Central District of California
Press releases recorded for this federal judicial district.
San Pedro Man Sentenced to 11 Years in Federal Prison for Robbing Gardena Credit Union at Gunpoint with Employee’s HelpRead the Press Release
LOS ANGELES – A San Pedro man was sentenced today to 132 months in federal prison for being the gunman in a violent, takeover-style robbery of a Gardena credit union, where an employee helped with the planning and execution of the heist.
Toyrieon Sessions, 30, a.k.a. “Phat” and “PhatStax,” was sentenced by United States District Judge André Birotte Jr.
During a four-day trial in June 2019, a jury found Sessions guilty of three felonies in relation to the robbery of the Northrop Grumman Federal Credit Union (NGFCU) on April 21, 2017: conspiracy to commit armed bank robbery, armed bank robbery, and brandishing a firearm in furtherance of a crime of violence.
The robbery also involved two conspirators who previously have been convicted for their roles in the robbery:
- Daronnie Thompkins, 32, of the Gramercy Park neighborhood of Los Angeles, who recruited Sessions to be the gunman and knew the credit union’s layout; and
- Iris Lester, 28, of Inglewood, a NGFCU employee who was Thompkins’ girlfriend at the time and who assisted with the robbery.
On the day of the robbery, Sessions entered the office building in which the credit union is located and walked past NGFCU’s main entrance, entering a side hallway where the NGFCU’s bathrooms were located. Sessions waited in the men’s restroom until Lester and another NGFCU employee exited the women’s bathroom, which was the signal for the robbery to begin. At that point, Sessions left the men’s bathroom, brandished a semi-automatic handgun and used it to force Lester, who was pretending to be a victim, and the other employee to provide access to the credit union’s vault room.
Once inside the vault room, Lester and the other NGFCU employee realized they did not have the key to open the vault. Sessions allowed Lester to exit the vault room – but, instead of escaping, Lester returned with another credit union employee who was supposed to have the vault key. Lester then left the room a second time and retrieved the keys.
When Lester returned, Sessions ordered her and the two other credit union employees onto their knees while pointing the handgun at each of them – an experience that “terrorized the victims…and left them…deeply traumatized,” prosecutors wrote in their sentencing memorandum.
Sessions stole a total of $311,300 from the credit union and placed the cash in a black trash bag before exiting the vault room and fleeing the scene in a silver Dodge Avenger.
During an August 2018 bench trial, Thompkins was convicted of conspiracy and armed bank robbery. Judge Birotte later sentenced him to nine years in federal prison. Lester pleaded guilty to criminal charges in this case. Her sentencing hearing is scheduled for June 18.
The FBI and the Los Angeles Police Department investigated this matter.
Assistant United States Attorneys Jeffrey M. Chemerinsky and Bruce K. Riordan of the Violent and Organized Crime Section prosecuted this case.
San Marino Man Who Drove Truck into Protesters Agrees to Plead Guilty to Illegally Obtaining, Transporting and Possessing FirearmsRead the Press Release
LOS ANGELES – A San Gabriel Valley man who drove his truck into a crowd of peaceful demonstrators last year in Pasadena has agreed to plead guilty to a series of federal firearms offenses, including illegally obtaining and transporting weapons, and possessing short-barreled rifles.
Benjamin Jong Ren Hung, 28, a San Marino resident who also has a home in Lodi, entered into a plea agreement with prosecutors that was filed today in United States District Court. Hung agreed to plead guilty to 11 felony offenses – including conspiracy, transporting and receiving firearms across state lines, making false statements during purchases of firearms, and possession of unregistered firearms – charged in a superseding information that was also filed today.
Hung admitted to participating in a multi-year conspiracy to make false statements to firearms dealers in Oregon and to illegally transport those firearms to California. Hung provided cash to a co-conspirator in Oregon to buy handguns for Hung and to falsely state that the co-conspirator was the actual buyer, rather than Hung. The co-conspirator then delivered the firearms to Hung in California. In his plea agreement, Hung admitted that he engaged in the scheme to obtain the firearms and “evade California’s firearms registration laws.”
Hung also admitted to making false statements to firearms dealers in Washington in connection with his purchase of four rifles and one shotgun in March 2020. When he purchased the firearms, Hung falsely attested that he was a resident of Washington, rather than California, which was material because, as Hung admitted in the plea agreement, “the firearms dealers were not legally permitted to sell firearms to California residents.” Hung also agreed to plead guilty to illegally transporting those firearms to California.
Hung further admitted he illegally possessed three unregistered short-barreled semiautomatic rifles, which authorities seized from his residence in Lodi in September 2020.
In the plea agreement, Hung admitted bringing one of his illegally obtained firearms, a Glock 26 9mm handgun, to counterprotest in Old Town Pasadena against a group who had gathered on May 31, 2020, to protest against inequitable treatment of minorities by police, including the death of George Floyd at the hands of a police officer in Minneapolis. Hung, who was driving a customized Dodge pickup truck with vanity license plates reading “WAR R1G,” accelerated toward an intersection where the protest was taking place, sounded a train horn installed on the truck, came to a stop, and then continued through the intersection. As he drove past the demonstrators, Hung caused the truck to emit a large amount of exhaust in what is sometimes called “coal rolling.” No protesters were injured during the incident.
Hung was detained by local police following his confrontation with the demonstrators, and the FBI then took over the investigation.
A date for Hung to appear in court to formally enter the guilty pleas has not yet been set.
This matter was investigated by the FBI’s Los Angeles Joint Terrorism Task Force, FBI civil rights squads and the Pasadena Police Department.
This case is being prosecuted by Assistant United States Attorneys Frances S. Lewis of the Public Corruption and Civil Rights Section, and David T. Ryan of the Terrorism and Export Crimes Section.
Salvadoran National Sentenced to 20 Years in Federal Prison for Distributing Child Pornography, Failing to Register as Sex OffenderRead the Press Release
SANTA ANA, California – A Salvadoran national – who was previously deported after being convicted of sexually abusing a minor – was sentenced today to 240 months in federal prison for distributing child pornography on Facebook’s Messenger after he illegally reentered the United States.
Jose Ramon Aguilar-Moreno, 52, of Fontana, was sentenced by United States District Judge David O. Carter.
Aguilar-Moreno pleaded guilty in July 2020 to one count of distribution of child pornography and one count of failure to register as a sex offender.
In August 2002, Aguilar-Moreno was convicted in San Bernardino County Superior Court of committing lewd and lascivious acts on a minor. Following his deportation in June 2003, he unlawfully returned to the United States in 2016. Since that time, he failed to register as a sex offender in California or anywhere else in the United States, which was required because of his 2002 conviction.
In June 2018, Aguilar-Moreno used the name “Abel Aguilar” on the Messenger application to distribute three videos that depicted minors engaged in sexually explicit conduct.
Law enforcement in June 2019 executed a search warrant at Aguilar-Moreno’s residence – which was across the street from an elementary school – and discovered over 900 still image and more than 1,200 videos of child pornography on his cell phones. Aguilar-Moreno’s child pornography “collection spans the gamut and is documentation of some of the most demeaning abuse inflicted on victims of child pornography,” prosecutors wrote in a sentencing memo filed with the court.
In the sentencing memo, prosecutors noted that Aguilar-Moreno also used WhatsApp to welcome individuals to “the world of child pornography” as he solicited the exchange of images and videos. Aguilar-Moreno chatted with individuals in at least 14 countries, meaning “His reach and impact truly was global,” prosecutors wrote.
In addition to the prison sentence, Judge Carter ordered Aguilar-Moreno to pay $60,000 in restitution to the victims depicted in the child pornography in this case.
Homeland Security Investigations and the United States Marshals Service investigated this matter.
Assistant United States Attorney Eli A. Alcaraz of the Riverside Branch Office prosecuted this case.
Two Inglewood Women Get Prison Sentences for Health Care Fraud and Fraudulently Billing Medi-Cal for Substance Abuse CounselingRead the Press Release
LOS ANGELES – An Inglewood woman and her mother-in-law, who both ran a South Los Angeles drug-and-alcohol abuse treatment program, were sentenced today to federal prison for scheming to defraud Medi-Cal out of over $500,000 for services to clients who did not medically need substance abuse treatment and for services that were never provided.
Mesbel Mohamoud, 48, was sentenced to 18 months’ imprisonment by United States District Judge Philip S. Gutierrez, who also sentenced Mohamoud’s mother-in-law, Erlinda Abella, 66, also of Inglewood, to one year and one day in federal prison. Each woman was ordered to pay $260,101 in restitution.
Mohamoud and Abella pleaded guilty in November 2020 to one count of health care fraud.
Mohamoud was the owner and executive director of The New You Center Inc. (TNYC), located in the Vermont Knolls neighborhood of South Los Angeles. Abella, who co-founded TNYC with Mohamoud in 2005, was the company’s program director. TNYC was authorized to provide medically necessary substance abuse treatment services through the Drug Medi-Cal program to adults and teenagers in Los Angeles County.
From January 2009 to December 2015, TNYC submitted false and fraudulent claims for counseling sessions that were not conducted at all, were not conducted at authorized locations, or did not comply with Drug Medi-Cal regulations regarding the length of sessions or the number of clients.
Mohamoud and Abella also caused TNYC to bill for clients who did not have a substance abuse problem, to falsify documents related to services supposedly provided to clients, and to forge client signatures on documents such as sign-in sheets.
In September 2013, TNYC submitted a fraudulent claim for Medi-Cal reimbursement in the amount of $62.15 for a three-hour counseling session for a client on August 17, 2013 – the same day when the client was hospitalized and did not receive any counseling from TNYC.
In her plea agreement, Mohamoud admitted she knew that Abella directed TNYC counselors to enroll clients in TNYC’s substance abuse treatment program even if the clients had used drugs or alcohol only occasionally or even just once.
TNYC submitted approximately $527,313 in false and fraudulent claims for group and individual substance abuse counseling services and was paid $260,101 on those claims.
The FBI, the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse, and the U.S. Department of Health and Human Services, Office of Inspector General investigated this matter.
Assistant United States Attorney Cathy J. Ostiller of the Major Frauds Section prosecuted this case.
Former Irvine Resident Pleads Guilty in Scheme to Defraud Afghan Government on U.S. Funded Contract to Build Power SubstationsRead the Press Release
LOS ANGELES – A former Orange County resident pleaded guilty Tuesday for his role in a scheme to defraud the government of Afghanistan out of more than $100 million. The funds were provided to Afghanistan by the U.S. Agency for International Development (USAID) for the purpose of constructing an electric grid in Afghanistan, in connection with the long-standing U.S. effort to strengthen that country’s basic infrastructure.
Saed Ismail Amiri, 38, who currently lives in Granite Bay, but until last year was a resident of Irvine, pleaded guilty to one count of wire fraud before United States District Judge Stanley Blumenfeld Jr.
According to court documents unsealed Tuesday afternoon, Amiri was at various times either the owner or senior consultant of Assist Consultants Incorporated (ACI), an Afghan company that had received over $250 million in U.S.-funded contracts since 2013. In or around January 2015, USAID, in connection with the U.S. effort to assist Afghanistan and its people, authorized the national power utility of Afghanistan, Da’ Afghanistan Breshna Sherkat (DABS), to solicit bids on a U.S.-funded contract to construct five electric power substations to connect Afghanistan’s Northeastern and Southeastern electric grid systems. Bids were sought only from companies that had substantial experience building electric power substations. Specifically, the contract criteria required bidders, such as ACI, to have previously worked on two electric substations of 220 kilovolts or more.
In 2015 and 2016, Amiri, ACI employees and others engaged in a scheme to obtain the contract by submitting a false work history and fraudulent supporting documents to deceive DABS into believing that ACI met the required contract criteria.
Specifically, in July 2015, ACI submitted a bid on the contract for $112,292,241, underbidding its competitors by more than $20 million. In its bid, ACI stated that it had worked as a subcontractor to a prime contractor on two 220 kilovolt substations for a cement factory in Uganda and a textile company in Nigeria. In fact, the alleged prime contractor was a fictitious company that ACI had invented and controlled, ACI had never worked to build a substation in Africa, and neither the Ugandan cement factory nor the Nigerian textile company existed.
In February 2016, after Amiri had returned to Irvine, DABS contacted ACI and requested supporting documents to verify ACI’s work history. Amiri then sent emails to co-conspirators outside California, including emails in which he advised that some of them would need to go to Uganda and Nigeria to obtain false documents to respond to DABS. Amiri thereafter departed the United States and, in furtherance of the scheme, emailed documents to DABS he knew were false and altered, including ACI’s purported subcontract to work on the Ugandan substation, coordinates of the substation, photographs, false bank records, and a false letter purporting to be from a Ugandan government official.
After submitting the fake records to DABS, Amiri met with U.S. law enforcement at the U.S. Embassy in Afghanistan and falsely stated, among other things, that he had learned the prior month that ACI had bid on the contract. Shortly thereafter, Amiri withdrew ACI’s bid. In a subsequent interview with law enforcement, Amiri also falsely stated that another ACI employee had submitted the false documents to DABS, when, in truth and in fact, Amiri had emailed the false documents himself.
Amiri is scheduled to be sentenced by Judge Blumenfeld on August 10, at which time he will face a maximum penalty of 20 years in federal prison. Judge Blumenfeld will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
This matter was investigated by the Special Inspector General for Afghanistan Reconstruction and the USAID Office of Inspector General.
Assistant United States Attorney Jeff Mitchell of the Major Frauds Section and DOJ Trial Attorney Matt Kahn of the Criminal Division’s Fraud Section are prosecuting the case.
Federal Indictments Target Street Gang for Alleged Crack Cocaine Distribution and Firearm Offenses at Housing Projects in WattsRead the Press Release
LOS ANGELES – Law enforcement this morning arrested 19 defendants, most of whom are members and associates of the Bounty Hunter Bloods (BHB) street gang named in a series of federal grand jury indictments charging them with manufacturing and distributing crack cocaine in and around their “territory” of the Nickerson Gardens public housing projects in the Watts neighborhood of the City of Los Angeles.
The 19 people arrested this morning are among 22 defendants charged in nine indictments unsealed today that allege violations of federal narcotics and firearms laws. The defendants arrested today are expected to be arraigned on the indictments this afternoon in United States District Court in downtown Los Angeles.
In addition to those arrested during “Operation Loyalty Matters,” one defendant is already in custody on unrelated charges. Authorities are continuing to search for two defendants.
During the investigation, law enforcement seized 26 firearms – including five “ghost guns,” or firearms lacking serial numbers – 1 kilogram of crack cocaine and 12 pounds of methamphetamine.
The case’s main indictment centers on the alleged drug manufacturing and distributing activities of Damion Baker, 43, a.k.a. “Fatts,” and Tony Carr, 49, a.k.a. “T-Bone,” both of whom are documented Watts-based BHB gang members. The 15-count indictment also charges Baker’s alleged network of narcotics suppliers, manufacturers, and distributors.
From August 2019 to May 2020, Baker obtained powder cocaine from suppliers and, along with Carr, manufactured or “cooked” crack cocaine in Nickerson Gardens, then prepared and packaged crack cocaine for other distributors and customers in the housing complex, according to the indictment. The conspirators allegedly collected proceeds from the crack cocaine sales after distributing the drugs to customers via hand-to-hand transactions.
“Because of the highly dangerous and lucrative nature of crack cocaine trafficking, individuals who worked together in the distribution of crack cocaine often had established relationships through their membership or association with the BHB,” the indictment alleges.
Baker, Carr and the indictment’s 10 other defendants are charged with one count of conspiracy to manufacture, distribute and possess with intent to distribute crack cocaine. Baker faces eight additional felony charges in the indictment, while Carr is charged with six additional felonies, including narcotics distribution and firearms-related offenses.
The remaining eight indictments charge an additional 10 defendants with violating federal narcotics and firearms laws.
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.
Fourteen defendants, including all 12 defendants charged in the lead indictment, face potential sentences of life imprisonment if they are convicted of conspiracy to distribute more than 280 grams of crack cocaine, and they potentially face mandatory minimum sentences of 10 years in federal prison for that offense. Four additional defendants face mandatory minimum sentences of five years in federal prison if convicted of charges of conspiracy to distribute 28 grams or more of crack cocaine, and possession of a firearm in furtherance of a drug trafficking crime.
Today’s arrests were made by the FBI’s Los Angeles Metropolitan Task Force on Violent Gangs, which consists of the FBI, the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, and the California Department of Corrections and Rehabilitation.
Assistant United States Attorney Amy E. Pomerantz of the Violent and Organized Crime Section is prosecuting this case.
Federal Employee Indicted by Federal Grand Jury on Charges of Kidnapping His Wife in 2016 in Abduction that Resulted in Her DeathRead the Press Release
SANTA ANA, California – A federal grand jury today returned an indictment that charges a Covina man with kidnapping his wife in 2016 in an incident that resulted in her death.
Eddy Reyes, 35, who lived with his wife in Santa Ana when she was last seen, was arrested in this case on April 15 pursuant to a criminal complaint that also charged him with kidnapping.
Reyes, an employee of U.S. Customs and Border Protection who has been held without bond since his arrest, is scheduled to be arraigned on the indictment on May 3 in United States District Court in Santa Ana.
The indictment alleges that Reyes kidnapped his wife, 21-year-old Claudia Sanchez Reyes, on May 6, 2016.
According to court documents, Claudia Reyes was last seen leaving work on the night of May 6, 2016. After Reyes filed a missing person report four days later, the Santa Ana Police Department conducted an investigation that revealed co-workers heard Claudia Reyes fighting with her husband on May 6 soon before he picked her up in a rented SUV, according to the affidavit in support of the criminal complaint, which notes detectives later found a drop of Claudia Reyes’ blood in that vehicle and a cadaver dog indicated that a dead body had been in the SUV.
The affidavit also documents a history of alleged domestic abuse by Reyes against his wife, including several threats to kill her, as well as temporary restraining orders Claudia Reyes obtained against her husband in 2014 and 2016.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If he were to be convicted of the charge of kidnapping resulting in death, Reyes would face potential sentences of the death penalty or life in federal prison without parole.
The investigation in this matter is being conducted by the Orange County Violent Gang Task Force, which is comprised of several federal, state and local agencies.
Assistant United States Attorneys Gregory W. Staples and Daniel H. Ahn of the Santa Ana Branch Office are prosecuting this case.
California Man Pleads Guilty to Scheme to Defraud Afghan Government on U.S. Funded ContractRead the Press Release
A California man pleaded guilty Tuesday for his role in a scheme to defraud the government of Afghanistan of over $100 million. These funds were provided to Afghanistan by the U.S. Agency for International Development (USAID) for the purpose of constructing an electric grid in Afghanistan, in connection with the long-standing U.S. effort to strengthen that country’s basic infrastructure.
According to court documents, Saed Ismail Amiri, 38, of Granite Bay, was at various times either the owner or senior consultant of Assist Consultants Incorporated (ACI), an Afghan company that had received over $250 million in U.S. funded contracts since 2013. In or around January 2015, USAID, in connection with the U.S. effort to assist Afghanistan and its people, authorized the national power utility of Afghanistan, Da’ Afghanistan Breshna Sherkat (DABS), to solicit bids on a U.S. funded contract to construct five electric power substations to connect Afghanistan’s Northeastern and Southeastern electric grid systems. Bids were sought only from companies that had substantial experience building electric power substations. Specifically, the contract criteria required bidders, such as ACI, to have previously worked on two electric substations of 220 kilovolts or more.
In 2015 and 2016, Amiri, ACI employees, and others engaged in a scheme to obtain the contract by submitting a false work history and fraudulent supporting documents in an effort to deceive DABS into believing that ACI met the required contract criteria. More specifically, in July 2015, ACI submitted a bid on the contract for $112,292,241.05, and ACI underbid its competitors by more than $20 million. In the bid, ACI stated that it had worked as a subcontractor to a prime contractor on two 220 kilovolt substations for a cement factory in Uganda and a textile company in Nigeria. In fact, the alleged prime contractor was a fictitious company that ACI had invented and controlled, ACI had never worked to build a substation in Africa, and neither the Ugandan cement factory nor the Nigerian textile company existed.
In February 2016, Amiri returned to his residence in the Los Angeles area, at which time DABS had contacted ACI and requested supporting documents to verify ACI’s work history. Amiri then sent emails to co-conspirators outside California, including emails in which he advised that some of them would need to go to Uganda and Nigeria to obtain false documents to respond to DABS. Amiri thereafter departed the United States and, in furtherance of the scheme, emailed DABS documents he knew were false and altered, including ACI’s purported subcontract to work on the Ugandan substation; coordinates of the substation; photographs; false bank records; and a false letter purporting to be from a Ugandan government official. After submitting the fake records to DABS, Amiri met with U.S. law enforcement at the U.S. Embassy in Afghanistan. During that meeting, Amiri falsely stated, among other things, that he had learned the prior month that ACI had bid on the contract. Shortly thereafter, Amiri withdrew ACI’s bid. In a subsequent interview with law enforcement, Amiri also falsely stated that another ACI employee had submitted the false documents to DABS, when in truth and in fact, Amiri had emailed the false documents himself.
Amiri pleaded guilty to wire fraud. He is scheduled to be sentenced at a later date and faces a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Tracy Wilkison of the Central District of California; Inspector General John F. Sopko of the Special Inspector General for Afghanistan Reconstruction (SIGAR); and Acting Inspector General Thomas J. Ullom of the USAID Office of Inspector General (USAID-OIG) made the announcement.
SIGAR and USAID-OIG are investigating the case.
Trial Attorney Matt Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jeff Mitchell of the Central District of California are prosecuting the case.
Two SoCal Men Indicted in Hate Crimes Case Alleging They Attacked Family-Owned Restaurant and Threatened to Kill the Victims InsideRead the Press Release
LOS ANGELES – A federal grand jury in Los Angeles has indicted two Los Angeles-area men on conspiracy and hate crime offenses for allegedly attacking five victims at a family-owned Turkish restaurant while shouting anti-Turkish slurs, hurling chairs at the victims and threatening to kill them.
The indictment was unsealed today following the arrest this morning of Harutyun Harry Chalikyan, 23, of Tujunga, who is scheduled to be arraigned this afternoon in United States District Court in Los Angeles.
The second defendant in the case – William Stepanyan, 23, of Glendale – is currently in state custody and is expected to appear in federal court in this case in the coming weeks.
Chalikyan and Stepanyan, both of whom are Armenian-American, are charged with one count of conspiracy and five hate crimes.
According to the indictment, Stepanyan sent a text message on November 4, 2020, saying that he planned to go “hunting for [T]urks.” Later that day, Stepanyan met with Chalikyan and other Armenian-Americans to protest what they considered to be Turkish aggression against Armenians, express their contempt for Turkey and show their support for Armenia.
Stepanyan, Chalikyan and other Armenian-Americans then drove to the family-owned restaurant, where Stepanyan and Chalikyan stormed into the restaurant and attacked the victims inside, the indictment alleges. Stepanyan and Chalikyan, who were both wearing masks during the attack, allegedly flung chairs at the victims while shouting derogatory slurs about Turkish people. Four of the five victims were of Turkish descent.
The indictment further alleges that at least one of the defendants threatened to kill the victims, shouting: “We came to kill you! We will kill you!”
During the attack, multiple victims were injured, including one individual who lost feeling in their legs and collapsed multiple times due to the injury, the indictment states. After the victims escaped, Stepanyan and Chalikyan allegedly continued to destroy the restaurant, ultimately causing over $20,000 in damage, forcing the restaurant to close temporarily and causing thousands of dollars in lost revenue.
An indictment is merely an allegation, and the defendants are presumed innocent unless proven guilty in a court of law.
If convicted, Stepanyan and Chalikyan each would face a maximum penalty of 10 years in prison for the hate crime charges and five years in prison for the conspiracy charge.
The FBI conducted the investigation in this matter and received substantial assistance from the Beverly Hills Police Department.
Assistant United States Attorney Lindsey Greer Dotson of the Public Corruption and Civil Rights Section, and Trial Attorney Michael J. Songer of the Justice Department’s Civil Rights Division are prosecuting the case.
Santa Clarita Valley Man Sentenced to 7 Years in Prison for $4 Million Con Where Clients Were Falsely Promised Government GrantsRead the Press Release
LOS ANGELES – A man who claimed to be a tax preparer was sentenced today to 84 months in federal prison for defrauding his clients out of more than $4 million by falsely promising them huge windfalls from a sham federal program that purportedly would issue large grants to them.
Edgardo Zeta Montalban, 70, of Valencia, was sentenced by United States District Judge Stanley Blumenfeld Jr., who said Montalban “exploited human frailty” in conducting his fraud. Judge Blumenfeld said the criminal conduct in this case was “despicable, cruel and callous,” and it caused “devastating effects on numerous victims.”
From 2013 to September 2020, Montalban, who held himself out as an accountant and tax preparer, asked some of his clients to invest in a federal grant program he called “Suppressed IRS Accounts.” Montalban told his clients that if they paid him in cash, the federal government would issue them grants many times larger than what they paid. In reality, no such grant program existed.
In furtherance of the scheme, a co-conspirator made counterfeit Treasury checks payable to the victim clients for tens of millions of dollars, which Montalban used as props to entice the victims to pay him. Montalban explained to the victims that they had to pay him in cash to protect the federal grant program’s secrecy.
After his victims paid him, Montalban made up excuses as to why the Treasury checks had been delayed, and tricked the victims into paying him more money, purportedly for expenses necessary to overcome the obstacles to their checks’ issuance.
“[Montalban] would promise his victims a huge windfall from the government in exchange for a modest payment up front to [Montalban] in cash,” prosecutors wrote in their sentencing memorandum. “Because the windfall was a fraud, each purported difficulty overcome by an additional cash payment had to lead to yet another difficulty, requiring yet another cash payment. [Montalban] repeated this process until he had bled his victims dry, or they realized they had been defrauded and stopped paying him.”
Montalban has been in federal custody since April 6, when Judge Blumenfeld found that he violated the conditions of his bond by continuing to commit the fraud even after pleading guilty in December 2020 to one count of conspiracy to commit wire fraud.
Federal prosecutors recommended Montalban receive a prison sentence of 120 months, but Judge Blumenfeld decided to issue the seven-year sentence after considering Montalban’s significant health issues.
The FBI investigated this case with assistance from the U.S. Secret Service and the U.S. Treasury Inspector General for Tax Administration (TIGTA).
Assistant United States Attorney Andrew Brown of the Major Frauds Section prosecuted this case.
Riverside Man Arrested on Federal Charge of ‘Animal Crushing’ After Allegedly Slitting His Dog’s Throat and Posting Video on SnapchatRead the Press Release
RIVERSIDE, California – Authorities this morning arrested a Riverside man on a federal charge alleging that he slit the throat of his young dog, produced a short video of the dying puppy, and posted the video on his Snapchat account.
Angel Ramos-Corrales, 19, was arrested without incident this morning by the FBI and the Riverside Police Department. Ramos-Corrales is expected to make his initial appearance this afternoon in United States District Court in Riverside.
Ramos-Corrales was named in a federal criminal complaint filed Friday that charges him with animal crushing, a federal crime of purposely subjecting certain types of animals to serious bodily injury not related to hunting or other lawful activity. The animal crushing statute carries a sentence of up to seven years in federal prison.
According to the affidavit in support of the complaint, the Riverside Police Department received a complaint on February 13 soon after Ramos-Corrales allegedly posted a video on Snapchat depicting the small brown dog with a large laceration on its neck. On the video, a person believed to be Ramos-Corrales makes a series of statements, including “I’m cold-hearted,” and then callously kicks the still-alive dog, which he had named Canelo, the complaint alleges.
Riverside Police officers went to Ramos-Corrales’ residence, where they found him with fresh blood stains on his clothes, as well as freshly cut wounds on his hand, according to the affidavit. Inside his house, officers found the severely injured dog lying on a bed and observed blood spatters in both the bedroom and bathroom.
During the investigation, the police officers located a roommate who said he locked himself in his bedroom after observing blood spatter and the dog wrapped in a rug while Ramos-Corrales was in his room yelling, the affidavit states.
Animal control officers responded to the residence on February 13 and removed the barely alive dog, according to the affidavit, which notes a veterinarian had to euthanize the animal after determining Canelo also had fractured bones in his head and chest.
During interviews with FBI agents in early March that are outlined in the affidavit, Ramos-Corrales said he purchased Canelo as a small puppy from a Craigslist posting several months earlier, and he claimed not to recall the details of what he had done to the dog.
This matter is being investigated by the FBI, which 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 is prosecuting this case.
A criminal complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Riverside County Man Charged in COVID-Relief Fraud SchemeRead the Press Release
LOS ANGELES – Federal authorities this morning arrested a Temecula man on federal fraud charges that allege he stole hundreds of thousands of dollars from the Paycheck Protection Program (PPP) after obtaining more than $7 million in PPP loan funds on behalf of his company that purports to repair potholes.
Oumar Sissoko, 59, was arrested pursuant to a four-count wire fraud indictment that was returned by a federal grand jury on April 13. Sissoko is expected to be arraigned on the indictment Thursday afternoon in United States District Court in Riverside.
According to the indictment, Sissoko obtained a $7.25 million loan for his company, Road Doctor California LLC, after submitting a PPP loan application in April 2020 claiming that Road Doctor was in the process of hiring 450 full-time employees and would have average monthly payroll expenses of $2.9 million. When he applied for the loan, Sissoko acknowledged the funds would be used to retain workers and maintain payroll, or make mortgage interest payments, lease payments and utility payments.
In the days after the PPP loan was funded on May 1, 2020, Sissoko allegedly misappropriated hundreds of thousands of dollars of the loan proceeds to use for impermissible purposes, including purchasing a luxury car for more than $100,000, paying off a loan on a different luxury car, and buying a computer for almost $6,000. “The impermissible uses also included a non-refundable down payment of approximately $100,000 to purchase a company located in New Hampshire, and the attempted transmission of approximately $150,000” to accounts in the African nation of Mauritania associated with a minerals exploration company for which Sissoko purports to serve as CEO, the indictment alleges.
If convicted, Sissoko would face a maximum penalty of 20 years in prison for each of the four counts in the indictment. A federal district court judge will determine any sentence after considering the United States Sentencing Guidelines and other statutory factors.
The arrest of Sissoko was announced by Acting U.S. Attorney Tracy L. Wilkison, Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, Assistant Director in Charge Kristi K. Johnson of the FBI’s Los Angeles Field Office, Special Agent in Charge Weston King of the U.S. Small Business Administration’s Office of Inspector General’s Western Region, and Special Agent in Charge Wade V. Walters of the San Francisco Regional Office of the Federal Deposit Insurance Corporation’s Office of Inspector General.
Assistant United States Attorney Alexander C.K. Wyman of the Major Frauds Section and DOJ Trial Attorney John “Fritz” Scanlon of the Criminal Division’s Fraud Section are prosecuting this case. Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section is providing substantial assistance, including the seizure of two luxury automobiles allegedly purchased with PPP loan funds.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020, and is designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
Anyone with general information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
California Man Charged with COVID-Relief Fraud SchemeRead the Press Release
A federal grand jury in Los Angeles, California, returned an indictment on April 13, charging a California man with stealing hundreds of thousands of dollars from the Paycheck Protection Program (PPP).
According to court documents, Oumar Sissoko, 59, of Temecula, submitted a PPP loan application on behalf of his company, Road Doctor California LLC, that sought and obtained $7.25 million. The loan application certified that the funds would be used to retain workers and maintain payroll or make mortgage-interest payments, lease payments, and utility payments. Between on or about May 1 to May 12, 2020, Sissoko misappropriated hundreds of thousands of dollars of the PPP loan proceeds to use for impermissible purposes, including the purchase of a luxury car for more than $100,000, the satisfaction of a loan made to Sissoko in connection with his prior acquisition of a different luxury car, and the purchase of a computer for almost $6,000. Sissoko also attempted to transmit approximately $150,000 to accounts in Mauritania associated with a different company for which Sissoko purports to serve as CEO.
Sissoko is charged with four counts of wire fraud. The defendant is scheduled for his initial court appearance at a later date in the U.S. District Court for the Central District of California. If convicted, he faces a maximum penalty of 20 years in prison for each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Tracy L. Wilkison of the Central District of California; Assistant Director in Charge Kristi K. Johnson of the FBI’s Los Angeles Field Office; Special Agent in Charge Weston King of the U.S. Small Business Administration’s Office of Inspector General’s (SBA-OIG) Western Region; and Special Agent in Charge Wade V. Walters of the San Francisco Regional Office of the Federal Deposit Insurance Corporation’s Office of Inspector General (FDIC-OIG) made the announcement.
The FBI, SBA-OIG and FDIC-OIG are investigating the case.
Trial Attorney John “Fritz” Scanlon of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Alexander C.K. Wyman of the Central District of California are prosecuting the case.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses at least a certain percentage of the PPP loan proceeds on payroll expenses.
The Fraud Section leads the Department of Justice’s prosecution of fraud schemes that exploit the CARES Act. In the months since the CARES Act was passed, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 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/cares-act-fraud.
Anyone with general information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
U.S. Attorney’s Office, FBI and ADL to Host Discussion on Hate Crimes, Hate Incidents and Discrimination Against Asian AmericansRead the Press Release
LOS ANGELES – The United States Attorney’s Office, along with the FBI’s Los Angeles Field Office and the Anti-Defamation League, will host a virtual discussion on Thursday, April 22, to explain how the federal government investigates and works to combat hate crimes and discrimination, including against the Asian-American and Pacific Islander community. The event will be open to the public on the WebEx platform, and pre-registration is required.
Assistant United States Attorneys will provide information on the legal framework of criminal and civil investigations into hate crimes and discrimination. The prosecutors are expected to discuss the distinction between hate crimes and hate speech, alternatives to prosecution, civil enforcement of civil rights statutes, and an overview of a hypothetical criminal hate crime investigation from complaint to conviction.
Representatives from the FBI will discuss hate crime statistics, local hate crime investigations and the FBI’s collaboration with local partners. The event will also include speakers from the Anti-Defamation League and the Department of Justice’s Community Relations Service will discuss their respective roles in interfacing with the community and stakeholders to monitor and address acts of hate locally and nationally.
The event, called “Federal Responses to AAPI Hate in the Central District of California: Awareness, Civil Actions & Criminal Enforcement,” will include time for questions and answers from the public.
The event announcement is available in English, Korean, Chinese, Tagalog, and Vietnamese. Anyone interested in attending the discussion should register here. Translation services will be available for this event upon request.
“With this program, we hope to continue working with our partners to empower the community with more knowledge about reporting hateful acts and how authorities investigate those reports. Everyone should be free from violence, threats and discrimination based on race or national origin,” said Acting United States Attorney Tracy L. Wilkison. “I encourage anyone with knowledge of discrimination, hate incidents and hate crimes to report them immediately.”
“The FBI is committed to investigating federal hate crimes and protecting the civil rights of Asian Americans and Pacific Islanders,” said Kristi K. Johnson, Assistant Director in Charge of the FBI Los Angeles Division. “Violent acts motivated by bias are not only an attack on the victim, but also threaten and intimidate an entire community and are contrary to our values of equality for all Americans.”
“For over 100 years, ADL has fought against hatred and bigotry of all kinds. ADL wrote the model hate crimes legislation that has now been adopted in 47 states and the District of Columbia, as well as the federal hate crimes statute,” said ADL Deputy Regional Director Ariella Loewenstein. “Hate crimes are message crimes telling victims that they are not safe or welcome in their communities. It is incumbent upon all of us to send a countervailing message of inclusivity and safety for all. We are participating in this important program, along with our federal partners, to show that hate targeting one group is hate targeting all of us, and it will not be tolerated locally or nationally.”
The U.S. Attorney’s Office, the FBI and other partners strongly encourage anyone who has knowledge or information concerning any hate crime or incident involving bias or discrimination on the basis of race, national origin, religion, disability, gender, gender identity, sexual orientation or any other factor prohibited by federal law to report it to the FBI. The FBI’s Los Angeles Field Office can be reached 24 hours a day at (310) 477-6565. Reports also can be made online at https://tips.fbi.gov/. The FBI handles complaints in multiple languages.
Individuals with knowledge or information concerning discrimination based on the above factors in places of public accommodation, housing, lending, education, employment, voting or any other factor prohibited by federal law should file a complaint with the United States Attorney’s Office by calling (213) 894-2879, emailing [email protected] or submitting this form. The U.S. Attorney’s Office is equipped to handle complaints in more than 70 languages.
Former Orange County Social Worker Who Distributed Child Pornography Videos Sentenced to 8 Years in Federal PrisonRead the Press Release
SANTA ANA, California – A former social worker in Orange County was sentenced today to 96 months in federal prison for distributing computer video files that contained sexually explicit videos depicting children, including infants and toddlers.
Carlos Castillo, 62, of Santa Ana, was sentenced by United States District Judge Cormac J. Carney, who also ordered Castillo to pay $40,000 in restitution to his victims. Castillo, who was remanded into federal custody today, pleaded guilty on January 11 to a single-count information charging him with distribution of child pornography.
Castillo worked at Orange County’s Social Services Agency from May 2002 to January 2020. Beginning in August 2007, Castillo was a placement senior social worker whose responsibilities included assessing applicants’ suitability to provide care of children who are in protective custody, completing a home and grounds environment assessment, and placing children into homes.
In November 2019, Castillo knowingly distributed child pornography consisting of three video files to an undercover law enforcement official. Castillo, using the screen name “Ratster12” as a member of a child pornography group that used the LiveMe application, posted a link to another webpage containing three videos depicting prepubescent children, including infants and toddlers, who were being sexually assaulted by adults and other children.
Castillo admitted in his plea agreement that in January 2020 he possessed a Dell computer, two flash drives and an Apple iPhone that contained at least 1,027 videos and 914 images of child pornography. Castillo further admitted that he possessed videos of minors undressing that Castillo had recorded from LiveMe. In addition, he admitted to possession of pictures of minors in public without the authorization or knowledge of the minors or their parents.
“The victims (and their families) must live with the reality that images and videos of their childhood victimization will live on in the Internet forever,” prosecutors wrote in their sentencing memorandum.
The FBI investigated this matter.
Assistant United States Attorney Vibhav Mittal of the Santa Ana Branch Office prosecuted this case.
Former Owner of Orange County Wastewater Treatment Company Indicted on Federal Environmental Criminal ChargesRead the Press Release
SANTA ANA, California – The former owner of a wastewater treatment facility in Orange has been indicted by a grand jury that accused him and his company – Klean Waters, Inc. – in a scheme that discharged untreated industrial wastes into an Orange County sewer system, among other violations of federal environmental laws.
Tim Miller, 64, of Wexford, Pennsylvania, along with Klean Waters, were named in a two-count indictment filed late Wednesday that charges both defendants with participating in a conspiracy and discharging without a permit into a publicly owned treatment works operated by the Orange County Sanitation District (OCSD).
Miller and Klean Waters will be summonsed to appear for arraignments in United States District Court on May 3.
In the scheme dating back to the establishment of Klean Waters in 2012 and continuing for several years, Miller and his company allegedly discharged wastewater that was not pretreated according to federal standards, failed to perform self-monitoring and prepare accurate reports, made false statements about their discharges, tampered with monitoring devices put in place by the OCSD, discharged untreated wastewater without a permit, and prevented inspectors from reviewing company documents or collecting samples from the company’s facility, according to the conspiracy charge in the indictment.
Klean Waters allegedly discharged untreated wastewater that contained pollutants – including firefighting foam and various metals – or that simply never had been tested after being brought to the facility for treatment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If convicted of the two charges in the indictment, Miller would face a statutory maximum penalty of eight years in federal prison. Klean Waters could be sentenced to pay fines of up to $300,000.
The FBI and the U.S. Environmental Protection Agency’s Criminal Investigation Division are investigating this matter.
Assistant United States Attorney Rosalind Wang of the Santa Ana Branch Office is prosecuting this case.
Covina Man Sentenced to 18 Months in Prison for CyberstalkingRead the Press Release
LOS ANGELES – A San Gabriel Valley man was sentenced today to 18 months in federal prison for sending hundreds of messages over several years to two victims, including a teenage girl, demanding they engage in sex acts with him and threatening to physically harm or kill them if they refused.
Carl De Vera Bennington, 34, of Covina, was sentenced by United States District Judge Dolly M. Gee, who described Bennington’s messages to his victims as “repeated, cruel” and “sadistic.” Bennington pleaded guilty in December 2020 to two counts of cyberstalking.
Bennington repeatedly sent one victim unsolicited online messages over a period of several years. When she blocked him from contacting her from one of her online accounts, Bennington created new online accounts and then continued sending her messages, including graphic messages between June and November 2019 in which he insulted the victim, demanded she engage in sex acts with him, and threatened to sexually assault her. When the victim demanded that Bennington stop harassing her, he threatened to kill her and her family.
Bennington also harassed another victim, who deactivated her social media accounts in 2017 after he solicited her to engage in a sexual relationship with him. In August 2019, after she reactivated her social media accounts, Bennington sent her numerous online messages threatening to kill her unless she responded to his demands for sex acts.
Neither victim ever met Bennington in person. Bennington frequently promoted incel (involuntarily celibate) ideology, which involves individuals who are unable to find a willing sex partner, according to a sentencing memo filed by prosecutors, which notes the ideology ranges in tone from expressing sadness and self-loathing to advocating the “absolute hatred” of women.
While Bennington suffers from mental health issues – which prompted prosecutors to seek enhanced supervision and mental health treatment following his release – a prison sentence was warranted because of his long pattern of cyberstalking activity and “his deep-seated and violent ideology regarding women,” according to the sentencing memo.
The FBI’s Joint Terrorism Task Force investigated this matter.
Assistant United States Attorney David T. Ryan of the Terrorism and Export Crimes Section prosecuted this matter.
Rhode Island Man Allegedly Swindled Victims Who Thought They Were Investing in Las Vegas Show Based on 'Magic Mike' FilmsRead the Press Release
LOS ANGELES – A Rhode Island man was arrested this morning on federal charges alleging that he defrauded investors out of more than $4.2 million in connection with “Magic Mike Live,” a stage show at the Hard Rock Hotel and Casino in Las Vegas based on two Magic Mike films that chronicle the life of a male stripper.
John A. Santilli Jr., 47, of East Greenwich, Rhode Island, is named in a 10-count indictment unsealed today that charges him with one count of securities fraud, eight counts of wire fraud, and one count of aggravated identity theft. Santilli made his initial court appearance this morning in United States District Court in Rhode Island, where a judge ordered his release on a $100,000 bond.
According to the indictment, Santilli managed and partly owned Aloris Entertainment, LLC, which acquired an interest – through securities called “Class A Units” – in Mike’s Mobile Detailing, LLC, the company that operates the Magic Mike Live show in Las Vegas. Santilli raised funds from victims by soliciting investments in “Aloris Magic Mike LP,” a different business that he falsely told investors owned the Class A Units. Santilli allegedly lied to investors, telling them that, in return for their investment, they would receive “shares” in Aloris Magic Mike LP that corresponded to a particular number of Class A Units and entitled them to a percentage of the profits from “Magic Mike Live.” To bolster his false claims, the indictment states, Santilli used a doctored a legal document that made it appear that Aloris Magic Mike LP was a member (i.e., a shareholder) of Mike’s Mobile Detailing.
The indictment also states that Santilli misappropriated a significant portion of his victims’ investments, including withdrawing more than $1 million at casinos across the United States. To raise more funds, Santilli falsely told his victims that new investment opportunities had arisen, resulting in Santilli selling shares in his businesses that corresponded to nearly double the number of Class A Units of Mike’s Mobile Detailing that his company actually owned, the indictment alleges.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If convicted of all charges, Santilli would face a statutory maximum sentence of 182 years in prison.
The FBI is investigating this matter.
Assistant United States Attorney Alexander B. Schwab of the Major Frauds Section is prosecuting this case.
Orange County Man Agrees to Plead Guilty to Tax Evasion for Failing to Report Interest from Millions of Dollars in Foreign Bank AccountsRead the Press Release
SANTA ANA, California – A South Korean national who lives in Orange County has been charged with tax evasion for failing to report on a federal income tax return interest income he earned from deposits in bank accounts he controlled in Hong Kong and Singapore.
Jean Guy Minn, 56, of Irvine, who is residing in the United States as a legal permanent resident, was named in a criminal information filed late Monday that charges him with one count of tax evasion.
The information specifically accuses Minn of filing a personal tax return for the year 2016 that failed to report $552,454 in interest income he earned from a foreign bank account. As a result, Minn failed to pay $162,369 in federal income tax that year.
In conjunction with the information, prosecutors on Monday also filed a plea agreement in which Minn agreed to plead guilty to the felony tax offense. In the plea agreement, Minn admitted that he failed to report a total of $2,365,427 of interest income for the tax years 2010 through 2017.
In his plea agreement, Minn agreed to pay $573,916 in back taxes for the eight years and an as-yet-undetermined amount of penalties. For example, because he also failed to report the existence of the accounts to U.S. authorities, the plea agreement calls for Minn to pay a 50 percent penalty on one of his foreign accounts that held up to approximately $18 million.
Minn has been directed to make his initial court appearance in this case in United States District Court in Santa Ana on April 26.
The statutory maximum sentence for the tax evasion offense is five years in federal prison.
This case was investigated by IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorney Lawrence E. Kole of the Santa Ana Branch Office.
Former Santa Maria Resident Sentenced to Three Months in Federal Prison for Shooting Elephant Seal to DeathRead the Press Release
LOS ANGELES – A former resident of Santa Barbara County was sentenced today to three months in federal prison for fatally shooting a northern elephant seal on a beach near San Simeon.
Jordan Gerbich, 30, who at the time of the offense resided in Santa Maria and who now lives in Coalville, Utah, was sentenced by United States District Judge Dale S. Fischer. Judge Fischer also ordered Gerbich to be placed on one year of supervised release following his release from prison, serve a three-month term of home detention, perform 120 hours of community service, and pay a $1,000 fine.
Gerbich pleaded guilty in December 2020 to one misdemeanor count of illegally taking a marine mammal.
On September 28, 2019, Gerbich drove to an elephant seal viewing area adjacent to the Piedras Blancas Marine Reserve and Monterey Bay National Marine Sanctuary. Gerbich brought a .45-caliber pistol and, aided with a flashlight, used the firearm to shoot and kill a northern elephant seal as the animal was resting on the beach in the Piedras Blancas rookery. The next day, the elephant seal was discovered on the beach with a bullet hole in its head.
“It remains unclear what motivated [Gerbich] to commit such an act; nevertheless, [Gerbich] knew it was wrong,” prosecutors wrote in their sentencing memorandum.
Northern elephant seals are a protected species under the Marine Mammal Protection Act. They live up and down North America’s Pacific coast and haul out on land in areas called rookeries. These rookeries are typically populated with elephant seals year-round, but populations vary throughout the year based on breeding and molting cycles.
The National Oceanic and Atmospheric Administration’s Office of Law Enforcement investigated this matter. The California Department of Fish and Wildlife provided substantial assistance.
Assistant United States Attorney Heather C. Gorman of the Environmental and Community Safety Crimes Section prosecuted this case.
Ex-L.A. Sheriff’s Deputy Sentenced to Seven Years in Federal Prison for Leading $2 Million Armed Robbery of Marijuana WarehouseRead the Press Release
LOS ANGELES – A former Los Angeles County Sheriff’s deputy was sentenced today to 84 months in federal prison for orchestrating and leading a $2 million armed robbery – staged as a legitimate law enforcement search – at a downtown Los Angeles warehouse where more than half a ton of marijuana and over $600,000 in cash was stolen.
Marc Antrim, 43, of South El Monte, who formerly was assigned to the LASD station in Temple City, was sentenced by United States District Judge Virginia A. Phillips, who said, “the seriousness of the crime could not be overstated.” The heist, which “sounded like a movie script,” was “tragic” for the victims and eroded “the public’s trust (in law enforcement),” the judge said.
Antrim pleaded guilty in March 2019 to a five-count information charging him with conspiracy to distribute marijuana, possession with intent to distribute marijuana, conspiracy to deprive rights under color of law, deprivation of rights under color of law, and brandishing a firearm in furtherance of a drug trafficking crime.
During the early morning hours of October 29, 2018, Antrim and his co-conspirators dressed as armed LASD deputies and approached the warehouse in an LASD Ford Explorer. Upon arrival, Antrim flashed his LASD badge and a fake search warrant to the security guards to gain entry to the warehouse. To perpetuate the ruse that they were legitimate law enforcement officers, Antrim and two fake deputies sported LASD clothing, wore duty belts, and carried firearms. One fake deputy also visibly carried a long gun to further intimidate the guards into submission.
At the beginning of the two-hour robbery, Antrim and his co-conspirators detained the three warehouse security guards in the cage of the LASD Ford Explorer. Soon after the guards were detained, a fourth man arrived at the warehouse in a large rental truck, and all four men began loading marijuana into the truck.
When Los Angeles Police Department officers legitimately responded to a call for service at the warehouse during the robbery, Antrim falsely told the LAPD officers that he was an LASD narcotics deputy conducting a legitimate search. To facilitate the sham, Antrim handed his phone to one of the LAPD officers so that the police officer could speak to someone on the phone claiming to be Antrim’s LASD sergeant. The individual on the phone was not Antrim’s sergeant, and Antrim did not have a legitimate search warrant for the warehouse.
After LAPD officers left the warehouse, other co-conspirators arrived and the robbery continued, allowing the fake law enforcement crew to steal even more marijuana and two large safes containing over half a million dollars in cash.
At the time of the robbery, Antrim was a patrol deputy assigned to the Temple City station, but he was not on duty, was not assigned to the department’s narcotics unit, was not a detective, and would not have had a legitimate reason to search a marijuana distribution warehouse in the City of Los Angeles.
Prosecutors have secured six convictions in this case for the co-conspirators who took part in the raid alongside Antrim.
Christopher Myung Kim, 31, of Walnut, a disgruntled former warehouse employee, is serving a 14-year federal prison sentence after being found guilty by a jury for his role in planning the heist and making off with $1.5 million in stolen marijuana after the raid. Antrim testified at Kim’s trial, which the judge credited as a significant reason to reduce Antrim’s sentence.
Kevin McBride, 45, of Glendora, and Eric Rodriguez, 35, of Adelanto, are serving federal prison sentences of six and nine years, respectively, after pleading guilty to felony charges in this case. In a related case, Antrim’s other co-conspirators, Matthew James Perez, 44, of Ontario, Daniel Aguilera, 33, of Los Angeles, and Jay Colby Sanford, 43, of Pomona, are serving sentences of six years’ imprisonment, two years’ imprisonment, and five years’ probation, respectively.
This case was investigated by the Drug Enforcement Administration; the FBI; and the Bureau of Alcohol, Tobacco, Firearms and Explosives. LASD’s Internal Criminal Investigations Bureau provided substantial assistance to the federal investigation.
Assistant United States Attorney Lindsey Greer Dotson of the Public Corruption and Civil Rights Section and Assistant United States Attorney Joseph D. Axelrad of the Violent and Organized Crime Section prosecuted this case.
Inland Empire Woman Sentenced to over 3 Years in Prison for Using Stolen Identities to Fraudulently Obtain over $500,000 in COVID ReliefRead the Press Release
LOS ANGELES – A Riverside County woman was sentenced today to 37 months in federal prison for fraudulently obtaining more than $500,000 in COVID-19-related unemployment benefits by using the stolen personal information of dozens of individuals obtained from the dark-net.
Cara Marie Kirk-Connell, 33, of Menifee, was sentenced by United States District Judge André Birotte, Jr. Kirk-Connell pleaded guilty in December 2020 to a single-count information charging her with use of an unauthorized access device.
From May to October 2020, Kirk-Connell used personal information – such as dates of birth and Social Security numbers – that she knew had been stolen and accessed via the dark-net. Kirk-Connell, who also watched YouTube instructional videos on how to commit unemployment insurance fraud, then used the stolen information and identities to apply for unemployment insurance benefits from the California Employment Development Department (EDD).
When Murietta police arrested Kirk-Connell in September 2020 during a traffic stop, she possessed eight EDD debit cards in other people’s names. The day before her arrest, Kirk-Connell used fraudulently obtained EDD debit cards to withdraw more than $1,000 in cash. When federal law enforcement arrested Kirk-Connell the following month, she possessed in her purse four EDD debit cards in victims’ names, four additional debit cards in victims’ names in her car trunk, and approximately $10,000 in cash.
“During the COVID pandemic over the past year, criminals have robbed the state of California of billions [of dollars] by engaging in identity theft to fraudulently obtain unemployment benefits from EDD,” prosecutors wrote in their sentencing memorandum. “[Kirk-Connell] was part of that scourge.”
The California EDD distributes unemployment benefits under the Coronavirus Aid, Relief, and Economic Security Act, passed by Congress in March 2020. The CARES Act expanded unemployment benefits to cover those who were previously ineligible, including business owners, self-employed workers, and independent contractors, who were put out of business or significantly reduced their services because of the COVID-19 pandemic.
This investigation, which is a result of the Department of Justice’s National Unemployment Insurance Fraud Task Force, was conducted by the U.S. Department of Labor – Office of Inspector General, IRS Criminal Investigation, and the United States Postal Inspection Service. California EDD Criminal Investigations and the Murrieta Police Department provided substantial assistance.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office prosecuted this case.
Grand Jury Indicts Huntington Park Man in Alleged Three-Month Robbery Spree Targeting 15 Trader Joe’s Grocery StoresRead the Press Release
LOS ANGELES – A federal grand jury today named a Huntington Park man in a 21-count indictment that accuses him of robbing 15 Trader Joe’s stores throughout Southern California during a three-month crime spree.
Gregory Johnson, 43, was named in a superseding indictment charging him with 15 counts of interference with commerce by robbery (Hobbs Act), five counts of knowingly using and possessing a firearm in furtherance of a crime of violence, and one count of being a felon in possession of a firearm.
His arraignment on the superseding indictment has not been scheduled. A June 22 trial previously was scheduled in this matter.
Johnson previously was charged via a two-count information on February 8 in connection with the robbery of a Trader Joe’s in Chino Hills on December 4, 2020. Today’s indictment charges him with 19 additional felonies.
According to the indictment, from August 28 to December 4, 2020, Johnson robbed Trader Joe’s stores in Eagle Rock, Sherman Oaks, Chatsworth, Pasadena, Culver City, Rancho Palos Verdes, Agoura Hills, Brea, Santa Ana, Tustin, and Chino Hills, and attempted to rob Trader Joe's stores in Simi Valley and Corona.
During many of the robberies, Johnson allegedly brandished a handgun. On two occasions, Johnson allegedly robbed stores in Rancho Palos Verdes and Brea, and 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 law enforcement learned of the Chino Hills Trader Joe’s robbery. A witness gave law enforcement a description of the Johnsons’ getaway car and its license plate, according to court documents.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of all charges, Gregory Johnson would face a statutory maximum sentence of 20 years in federal prison for each robbery charge, seven years in prison for each firearms use charge, and 10 years’ imprisonment for the felon-in-possession of a firearms charge.
On March 15, Gregory Eric Johnson pleaded guilty 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. His sentencing hearing is scheduled for July 12, at which time he will face a statutory maximum sentence of 40 years in federal prison.
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 are prosecuting this case.
3 Inland Empire Women Arrested on Charges of Illegally Obtaining COVID-Related Unemployment Benefits in Names of Prison InmatesRead the Press Release
RIVERSIDE, California – Federal authorities this week arrested three Inland Empire residents on fraud charges alleging they used information belonging to California state prison inmates to file for pandemic-related unemployment benefits, with each causing at least $345,000 in losses.
The three defendants are charged in separate criminal complaints, and each woman faces two counts – fraud in connection with emergency benefits and wire fraud.
With the three cases announced today, prosecutors in the Central District of California have now charged a dozen defendants with fraudulently obtaining enhanced unemployment benefits implemented during the pandemic. The defendants arrested this week are the latest of approximately 150 defendants who have been charged across the United States in what the Justice Department calls an unprecedented explosion of unemployment insurance (UI) fraud over the past year. The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress and signed into law in March 2020 provided additional UI benefits to qualified individuals and helped provide unemployment insurance benefits during the COVID-19 pandemic to people who did not otherwise qualify, including business owners, self-employed workers, independent contractors, and those with a limited work history.
This week’s arrests are the result of investigations conducted by the Department of Labor – Office of Inspector General, the FBI, and the United States Postal Inspection Service. Investigators with the California Employment Development Department (EDD), which administers the UI program in California, provided substantial assistance.
Sequoia Edwards, 35, of Moreno Valley, was arrested this morning after being charged with filing at least 27 fraudulent UI claims over two months last summer, at least six of which used personally identifiable information (PII) belonging to California prison inmates that she allegedly received from her incarcerated cousin. As a result, the EDD issued at least $455,000 in benefits intended to help individuals who were out of work due to the COVID-19 pandemic, which did not apply to prison inmates. During the execution of a search warrant at Edwards’ residence in February, the FBI recovered several debit cards issued by the EDD and $45,000 in cash, according to the affidavit in support of her criminal complaint. Edwards is expected to make her initial appearance this afternoon in United States District Court in Riverside.
Mireya Ramos, 42, of Colton, was arrested Thursday for allegedly filing at least 37 fraudulent UI claims, most of which were submitted in the names of inmates in the California prison system and many of which falsely stated the applicants were barbers who could not work due to the pandemic. The affidavit in support of her criminal complaint states that Ramos obtained the inmates’ PII from her long-time boyfriend, who is currently serving a life sentence in Calipatria State Prison. As a result of the fraudulent claims, the EDD, from June 2020 through January 2021, issued at least $353,532 in unemployment benefits. During a court appearance Thursday afternoon, Ramos was released on a $10,000 bond, and an arraignment was scheduled for May 4.
Paris Thomas, 33, of San Bernardino, was arrested Wednesday for allegedly filing approximately 49 fraudulent UI applications, at least 15 of which were filed in the names of people incarcerated in state prisons, a federal prison and county jails. “The 49 fraudulent UI claims mentioned above caused EDD to disburse over $440,000 in UI benefits from June 2020 to December 2020,” according to the affidavit in support of Thomas’ criminal complaint. During a search of Thomas’ residence in February, the FBI seized EDD cards and a notebook filled with PII for more than 40 people, the affidavit notes. When she appeared in court on Wednesday, a United States magistrate judge released Thomas on a $10,000 bond and ordered her to appear for an arraignment on May 11.
Discussing the fraudulent UI claims filed on behalf of state prisoners, the affidavits for all three defendants state “Due to their custody status, the inmates listed as named claimants were not…eligible to apply [for] UI benefits because they were not: (1) unemployed through no fault of their own; (2) able and available for work; and/or (3) actively seeking work.”
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The charge of fraud in connection with emergency benefits carries a statutory maximum sentence of 30 years in federal prison, and wire fraud carries a maximum possible penalty of 20 years in prison.
Assistant United States Attorneys Byron R. Tuyay and Julius J. Nam of the Riverside Branch Office are prosecuting these cases.
Ex-Accounting Manager Sentenced to 10½ Years in Prison for Embezzling More Than $36 Million from Internet CompanyRead the Press Release
LOS ANGELES – A former accounting manager for a Los Angeles firm was sentenced today to 126 months in federal prison for embezzling more than $36 million from his employer’s client and then using the bulk of the illicit gains to pay off tens of millions of dollars in credit card debt.
Paul McDaniel, 44, a.k.a. “Edward Martin Karuku,” who resided in Orange before fleeing the United States over four years ago, was sentenced by United States District Judge John A. Kronstadt. McDaniel pleaded guilty in September 2019 to one count of wire fraud.
For more than seven years, McDaniel embezzled the funds from Hypermedia Systems Inc., a media technology services firm based in downtown Los Angeles. McDaniel initially was an independent contractor for, and then an employee of, E-Times Corp., a downtown Los Angeles-based professional services firm that provided accounting assistance to Hypermedia Systems. McDaniel was assigned to work at Hypermedia as an accounting manager. As part of his job, he would request payments to be made from a Hypermedia account to pay Hypermedia vendors.
While working with Hypermedia, McDaniel formed a Nevada corporation with a name like one of Hypermedia’s vendors and then opened a bank account – which he controlled – in that entity’s name. He then used his authority as Hypermedia’s accounting manager to approve and direct tens of millions of dollars’ worth of payments to this bank account.
To justify the payments, McDaniel created more than 100 false and fictitious invoices that appeared to be from actual Hypermedia vendors, falsely stating the goods and services had been provided to the company. In total, McDaniel caused more than $36 million to be fraudulently transferred by wire or check from Hypermedia to the bank account he controlled. McDaniel used the ill-gotten gains to pay off $23 million in credit card bills and transferred another $8 million to his personal bank accounts. As part of his sentence, McDaniel was ordered to pay $36,332,388 in restitution to Hypermedia.
McDaniel fled to Costa Rica in early 2017, and he was arrested there later that year pursuant to a provisional arrest warrant filed by the United States. He was extradited to the United States in February 2019 and has been in custody since then.
The FBI investigated this matter.
Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section prosecuted this case.
Detroit Man Who Robbed Credit Union and Crashed Getaway Car Near Vandenberg Air Force Base Pleads Guilty to Bank Robbery ChargeRead the Press Release
LOS ANGELES – A Michigan man who robbed a credit union – and two days later attempted to rob a bank and led law enforcement on a high-speed pursuit that ended with him crashing his getaway car near Vandenberg Air Force Base – pleaded guilty today to a federal criminal charge.
Maurice Antwion Pilgrim Jr., 19, of Detroit, pleaded guilty to one count of bank robbery.
According to his plea agreement, on October 13, 2020, Pilgrim robbed Coast Hills Credit Union in Lompoc, netting $3,000 in the theft. Two days later, Pilgrim attempted to rob Mechanics Bank in Guadalupe by handing one of the tellers a note which read, “give me $5,000-$10,000 and no gets hurt.” Pilgrim fled the scene after seeing a nearby bank security guard.
After fleeing Mechanics Bank, local law enforcement spotted Pilgrim driving a car on Highway 1 and began pursuing him. After initially stopping his car, Pilgrim refused to exit the vehicle and, to avoid capture, sped away. During his subsequent flight from law enforcement he drove at speeds more than 110 mph, weaving in and out of traffic, and almost colliding with other motorists on the road, the plea agreement states.
Pilgrim’s vehicle went off the road near the Vandenberg Air Force Base visitor center, and he attempted to flee on foot, but he was quickly apprehended. Law enforcement recovered $552 from Pilgrim’s car and $1,700 from his pockets that were proceeds of his robbery of Coast Hills Credit Union two days earlier.
United States District Judge Percy Anderson has scheduled a June 21 sentencing hearing, at which time Pilgrim will face a statutory maximum sentence of 20 years in federal prison.
The FBI, the Lompoc Police Department, the Guadalupe Police Department, and the Santa Barbara County Sheriff’s Office investigated this matter.
Assistant United States Attorney Lynda Lao of the General Crimes Section is prosecuting this case.
Federal Immigration Official Originally from Nigeria Charged with Illegally Obtaining U.S. Citizenship under Fake IdentityRead the Press Release
SANTA ANA, California – An immigration services officer with U.S. Citizenship and Immigration Services was arrested this morning in Maryland on a federal charge that alleges he obtained U.S. citizenship under a false name.
The defendant is charged under the false name of “Karl Nwabugwu Odike Ifemembi,” but the criminal complaint in this case notes that his real name is Modestus Nwagubwu Ifemembi, originally of Nigeria. Ifemembi, 48, who previously resided in Aliso Viejo, but relocated to Rockville, Maryland, last year, has worked for USCIS for seven years. Ifemembi is charged in the complaint with one count of unlawfully procuring U.S. citizenship.
Ifemembi made false statements on various government forms to obtain U.S. citizenship, as well as employment with USCIS, according to the affidavit in support of the complaint, which was unsealed this morning.
Ifemembi first entered the United States in 2000 when he flew from France to Chicago with a British passport that had been issued to another person but had been altered to display Ifemembi’s photograph, according to the affidavit. While immigration officials in Chicago caught Ifemembi – who admitted his fraudulent use of the U.K. passport, the affidavit states – he ultimately was granted asylum after falsely claiming his real name was “Karlos Mourfy” and that he was a native of Sierra Leone.
After being granted asylum, Ifemembi attended the University of California, Berkeley, which granted him a bachelor’s degree in 2004, and then obtained J.D. from the University of Oregon, School of Law. Then, in late 2010, “Karlos Mourfy” applied for U.S. citizenship and asked to change his name to Ifemembi – requests that were granted in May 2011. Two years later, in 2013, Ifemembi was hired by USCIS, according to the affidavit.
During the investigation into Ifemembi, federal investigators traveled to Africa – including his hometown of Akuma, Nigeria – and searched his Orange County residence in 2019, obtaining evidence about his true identity, including baptism, school and financial records, the affidavit states.
Ifemembi is scheduled to make his initial appearance this afternoon in United States District Court in Greenbelt, Maryland.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The charge of unlawful procurement of citizenship or naturalization carries a statutory maximum penalty of 10 years in federal prison, and upon conviction, U.S. citizenship is automatically revoked.
The investigation into Ifemembi is being conducted by the United States Department of Homeland Security – Office of Inspector General, United States Citizenship and Immigration Services – Office of Investigations, and the United States Department of State, Diplomatic Security Service (DSS).
This matter is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.
Federal Grand Jury Charges Founder of Online Live Streaming Outfit with Wire Fraud in Connection with Bogus $14 Million Stock OfferingRead the Press Release
SANTA ANA, California – A former Southern California resident was charged today with defrauding more than 100 investors out of $14 million by using boiler room tactics to fraudulently offer a “pre-IPO” investing opportunity in his online streaming and entertainment company, then using much of the funds to support his lavish lifestyle.
Ronald Shane Flynn, a.k.a. “Ronnie Shane,” 57, who formerly resided in Santa Monica and Orange County and is believed to be residing abroad, was charged in a federal grand jury indictment with 15 counts of wire fraud.
According to the indictment, Flynn was the founder and operator of Vuuzle Media Corp., which purported to be a streaming media business with offices in New York, Las Vegas, the United Arab Emirates, the Philippines, and other locations throughout the world.
From September 2016 to the present, Flynn falsely represented to investors that Vuuzle was a pre-IPO (initial public offering) investment opportunity that would provide high returns when it went public. To raise investor money, Flynn, through Vuuzle, hired a salesforce to solicit investors to purchase Vuuzle stock, according to the indictment. Although Vuuzle’s paperwork with federal securities regulators indicated Vuuzle would pay no commissions, Flynn allegedly paid large commissions to his salesforce and independent stock promoters.
Flynn also falsely told investors that their money would be used to operate and build Vuuzle’s online streaming business, as well as to take the company public, and he promised investors they would receive dividend payments from their investments in Vuuzle, according to the indictment.
Based on Vuuzle’s U.S.-based bank account and filed tax returns, Vuuzle never made a profit, and Flynn did not intend to conduct an IPO for Vuuzle, the indictment alleges. Because Vuuzle did not have audited financials, it could never make a public offering on any public stock exchange, and, since its inception in 2016, Vuuzle has never paid dividends to any investor, according to the indictment.
Out of the $14 million raised in investor funds, Flynn allegedly took a large portion of investor money to support his lavish lifestyle, including purchases at resorts and jewelry merchants, using an American Express credit card paid for by Vuuzle.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of all charges, Flynn would face a statutory maximum sentence of 300 years in federal prison.
In January, the Securities and Exchange Commission sued Flynn and Vuuzle in federal court in New Jersey, alleging violations of federal securities laws.
The FBI investigated this matter.
Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office is prosecuting this case.
Torrance Man and His Sister Charged in Multimillion Dollar Real Estate Scam Involving Fake Open Houses at Not-for-Sale HomesRead the Press Release
LOS ANGELES – A Southern California brother-and-sister team were arrested today on federal charges alleging they orchestrated a $6 million real estate fraud scam in which they listed homes without the owners’ consent and collected money from multiple would-be buyers for each of the not-for-sale homes.
Adolfo Schoneke, 43, of Torrance, and his sister, Bianca Gonzalez, a.k.a. Blanca Schoneke, 38, of Walnut, each pleaded not guilty this afternoon to nine charges contained in an indictment unsealed after their arrests. The indictment charges Schoneke and Gonzalez with one count of conspiracy, seven counts of wire fraud, and one count of aggravated identity theft.
According to the indictment, Schoneke and Gonzalez, with the help of co-conspirators, operated real estate and escrow companies based in Cerritos, La Palma and Long Beach under a variety of names, including MCR and West Coast. The indictment alleges Schoneke and Gonzalez found properties that they would list for sale – even though many, in fact, were not for sale, and they did not have authority to list them for sale – and they then marketed the properties as short sales providing opportunities for purchases at below-market prices.
Using other people’s broker’s licenses, Schoneke and Gonzalez allegedly listed the properties on real estate websites such as the Multiple Listing Service (MLS). In some cases, the indictment alleges, the homes were marketed through open houses that co-conspirators were able to host after tricking homeowners into allowing their homes to be used.
As part of the alleged scheme, the co-conspirators accepted multiple offers for each of the not-for-sale properties, hiding this fact from the victims and instead leading each of the victims to believe that his or her offer was the only one accepted. The co-conspirators allegedly were able to string along the victims – sometimes for years – by telling them closings were being delayed because lenders needed to approve the purported short sales.
The indictment also alleges that Schoneke and Gonzalez directed office workers to open bank accounts in the office workers’ names. Those accounts were used to receive down payments on the homes and other payments from victims who were convinced to transfer the full “purchase price” to these bank accounts after receiving forged short sale approval letters. Schoneke and Gonzalez also allegedly directed the office workers to withdraw large amounts of cash from these accounts and give it to them – a procedure that allowed Schoneke and Gonzalez to take possession of the fraud proceeds while hiding their involvement in the scheme.
Investigators estimate that several hundred victims collectively lost more than $6 million during the scheme.
During the arraignments this afternoon, a trial was scheduled for June 1. Both defendants will remain in custody at least until detention hearings scheduled for Friday for Schoneke and April 13 for Gonzalez.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of all charges, Schoneke and Gonzalez each would face a statutory maximum sentence of 162 years in federal prison.
This matter was investigated by the FBI and the Federal Deposit Insurance Corporation, Office of Inspector General. The investigation was initiated by numerous complaints to the Long Beach Police Department and the Los Angeles County Sheriff’s Department, both of which provided substantial assistance during the federal investigation.
This case is being prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.
Beverlywood Man Arrested for Allegedly Bilking Investors by Falsely Claiming to License Latin American Film Rights to Netflix and HBORead the Press Release
LOS ANGELES – A Beverlywood man was arrested this morning on a federal criminal complaint alleging that victims put $227 million – investment principal that has yet to be repaid – into a scheme based on false claims their money would be used to acquire licensing rights to films that HBO and Netflix had agreed to distribute abroad, particularly in Latin America.
Zachary Joseph Horwitz, 34, who has used the screen name “Zach Avery,” was taken into custody by special agents with the FBI. The criminal complaint was unsealed during Horwitz’s initial appearance this afternoon in United States District Court.
The criminal complaint filed Monday charges Horwitz with wire fraud, a crime that carries a statutory maximum penalty of 20 years in prison.
According to the affidavit in support of the complaint, over the course of about five years, Horwitz solicited investors to invest in his company – 1inMM Capital LLC – which he claimed would use the funds to purchase regional distribution rights to films and then license the rights to online platforms such as Netflix and HBO. Horwitz provided promotional materials to investors that claimed 1inMM Capital offered “safe” investments because “we receive confirmation from each of our outputs indicating their desire to acquire the rights to any title we purchase PRIOR to us releasing funds for the film,” according to the affidavit.
However, instead of using the funds to acquire films and forge distribution deals, Horwitz allegedly operated 1inMM Capital as a Ponzi scheme, using victims’ money to repay earlier investors and to fund his own lifestyle, including the purchase of his $6 million Beverlywood residence.
The scheme allegedly began in 2015, when investment firms began entering into a series of 6-month or 12-month promissory notes with 1inMM Capital based on Horwitz’s statements. The funds supplied under each note were supposed to provide money for 1inMM Capital to acquire the rights to a specific film. To convince investors he was legitimate, the affidavit states, Horwitz provided investors with fake license agreements, as well as fake distribution agreements with Netflix and HBO, all of which contained forged or fictional signatures. Despite Horwitz’s claim of “solid relationships” with online platforms, representatives for Netflix and HBO have denied that their companies engaged in any business with Horwitz or 1inMM Capital, the affidavit states.
Investors started to complain after 1inMM Capital began defaulting on notes at various times in 2019, the affidavit states. To prolong the scheme in the wake of mounting defaults, Horwitz provided excuses that were purportedly given by Netflix and HBO, forwarding to investors spoofed correspondence with Netflix and HBO in which Horwitz again fraudulently used the identities of Netflix or HBO employees.
According to the affidavit, private investment firms have transferred approximately $227 million to 1inMM Capital pursuant to promissory notes since late 2018. Horwitz, through 1inMM Capital, allegedly has defaulted on all these underlying notes.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
During this afternoon’s initial appearance, a United States Magistrate Judge set Horwitz’s bond at $1 million, but he will not be released from custody until the bond is approved. An arraignment in this matter was scheduled for May 13.
The FBI is investigating this matter. The U.S. Securities and Exchange Commission provided substantial assistance.
This case is being prosecuted by Assistant United States Attorneys Alexander B. Schwab and David H. Chao of the Major Frauds Section.
Federal Drug Task Force Targets Southern California Ring that Distributed Fentanyl and Other Dangerous Narcotics Across U.S.Read the Press Release
LOS ANGELES – Members of the Los Angeles Strike Force this morning arrested eight defendants named in a federal grand jury indictment that alleges a drug trafficking organization operating in Los Angeles and Riverside counties distributed large quantities of methamphetamine, heroin, fentanyl and other narcotics across the United States.
The defendants arrested today – and nine others who are still being sought by authorities – are charged in a 20-count indictment that outlines an 18-month investigation that led to multiple seizures of narcotics, firearms and approximately $1.5 million in drug proceeds.
The indictment alleges that the drug ring was headed by Rigoberto Sanchez Martinez, 36, of Perris, who obtained wholesale quantities of narcotics, oversaw their storage, and coordinated distribution of the drugs to locations that included the states of Washington and New York. Martinez was one of the eight defendants arrested this morning.
The first major seizure in the investigation, according to the indictment, was on May 25, 2018, when authorities recovered approximately 54 kilograms of methamphetamine, nearly a kilogram of cocaine, and more than 25 kilograms of marijuana from a “stash house” near Whittier High School that was maintained by defendants Rogelio Barajas, 39, who is a fugitive, and Irene Equigua, 40, who was arrested this morning. Some of the narcotics seized by investigators were stored in coolers that had been buried in the backyard of the residence.
On the same day law enforcement seized the narcotics in Whittier, Martinez called the operator of another stash house and instructed him to take narcotics and drug proceeds and “wrap them and cover them with items such as Vicks VapoRub, coffee, pepper, and powdered soap, dig a deep hole, and bury the drugs in the ground,” the indictment alleges.
During the following year, investigators made several other seizures, including just over $240,000 in cash and numerous firearms seized from a drug courier returning from a trip to Washington; $1,041,970 in cash recovered from a residence in Long Beach; and $118,800 in cash seized from a drug courier who had travelled from New York with the intent to purchase five kilograms of cocaine from Martinez, the indictment states.
Authorities made additional seizures of narcotics that the indictment directly links to Martinez. On May 28, 2019, authorities seized 3.1 kilograms of methamphetamine, nearly 21 kilograms of cocaine, nearly 10 kilograms of fentanyl, and nearly 9 kilograms of heroin from a storage facility in Fontana, the indictment states. And, on September 13, 2019, at another stash house that Martinez had rented in Whitter, law enforcement seized more than 13 kilograms of methamphetamine and approximately $31,000 in cash.
The eight defendants arrested today are expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.
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 17 defendants named in the indictment are charged in various counts in the indictment. Each defendant is charged in court one, which alleges a conspiracy to distribute and possess with intent to distribute controlled substances. That narcotics conspiracy charge carries a mandatory minimum sentence of 10 years in federal prison and potential sentence of life without parole.
This case is being investigated by the Los Angeles Strike Force, which was formed in 2014 to target Mexican drug cartels that use the Los Angeles metropolitan region as a primary hub for the distribution of narcotics across the United States. The goals of the Strike Force are to target high-level narcotics traffickers, disrupt and dismantle the cartels’ narcotics trafficking and related money laundering activities, and arrest and prosecute major drug traffickers.
A number of agencies provided substantial assistance to the Strike Force, including the Drug Enforcement Administration, the Federal Bureau of Investigation, the United States Marshals Service, U.S. Customs and Border Protection, Homeland Security Investigations, the United States Postal Inspection Service, the United States Coast Guard Investigative Service, and IRS Criminal Investigation. Local law enforcement agencies participating in the investigation included the Pasadena Police Department, the Whittier Police Department, the Torrance Police Department, the Fontana Police Department, the South Gate Police Department, the San Bernardino Police Department, the Downey Police Department, the Ontario Police Department, the Los Angeles Police Department, the Seal Beach Police Department, the Irvine Police Department, the Bakersfield Police Department, the Orange County Sheriff’s Department, the Riverside County Sheriff’s Department, the California Highway Patrol, the New York Police Department, the Spokane (Washington) Police Department, and the Oregon State Police.
This matter is being prosecuted by Assistant United States Attorneys Lindsay M. Bailey and Shawn Nelson of the International Narcotics, Money Laundering, and Racketeering Section, which is headed by AUSA Nelson.
Lebanese-Nigerian Billionaire and Two Associates Resolve Federal Probe into Alleged Violations of Campaign Finance LawsRead the Press Release
Chagoury DPA
Arsan DPA
Baaklini DPA
LaHood NPALOS ANGELES – A Lebanese-Nigerian billionaire has resolved and two of his associates have agreed to resolve a federal investigation that they conspired to violate federal election laws by scheming to make illegal campaign contributions to U.S. presidential and congressional candidates, the Department of Justice announced today.
Gilbert Chagoury, 75, who presently resides in Paris, France, paid $1.8 million to resolve allegations that he, with the assistance of others, provided approximately $180,000 to individuals in the United States that was used to make contributions to four different federal political candidates in U.S. elections.
Chagoury, a foreign national prohibited by federal law from contributing to any U.S. elections, admitted he intended these funds to be used to make contributions to these candidates. He further admitted to making illegal conduit contributions – causing campaign contributions to be made in the name of another individual.
According to a deferred prosecution agreement with the government, Chagoury accepted responsibility for his role and conduct that resulted in violations of federal election contribution laws between June 2012 and March 2016 and agreed to cooperate with the government’s investigation. Chagoury entered into the agreement on October 19, 2019, and he paid the fine in December 2019.
Federal prosecutors entered into the deferred prosecution agreement considering, among other factors, Chagoury’s unique assistance to the U.S. government, his payment of a fine, Chagoury’s acceptance of responsibility for his actions, and his residence outside the United States.
Relatedly, two Chagoury associates – Joseph Arsan, 68, also of Paris, and Toufic Joseph Baaklini, 58, of Washington, D.C. – agreed to resolve allegations that they violated campaign contribution laws by assisting Chagoury in his illegal contributions. Arsan, a physician who worked as an assistant to Chagoury, admitted helping Chagoury reimburse others for contributions to political candidates. In 2014, Arsan – at Chagoury’s direction – wired $30,000 to a third party and indicated on the wire information form that the funds were for a “wedding gift,” when he knew or should have known that the funds were reimbursement for making a political contribution to a campaign fund for a federal elected official.
Arsan’s deferred prosecution agreement, which took effect in November 2020, also resolves a criminal investigation into his alleged tax violations in the years 2012 to 2016 stemming from his failure to report money he held in foreign bank accounts. Arsan agreed to pay $1.7 million in penalties to resolve the tax probe and to cooperate in the government’s investigation.
In his deferred prosecution agreement signed on March 1, 2021, Baaklini admitted to giving $30,000 in cash provided by Chagoury to an individual at a restaurant in Los Angeles who, along with others, later made campaign contributions to the 2016 campaign of a U.S. congressman. Baaklini also agreed to pay a $90,000 fine as part of his agreement and agreed to cooperate with the government’s investigation.
In a separate and unrelated matter, Ray LaHood, 75, who served as U.S. Secretary of Transportation from 2009 to 2013, paid a $40,000 fine to resolve a federal criminal investigation into LaHood’s conduct related to a $50,000 financial transaction between LaHood and Baaklini in June 2012.
LaHood, who at the time was suffering financial difficulties, admitted that in 2012 he accepted a $50,000 personal check from Baaklini – with the word “Loan” written in the check’s memo portion – and understood at the time that the money came from Chagoury. LaHood failed to disclose the $50,000 check on two government ethics forms as required because LaHood did not want to be associated with Chagoury. Later, LaHood also made misleading statements to FBI agents investigating Chagoury about the check and its source. As part of his non-prosecution agreement signed in December 2019, LaHood also agreed to cooperate with the government’s investigation and repaid the $50,000 to Baaklini.
This matter was investigated by the FBI, IRS Criminal Investigation, and Department of Transportation’s Office of Inspector General.
These cases were prosecuted by Assistant United States Attorneys Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Aron Ketchel, also of the Public Corruption and Civil Rights Section.
Orange County Man Arrested on Criminal Complaint Alleging He Received Illegal Kickbacks from Corrupt Sober Living HomesRead the Press Release
SANTA ANA, California – Special agents with the FBI this morning arrested an Orange County man on federal charges of soliciting and receiving illegal kickbacks from corrupt sober living homes in exchange for finding them new patients in a process known as “body brokering.”
Darius Jarell Moore, 27, of Santa Ana, is charged with one count of solicitation and receipt of payment in return for referring a patient to a recovery home or clinical treatment facility. Moore is scheduled to make his initial appearance this afternoon in United States District Court in Santa Ana.
An affidavit filed with the complaint alleges Moore received hundreds of thousands of dollars in kickbacks from four Orange County facilities with two separate ownership groups via a shell company – Moore Recovery Solutions LLC, a Santa Ana-based business. The kickbacks allegedly were covered up by bogus contracts for “marketing” services.
According to the affidavit, “Patient brokering has created a situation where substance abusers with no desire to stop using drugs are able to gain income from their insurance benefits by periodically participating in treatment programs.…The facilities generally know patient brokers pay patients and give patients drugs, but they maintain deniability by discharging patients who admit they were paid and stopping work with particular patient brokers as soon as such actions become overtly known.”
The complaint specifically alleges that Moore in October 2020 accepted a $16,000 kickback wired to a bank account held in the name of Moore Recovery Solutions from a checking account of a corrupt sober living home. The affidavit further details more than $350,000 in illegal kickbacks that the sober living homes allegedly paid to Moore in exchange for recruiting new patients. The sober living homes then submitted claims to health insurers.
The affidavit also details a recorded conversation between Moore and a sober living home employee discussing the clients Moore had placed into the facility and the cash value of the clients.
In December 2020, investigators executing search warrants at Moore’s residence found marketing agreements between Moore Recovery Solutions and two sober living homes that agreed to pay him $70,000 per month and $10,000 per month, respectively, but no other evidence that Moore’s company was a legitimate marketing service, according to the affidavit.
Investigators also found text messages from patients to Moore asking for money and asking to be placed in treatment. In response, Moore told the patients he would only talk to them through Signal, an encrypted communication application.
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.
If convicted, Moore would face a statutory maximum sentence of 10 years in federal prison.
This matter was investigated by the FBI, the United States Office of Personnel Management – Office of Inspector General, and the California Department of Insurance.
This case is being prosecuted by Assistant United States Attorney Benjamin R. Barron, Chief of the Santa Ana Branch Office, and DOJ Trial Attorney Justin Givens of the Criminal Division’s Fraud Section.
Lake Elsinore Man Pleads Guilty to Criminal Charge for Bagman Role in Conspiracy to Defraud Elderly by Posing as Federal AgentsRead the Press Release
LOS ANGELES – A Riverside County man pleaded guilty today to a federal criminal charge that he participated in an international conspiracy where he helped collect more than $500,000 in cash conned out of elderly victims by other co-conspirators pretending to be federal agents threatening the victims with arrest on bogus warrants.
Anuj Mahendrabhai Patel, 31, a.k.a. “Mike” and “Indio,” of Lake Elsinore, pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud.
According to his plea agreement, from April 2019 to March 2020, Patel participated in an international conspiracy that deceived elderly victims out of their money. Other members of the conspiracy, some of whom are believed to be in India, telephoned victims and pretended to be government employees or law enforcement officers. Using several false pretenses – including phony badge numbers and using spoofed government telephone numbers – the co-conspirators convinced the victims, most of whom were elderly, that their identities or assets were in trouble.
Some victims were told that their Social Security numbers had been linked to crimes and that there were warrants issued by courts authorizing the victims’ arrests. The co-conspirators further told the victims that to clear the warrants, they should withdraw their savings and send cash by mail to other members of the scheme.
The victims were ordered to send the parcels through shipping companies that allowed parcel recipients to pick up parcel so long as the recipients had identification matching the names listed on the parcel as the addressees. The addresses the defendants gave primarily were at locations in Riverside County, but also in Los Angeles and San Diego counties.
Patel admitted he used tracking numbers to monitor the victims’ parcels, and communicated with couriers – Elmer Miranda Barrios, 36, a.k.a. “Welbin Raul Mejia” and “Joe Rodriguez,” and William Margarito Barrios, 36, Elmer Barrios’s cousin, both of Lake Elsinore – who used fraudulent identification documents matching the names listed on the parcels as addresses. Patel also admitted to receiving or intending to receive 18 packages sent by victims.
The total loss in this case is approximately $541,420 and Patel admitted the scheme involved at least 10 victims, many of whom he knew were vulnerable people.
United States District Judge Otis D. Wright II has scheduled a June 28 sentencing hearing, at which time Patel will face a statutory maximum sentence of 20 years in federal prison.
William Barrios pleaded guilty on January 4 to one count of conspiracy to commit mail fraud and wire fraud, and was sentenced on March 29 and was given a time-served sentence of five months in federal prison and was ordered released to immigration authorities for deportation. Elmer Barrios is scheduled to go on trial in this matter on May 4.
This matter was investigated by Homeland Security Investigations; the Social Security Administration; the United States Department of Treasury Inspector General for Tax Administration; the Murrieta Police Department; the San Bernardino County Sheriff’s Department; the Los Angeles County Sheriff’s Department; the Huntington Beach Police Department; the Fullerton Police Department; the Stanislaus County (California) Sheriff’s Department; the Seattle Police Department; the Brownsville (Texas) Police Department; the St. James Parish (Louisiana) Sheriff’s Office; the Cook County (Illinois) Sheriff’s Office; the Addison (Illinois) Police Department; the Columbus (Ohio) Division of Police; the Northwest Lancaster County (Pennsylvania) Regional Police Department; the Edison Township (New Jersey) Police Department; and the St. Petersburg (Florida) Police Department.
This case is being prosecuted by Assistant United States Attorney Peter H. Dahlquist of the Riverside Branch Office.
The U.S. Attorney’s Office in Los Angeles is one of six offices participating in the Transnational Elder Fraud Strike Force, a joint law enforcement effort that brings together the resources and expertise of federal law enforcement and non-governmental organizations to combat international fraud schemes that disproportionately affect American seniors.
Santa Clarita Man Pleads Guilty to COVID-19 Relief FraudRead the Press Release
LOS ANGELES – A Santa Clarita Valley man pleaded guilty today to perpetrating a scheme 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).
According to court documents, Hassan Kanyike, 29, of Santa Clarita, admitted that he 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 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 in payroll in 2019. But Kanyike admitted during his plea that the company had substantially fewer employees and substantially lower payroll. Kanyike further admitted that he obtained additional Employer Identification Numbers from the IRS in April and May 2020, so that 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 was arrested in December 2020 at Los Angeles International Airport just before he was about to board a flight to Dubai. At the time of his arrest, 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.
Kanyike pleaded guilty to one count of wire fraud before United States District Judge Virginia A. Phillips. He is scheduled to be sentenced on August 23 and faces a maximum penalty of 20 years in prison. As part of his guilty plea, Kanyike is required to pay approximately $1.3 million in restitution.
Homeland Security Investigations and Treasury Inspector General for Tax Administration investigated the case.
Assistant Chief William Johnston of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Richard E. Robinson of the U.S. Attorney’s Office for the Central District of California’s Major Fraud Section are prosecuting the case. The case was previously prosecuted by former Trial Attorney Benjamin Saltzman of the Fraud Section.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP, and $10 billion in low-interest loans to small businesses through the EIDL program. In April 2020, Congress authorized over $300 billion in additional PPP funding and $10 billion in additional EIDL funding, and in December 2020, Congress authorized another $284 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
The EIDL program is designed to provide economic relief to small businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities, and fixed-debt payments. If an applicant also obtains a loan under the PPP, the EIDL funds cannot be used for the same purpose as the PPP funds.
The Fraud Section leads the Department of Justice’s prosecution of fraud schemes that exploit the CARES Act. In the months since the CARES Act was passed, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP and EIDL 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/cares-act-fraud.
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.
California Man Pleads Guilty to COVID-Relief FraudRead the Press Release
A California man pleaded guilty today to perpetrating a scheme 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).
According to court documents, Hassan Kanyike, 29, of Santa Clarita, admitted that he 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 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 in payroll in 2019. But Kanyike admitted during his plea that the company had substantially fewer employees and substantially lower payroll. Kanyike further admitted that he obtained additional Employer Identification Numbers from the IRS in April and May 2020, so that 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 was arrested in December 2020 at Los Angeles International Airport just before he was about to board a flight to Dubai. At the time of his arrest, 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.
Kanyike pleaded guilty to one count of wire fraud in the Central District of California. He is scheduled to be sentenced on Aug. 23, and faces a maximum penalty of 20 years in prison. As part of his guilty plea, Kanyike is required to pay approximately $1.3 million in restitution. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Tracy L. Wilkison of the U.S. Attorney’s Office for the Central District of California; Special Agent in Charge David A. Prince of the Los Angeles Field Office of Homeland Security Investigations (HSI); and Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA) made the announcement.
HSI and TIGTA are investigating the case.
Assistant Chief William Johnston of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Richard E. Robinson of the U.S. Attorney’s Office for the Central District of California are prosecuting the case. The case was previously prosecuted by former Trial Attorney Benjamin Saltzman of the Fraud Section.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP, and $10 billion in low-interest loans to small businesses through the EIDL program. In April 2020, Congress authorized over $300 billion in additional PPP funding and $10 billion in additional EIDL funding, and in December 2020, Congress authorized another $284 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
The EIDL program is designed to provide economic relief to small businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities, and fixed-debt payments. If an applicant also obtains a loan under the PPP, the EIDL funds cannot be used for the same purpose as the PPP funds.
The Fraud Section leads the Department of Justice’s prosecution of fraud schemes that exploit the CARES Act. In the months since the CARES Act was passed, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP and EIDL 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/cares-act-fraud.
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.
27 Hotels Across Southern California and on Central Coast Sign Agreements to Improve Access for Persons with DisabilitiesRead the Press Release
LOS ANGELES – The United States Attorney’s Office announced today that it has signed agreements with 27 hotels across Southern California to resolve investigations pursuant to the Americans with Disabilities Act (ADA).
The agreements were finalized over a one-year period that began last April and concluded today with the 27th agreement. After federal investigations into the hotels revealed non-compliance with various provisions of the ADA pertaining to “public accommodations,” the various hotels agreed to remedy the violations, with some agreeing to stop the illegal practice of charging more for accessible rooms – a “disability tax” of up to $25 when compared to similar non-accessible rooms.
Various hotels also agreed to relief that includes adding additional accessible rooms and communication features for persons with disabilities, ensuring that booking websites provide sufficient information about accessible features, and the payment of civil penalties.
The hotels that have entered into settlement agreements with the United States Attorney’s Office are:
- The Knights Inn Los Angeles Central/Convention Center;
- The Mayfair Inn in Ontario (formerly called the Knights Inn Ontario);
- The Red Roof Inns in San Dimas-Fairplex and Santa Ana;
- Rodeway Inn & Suites in Beaumont, Canyon Lake (Riverside County), Corona, and Harbor City;
- Rodeway Inns, one near Venice Beach and a second in Encino;
- The Santa Fe Inn (formerly Rodeway Inn Near LA Live); and
- Super 8 hotels located in Cypress, Hollywood, Inglewood, North Hollywood, Redlands, and Torrance.
Ten entities have signed letters of resolution and agreed to come into compliance with the ADA. They are:
- Rodeway Inn & Suites in Hollywood and Lynwood;
- Two Rodeway Inn locations, one near Maingate Knott’s and one known as Regalodge (in Glendale);
- Vantage Point Inn (formerly known as Knights Inn Woodland Hills);
- Super 8 locations near LAX, and in Pasadena, Santa Clarita, and San Luis Obispo; and
- Red Lion Hotels Corporation.
“It is unfair and illegal for private entities that own or operate public accommodations such as hotels to discriminate against people with disabilities,” said Acting United States Attorney Tracy L. Wilkison. “I commend the hotels in this district that have demonstrated their commitment to ensuring full access for persons with disabilities by cooperating in our investigations and by agreeing to comply with the ADA.”
These matters were handled by Assistant United States Attorneys Acrivi Coromelas, Katherine Hikida and Matthew Nickell of the Civil Rights Section in the Civil Division.
For more information on the ADA, or to file a complaint, please call the ADA Information Line at 800-514-0301 or 800-514-0383 (TDD), or visit the ADA website at http://www.ada.gov.
Moreno Valley Man Pleads Guilty to Federal Robbery Charges for Month-Long Pharmacy Crime Spree in Inland EmpireRead the Press Release
RIVERSIDE, California – A Riverside County man pleaded guilty today to federal criminal charges that he engaged in a month-long robbery spree of pharmacies in the Inland Empire while wearing a medical mask over his face.
David Anthony Battle, 51, of Moreno Valley, pleaded guilty to six felony counts of interference with commerce by robbery (Hobbs Act robbery).
According to his plea agreement, from July 6, 2020 to August 10, 2020, Battle robbed six pharmacies – Walgreens, CVS, and Rite Aid – in Moreno Valley, Colton, and San Bernardino, and attempted to rob two other Moreno Valley pharmacies.
During each incident, Battle wore similar clothing – including wearing medical masks covering his nose and mouth – and used a similar method of brandishing what appeared to be a handgun by pulling it out from his waistband and holding it at his side, according to an affidavit filed with a criminal complaint in this case. He then demanded that money in the cash register be placed in a bag and handed over, the plea agreement states.
Law enforcement reviewed store surveillance videos, which led them to arrest Battle, court documents state. During Battle’s arrest, a black BB-gun-style pistol was found on the ground near him, the affidavit states.
Battle netted $5,453 in illicit gains from the robberies, though $3,200 of that came from the July 6 robbery of a Walgreens store in Moreno Valley, according to the plea agreement.
United States District Judge Jesus G. Bernal has scheduled a June 14 sentencing hearing, at which time Battle will face a statutory maximum sentence of 20 years in federal prison for each Hobbs Act robbery count.
The FBI, the Riverside County Sheriff’s Department, the San Bernardino Police Department, and the Colton Police Department investigated this matter.
Assistant United States Attorney Peter H. Dahlquist of the Riverside Branch Office is prosecuting this case.
Owner of Anaheim-Based Company Faces Additional Charges Related to Nearly $30 Million in Payroll Taxes Owed to IRSRead the Press Release
SANTA ANA, California – The owner of Orange County-based temporary staffing companies, who previously was charged with failing to pay more than $29 million in payroll taxes, was indicted today on six additional federal charges that he caused one of his companies to file false tax returns that failed to report an additional $29.6 million in payroll taxes.
Luis E. Perez, 52, who has maintained residences in Anaheim Hills, Yorba Linda, and Dove Canyon, was charged with six counts of aiding and assisting in the preparation of false tax returns. The charges carry an additional penalty for being offenses committed while Perez was free on bond after the initial tax evasion count was filed against him. Perez initially was charged in this case in early 2018 and a May 11 trial date is on calendar. His arraignment on today’s indictment is scheduled for April 5.
Perez’s companies – which include Checkmates Staffing Inc.; Staffaid Inc.; BaronHR, LLC; BaronHR West Inc.; and Fortress Holding Group LLC – were required to withhold taxes from employee wages and to pay the withheld amounts to the IRS on a periodic basis. These withheld taxes, sometimes known as “trust fund taxes,” include income taxes and Federal Insurance Contributions Act (FICA) taxes that fund Social Security and Medicare. In additional, Perez’s companies, as employers, were required to pay matching FICA taxes imposed at the employer level. Collectively, trust fund taxes and employer FICA taxes are generally referred to as “payroll taxes.”
According to a second superseding indictment that a federal grand jury returned today, Perez caused the Anaheim-based temporary staffing company BaronHR West Inc. to substantially underreport employee wages and other compensation, which resulted in the company’s failure to report and pay $29,633,516 in payroll taxes to the IRS. From October 2018 to August 2019, Perez willfully aided and assisted in the preparation of false tax returns that substantially understated the wages paid to BaronHR West employees from January 2018 through June 2019, the indictment alleges.
Perez allegedly committed these crimes while charged with tax evasion. According to a previous indictment in this case that a federal grand jury returned in August 2019, for the tax years 2001, 2002, 2003, 2006, 2007, 2008 and 2010, Perez’s companies failed to pay the IRS the payroll taxes, including trust fund taxes that Perez’s companies withheld from employees’ paychecks. Beginning in June 2007, the IRS attempted to collect Perez’s outstanding tax liability, including penalties and interest. By February 2017, the outstanding balance had grown to $29,593,378, which included the unpaid taxes, interest and the “Trust Fund Recovery Penalty.”
Perez allegedly attempted to thwart the IRS’s collection efforts by purchasing luxury items – including numerous cars and a boat – and concealing his ownership by placing the titles of these items in the names of his businesses and other individuals. Those luxury items included a 2005 Ferrari 360 Spider F, a 2007 Rolls Royce Phantom, a Duffy D 22 Bay Island boat, a 2011 Mercedes-Benz SLS, a 2015 Mercedes-Benz G-Class, and a 2014 Lamborghini Aventador, according to the indictment.
As part of his efforts to impede the IRS, Perez allegedly made false statements to IRS revenue officers during interviews and failed to include material information in documents submitted to the IRS.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of all charges, Perez would face a statutory maximum sentence of 33 years in federal prison.
IRS Criminal Investigation investigated this matter.
Assistant United States Attorneys Brett A. Sagel of the Santa Ana Branch Office and James C. Hughes of the Major Frauds Section are prosecuting this case.
Chino Woman Arrested on Indictment Alleging Fentanyl and Heroin Trafficking Operation through Southern California AirportsRead the Press Release
LOS ANGELES – Federal authorities today arrested a San Bernardino County woman on an indictment charging her with recruiting drug couriers to smuggle pound quantities of fentanyl and heroin through Southern California airports for transport to other parts of the United States.
Chavon Sayles, a.k.a. “Amber,” 28, of Chino, was arrested this morning at her residence. She is expected to be arraigned this afternoon in United States District Court in Los Angeles.
A federal grand jury indictment returned on March 16 charges her with one count of conspiracy to distribute heroin and fentanyl, and one count of possession with intent to distribute fentanyl.
According to the indictment, from June 2018 to March 2019, Sayles and other co-conspirators recruited drug couriers to transport heroin and fentanyl through Hollywood Burbank Airport, Long Beach Airport, and Ontario International Airport to Ohio, Oregon, and elsewhere in the nation. Sayles allegedly contacted the couriers the night before the flight, and then booked their flight.
The couriers would then receive a bag containing concealed pound quantities of drugs, and they would be responsible for checking it in at the airport, the indictment alleges. In June 2018, a co-conspirator, for whom Sayles allegedly purchased a plane ticket the night before, checked a bag intended for delivery to other co-conspirators in Ohio containing 6.5 pounds of heroin at Hollywood Burbank Airport. In July 2018, Sayles allegedly picked up another co-conspirator and dropped her off at Long Beach Airport with 6.6 pounds of fentanyl in her luggage for a flight to Dayton, Ohio.
In January 2019, Sayles allegedly told one co-conspirator via text to get ready for a short trip from Ontario International Airport to Portland, Oregon the next day, and to “make sure you bring a lot of stuff your bag has to look so full it’s going to bust.” The co-conspirator later checked into the airport with a bag containing 3.2 pounds of heroin, the indictment alleges.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of all charges, Sayles would face a statutory maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years in federal prison.
Other co-conspirators, including Tatijana Bell, 27, of San Bernardino, and Keeshanai Monique Wilcher, 27, of San Bernardino, have pleaded guilty to federal narcotics charges in connection with this case. Wilcher is serving a 31-month prison sentence for her role in this drug trafficking operation.
Homeland Security Investigations investigated this matter.
Assistant United States Attorneys Jehan M. Pernas of the International Narcotics, Money Laundering, and Racketeering Section, and Morgan J. Cohen of the General Crimes Section are prosecuting this case.
Top Federal Prosecutor in Los Angeles and Head of FBI Field Office Denounce Hate Crimes and Racism Targeting Asian AmericansRead the Press Release
LOS ANGELES – With a call to the public to report hate crimes to law enforcement authorities, Acting United States Attorney Tracy L. Wilkison and FBI Assistant Director in Charge Kristi K. Johnson today condemned bigotry, racism and hatred against the Asian American and Pacific Islander community.
“Discrimination against Asian Americans is a long-standing and malignant problem that has found new roots in the pandemic,” said Acting U.S. Attorney Wilkison. “Everyone deserves to feel safe in their communities, and attacks based on race, ethnicity or national origin have no place in our society. We urge the public to report potential racial discrimination and hate crimes to law enforcement so we can address these illegal and immoral acts.”
“The FBI is committed to reaching out to the AAPI community, among other groups who have been targeted historically with racial bigotry, so that affected individuals know their rights and know that they have an ally with their law enforcement professionals,” said Assistant Director in Charge Johnson, who runs the FBI’s Los Angeles Field Office. “The FBI and partners with the Los Angeles County Sheriff’s Department and the Los Angeles Police Department operate the L.A. Hate Crimes Task Force to investigate and properly address hate crime allegations. We encourage anyone who believes their civil rights were violated to report it so that we can determine whether a crime occurred. Hate crime threats in the form of racially charged rhetoric or violent assaults are taken extremely seriously as we continue to safeguard the rights of every individual, citizen and non-citizen alike."
In addition to working with colleagues in law enforcement, the United States Attorney’s Office and the FBI review allegations of hate crimes for possible federal prosecution. Members of the public may report a potential hate crime to the Federal Bureau of Investigation. The FBI’s Los Angeles Field Office can be reached 24 hours a day at (310) 477-6565, or reports can be made online at https://tips.fbi.gov/. The Civil Division of the U.S. Attorney’s Office also investigates non-criminal instances of discrimination, and citizens may report potential civil rights violations by submitting this form.
The United States Attorney’s Office is increasing its outreach efforts as more people are becoming aware of anti-Asian bias in our communities. The Office last week participated in a rally on the steps of the Kenneth Hahn Hall of Administration to emphasize that we all stand together as we see an increase in the reporting of hate crime incidents against Asian Americans in our district. The event was presented by the LA vs Hate Campaign and featured representatives from County Supervisors’ offices, the Mayor’s office, the Anti-Defamation League, Asian Americans Advancing Justice, and other civil and human rights leaders in Los Angeles County.
The United States Attorney’s Office and the FBI, along with other federal partners and community stakeholders, are hosting a virtual community event on April 22 to discuss the federal government’s multi-faceted response to hate against the AAPI community and other communities.
President Biden on January 26 issued the “Presidential Memorandum Condemning and Combating Racism, Xenophobia, and Intolerance Against Asian Americans and Pacific Islanders in the United States.” The memorandum mandates that the Attorney General explore opportunities to support, consistent with applicable law, the efforts of State and local agencies, as well as AAPI communities and community-based organizations, to prevent discrimination, bullying, harassment, and hate crimes against AAPI individuals, and expand collection of data and public reporting regarding hate incidents against such individuals.
The Justice Department’s Civil Rights Division enforces federal anti-discrimination laws, and the United States Attorney’s Office has dedicated units that prosecute civil rights violations in its Criminal Division: Public Corruption and Civil Rights Section and enforce civil rights laws in its Civil Division.
East L.A. Gang Member Who Led Firebomb Attacks on African American Residences Sentenced to 16 Years in Federal PrisonRead the Press Release
LOS ANGELES – A senior member of the Big Hazard street gang was sentenced this morning to 192 months in federal prison for orchestrating and executing the nighttime firebombing of African American families at the Ramona Gardens Housing Development in Boyle Heights in 2014 in order to force the residents out of their homes.
Carlos Hernandez, 36, aka “Rider” and “Creeper,” was sentenced by United States District Judge Christina A. Snyder. During the hearing, Judge Snyder explained that her sentence was intended to “send a message to the community that hate crimes will not be tolerated” and that this was “not a time for any court to tolerate hate crimes.”
Hernandez pleaded guilty in April 2019 to five felony counts: conspiracy to violate civil rights, violent crime in aid of racketeering, criminal interference with fair housing rights, use of fire in the commission of a federal felony, and carrying a firearm in the commission of a crime of violence.
“The defendants in this case perpetrated hate crimes that targeted innocent victims in their homes simply because of their skin color,” said Acting United States Attorney Tracy L. Wilkison. “These despicable acts are simply unacceptable in our society. We are committed to protecting everyone’s civil rights, and anyone who participates in this type of conduct will find that the federal government will marshal all of its resources to ensure they are brought to justice.”
“There is absolutely no place for race-based violence in a civilized society,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Investigators worked diligently to identify Mr. Hernandez as the one who masterminded this crime and arrested Hernandez and others before they could target any other innocent victims. The FBI will continue to protect the civil rights of our community by holding responsible anyone so filled with hate that they would attempt to commit such heinous violence based on the color of a victim’s skin.”
“The defendant planned, coordinated, and led these racially-motivated attacks that targeted vulnerable families, including grandparents and infants, while they were sleeping peacefully in their own homes,” said Principal Deputy Assistant Attorney General Pamela S. Karlan of the Justice Department’s Civil Rights Division. “The Justice Department will continue to prioritize the prosecution of hate-fueled violence.”
On the evening of May 11, 2014, which was Mother’s Day, Hernandez organized and led seven co-defendants – all members of the Big Hazard street gang – in a plan to firebomb several apartments in the Ramona Gardens housing complex. Hernandez and his co-defendants targeted each of the residences because African Americans lived there. Hernandez divided the defendants into groups to carry out the firebombings, assigned each defendant a specific role within those groups, and provided various defendants with a lighter or hammer to be used in the attacks, as well as masks to conceal their identities. The defendants stashed their cell phones to prevent law enforcement tracking and traveled a predetermined route designed to evade surveillance cameras. Heightening the dangerousness of the attacks, Hernandez armed himself with a semiautomatic handgun.
Once the gang members located the targeted apartments, they smashed the windows of four apartments to allow for cleaner entry of the firebombs to maximize damage. Hernandez and his co-defendants then threw lit Molotov cocktails into the residences. Three of the four targeted apartments were occupied by African American families who were sleeping at the time of the unprovoked attack. A mother who was sleeping with her infant baby on her chest at the time of the attack barely evaded being hit by a firebomb when she rolled off the couch with her baby after hearing a window shatter.
A federal task force with numerous federal agencies and local partners was established to investigate the attack, which remained unsolved for two years until prosecutors unsealed the charges in this matter.
All of the defendants who participated in the firebombing were charged in 2016 and have pleaded guilty to federal hate crime and related offenses. Those defendants all admitted that they participated in the firebombing attacks because of the victims’ race and color and with the intent to force the victims to move away from the federally funded housing complex.
Today’s sentencing hearing follows the sentencings of several other defendants in this case: Jose Saucedo, aka “Lil Mo,” who was ordered to serve 156 months; Josue Garibay, aka “Malo,” who received a 12-year sentence; Jonathan Portillo, aka “Pelon,” sentenced to 63 months; Francisco Farias, aka “Bones,” who was ordered to serve 42 months; and Edwin Felix, aka “Boogie,” who received a 92-month sentence.
The investigation into the firebombing was conducted by agents and detectives with the FBI; the Los Angeles Police Department; the Los Angeles Fire Department; and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
This case was prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Justice Department Special Litigation Counsel Julia Gegenheimer of the Civil Rights Division’s Criminal Section.
Iranian Nationals Charged with Conspiring to Evade U.S. Sanctions on Iran by Disguising $300 Million in Transactions over Two DecadesRead the Press Release
LOS ANGELES – A federal criminal complaint unsealed today charges 10 Iranian nationals with running a nearly 20-year-long scheme to evade U.S. sanctions on the Government of Iran by disguising more than $300 million worth of transactions – including the purchase of two $25 million oil tankers – on Iran’s behalf through front companies in the San Fernando Valley, Canada, Hong Kong and the United Arab Emirates. In addition, a civil forfeiture complaint filed today seeks a money laundering penalty in the amount of $157,332,367.
The complaint, filed in October 2020 in United States District Court in Los Angeles, charges the defendants with one count of conspiracy to violate the Iranian Transactions and Sanctions Regulations, the Iranian Financial Sanctions Regulations and the International Emergency Economic Powers Act. The defendants are believed to be located outside of the United States.
“In a wide-ranging scheme spanning nearly two decades and several continents, the defendants conspired to abuse the U.S. financial system to conduct hundreds of millions of dollars in transactions on behalf of the Government of Iran,” said Acting United States Attorney Tracy L. Wilkison for the Central District of California. “Today’s indictment is an example of the will of federal law enforcement to bring to justice those who violate our sanctions and laws designed to strengthen our national security.”
“In a substantial civil forfeiture action filed by the Department, the defendants stand to lose over $157 million in funds involved in violations of the Iran sanctions,” said Assistant Attorney General for National Security John C. Demers. “This is only right. Through the use of front companies, money service businesses and exchanges throughout the world, the defendants worked to disguise hundreds of millions of dollars’ worth of transactions on behalf of a state sponsor of terrorism. Make no mistake, the Department of Justice will continue to deploy all tools necessary to curb the Iranian regime’s ability to use the U.S. financial system to support its malign endeavors.”
“Sanctions are imposed, in part, to thwart an adversarial country’s ability to take actions in violation of diplomatic agreements and which threaten international relations,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The charges announced today should send a message that the United States will not allow the laundering of money through American banks as a secret backdoor to conduct business and avoid the limitations imposed by sanctions.”
According to court documents, the complaint details a decades-long conspiracy to evade U.S. sanctions on Iran, a nation which the U.S. State Department has designated as a state sponsor of terrorism. During the scheme, the defendants allegedly created and used more than 70 front companies, money service businesses and exchange houses – often using the name “Persepolis” or “Rosco” – in the United States, Iran, Canada, the United Arab Emirates and Hong Kong. The defendants also allegedly made false representations to financial institutions to disguise more than $300 million worth of transactions on Iran’s behalf, using money wired in U.S. dollars and sent through U.S.-based banks.
The complaint alleges that the defendants were aware of U.S. sanctions on Iran throughout the conspiracy. In one email exchange, for example, defendants allegedly discussed the U.S. government’s efforts to disrupt Iranian Supreme Leader Ali Khamenei’s “international financial network,” an organization allegedly designed to conceal investments from the Iranian people and international regulators. In an iCloud account, one defendant saved a press report about new U.S. sanctions imposed on firms suspected of funding the Iranian Revolutionary Guard Corps.
As alleged, several defendants operated or were employed by Persepolis Financial Services Inc., an Encino-based company that facilitated the illegal transfer of U.S. dollars on Iran’s behalf from 1999 through the early 2000s. After a Persepolis Financial executive was convicted in 2003, several defendants left the country and moved to Canada and the United Arab Emirates. There, they owned, operated or were employed by additional front companies – using the names Rosco Trading, Rosco International, Persepolis and Rosco Investment – that were used for well over a decade to secretly facilitate U.S. dollar transactions on Iran’s behalf.
In addition, several defendants allegedly used a Hong Kong-based front company known as Total Excellence Ltd. to secretly buy two $25 million oil tankers on Iran’s behalf. The U.S. later sanctioned the businessman for using Iranian money to purchase oil tankers and to help Iran ship crude oil in violation of U.S. and European Union sanctions. In 2013, two defendants allegedly defrauded a financial institution in the UAE by preparing a fraudulent invoice and making false statements indicating that a transaction in U.S. dollars – processed through a New York-based bank – was undertaken on behalf of a UAE-based front company. In actuality, the true buyer was an Iranian oil and gas company, the affidavit states.
Furthermore, in 2016, several defendants allegedly conspired to wire millions of dollars through the U.S. financial system to complete a transaction with a South Korean equipment manufacturer on Iran’s behalf. During that transaction, four defendants instructed the manufacturer to not to “mention any name of Iran” in any paperwork exchanged with financial institutions processing the transaction, the affidavit alleges. In March 2017, the South Korean company sent $1 million to a front company selected by the conspirators.
Finally, in 2016, the conspirators secretly transferred thousands of dollars into Southern California on Iran’s behalf, including $66,766 that a defendant transferred to a Santa Monica-based company with a bank account held at Wells Fargo & Co., to acquire electronic equipment at the direction of a business associate at an Iran-based company, according to the affidavit.
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.
If convicted, the defendants would face a statutory maximum sentence of 20 years in federal prison.
The FBI is investigating the case.
Assistant U.S. Attorneys William M. Rollins of the Terrorism and Export Crimes Section, Dan G. Boyle of the Asset Forfeiture Section, and Trial Attorney David Lim of the Department of Justice’s Counterintelligence and Export Control Section are prosecuting this case.
Iranian Nationals Charged with Conspiring to Evade U.S. Sanctions on Iran by Disguising $300 Million in Transactions over Two DecadesRead the Press Release
WASHINGTON – A federal criminal complaint unsealed today charges 10 Iranian nationals with running a nearly 20-year-long scheme to evade U.S. sanctions on the Government of Iran by disguising more than $300 million worth of transactions – including the purchase of two $25 million oil tankers – on Iran’s behalf through front companies in the San Fernando Valley, Canada, Hong Kong and the United Arab Emirates. In addition, a forfeiture complaint filed today seeks a money laundering penalty in the amount of $157,332,367.
The complaint, filed in October 2020 in U.S. District Court of Los Angeles, charges the defendants with one count of conspiracy to violate the Iranian Transactions and Sanctions Regulations, Iranian Financial Sanctions Regulations and the International Emergency Economic Powers Act. The defendants are believed to be located outside of the United States. If convicted, the defendants would face a statutory maximum sentence of 20 years in federal prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
“In a substantial civil forfeiture action filed by the Department, the defendants stand to lose over $157 million in funds involved in violations of the Iran sanctions,” said Assistant Attorney General for National Security John C. Demers. “This is only right. Through the use of front companies, money service businesses and exchanges throughout the world, the defendants worked to disguise hundreds of millions of dollars worth of transactions on behalf of a state sponsor of terrorism. Make no mistake, the Department of Justice will continue to deploy all tools necessary to curb the Iranian regime’s ability to use the U.S. financial system to support its malign endeavors.”
“The FBI has a keen ability to track nefarious actors who use the U.S. financial system to evade sanctions,” said Alan E. Kohler, Jr., Assistant Director of the FBI’s Counterintelligence Division. “Our investigation revealed over 70 front companies were used by these individuals to hide their conspiracy in support of the Iranian Governments pursuit of nuclear weapons and sponsorship of terrorism.”
“In a wide-ranging scheme spanning nearly two decades and several continents, the defendants conspired to abuse the U.S. financial system to conduct hundreds of millions of dollars in transactions on behalf of the Government of Iran,” said Acting United States Attorney Tracy L. Wilkison for the Central District of California. “Today’s indictment is an example of the will of federal law enforcement to bring to justice those who violate our sanctions and laws designed to strengthen our national security.”
According to court documents, the complaint details a decades-long conspiracy to evade U.S. sanctions on Iran, a nation which the U.S. State Department has designated as a state sponsor of terrorism. During the scheme, the defendants allegedly created and used more than 70 front companies, money service businesses and exchange houses – often using the name “Persepolis” or “Rosco” – in the United States, Iran, Canada, the United Arab Emirates and Hong Kong. The defendants also allegedly made false representations to financial institutions to disguise more than $300 million worth of transactions on Iran’s behalf, using money wired in U.S. dollars and sent through U.S.-based banks.
The complaint alleges that the defendants were aware of U.S. sanctions on Iran throughout the conspiracy. In one email exchange, for example, defendants allegedly discussed the U.S. government’s efforts to disrupt Iranian Supreme Leader Ali Khamenei’s “international financial network,” an organization allegedly designed to conceal investments from the Iranian people and international regulators. In an iCloud account, one defendant saved a press report about new U.S. sanctions imposed on firms suspected of funding the Iranian Revolutionary Guard Corps.
As alleged, several defendants operated or were employed by Persepolis Financial Services Inc., an Encino-based company that facilitated the illegal transfer of U.S. dollars on Iran’s behalf from 1999 through the early 2000s. After a Persepolis Financial executive was convicted in 2003, several defendants left the country and moved to Canada and the United Arab Emirates. There, they owned, operated or were employed by additional front companies – using the names Rosco Trading, Rosco International, Persepolis and Rosco Investment – that were used for well over a decade to secretly facilitate U.S. dollar transactions on Iran’s behalf.
In addition, several defendants allegedly used a Hong Kong-based front company known as Total Excellence Ltd. to secretly buy two $25 million oil tankers on Iran’s behalf. The U.S. later sanctioned the businessman for using Iranian money to purchase oil tankers and to help Iran ship crude oil in violation of U.S. and European Union sanctions. In 2013, two defendants allegedly defrauded a financial institution in the UAE by preparing a fraudulent invoice and making false statements indicating that a transaction in U.S. dollars – processed through a New York-based bank – was undertaken on behalf of a UAE-based front company. In actuality, the true buyer was an Iranian oil and gas company, the affidavit states.
Furthermore, in 2016, several defendants allegedly conspired to wire millions of dollars through the U.S. financial system to complete a transaction with a South Korean equipment manufacturer on Iran’s behalf. During that transaction, four defendants instructed the manufacturer to not to “mention any name of Iran” in any paperwork exchanged with financial institutions processing the transaction, the affidavit alleges. In March 2017, the South Korean company sent $1 million to a front company selected by the conspirators.
Finally, in 2016, the conspirators secretly transferred thousands of dollars into Southern California on Iran’s behalf, including $66,766 that a defendant transferred to a Santa Monica-based company with a bank account held at Wells Fargo & Co., to acquire electronic equipment at the direction of a business associate at an Iran-based company, according to the affidavit.
The FBI is investigating the case.
Assistant U.S. Attorneys William M. Rollins of the Terrorism and Export Crimes Section, Dan G. Boyle of the Asset Forfeiture Section, and Trial Attorney David Lim of the Department of Justice’s Counterintelligence and Export Control Section are prosecuting this case.
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.
Ex-Federal Correctional Officer Sentenced to 15 Months in Prison for Taking over $15,000 in Bribes and Smuggling Contraband for InmatesRead the Press Release
LOS ANGELES – A former Bureau of Prisons (BOP) correctional officer at the Federal Correctional Complex, Victorville was sentenced today to 15 months in federal prison for accepting more than $15,000 in cash bribes in exchange for smuggling contraband – including methamphetamine and cell phones – into the complex’s high-security penitentiary.
Paul James Hayes II, 52, of Victorville, who retired from his job with the BOP in March 2019, was sentenced by United States District Judge Michael W. Fitzgerald. Hayes pleaded guilty in January 2020 to one count of conspiracy and one count of acceptance of a bribe by a public official.
Hayes was a lieutenant with BOP’s Special Investigation Services (SIS), a unit that investigates illegal activity by correctional officers and inmates. From early 2018 to September 2018, Hayes met in person with co-defendant Angel Marie Wagner, 44, of Buena Park, in parking lots of stores or restaurants in Victorville, and accepted cash bribes from her. In exchange for the bribes, Hayes accepted wrapped contraband -- including methamphetamine, suboxone and cell phones -- to be smuggled into the prison. Hayes then smuggled the contraband into the prison and provided it to inmate coconspirators, who then distributed the contraband to other inmates.
In total, Hayes accepted more than $15,000 in cash to smuggle contraband into the prison, and he smuggled at least four separate packages of contraband into the penitentiary.
Wagner pleaded guilty in July 2020 to one count of conspiracy and one count of bribery of a public official, and she was sentenced on February 4 to two years’ probation.
The U.S. Department of Justice Office of Inspector General and the FBI investigated this matter.
Assistant United States Attorney Sean D. Peterson of the Riverside Branch Office prosecuted this case.
Palm Desert Man Pleads Guilty to Firebombing Republican ClubRead the Press Release
LOS ANGELES – A Palm Desert man pleaded guilty today to a federal arson charge and admitted that he used a Molotov cocktail in an attempt to destroy the East Valley Republican Women Federated (EVRWF) office in La Quinta.
Carlos Espriu, 23, who has been in custody since his arrest in this case last fall, pleaded guilty this afternoon to one count of attempted arson of a building.
During the early morning hours of May 31, 2020, Espriu broke the front windows of the EVRWF headquarters and repeatedly tossed through the windows a lighted Molotov cocktail made of three bottles he had taped together.
In his plea agreement, Espriu agreed to pay at least $5,426 in restitution to compensate the victim for the damage caused by the firebombing.
Espriu pleaded guilty during a hearing on Zoom before United States District Judge Percy Anderson, who scheduled a sentencing hearing for May 24.
The attempted arson charge carries a mandatory minimum sentence of five years in federal prison and statutory maximum sentence of 20 years.
The investigation in this matter was conducted by the FBI’s Inland Empire Joint Terrorism Task Force.
This matter is being prosecuted by Sara Milstein of the Violent and Organized Crime Section.
Four Additional Members of Los Angeles-Based Fraud Ring Indicted for Exploiting COVID-Relief ProgramsRead the Press Release
A federal grand jury in Los Angeles returned a superseding indictment, unsealed Thursday, charging four additional individuals for their alleged participation in a scheme to submit over 150 fraudulent loan applications seeking over $21.9 million in COVID-19 relief funds guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Manuk Grigoryan, 27, of Sun Valley, California; Arman Hayrapetyan, 38, of Glendale, California; Edvard Paronyan, 40, of Granada Hills, California; and Vahe Dadyan, 41, of Glendale, were each charged in a superseding indictment filed in the Central District of California with one count of conspiracy to commit wire fraud and bank fraud and one count of conspiracy to commit money laundering.
Grigoryan, Hayrapetyan, and Paronyan were each also charged with 11 counts of wire fraud and eight counts of bank fraud. In addition, Grigoryan and Hayrapetyan were each charged with one count of aggravated identity theft. Vahe Dadyan was charged with six counts of wire fraud, three counts of bank fraud, and one count of money laundering.
Grigoryan, Paronyan, and Vahe Dadyan made their initial court appearances before U.S. Magistrate Judge Maria A. Audero of the U.S. District Court for the Central District of California. If convicted, each defendant faces a maximum penalty of 30 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The superseding indictment adds charges to previously charged co-defendants Richard Ayvazyan, Marietta Terabelian, Artur Ayvazyan, and Tamara Dadyan for wire fraud, bank fraud, conspiracy to commit money laundering, and aggravated identity theft.
According to the superseding indictment, the defendants conspired together, and with others, as part of a disaster-relief loan fraud ring based in and around Los Angeles, California, and used the fraudulently obtained funds as down payments on luxury homes and to buy gold coins, diamonds, jewelry, luxury watches, fine imported furnishings, designer handbags and clothing, cryptocurrency, and securities.
Richard Ayvazyan and Tamara Dadyan are also charged with committing crimes while they were released on bond awaiting trial. Richard Ayvazyan is charged with five counts of money laundering, and Tamara Dadyan is charged with one count of attempted bank fraud. The superseding indictment alleges that Richard Ayvazyan continued to use his alias “Iuliia Zhadko” to launder the proceeds of the scheme, including by using the money to buy cryptocurrency and securities. As alleged, Tamara Dadyan repeatedly lied to a bank as part of a scheme to unlawfully obtain disaster-relief funds that had been frozen in an account that she had fraudulently opened using a stolen identity.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Tracy L. Wilkison of the U.S. Attorney’s Office for the Central District of California; Special Agent in Charge Kristi Johnson of the FBI’s Los Angeles Field Office; Special Agent in Charge Ryan L. Korner of the IRS Criminal Investigation (IRS-CI) Los Angeles Field Office; Special Agent in Charge Weston King of the Small Business Administration’s Office of Inspector General (SBA-OIG) Western Region; and Special Agent in Charge Jay N. Johnson of the Federal Housing Finance Agency – Office of Inspector General (FHFA-OIG) Western Region made the announcement.
The FBI, IRS-CI, SBA-OIG, and FHFA-OIG are investigating the case.
Trial Attorney Christopher Fenton of the Justice Department’s Fraud Section and Assistant U.S. Attorneys Brian Faerstein and Scott Paetty of the U.S. Attorney’s Office for the Central District of California are prosecuting the case.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP, and $10 billion in low-interest loans to small businesses through the EIDL program. In April 2020, Congress authorized over $300 billion in additional PPP funding and $10 billion in additional EIDL funding, and in December 2020, Congress authorized another $284 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
The EIDL program is designed to provide economic relief to small businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities, and fixed-debt payments. If an applicant also obtains a loan under the PPP, the EIDL funds cannot be used for the same purpose as the PPP funds.
The Fraud Section leads the Department of Justice’s prosecution of fraud schemes that exploit the CARES Act. In the months since the CARES Act was passed, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP and EIDL 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/cares-act-fraud.
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.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
3 Additional Members of Alleged Fraud Ring Based in San Fernando Valley Arrested on Charges of Exploiting COVID-Relief ProgramsRead the Press Release
LOS ANGELES – Expanding a case in which four people were indicted last year, federal authorities have charged four new defendants with participating in a scheme that allegedly submitted more than 150 fraudulent loan applications seeking nearly $22 million in COVID-19 relief funds authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Justice Department announced today.
Three of the new defendants were arrested Thursday as the result of a 33-count superseding indictment that charges a total of eight defendants with using fake, stolen or synthetic identities to submit fraudulent applications for loans guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Relief Program (EIDL) and the Paycheck Protection Program (PPP) under the CARES Act.
The three defendants arrested Thursday are: Manuk Grigoryan, 27, of Sun Valley; Edvard Paronyan, 40, of Granada Hills; and Vahe Dadyan, 41, of Glendale. All three were arraigned on the superseding indictment Thursday afternoon in United States District Court in downtown Los Angeles. During court appearances that continued into the evening, a United States Magistrate Judge released all three on bond and ordered them to stand trial on May 4.
A fourth new defendant charged in the superseding indictment – Arman Hayrapetyan, 38, of Glendale – is still being sought by federal authorities.
The superseding indictment, which was filed on Tuesday, adds the four new defendants to an indictment filed in November that led to the arrests of co-defendants Richard Ayvazyan, Marietta Terabelian, Artur Ayvazyan and Tamara Dadyan.
According to the superseding indictment, the eight defendants conspired together, and with others, as part of a disaster-relief loan fraud ring that submitted fraudulent loan applications that often included fake identity documents, tax documents and payroll records. The eight defendants “submitted and caused the submission of at least 151 fraudulent PPP and EIDL loan applications seeking a total of at least $21.9 million in PPP and EIDL proceeds from the SBA and at least 11 financial institutions, and received a total of at least $18 million in PPP and EIDL loan proceeds from the SBA and financial institutions,” the indictment states.
The defendants allegedly 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 and clothing, cryptocurrency, and securities, according to the indictment.
All of the defendants named in the superseding indictment are charged with conspiracy to commit wire fraud and bank fraud, as well as conspiracy to commit money laundering. Each defendant is named in various other counts in the indictments which allege wire fraud, bank fraud, money laundering and aggravated identity theft.
The superseding indictment alleges that Richard Ayvazyan and Tamara Dadyan committed crimes after they were released on bond in this case. The superseding indictment further alleges that Richard Ayvazyan continued to use his alias “Iuliia Zhadko” to launder the proceeds of the scheme, including by using the money to buy cryptocurrency and securities. As alleged, Tamara Dadyan repeatedly lied to a bank as part of a scheme to unlawfully obtain disaster-relief funds that had been frozen in an account that she had fraudulently opened using a stolen identity.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The investigation in this case is being conducted by the FBI, IRS Criminal Investigation, the Small Business Administration’s Office of Inspector General, and the Federal Housing Finance Agency – Office of Inspector General.
This case is being prosecuted by Assistant United States Attorneys Brian Faerstein of the Environmental and Community Safety Crimes Section and Scott Paetty of the Major Frauds Section, and Trial Attorney Christopher Fenton of the Justice Department’s Fraud Section.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP, and $10 billion in low-interest loans to small businesses through the EIDL program. In April 2020, Congress authorized more than $300 billion in additional PPP funding and $10 billion in additional EIDL funding, and in December 2020, Congress authorized another $284 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
The EIDL program is designed to provide economic relief to small businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities and fixed-debt payments. If an applicant also obtains a loan under the PPP, the EIDL funds cannot be used for the same purpose as the PPP funds.
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.
Irvine Man Sentenced to 9½ Years in Federal Prison for Role in Robbery Spree of Cell Phone Stores Across Southern CaliforniaRead the Press Release
RIVERSIDE, California – An Orange County man who was part of a crew that committed a series of armed robberies at Southern California cell phone stores has been sentenced to 114 months in federal prison, the Justice Department announced today.
Anthony Wimbley, 28, of Irvine, was sentenced on Monday by United States District Judge Jesus G. Bernal. Wimbley pleaded guilty in September 2020 to one count of Hobbs Act robbery and one count of using a firearm in furtherance of a crime of violence.
Wimbley’s sentencing was announced today after a federal jury in Fort Worth, Texas late Wednesday convicted another member of Wimbley’s crew – Edward Eugene Robinson, 49, of Long Beach – of conspiracy to interfere with commerce by robbery, two counts of interfering with commerce by robbery, and two counts of brandishing a firearm during a crime of violence. Robinson also faces criminal charges in Wimbley’s federal case in Riverside.
According to the evidence presented at trial, on May 21, 2019, Wimbley, brandishing a handgun and accompanied by three co-conspirators, robbed an AT&T Wireless store in Fullerton, stealing $23,339 worth of electronic devices and cell phones. During the robbery, one of the conspirators pointed a gun at employee’s abdomen and forced her to go to the back of the store after she said she was scared, according to court documents. Law enforcement later found the robbers in a parked car and found nearby the handgun and stolen goods.
A federal grand jury in October 2019 charged Wimbley, Robinson and four other men in an indictment that alleged a conspiracy to rob cellular phone stores in Chino, Fullerton, Long Beach, Victorville, and Beaumont. The defendants targeted cell phones that did not contain tracking devices, and, in total, stole approximately $191,053 worth of cell phones and electronic devices, and approximately $2,434 in cash, according to the indictment.
Three other defendants in this case – Wimbley’s cousin, Robert Wimbley, 28, of Pomona; Wimbley’s brother, Darron Wimbley, 29, of Fontana; and Djovonte Lewis, 23, of Pomona – each pleaded guilty in August 2020 to one count of Hobbs Act robbery and one count of using a firearm during a violent crime. Robert Wimbley was sentenced to 114 months in federal prison, and Darron Wimbley is serving a 100-month federal prison sentence for his crimes. Lewis is expected to be sentenced on April 19.
The indictment’s lead defendant, Aaron Tremmell Hardrick, 33, of Fort Worth, Texas, also was transferred to the Northern District of Texas, where some of crewmembers committed additional robberies. Hardrick pleaded guilty to Hobbs Act robbery and a firearms offense, admitted to committing the robberies in Southern California, and was sentenced to 45 years in federal prison.
This matter was investigated by the FBI, the Redlands Police Department, the Rialto Police Department, the Glendora Police Department, the Riverside County Sheriff's Department, the Chino Police Department, the Fullerton Police Department, the Long Beach Police Department, the San Bernardino County Sheriff’s Department, the Beaumont Police Department, and the Pomona Police Department.
This case was prosecuted by Assistant United States Attorneys Jerry C. Yang, Chief of the Riverside Branch Office, and Peter H. Dahlquist, also of the Riverside Branch Office. The United States Attorney’s Office for the Northern District of Texas is providing substantial assistance by prosecuting the cases against Hardrick and Robinson, which were handled by Assistant U.S. Attorneys Matthew Weybrecht and Nancy Larson.
Hawthorne Man Sentenced to 212 Years in Prison for Scheming to Collect Insurance Proceeds by Intentionally Killing His ChildrenRead the Press Release
LOS ANGELES – A Hawthorne man was sentenced today to 212 years in federal prison for intentionally driving his ex-wife and two disabled sons off a wharf at the Port of Los Angeles into the ocean – drowning the boys who were trapped in the car – to collect on accidental death insurance policies he had taken out on their lives.
Ali F. Elmezayen, 45, was sentenced by United States District Judge John F. Walter, who, in imposing the maximum sentence allowed by law, noted Elmezayen’s “evil and diabolical scheme” as well as the “vicious and callous nature of his crimes.”
“He is the ultimate phony and a skillful liar…and is nothing more than a greedy and brutal killer,” Judge Walter said. “The only regret that the defendant has is that he got caught.”
Judge Walter also ordered Elmezayen to pay $261,751 in restitution to the insurance companies that he defrauded.
During a nine-day trial in October 2019, a federal jury found Elmezayen guilty of four counts of mail fraud, four counts of wire fraud, one count of aggravated identity theft, and five counts of money laundering.
“Mr. Elmezayen conceived a cold-blooded plan to murder his autistic sons and their mother, then cash in on insurance policies,” said Acting United States Attorney Tracy L. Wilkison. “He now has ample time to reflect – from the inside of a federal prison cell – on where his greed and self-interest took him. We continue to grieve for those two helpless boys who deserved better from their father, who will never again walk among us as a free man.”
“Fathers are supposed to protect their children but instead, Elmezayen drove his boys straight to their certain death in exchange for cash,” said Kristi Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The defendant maliciously planned the death of his autistic sons and gave them virtually no chance of survival. The investigation that led to today's sentencing won’t give them their lives, but affords them justice in death.”
From July 2012 to March 2013, Elmezayen bought from eight different insurance companies more than $3 million of life and accidental death insurance policies on himself and his family. Elmezayen paid premiums in excess of $6,000 per year for these policies – even though he reported income of less than $30,000 per year on his tax returns. Elmezayen began purchasing the insurance policies the same year he exited a Chapter 11 bankruptcy proceeding.
After purchasing the policies, Elmezayen repeatedly called the insurance companies – sometimes pretending to be his ex-wife in whose name he had obtained some of the policies – to verify that the policies were active and that they would pay benefits if his ex-wife died in an accident. Elmezayen also called at least two of the insurance companies to confirm they would not investigate claims made two years after the policies were purchased. These telephone calls were recorded and were played for the jury.
On April 9, 2015, 12 days after the two-year contestability period on the last of his insurance policies expired, Elmezayen drove a car with his ex-wife and two youngest children off a wharf at the Port of Los Angeles. The site of the crash was a loading dock and worksite for commercial fishermen.
Elmezayen swam out the open driver’s side window of the car. Elmezayen’s ex-wife, who did not know how to swim, escaped the vehicle and survived when a nearby fisherman threw her a flotation device. Two of the couple’s three sons, who were 8 and 13 and who were both severely autistic, were strapped into the car and drowned. The couple’s third son was away at camp at the time and was not in the car at the time his father drove it into the water.
Elmezayen then collected more than $260,000 in insurance proceeds from Mutual of Omaha Life Insurance and American General Life Insurance on the accidental death insurance policies he had taken out on the children’s lives. He used part of the insurance proceeds to purchase real estate in Egypt as well as a boat.
“[Elmezayen] murdered his disabled children and attempted to murder his ex-wife for money,” prosecutors wrote in their sentencing memorandum. “After years of physically and emotionally abusing his ex-wife and neglecting the children, [Elmezayen] bought $3.4 million in insurance on their lives, waited for two years so the insurance companies would not contest his claims, and then drove them into the ocean, leaving them to drown. That was [Elmezayen’s] fraudulent scheme. It was also premeditated murder.”
In addition to posing as his ex-wife in communications with the insurance companies without her knowledge, following the crash, Elmezayen repeatedly lied to law enforcement officers and insurance companies. He also lied in subsequent civil litigation he filed concerning the crash – about the extent of the insurance he had purchased on his family, and specifically about whether he had insured his disabled children’s lives. He also attempted to persuade witnesses to lie to law enforcement and say he had given the insurance proceeds to charity.
FBI agents arrested Elmezayen in November 2018 and he has been in federal custody ever since.
“Today Ali Elmezayen was held accountable for his actions, which directly led to the tragic death of his two sons. It is unthinkable that any father would jeopardize the lives of his family for his own financial gain,” stated Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation. “IRS-CI is proud to work alongside our law enforcement partners to help bring some closure to this horrifying scheme.”
The FBI and IRS Criminal Investigation investigated this case. The Los Angeles Police Department, the Los Angeles Port Police, and the Los Angeles City Attorney’s Office provided substantial assistance in this case.
This matter was prosecuted by Assistant United States Attorneys Alexander C.K. Wyman of the Major Frauds Section and David T. Ryan of the Terrorism and Export Crimes Section.