pleaded guilty in October 2019 to one count of wire fraud and, in December 2019, to an additional count of wire fraud.
Joiner used fake documents and forged signatures to raise millions of dollars from foreign investment firms based in South Korea and China for a movie project he said would be called “Legends” and would depict American folklore icons such as Paul Bunyan and John Henry. But Joiner’s “representations proved to be as fictitious as the legendary figures his film was supposed to depict,” prosecutors wrote in a sentencing memo filed with the court.
Joiner, who operated a company called Dark Planet Pictures, LLC, defrauded Korea Investment Global Contents Fund, a South Korean investment fund whose assets are managed by Korean Investment Partners Co. Ltd., which suffered $8 million in losses. Joiner also defrauded a Chinese investment firm called Star Century Pictures Co. Ltd., and its affiliate PGA Yungpark Capital Ltd., which invested $6 million into “Legends.”
As part of the scheme, Joiner falsely told the investors that Netflix had agreed to distribute the picture, a claim Joiner supported with a bogus distribution agreement that contained the forged signature of a Netflix executive. Joiner subsequently told the investors that he had terminated the distribution agreement with Netflix and had secured a new agreement with Amblin Partners, all of which was false.
Approximately $5.2 million of victim investors’ money was used to purchase Joiner’s Manhattan Beach residence and another $4.3 million was transferred to a bank account held by Joiner that may be linked to developing an unrelated film. Prosecutors noted in their sentencing memo that, while misappropriating the victim investors’ money, Joiner “continued to dissemble, concocting tales of contract negotiations with director Guillermo del Toro and a new distribution agreement with Amblin Partners in an effort to lull his victims into complacency.”
After signing his plea agreement but before he entered his guilty plea in this case, Joiner in October 2019 sold his Manhattan Beach house he had purchased with the proceeds of his fraud. Before doing so, he fraudulently removed the liens his victims had placed on the house by filing documents bearing the forged signatures of attorneys who represented the victims. Caught again, Joiner entered an additional guilty plea to wire fraud in December 2019.
As part of the case, the government seized $5,572,581 from accounts belonging to Joiner, $4 million of which has already been returned to KIGCF.
The FBI investigated this matter.
Assistant United States Attorneys Alexander B. Schwab of the Major Frauds Section and Jonathan S. Galatzan, Chief of the Asset Forfeiture Section, prosecuted these cases. Assistant United States Attorney Robert I. Lester of the Civil Division’s Financial Litigation Section handled the bond forfeiture matter in this case.
Arizona Man Agrees to Plead Guilty to Distributing Fentanyl in Connection with the Overdose Death of Hip-Hop Artist Mac MillerRead the Press Release
LOS ANGELES – An Arizona man has agreed to plead guilty to a federal criminal charge for supplying counterfeit pharmaceutical pills containing fentanyl to the drug dealer accused of selling them to rapper Mac Miller, who soon afterward suffered a fatal overdose, the Justice Department announced today.
Ryan Michael Reavis, 38, formerly of West Los Angeles and who moved to Lake Havasu, Arizona in 2019, has agreed to plead guilty to a single-count superseding information charging him with distribution of fentanyl.
According to a plea agreement filed today, on September 4, 2018, at the direction of co-defendant Stephen Andrew Walter, 48, of Westwood, Reavis knowingly distributed counterfeit oxycodone pills to co-defendant Cameron James Pettit, 30, of West Hollywood.
Reavis admitted in his plea agreement to knowing that the pills contained fentanyl or some other controlled substance. In fact, the pills contained fentanyl. Shortly after Reavis distributed the fentanyl-laced pills to Pettit, Pettit distributed the pills to 26-year-old rapper Malcolm James McCormick – who recorded and performed under the name Mac Miller – approximately two days before McCormick suffered a fatal drug overdose in Studio City on September 7, 2018.
Last month, Walter signed a plea agreement in which he agreed to plead guilty to one count of distribution of fentanyl. Both Walter and Reavis are expected to plead guilty in the coming weeks before United States District Judge Otis D. Wright II in Los Angeles.
The case against Pettit is pending.
The investigation into this matter was conducted by the High Intensity Drug Trafficking Area’s (HIDTA) Opioid Response Team, which operates under the direction of the DEA. The Los Angeles Police Department provided substantial assistance in this matter.
Assistant United States Attorneys Solomon Kim of the Terrorism and Export Crimes Section and Elia Herrera of the General Crimes Section are prosecuting this case.
Federal Correctional Officer Pleads Guilty to Making False Statements About Engaging in Unlawful Sexual Activity with Jail InmateRead the Press Release
LOS ANGELES – A correctional officer at the federal jail in downtown Los Angeles pleaded guilty today to a felony charge for lying to investigators about his sexual activity with an inmate who was under his care and supervision.
Abel Concho, 53, of East Los Angeles, pleaded guilty to one count of making false statements.
According to his plea agreement, Concho was employed by the Bureau of Prisons (BOP) as a correctional officer at the Metropolitan Detention Center (MDC) in Los Angeles. The victim in this case was an MDC inmate under Concho’s supervision from June 2010 to February 2011.
On July 28, 2021, Concho made a series of false statements during an administrative interview with federal investigators, including that he “never” had sexual contact with one MDC inmate, when in fact Concho engaged in sexual contact with the victim on approximately 35 different occasions. Concho, on multiple occasions, also lied that he “never had sexual contact” with any MDC inmates, Concho admitted in the plea agreement.
After initially denying he had any sexual contact with the victim, Concho then falsely stated that he had sexual intercourse with the victim just “once (or) twice” that he could recall. Concho also falsely stated on multiple occasions that he did not provide a cellphone to the victim to take nude photographs for him. In fact, he illegally smuggled a cellphone into MDC and provided that cellphone to the victim to take nude photographs for him, which the victim then did.
Concho admitted in his plea agreement that he knew it was a federal crime and an offense that could lead to termination for a BOP employee to knowingly engage in any sexual act with a person in official detention and under his custodial, supervisory and disciplinary authority in a federal facility. Concho admitted he knew that under the law and pursuant to the BOP employee code of conduct, sexual activity between staff and inmates could not be considered consensual and was not permitted. In addition to the harm it caused inmates, staff sexual acts with inmates threatened the safety and security of the prison and betrayed the trust and confidence placed in the BOP by the public, Concho admitted.
He further admitted he knew it was a federal crime and an offense that could lead to termination for a BOP employee to smuggle contraband, including cellphones, into MDC for inmates’ use.
As part of the plea agreement, Concho agreed not to seek employment in any law enforcement capacity or a position that requires carrying a firearm, to complete 100 hours of community service, and to pay $9,500 in restitution to the victim.
United States District Judge R. Gary Klausner has scheduled a February 7, 2022 sentencing hearing, at which time Concho will face a statutory maximum sentence of five years in federal prison.
The United States Department of Justice Office of Inspector General and the FBI investigated this matter.
Assistant United States Attorney Veronica Dragalin of the Public Corruption and Civil Rights Section is prosecuting this case.
Bicycle Casino Agrees to Pay $500,000 Settlement and Submit to Increased Review of Anti-Money Laundering Compliance ProgramRead the Press Release
NON-PROSECUTION AGREEMENTLOS ANGELES – To resolve an investigation into alleged violations of the anti-money laundering provisions of the Bank Secrecy Act (BSA), the partnership that operates the Bicycle Hotel & Casino in Bell Gardens has agreed to pay $500,000 and undergo enhanced review and reporting requirements designed to prevent future violations of federal law.
According to a Non-Prosecution Agreement (NPA) with federal prosecutors, the Bicycle accepted responsibility for failing to properly file reports for a foreign national who conducted millions of dollars in cash transactions at the casino in 2016. The casino failed to file Currency Transaction Reports (CTRs) and Suspicious Activity Reports for Casinos (SARCS) that are required under the BSA, a law intended to thwart money laundering.
Federal prosecutors entered into the NPA in recognition of the Bicycle’s remedial efforts to strengthen its anti-money laundering program, as well as its acceptance of responsibility, cooperation with authorities during this investigation, and agreement to make a $500,000 payment.
Under the BSA, casinos like the Bicycle are required to implement and maintain programs designed to prevent criminals from using the casino to launder the large sums of cash that illegal activity can generate. For example, casinos must record and report to the government the details of transactions involving more than $10,000 in cash by any one gambler in a 24-hour period. The BSA also requires casinos to file reports documenting suspicious activity, such as efforts designed to avoid the filing of accurate currency transaction reports.
As part of the NPA, the Bicycle admitted that a “high roller” Chinese national gambled at the casino approximately 100 times over an eight-month period in 2016, playing high-limit baccarat in a VIP room with huge sums of cash that on some occasions he transported to and from the casino in duffle bags. A Statement of Facts in the NPA also chronicles some of the high roller’s marathon play sessions, such as one occasion where he withdrew $2 million from his player account at approximately 2:45 p.m. and played in a VIP room through 1:20 a.m. the following morning.
When conducting cash transactions, the high roller relied on an assistant to conduct over $100 million in cash-in or cash-out transactions on his behalf. The Bicycle admitted in the agreement that, from at least January 7, 2016, through July 27, 2016, it improperly filed currency transaction reports in the name of the assistant when it should have referenced the high roller in those reports. The casino also failed to file any SARCs during this period.
Bicycle staff informed senior management in July 2016 of the failure to file CTRs or SARCs in the high roller’s name, according to the Statement of Facts. The Bicycle then took various remedial actions, including amending the CTRs to indicate that the cash transactions were done on the high roller’s behalf, regularly filing SARCs for the high roller based on the suspicious nature of his source of funds, supplementing its compliance department with additional staff and resources, and creating an Anti-Money Laundering Committee comprising members of senior management to meet regularly to discuss BSA compliance issues.
Under the terms of the agreement, the Bicycle agreed to pay the United States $500,000, which represents the revenue the Bicycle made from the high roller. The Bicycle must also implement additional review and reporting requirements to assure BSA compliance, including an audit by a third party and regular reporting to the U.S. Attorney’s Office. The agreement also requires the Bicycle to cooperate with law enforcement in any additional investigations or proceedings arising from the conduct described in the agreement’s statement of facts.
Criminal investigators with the California Department of Justice’s Bureau of Gambling Control, IRS Criminal Investigation, and Homeland Security Investigations investigated this matter.
Assistant United States Attorney Alexander B. Schwab of the Major Frauds Section negotiated the resolution of this investigation.
Doctor Who Distributed Unapproved Cancer Treatment Drug Convicted of More Than Two Dozen Felony ChargesRead the Press Release
SANTA ANA, California – A physician has been found guilty of 26 felony charges for fraudulently distributing an unapproved cancer treatment over a six-year period, charging up to $2,000 per bottle, the Justice Department announced today.
Benedict Liao, 81, a.k.a. “Wada Masao,” and “Masao A. Wada,” of Fullerton, was found guilty on Tuesday afternoon of seven counts of wire fraud, 11 counts of selling a misbranded drug and eight counts of selling an unapproved new drug.
According to evidence presented at his five-day trial, Liao operated the Oeyama-Moto Cancer Research Foundation, which had offices in Monterey Park and, later, in West Covina.
Using the alias "Masao A. Wada, M.D." Liao submitted to the United States Food and Drug Administration in 2011 and 2012 an Investigational New Drug (IND) application in which he stated that he planned to engage in clinical trials of a product called Allesgen, which he told FDA and stated in promotional material was intended to treat and cure many types of cancer. FDA received these applications and both times informed Liao that the IND applications for Allesgen had been placed on a full clinical hold due to deficiencies in the submissions.
The FDA required that a drug distributed under an IND application bear a label stating that it was a “New Drug – Limited by Federal…law to investigational use."
Liao told FDA that he would place a label on Allesgen with such a statement. Instead of doing so, Liao manufactured Allesgen in Fullerton and distributed the unapproved drug with a label calling Allesgen a “supplement,” not a drug, and this label stated that it “had not been evaluated by the FDA” and was not intended to treat any disease.
From July 2012 through June 2014, Liao sold and distributed Allesgen at a price generally set at $2,000 per bottle, plus shipping, to customers in various states and in foreign countries, because of which he received at least approximately $850,000 in revenue. From approximately July 2014 through January 2018, Liao continued to sell and distribute additional bottles of Allesgen to customers in various states and in foreign countries, as a result of which he received additional revenue totaling approximately $765,000.
The jury found that Liao schemed to defraud buyers of Allesgen by failing to inform them it was not an approved cancer treatment, that FDA had placed it on hold, barring any distribution of it, that he was not allowed to charge anything for it, and that it could have side effects that were unpredictable and could be serious. Several Allesgen buyers testified during the trial, described sending tens of thousands of dollars to Liao, explained that the information Liao did not disclose would have been important to know, and one said that he would not have purchased it had he been told that it was unapproved.
United States District Judge James V. Selna has scheduled a February 14, 2022 sentencing hearing, at which time Liao will face a statutory maximum sentence of 20 years in federal prison for each wire fraud count and three years’ imprisonment for each of the 19 additional counts.
The FDA investigated this matter.
Assistant United States Attorney Lawrence E. Kole of the Santa Ana Branch Office is prosecuting this case.
San Fernando Valley Man Who Plotted Bombing of Long Beach Rally Sentenced to 25 Years in Federal PrisonRead the Press Release
A California man who planned the bombing of a political rally in Long Beach, California, in 2019 was sentenced yesterday to 25 years in federal prison.
On Aug. 11, Mark Steven Domingo, 28, of Reseda, was found guilty of one count of providing material support to terrorists and one count of attempted use of a weapon of mass destruction at the conclusion of a five-day jury trial. Domingo has been in federal custody since April 2019.
According to court documents and the evidence presented at trial, the investigation into Domingo was prompted by Domingo’s online posts and conversations in an online forum, in which he expressed support for violence, specifically a desire to seek violent retribution for attacks against Muslims, and a willingness to become a martyr. After considering various attacks – including targeting Jewish people, churches and police officers – Domingo decided to bomb a rally scheduled to take place in Long Beach in April 2019.
As part of the plot, Domingo asked a confederate – who actually was working with the FBI as part of the investigation – to invite a bomb-maker into the scheme. Domingo then purchased and provided to the confederate and the bomb-maker – who in fact was an undercover law enforcement officer – several hundred 3½-inch nails to be used as shrapnel for the bombs. Domingo specifically chose those nails because they were long enough to penetrate organs in the human body.
Leading up to the attack, Domingo called for an event similar to the October 2017 mass shooting in Las Vegas. Following an attack on Muslims in New Zealand in March 2019, Domingo called for retribution in an online post.
Domingo selected the Long Beach rally as his target and, in April 2019, drove his confederate and the undercover officer to Long Beach to scout the location he planned to attack. While there, Domingo discussed finding the most crowded areas to place the bombs so he could kill the most people. On April 26, 2019, Domingo received what he thought were two live bombs, but were actually inert explosive devices delivered by an undercover law enforcement officer. He was arrested that same day with one of the bombs in his hands.
“At trial, [Domingo] testified and repeatedly affirmed that he intended to commit mass murder in March and April 2019,” prosecutors wrote in a sentencing memorandum that recommended a sentence of life in prison. “He admitted that the [confidential informant] stopped him from committing at least one murder in April 2019 by encouraging him to be patient. Finally, he admitted that he was excited when he learned that the [confidential informant] had access to an individual who could construct a bomb, and that he was the one who chose to attack the rally, chose to use the bombs, and chose to go through with the plot to commit mass murder, right up until the moment of his arrest.”
The FBI’s Joint Terrorism Task Force (JTTF) investigated this matter. JTTF members who participated in the investigation include the FBI, the Los Angeles Police Department, the Naval Criminal Investigative Service, the Los Angeles County Sheriff's Department and the Long Beach Police Department.
Assistant U.S. Attorneys Reema M. El-Amamy and David T. Ryan of the Central District of California and Trial Attorneys Lauren Goddard and Joshua Champagne of the National Security Division’s Counterterrorism Section prosecuted this case.
San Fernando Valley Man Who Plotted the Bombing of Long Beach Rally Sentenced to 25 Years in Federal PrisonRead the Press Release
LOS ANGELES – A San Fernando Valley man who planned the bombing of a political rally in Long Beach in 2019 was sentenced today to 25 years in federal prison.
Mark Steven Domingo, 28, of Reseda, was sentenced by United States District Judge Stephen V. Wilson.
At the conclusion of a five-day trial, a federal jury on August 11 found Domingo guilty of one count of providing material support to terrorists and one count of attempted use of a weapon of mass destruction.
Judge Wilson sentenced Domingo to 15 years’ imprisonment on the providing material support count and 25 years in federal prison for attempted use of a weapon of mass destruction – both sentences to be served concurrently. The court also ordered Domingo to be placed on supervised release for a term of 20 years once Domingo completes his prison sentence.
Domingo has been in federal custody since his arrest in April 2019.
“This defendant planned a mass-casualty terrorist attack and repeatedly admitted at trial that he had a desire to kill as many people as possible,” said Acting United States Attorney Tracy L. Wilkison. “Had this bombing been successful, many innocent people would have been murdered, yet this defendant has shown no remorse for his conduct, nor has he renounced the extremist ideology that motivated his horrific plot.”
“Mr. Domingo represents the very real threat posed by homegrown violent extremists in the United States,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Domingo’s plans and a potentially catastrophic attack were thwarted when the Joint Terrorism Task Force learned of his intentions in advance and carried out this successful undercover operation with our partners. This case was the result of a collaborative effort with the Naval Criminal Investigative Service, the Los Angeles Police Department, the Los Angeles County Sheriff's Department, and the Long Beach Police Department.”
The investigation into Domingo was prompted by his online posts and conversations in an online forum in which he expressed support for violence, specifically a desire to seek violent retribution for attacks against Muslims, as well as a willingness to become a martyr. After considering various attacks – including targeting Jewish people, churches, and police officers – Domingo decided to bomb a rally scheduled to take place in Long Beach in April 2019.
As part of the plot, Domingo asked a confederate – who actually was working with the FBI as part of the investigation – to invite a bomb-maker into the scheme. Domingo then purchased and provided to the confederate and the bomb-maker – who in fact was an undercover law enforcement officer – several hundred 3½-inch nails to be used as shrapnel for the bombs. Domingo specifically chose those nails because they were long enough to penetrate organs in the human body.
Leading up to the attack, Domingo called for an event similar to the October 2017 mass shooting in Las Vegas. Following an attack on Muslims in New Zealand in March 2019, Domingo called for retribution in an online post.
Domingo selected the Long Beach rally as his target and, in April 2019, drove his confederate and the undercover officer to Long Beach to scout the location he planned to attack. While there, Domingo discussed finding the most crowded areas to place the bombs so he could kill the most people. On April 26, 2019, Domingo received what he thought were two live bombs, but actually were inert explosive devices delivered by an undercover law enforcement officer. He was arrested that same day with one of the bombs in his hands.
“At trial, [Domingo] testified and repeatedly affirmed that he intended to commit mass murder in March and April 2019,” prosecutors wrote in a sentencing memorandum that recommended a sentence of life in prison. “He admitted that the [confidential informant] stopped him from committing at least one murder in April 2019 by encouraging him to be patient. Finally, he admitted that he was excited when he learned that the [confidential informant] had access to an individual who could construct a bomb, and that he was the one who chose to attack the rally, chose to use the bombs, and chose to go through with the plot to commit mass murder, right up until the moment of his arrest.”
The FBI’s Joint Terrorism Task Force (JTTF) investigated this matter. JTTF members who participated in the investigation include the FBI, the Los Angeles Police Department, the Naval Criminal Investigative Service, the Los Angeles County Sheriff's Department and the Long Beach Police Department.
Assistant United States Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section, along with Trial Attorneys Lauren Goddard and Joshua Champagne of the National Security Section’s Counterterrorism Section at the Department of Justice, prosecuted this case.
Riverside Man Sentenced to 2 Years in Prison for Severely Injuring Puppy, Then Posting Video of the Wounded Animal on Social MediaRead the Press Release
LOS ANGELES – A Riverside man was sentenced today to 24 months in federal prison for inflicting severe injuries on a puppy – including slitting its throat – then posting videos of the suffering animal on his social media accounts.
Angel Ramos-Corrales, 19, was sentenced by United States District Judge John F. Walter. Ramos-Corrales pleaded guilty on June 3 to one felony count of animal crushing.
On February 13, Ramos-Corrales assaulted his pet dog, whom he named “Canelo,” inflicting severe injuries to the puppy’s head and torso, causing skull and rib fractures. The dog’s injuries caused it to continuously fall headfirst, and Ramos-Corrales recorded a video of the injured puppy and posted it on his Instagram account.
On the same day, Ramos-Corrales slit Canelo’s throat by approximately 4.4 centimeters (1.7 inches), causing the dog to bleed significantly and lapse into unconsciousness. While Canelo was lying on a bathroom floor, Ramos-Corrales recorded a video of the puppy and posted it on his Snapchat account, according to the plea agreement. On the video, Ramos-Corrales makes a series of statements, including “I’m cold-hearted,” and then intentionally kicks the still-alive Canelo.
After law enforcement arrived at Ramos-Corrales’ residence, Riverside County Department of Animal Services took custody of Canelo and a veterinarian determined that the dog was still alive, but later euthanized Canelo because of the severity of the dog’s injuries.
“[Ramos-Corrales’] offense of conviction was a gruesome act of violence, which he committed with wanton disregard of the life of his puppy, Canelo,” prosecutors wrote in a sentencing memorandum. “By the very nature and circumstances of [Ramos-Corrales’] violent offense, he has shown himself to be capable of ‘cold-hearted’ cruelty, as he himself admitted.”
The FBI investigated this matter and received substantial assistance from the Riverside Police Department. The Riverside County District Attorney’s Office received the initial referral from the Riverside Police Department, and, after reviewing the matter and conferring with the United States Attorney’s Office, a decision was made that federal prosecutors would file the case.
Assistant United States Attorney Julius J. Nam of the Riverside Branch Office prosecuted this case.
Pasadena Man Sentenced to More Than 16 Years in Federal Prison for Conspiring to Kidnap Chinese National Who Later Was MurderedRead the Press Release
LOS ANGELES – A San Gabriel Valley man was sentenced today to 195 months in federal prison for participating in a conspiracy to kidnap a Chinese national who was violently abducted from a San Gabriel parking lot, and whose parents were extorted for $2 million in ransom before the victim died from his injuries.
Anthony Valladares, 29, of Pasadena, was sentenced by United States District Judge Fernando M. Olguin, who said, that Valladares and his co-conspirators committed a “horrendous crime” when they conspired to kidnap the victim, resulting in his death. Judge Olguin also ordered Valladares to pay $33,090 in restitution. Valladares pleaded guilty in October 2020 to one count of conspiracy to kidnap.
Valladares conspired with others, including Chinese nationals Guangyao Yang, 28, and Peicheng Shen, 35, to kidnap Ruochen “Tony” Liao, of Santa Ana. Valladares was the “muscle” hired to intimidate, beat, and subdue Liao during the kidnapping. Valladares agreed to accept cash for the job.
Shen, using an alias, met the victim several times under the pretense that Shen would help the victim collect a debt from another individual, according to court documents. During their third meeting, at a San Gabriel shopping center on July 16, 2018, Shen lured the victim to a minivan, where Valladares was hiding, and whose driver was Alexis Ivan Romero Velez, 25, of Azusa, whom Valladares recruited for the conspiracy.
Liao entered the minivan and spoke in Chinese with Shen, who used a specific word to signal Valladares to begin attacking the victim. Once Shen uttered the word, Valladares and Shen violently assaulted Liao, used a taser to subdue him, and ultimately bound and restrained him with a black hood and ties. Valladares admitted to helping Yang acquire the taser used in the kidnapping and admitted to acquiring a revolver and bullets for the kidnapping. Romero then drove the minivan to a location in Rosemead, where Liao was moved into a different car.
Shen and Yang then took the victim to a house in Corona, where they confined him by binding his legs together, taping his eyes shut, restraining his arms behind him, and confining him in a closet.
The day after the kidnapping, the victim’s father received a demand for a $2 million ransom in exchange for the victim’s life, with the money to be deposited into three Chinese bank accounts within three hours.
Valladares was not physically present for Liao’s death, which occurred when Shen and Yang held him captive.
Shen and Yang drove to the area of Mojave, California, to bury or otherwise dispose of the victim’s body and other physical evidence involved in the crime. Further, Shen allegedly had the closet of the Corona house re-carpeted. Yang also performed internet searches to determine, in effect, how fast a corpse decomposes in soil, court papers state. Liao’s remains were discovered in Mojave late last year.
“The seriousness of [Valladares’] crime cannot be overstated,” prosecutors wrote in a sentencing memorandum. “[Valladares] was an active participant and organizer of a violent kidnapping motivated solely by greed. He acted with utter disregard to the potential suffering and harm to the victim and his family.”
Yang and Shen, whose last known U.S. residences were in West Covina, are currently in custody in China on charges filed there related to the kidnapping. Velez pleaded guilty in September 2019 to one count of conspiracy to kidnap. His sentencing hearing is scheduled for November 10.
The FBI conducted this investigation, with significant assistance provided by members of the FBI’s Safe Street Task Force, which includes the Pasadena Police Department.
Assistant United States Attorneys Julia S. Choe and Frances S. Lewis, both of the General Crimes Section, prosecuted this case.
Orange County Man Arrested for Alleged Ponzi Scheme that Raised Nearly $14 Million with False Promises of Profits from House FlippingRead the Press Release
SANTA ANA, California – A Costa Mesa man has been arrested on federal fraud and money laundering charges alleging he helped run a fraudulent investment scheme that raised $13.8 million by promising investors returns of up to 10 percent that would be generated through real estate deals.
Brett Barber, 42, who was a co-owner of the Newport Beach-based BNZ Capital One, LLC, was arrested Thursday morning by special agents with the FBI. Barber, who is charged in a six-count indictment returned Wednesday by a federal grand jury, entered not guilty pleas Thursday afternoon during an arraignment in United States District Court.
Another owner of BNZ Capital – Louis Zimmerle, 62, of Sacramento – was charged Thursday with one count of wire fraud. In a plea agreement also filed Thursday in United States District Court, Zimmerle agreed to plead guilty to the felony offense.
Also on Thursday, the United States Securities and Exchange Commission filed a parallel civil lawsuit naming Barber, Zimmerle and BNZ Capital.
According to court documents, since the spring of 2019, BNZ Capital, its principals and several marketers raised money by falsely representing that the firm bought and sold real estate projects and “flipped” real estate. Barber, Zimmerle and the marketers falsely promised investors a “guaranteed” return of between 8 percent and 10 percent, as well as potential bonuses based on successful deals. According to the indictment, Barber told investors that their funds were “safe” and “FDIC insured.”
In fact, while BNZ Capital did purchase some real estate, it did not take any substantial steps to develop parcels, nor did BNZ flip real estate for a profit, according to court documents. Rather, BNZ primarily used investor funds to pay Barber, Zimmerle and others associated with the scheme, including purchasing residences where Barber and Zimmerle lived. Some of the investors’ money was used to repay earlier investors.
Additionally, the indictment alleges that Barber failed to disclose to investors that he previously was barred from acting as or associating with a broker-dealer by the Financial Industry Regulatory Authority (FINRA).
During the scheme, Barber, Zimmerle, and the marketers solicited or caused to be transferred to BNZ Capital approximately $13.8 million from victim investors. Because several million dollars were paid to earlier investors, investigators estimate that actual losses resulting from this alleged scheme are more than $9 million. In his plea agreement, Zimmerle admits that he received and kept approximately $582,815 of investor money.
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.
Barber is charged with four counts of wire fraud and two counts of money laundering. The wire fraud charges carry a statutory maximum sentence of 20 years in federal prison, and the money laundering offense carry a statutory maximum sentence of 10 years in prison.
During his arraignment Thursday, a United States Magistrate Judge set bond at $800,000, and Barber is expected to be release later today. A trial in this case was scheduled for December 21.
The FBI is investigating this matter. The SEC provided substantial assistance.
Assistant United States Attorney Bradley E. Marrett of the Santa Ana Branch Office is prosecuting this case.