Central District of California
Press releases recorded for this federal judicial district.
Grand Jury Charges Pasadena Man Who Allegedly Bought Maserati SUV with Fraudulently Obtained COVID-19 Jobless Relief MoneyRead the Press Release
LOS ANGELES – A Pasadena man is scheduled to be arraigned today on federal charges alleging he used stolen identities to fraudulently obtain unemployment insurance benefits, which he later used to purchase a Maserati luxury SUV.
A federal grand jury on November 17 named Robert Sloan Mateer, 30, in a five-count indictment charging him with possession of at least 15 or more unauthorized access devices with intent to defraud, aggravated identity theft, possession with intent to distribute methamphetamine, possession of a firearm in furtherance of a drug trafficking crime, and being a felon in possession of ammunition.
According to an affidavit in support of a criminal complaint filed in this case, during a traffic stop on October 1, Pasadena Police officers arrested Mateer and found inside his Maserati 17 unemployment benefits debit cards, several other credit and debit cards, approximately $197,711 in cash, more than 85 grams of methamphetamine, and a loaded firearm with no serial number.
Evidence gathered during the investigation determined that at least 14 of the 17 debit cards were loaded with at least $133,000 in unemployment insurance benefits, later determined to have been issued under the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress in March, and had been issued in the names of third-parties, including identity theft victims.
The California Employment Development Department (EDD) distributes unemployment insurance benefits under the CARES Act, which 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.
According to the affidavit, Mateer admitted to obtaining the unemployment benefits debit cards by using “thousands” of identity profiles in his possession, that each debit card was loaded with approximately $14,500, and that he used the fraudulently obtained unemployment benefits to purchase the Maserati automobile.
Mateer also admitted that he withdrew the approximately $197,711 in cash found in his Maserati from ATMs across the Los Angeles area, the affidavit states. Mateer also allegedly withdrew approximately $13,840 from the EDD debit cards in his possession from September 19 to September 25.
Mateer was taken into federal custody on October 21 and was ordered detained pending trial.
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, Mateer would face a statutory mandatory minimum sentence of 17 years and a statutory maximum sentence of life in prison.
This matter was investigated by United States Postal Inspection Service.
Assistant United States Attorney Jason C. Pang of the International Narcotics, Money Laundering, and Racketeering Section and Anna P. Farias-Eisner of the General Crimes Section are prosecuting this case. Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section provided substantial assistance in this matter.
Fashion District Wholesaler and 2 Men Linked to Company Indicted in Schemes to Avoid Tariffs, Launder Drug Money and Avoid TaxesRead the Press Release
LOS ANGELES – A federal grand jury has returned a 35-count indictment alleging that a Fashion District outfit was at the center of two schemes, one that avoided the payment of more than $10 million in customs duties on imported clothing, and a second “Black Market Peso Exchange” scheme in which the company laundered narcotics proceeds and failed to report on tax returns over $17 million derived from cash transactions.
The schemes are outlined in a 49-page indictment, which was filed late Wednesday and is the latest case resulting from an operation in September 2014 when law enforcement authorities executed dozens of search warrants as part of an investigation into money laundering and other crimes at Fashion District businesses. During one of those searches at a downtown condominium linked to the defendants in this case, authorities seized more than $38.3 million in cash.
The defendants named in the indictment are:
- C’est Toi Jeans, Inc. (CTJ), an importer of apparel from countries such as China, and exporter of clothing to customers in Mexico, Central America and South America;
- Si Oh Rhew, 67, of La Cañada Flintridge, the president of CTJ and a 75 percent owner of the company; and
- Lance Rhew, who is Si Oh Rhew’s son, 33, of downtown Los Angeles, a CTJ corporate officer and the owner of another company called GLLR, Inc. that did business as CTJ.
The indictment contains charges of conspiracy; entry of goods falsely classified; entry of goods by means of false statements; passing false and fraudulent papers through customhouse; international promotional money laundering; failure to file reports of $10,000 currency transactions; and aiding, assisting, and procuring the filing of a false tax return.
The first scheme outlined in the indictment allegedly involves the avoidance of customs duties and tariffs by purchasing garments from overseas manufacturers, including from China, but then submitting false information to U.S. Customs and Border Protection (CBP) that understated the true value of the items being imported in the U.S. As a result, the import duties owed on the shipments were lowered. The indictment alleges that the defendants sent 515 individual wire transfers totaling $137,156,726 to pay overseas suppliers for undervalued garments. Overall, according to the indictment, CTJ imported goods that were undervalued by more than $62 million, causing approximately $10,269,068 in unpaid tariffs and duties that should have been paid to CBP. Some of this conduct occurred prior to authorities executing search warrants at CTJ and GLLR in 2014, but the indictment alleges that undervaluation resumed in 2018 and lasted until at least July 2020.
In the second scheme, the Rhews used CTJ “to receive large amounts of bulk United States currency, including from narcotics proceeds, as payment for outstanding merchandise orders from customers in Mexico and elsewhere,” according to the indictment. CTJ allegedly accepted large cash payments of up to $70,000 even after the law enforcement action targeted their businesses in 2014. The defendants failed to file currency transaction reports, which are required for any transaction involving more than $10,000 in cash, and they concealed the cash receipts from an accountant who prepared their taxes, which led the Rhews to fraudulently omit more than $17.6 million in gross sales from tax returns filed with the IRS, 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.
The court will issue summons directing the three defendants to appear for arraignments in United States District Court on February 4.
If convicted of the charges in the indictment, the Rhews would each face potential sentences of decades in federal prison, and CTJ could face fines of as much as $100 million.
This case is the product of an ongoing investigation by Homeland Security Investigations (HSI), IRS Criminal Investigation, U.S. Customs and Border Protection, the Monterey Park Police Department, the El Segundo Police Department, LA IMPACT, the Long Beach Police Department, the Los Angeles Police Department, the Gardena Police Department, and the West Covina Police Department. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force.
This case was investigated under the aegis of the HSI-led El Camino Real Financial Crimes Task Force, which includes representatives from the United States Attorney’s Office, the Drug Enforcement Administration, the FBI and IRS Criminal Investigation. The task force is working to protect legitimate businesses in the financial sector by targeting criminal activity and encouraging companies to comply with import/export regulations.
This matter is being prosecuted by Assistant United States Attorneys Puneet V. Kakkar and Lucy B. Jennings of the International Narcotics, Money Laundering and Racketeering Section.
Five Canadian Nationals Charged with Running Magazine Telemarketing Scam Targeting Elderly Victims in Southern CaliforniaRead the Press Release
LOS ANGELES – Five Canadian men have been indicted on federal fraud charges alleging they ran a million-dollar telemarketing scam that deceived victims – many of them elderly Southern California residents – into paying off non-existent debts they purportedly owed from magazine subscriptions.
A federal grand jury on Friday returned a 10-count indictment that charges the defendants with conspiracy and nine counts of wire fraud. Those charged are:
- Ahmad Eraif, 35, of Dollard-des-Ormeaux, Quebec;
- Mohamed Eraif, 37, of Pierrefonds, Quebec, who is Ahmad Eraif’s brother;
- Jonathan Massouras, 30, of Dollard-des-Ormeaux, Quebec;
- William Gampel, 29, of Dollard-des-Ormeaux, Quebec; and
- Kevin Gampel, 26, of Dollard-des-Ormeaux, Quebec, who is William Gampel’s brother.
The indictment alleges that, from 2013 to September 2015, the defendants, from locations in Montreal and Toronto, contacted victims throughout the United States, claiming to be calling from companies such as “Magazine Readers,” “Global Readers,” and “American Reader Services.” During these telephone calls, the defendants allegedly claimed that the victims – many of whom were elderly – owed money for magazine subscriptions.
Participants in the scheme allegedly told victims that if they paid the amount “owed” their purported debts would be satisfied and they would receive no future phone calls. However, victims’ personal information was collected and stored for the purposes of charging the victims’ financial accounts and for making repeated calls demanding payments, according to the indictment.
In reality, the victims did not owe the money demanded by the callers. Even when they paid, the defendants and others acting at their direction often called the victims again, sometimes repeatedly, demanding additional payments for other purported debts related to magazine subscriptions, the indictment alleges.
To further induce the victims to send money, the defendants allegedly threatened to damage the victims’ credit or bring legal action against them if the victims did not pay the amounts demanded.
The indictment alleges specific telephone calls between telemarketers in Canada and victims in Garden Grove, Ventura, Beverly Hills and Granada Hills.
The total losses in this case exceed $1 million, 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.
Each count in the indictment carries a statutory maximum sentence of 20 years in federal prison.
This matter was investigated by the United States Secret Service and the Royal Canadian Mounted Police.
This case is being prosecuted by Assistant United States Attorney Monica E. Tait of the Major Frauds Section.
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.
San Fernando Valley Man Admits to Fraudulently Obtaining $655,000 in COVID-19 Relief PPP LoansRead the Press Release
LOS ANGELES – A Northridge man pleaded guilty today to a federal criminal charge that he fraudulently obtained $655,000 in Paycheck Protection Program (PPP) loans for his companies by submitting fake tax documents and false employee information.
Steven R. Goldstein, 36, pleaded guilty to a single-count information charging him with fraud in connection with major disaster or emergency benefits.
According to his plea agreement, Goldstein knowingly submitted applications for PPP loans to banks that contained false statements about the number of employees and the amount of employee payroll expenses.
On May 2, Goldstein submitted a $355,000 PPP loan application to Bank of America for a company called Beagle Real Estate Investments. On the application, Goldstein listed false information that the company’s average monthly payroll was $120,000 and it employed a total of 43 workers. Goldstein also submitted fabricated tax documents that falsely stated that Beagle Real Estate’s payments to its employees in 2019 totaled $1,704,000, and that the company reported $308,000 in wages paid to 13 employees during the first quarter of 2020. The fraudulent loan application was approved and, on May 4, Bank of America disbursed $355,000 of PPP loan proceeds to a bank account that Goldstein provided in his application.
Goldstein further admitted to knowingly submitting at least one additional fraudulent PPP loan application, which resulted in Bank of America disbursing $300,000 to him. That loan application also contained similar false statements and fabricated tax documents. When law enforcement interviewed Goldstein in October, he admitted to submitting multiple PPP loan applications that contained false information about employees and payroll as well as fake tax documents.
The actual loss from the two approved loans was $655,000, according to the plea agreement.
United States District Judge Stanley Blumenfeld Jr. has scheduled a March 30, 2021 sentencing hearing, at which time Goldstein will face a statutory maximum sentence of 30 years in federal prison.
Goldstein’s business partner, Raymond Magana, 39, of Santa Clarita, was charged in a criminal complaint in October with fraudulently obtaining PPP loans and is expected to surrender to federal authorities in the coming days.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is 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, Congress authorized more than $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 percent. Businesses must use PPP loan proceeds 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.
This matter was investigated by IRS Criminal Investigation and the Small Business Administration Office of Inspector General.
This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.
San Bernardino County Man Who Recorded Child Pornography on His Social Media Accounts Sentenced to 25 Years in Federal PrisonRead the Press Release
RIVERSIDE, California – An Inland Empire man was sentenced this afternoon to 300 months in federal prison for producing dozens of sexually explicit images and videos of children, including videos that were recorded on his Snapchat and Facebook social media accounts.
Chaunta A. Bashir, a.k.a. “taytheonly,” 27, of Chino, was sentenced by United States District Judge Jesus G. Bernal. Bashir pleaded guilty on July 15 to one count of production of child pornography.
From June 2015 to October 2018, Bashir produced multiple images of child pornography. Specifically, in October and November 2017, he took sexually explicit images and videos of a 3-year-old victim, including of himself sexually abusing the child.
In the spring and summer of 2018, Bashir produced additional sexually explicit images and videos of children ranging in age from 4 years to 14 years. Bashir recorded some of those videos on his Facebook and Snapchat social media accounts.
During a search of Bashir’s home in October 2018, law enforcement officials recovered more than 600 images and videos from his electronic devices that depicted minors engaged in sexually explicit conduct.
This matter was investigated by Homeland Security Investigations with assistance from the Chino Police Department.
This case was prosecuted by Assistant United States Attorney Tritia L. Yuen of the Riverside Branch Office.
Three Members of Gardena Street Gang Charged in Federal Racketeering Case Alleging Murder of Man Outside His HomeRead the Press Release
LOS ANGELES – Three members of a Gardena street gang that operates in several states under the control of the Mexican Mafia, have been charged in federal court with violent crime in aid of racketeering for allegedly participating in a shooting that resulted in the death of a 29-year-old man who was gunned down in front of his home.
One of the defendants, Jesus Francisco Hernandez, was taken into custody this morning by special agents with Homeland Security Investigations. Hernandez is scheduled to make his initial appearance this afternoon in United States District Court in Los Angeles.
The three defendants are charged in a criminal complaint alleging they participated in the November 13 murder of the victim, who is identified in court papers as “E.C.” The charged defendants, all residents of Gardena, are:
- Jesus Hernandez, a.k.a. “Rowdy, 27;
- Antonio Yanez, a.k.a. “Tank,” 22, who is currently in state custody; and
- Justin Arteaga, a.k.a. “Hitta,” 20, who also is currently in state custody.
A fourth man who allegedly participated in the attack – G. Hernandez, who is Jesus Hernandez’s older brother and who is described in court papers as a longtime documented gang member – was shot by E.C.’s father during the November 13 incident and later died at a hospital.
According to the affidavit in support of the criminal complaint, E.C. and his brother were seated in parked car near their driveway when they were confronted by three men on foot – G. Hernandez, Yanez and Arteaga. E.C.’s brother told the men they were not affiliated with a gang and they were simply in front of their longtime home. As the men neared the parked car, E.C. stepped out of the vehicle while his brother texted their father, asking him to bring his gun outside because of the escalating situation.
The affidavit alleges that G. Hernandez swung at E.C., who swung back, and all three assailants pulled out guns and began shooting. The father saw the text message and soon after heard approximately 15-20 gunshots. The father came out to the car and saw G. Hernandez approximately 50 yards down the street. G. Hernandez began shooting at the father, who returned fire and struck G. Hernandez. One of the other gunman also fired at the father after G. Hernandez fell to the ground.
Police and paramedics responded to the scene, where they treated E.C., but he died soon after as a result of the 10 gunshot wounds he suffered. G. Hernandez, who was found lying on the street with gunshot wounds to his head and chest, was brought to a hospital, where he died several days later.
Soon after the shooting, Gardena Police officers arrested J. Hernandez and Yanez in the backyard of a nearby residence. Responding officers also recovered four 9mm handguns, three of which were “ghost guns” with no serial numbers.
Arteaga was arrested on November 17 at Los Angeles International Airport as he was preparing to board a one-way flight to Guadalajara, Mexico. He was wearing the same hat he was seen wearing on security video taken the night of the shooting, according to the affidavit.
Yanez and Arteaga initially were charged by the Los Angeles County District Attorney’s Office, which has dismissed those charges in light of the federal racketeering case. Jesus Hernandez was not charged after he was detained by local authorities.
The federal complaint alleges that the murder of E.C. was committed to further the power of the Gardena 13 street gang, which is described in the affidavit as a criminal enterprise that has documented membership in California, Nevada, Texas, Hawaii and Rosarito, Mexico. The Gardena Police Department believes the gang distributes narcotics, primarily methamphetamine, both locally and in Hawaii.
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 violent crime in aid of racketeering offense alleged in the complaint carries a statutory maximum sentence of the death penalty or life in federal prison because victim E.C. was murdered.
This matter is being investigated by Homeland Security Investigations, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Gardena Police Department.
This case is being prosecuted by Assistant United States Attorney Joseph D. Axelrad of the Violent and Organized Crime Section.
Federal Grand Jury Charges Dive Boat Captain with Seaman’s Manslaughter in Fire off Santa Barbara Coast that Killed 34 PeopleRead the Press Release
LOS ANGELES – The captain of the P/V Conception, a Santa Barbara-based dive boat that caught fire last year near Santa Cruz Island, resulting in the deaths of 33 passengers and one crew member, was indicted today by a federal grand jury on 34 counts of seaman’s manslaughter.
Jerry Nehl Boylan, 67, of Santa Barbara, was named in the indictment returned this afternoon by a federal grand jury that alleges Boylan, as the captain and master of the vessel, “was responsible for the safety and security of the vessel, its crew, and its passengers.”
Federal prosecutors informed Boylan’s attorneys of the indictment after it was filed, and the defendant is expected to self-surrender to federal authorities in the coming weeks.
The indictment alleges that Boylan caused the deaths of 33 passengers and one crewmember “by his misconduct, negligence, and inattention to his duties.” The indictment cites three specific safety violations:
- failing to have a night watch or roving patrol, which was required by the Code of Federal Regulations (CFR) and for over 20 years was a requirement in the Conception’s Certificate of Inspection issued by the United States Coast Guard;
- failing to conduct sufficient fire drills, which are mandated in the CFR; and
- failing to conduct sufficient crew training, which was also required by the CFR.
The Conception was a 75-foot, wood-and-fiberglass passenger vessel that docked in Santa Barbara Harbor. During a Labor Day weekend dive trip last year, the boat carried 33 passengers and six crew members, including Boylan. During the early morning hours of September 2, 2019, a fire broke out while the boat was anchored in Platt’s Harbor near Santa Cruz Island. The fire, which engulfed the boat and led to its sinking, resulted in the deaths of 34 people who had been sleeping below deck. Five crewmembers, including Boylan, were able to escape and survived.
“As a result of the alleged failures of Captain Boylan to follow well-established safety rules, a pleasant holiday dive trip turned into a hellish nightmare as passengers and one crew member found themselves trapped in a fiery bunkroom with no means of escape,” said United States Attorney Nick Hanna. “The loss of life that day will forever impact the families of the 34 victims. With this indictment and our commitment to vigorously prosecute the case, we seek a small measure of justice for the victims and their loved ones.”
“Nothing will ever replace the 34 lives that were lost in the Conception tragedy,” said Special Agent in Charge Kelly S. Hoyle of the Coast Guard Investigative Service – Pacific Region. “Our hearts remain with the families as the Coast Guard continues to work with our partners in the Department of Justice on this investigation.”
“This tragedy forever altered the lives of so many families and loved ones, and it deeply affected members of the public who watched in horror. We continue to grieve with them,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI provided extensive investigative and technical resources to the joint investigation, including expert divers and evidence recovery assets. Our hope is that this indictment leads to the prevention of boating accidents and the senseless destruction of lives through proper precautions and training.”
“This was a devastating and tragic loss of 34 lives,” said Monique Villegas, the Special Agent in Charge of the ATF’s Los Angeles Field Division. “Our condolences continue to go out to all the families that have suffered from this tragedy. ATF remains committed to working closely with our partners to investigate complex fire scenes such as this by providing our technical expertise in the area of fire investigation.”
Each charge of seaman’s manslaughter carries a statutory maximum penalty of 10 years in federal prison.
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 ongoing investigation in this matter is being conducted by the FBI; Coast Guard Investigative Service; and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
This case is being prosecuted by Assistant United States Attorneys Mark A. Williams, Joseph O. Johns and Diana Kwok of the Environmental and Community Safety Crimes Section.
New Indictment in RICO Case Against Former L.A. City Councilman Jose Huizar Adds 5 Defendants, Including a Former Deputy MayorRead the Press Release
FIRST SUPERSEDING INDICTMENTLOS ANGELES – In a superseding indictment unsealed today that adds new details to the criminal case alleging a widespread corruption scheme led by former Los Angeles City Councilman Jose Huizar, a federal grand jury has added five defendants, including former Los Angeles Deputy Mayor Raymond Chan, to the racketeering case that accuses Huizar and his close associates of illegally obtaining financial benefits from developers who, in exchange, sought favorable treatment on pending real estate development projects.
After being arrested in June pursuant to a criminal complaint, Huizar, 52, of Boyle Heights, was charged in July in a 34-count indictment that alleged a conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act in which Huizar agreed to accept at least $1.5 million in illicit financial benefits. That racketeering charge alleged 402 overt acts that Huizar and his co-conspirators committed to further their criminal enterprise, including bribery, honest services fraud, and money laundering. The 41-count superseding indictment unsealed today adds 50 overt acts to the RICO conspiracy count. The racketeering charge now also charges Chan, who formerly was the general manager of the Los Angeles Department of Building and Safety and, more recently, was the city’s deputy mayor of economic development.
The five new defendants in the superseding indictment are:
- Raymond She Wah Chan, also known as “She Wah Kwong,” 64, of Monterey Park, identified in previous court filings as “Individual 1,” who is charged with RICO conspiracy, bribery, honest services fraud and lying to federal agents;
- Wei Huang, 55, a resident of Shenzhen, China, who also maintains a residence in San Marino, previously identified in court documents as “Chairman E,” who is the billionaire chairman and president of a global development company headquartered in China, and who faces charges of bribery, honest services fraud and Travel Act violations;
- Shen Zhen New World I, LLC, one of Huang’s U.S.-based companies, which acquired the L.A. Grand Hotel Downtown in 2011 for $90 million and planned to redevelop it into a 77-story tower, and which is named in the same counts as Huang;
- Dae Yong Lee, also known as “David Lee,” 56, of Bel Air, identified in prior court filings as “Developer C,” who is a developer with multiple properties in Los Angeles, and who is charged with bribery, honest services fraud and obstruction; and
- 940 Hill, LLC, a Lee-owned company that purchased a South Hill Street property in downtown Los Angeles in 2008 for $9 million and planned to redevelop it into a mixed-use development, and which is named in the same counts as Lee.
In addition to the RICO conspiracy charge, the indictment charges 14 counts of honest services wire fraud, two counts of honest services mail fraud, four counts of traveling interstate in aid of racketeering, nine counts of bribery, five counts of money laundering, one count of structuring cash deposits to conceal bribes, one count of making a false statement to a financial institution, one count of alteration of records in a federal investigation, two counts of making false statements to federal law enforcement, and one count of tax evasion. Each of the defendants is charged in various counts. Huizar, for example, is charged in 34 of the 41 counts.
“The scope of corruption outlined in this indictment is staggering,” said United States Attorney Nick Hanna. “As the indictment alleges, Huizar, Chan and their network of associates repeatedly violated the public trust by soliciting and accepting numerous cash bribes and other financial benefits, turning Huizar’s City Council seat into a money-making criminal enterprise. Powerful developers, operating through well-connected lobbyists, eagerly participated in the schemes to get preferential treatment for their downtown projects. This detailed indictment, which lays bare these backroom deals, should prompt a serious discussion as to whether significant reforms are warranted in Los Angeles city government.”
“The charges announced today allege wholesale corruption and outline the way in which Huizar and Chan brokered their powerful positions to gain personally, politically and financially by selling to the highest bidders in a stunning betrayal of the Angelenos they swore an oath to serve,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “I’m proud of the investigators and prosecutors who investigated this case and methodically uncovered – then dismantled – abject corruption in one of America’s largest cities, with the shared goal of restoring trust in city government.”
The indictment alleges that Huizar and Chan operated the “CD-14 Enterprise,” named for City Council District 14, which Huizar represented from 2005 until this year. Other members of the conspiracy were George Esparza, Huizar’s former special assistant, and real estate development consultant George Chiang, each of whom pleaded guilty earlier this year to participating in the RICO conspiracy. The indictment adds overt acts to the RICO conspiracy alleging that CD-14 Enterprise members illegally solicited political contributions by foreign nationals to help maintain the enterprise’s political power.
Among the numerous other corruption allegations, the indictment charges that Huizar illegally accepted more than $800,000 in benefits from Huang, mainly during luxury-laden gambling trips. In addition, at Huizar’s and Chan’s request, and after Huizar had helped save Chan’s city position by helping to prevent a planned merger that would have eliminated Chan’s department, Huang also provided $600,000 in collateral to fund a settlement of a sexual harassment lawsuit filed against Huizar by a former CD-14 staffer, allegations that threatened his 2015 re-election campaign, according to the indictment. At the time he provided these benefits, Huang was planning to redevelop the L.A. Grand Hotel into the tallest tower west of the Mississippi, which would require city approvals and Huizar’s help. When Chan was later interviewed by FBI agents about the lawsuit settlement, he allegedly lied about his participation in this secret payment arrangement and about his knowledge of Huang’s “asks” of Huizar.
Chan is also charged with multiple counts of bribery and honest services fraud for agreeing to accept, while he was deputy mayor, more than $100,000 from Chiang for official acts to benefit a project by Chinese developer Shenzhen Hazens. Additionally, Chan is charged with facilitating a bribe agreement in which a Hazens domestic subsidiary, Jia Yuan USA Co., Inc., would make a $100,000 campaign contribution to a Huizar relative running for the CD-14 seat in exchange for Huizar’s votes to approve the project. Last month, Jia Yuan, which was seeking to redevelop the Los Angeles Luxe City Center Hotel, paid $1,050,000 to resolve the government’s investigation into its conduct related to this case, which included bribery and illegal campaign contributions. Jia Yuan entered into a non-prosecution agreement, agreed to cooperate with the government’s investigation, and admitted to providing benefits to Huizar and his associates before Huizar voted to approve the Luxe Hotel project when the matter came before the city’s Planning and Land Use Management Committee, which Huizar chaired, and the City Council.
The indictment further alleges that Lee provided $500,000 in cash for Huizar and Esparza in exchange for Huizar’s help in resolving a labor organization appeal on the 940 Hill development project. Court documents allege that Lee provided bags of cash to Justin Jangwoo Kim, a Huizar fundraiser, to deliver to Huizar and Esparza. Kim admitted to facilitating the bribe from Lee and pleaded guilty to a federal bribery offense. Lee and 940 Hill are also charged with falsifying accounting and tax records to cover up the bribe.
Huizar pleaded not guilty in August to the charges in the initial indictment. He is expected to be arraigned on the superseding indictment on December 7.
Chan and Lee have been directed to surrender to federal authorities. Chan and Lee are expected to be arraigned on the superseding indictment Tuesday afternoon in United States District Court in downtown Los Angeles.
940 Hill has been issued a summons to appear in United States District Court on Tuesday. Shen Zhen New World I has been issued a summons to appear December 7. Huang and his counsel have been notified that Huang has been named in the superseding indictment and that the United States government has issued a warrant for his arrest.
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 RICO conspiracy, honest services fraud, obstruction, and money laundering charges each carry a statutory maximum sentence of 20 years in federal prison. The charge of making false statements to a financial institution has a statutory maximum sentence of 30 years in prison. The bribery charges each carry a statutory maximum sentence of 10 years in federal prison. The charges of tax evasion, structuring, making false statements to law enforcement, and interstate travel in aid of racketeering have five-year maximum prison sentences.
Huizar is currently scheduled to go on trial on June 22.
With the charges against Chan, Huang and Lee, a total of nine individuals have been charged as a result of Operation “Casino Loyale,” the ongoing corruption investigation into Los Angeles City Hall being conducted by the FBI and the United States Attorney’s Office. Shen Zhen New World I and 940 Hill are the first corporate entities to be formally charged.
In addition to Esparza, Chiang and Kim, Morris Goldman, a longtime City Hall lobbyist, pleaded guilty to participating in a bribery scheme in which a developer agreed to make political donations in exchange for Huizar’s support of a project in the city’s Arts District. Goldman is scheduled to be sentenced on August 23. Esparza is scheduled to be sentenced on February 8, and sentencing hearings for Chiang and Kim are scheduled for February 22.
Former Los Angeles City Councilman Mitchell Englander pleaded guilty in July to charges of scheming to falsify material facts related to trips he took to Las Vegas and Palm Springs, during which he accepted cash and other benefits from a businessperson. Englander’s sentencing hearing is scheduled for January 25.
The cases against Huizar, Chan and their associates in the CD-14 Enterprise are being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Veronica Dragalin and Melissa Mills, also of the Public Corruption and Civil Rights Section.
Any member of the public who has information related to this or any other public corruption matter in the City of Los Angeles is encouraged to send information to the FBI’s tip line at tips.fbi.gov or to contact the FBI’s Los Angeles Field Office at (310) 477-6565.
Hacker Collective Member Who Made Online Threats Against Schools and Airline Sentenced to Nearly 8 Years in Federal PrisonRead the Press Release
LOS ANGELES – A North Carolina man who engaged in a series of cyber and swatting attacks, including sending bogus threats of shootings and bombings to schools in the United States and United Kingdom, was sentenced today to 95 months in federal prison.
Timothy Dalton Vaughn, 22, whose online aliases included “WantedbyFeds” and “Hacker_R_US,” of Winston-Salem, North Carolina, was sentenced by United States District Judge Otis D. Wright II.
Vaughn pleaded guilty in November 2019 to one count of conspiracy to convey threats to injure, convey false information concerning use of explosive device, and intentionally damage a computer; one count of computer hacking; and one count of possession of child pornography.
Judge Wright sentenced Vaughn to prison terms of 95 months for the child pornography possession charge and 60 months for each of the other charges. The terms are to be served concurrently.
Vaughn was a member of the “Apophis Squad,” a worldwide collective of computer hackers and swatters. The collective caused disruptions by making threatening phone calls, sending bogus reports of violent school attacks via email, and launching distributed denial-of-service (DDoS) attacks on websites.
Vaughn and others sent emails to at least 86 school districts threatening armed students and explosives. The threatened attacks included the imminent detonation of a bomb made with ammonium nitrate and fuel oil, rocket-propelled grenade heads placed under school buses, and the placement of land mines on sports fields.
In another instance, Vaughn and others called in a false hijacking report related to a flight traveling from London to San Francisco, claiming that four men with weapons and explosives had hijacked the plane.
In early 2018, Vaughn demanded 1.5 bitcoin (then worth approximately $20,000) from a Long Beach company, to prevent denial-of-service attacks on its website. When the company refused to pay, he launched a DDoS attack that disabled the company’s website.
Vaughn also possessed nearly 200 sexually explicit images and videos depicting children, including at least one toddler.
This matter was investigated by the FBI with assistance provided by the United States Secret Service as part of the Electronic Crimes Task Force.
This case was prosecuted by Assistant United States Attorney Julia S. Choe of the Cyber and Intellectual Property Crimes Section.
Whittier Paralegal Pleads Guilty to Wire Fraud Charge for Embezzling Money from Immigration Law Firm ClientsRead the Press Release
LOS ANGELES – A Los Angeles County paralegal pleaded guilty today to defrauding more than 100 immigration law firm clients in Southern California by depositing their payments for immigration-related application filing fees or legal services into her personal bank accounts.
Tanya Garcia, 41, of Whittier, pleaded guilty to one count of wire fraud.
According to her plea agreement, from October 2014 to October 2018, Garcia worked at multiple immigration law firms in Los Angeles and Riverside counties. The law firms assisted clients with matters such as obtaining asylum, relief from deportation, U.S. residency and citizenship, and work permits.
Garcia admitted she met with the law firms’ clients and collected payments from them in the form of money orders or checks, representing that the payments would be used for application filing fees with United States Citizenship and Immigration Services (USCIS) or for immigration-related legal services provided by the law firms.
As part of her scheme to defraud, Garcia sometimes instructed clients to leave the “pay to” line of money orders or checks blank and at other times she informed the clients that she would complete the money orders or checks for them. Garcia generally would then write her own name in the “pay to” line of the money orders or checks. Other times, Garcia crossed out “U.S. Department of Homeland Security” from the “pay to” line of money orders and wrote in her own name. Garcia admitted she deposited the clients’ money orders and checks into her personal bank accounts and used the funds to pay off personal expenses including credit card payments, clothing, and food.
In many cases, when the immigration law firms’ clients realized they were not receiving legal services or their immigration-related applications were not being processed by USCIS after providing payment to Garcia, Garcia provided false explanations for the delays or lack of response from USCIS. She also admitted that sometimes she refused to permit the clients to speak to a licensed attorney at the law firms.
In total, Garcia admitted to defrauding at least 144 victim clients. She also admitted to defrauding the clients and the immigration law firms out of approximately $199,077.
United States District Judge George H. Wu has scheduled a February 25, 2021 sentencing hearing, at which time Garcia will face a statutory maximum sentence of 20 years in federal prison.
This matter was investigated by United States Secret Service, the Inglewood Police Department, and the United States Postal Inspection Service.
This case is being prosecuted by Assistant United States Attorneys Brian R. Faerstein of the Environmental and Community Safety Crimes Section, and Patrick Castañeda of the International Narcotics, Money Laundering, and Racketeering Section.
Hollywood Man Arrested on Federal Charge Alleging He Recklessly Operated a Drone that Crashed into and Damaged LAPD HelicopterRead the Press Release
LOS ANGELES – Special agents with the FBI this morning arrested a Hollywood man on a federal charge alleging that he recklessly operated a drone that crashed into a Los Angeles Police Department helicopter.
The drone damaged the LAPD aircraft and the pilot was forced to initiate an emergency landing. The drone also damaged a vehicle when the unmanned aircraft fell from the sky after the crash.
Andrew Rene Hernandez, 22, was arrested pursuant to a criminal complaint filed Wednesday that charges him with one count of unsafe operation of an unmanned aircraft.
According to the complaint filed in United States District Court, during the early morning hours of September 18, LAPD officers responded to a burglary call at a pharmacy in Hollywood. The responding officers requested air support, and an LAPD helicopter flew toward the scene. As the helicopter approached the pharmacy, the pilot saw the drone and attempted to evade the unmanned aircraft. Despite the evasive efforts, the drone stuck the helicopter, forcing the pilot to initiate an emergency landing. The drone damaged the helicopter’s nose, antenna and bottom cowlings. According to the complaint, “if the drone had struck the helicopter’s main rotor instead of the fuselage, it could have brought the helicopter down.”
LAPD officers located parts of the drone near the pharmacy and discovered a vehicle damaged by the drone as it fell from the sky. Further investigation, including a review of the drone’s camera and SD card, led to the identification of Hernandez as the drone’s operator.
The FBI executed additional search warrants in late October at Hernandez’s residence. Hernandez admitted to flying the drone on September 18 after he heard police vehicles and an approaching helicopter just after midnight. According to the complaint, Hernandez said he flew his drone “to see what was going on.” As the drone was ascending, Hernandez saw the drone “smacked” by the hovering police helicopter, and it fell to the ground at a nearby residence, the complaint states.
Hernandez is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles.
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.
As charged, the unsafe operation of an unmanned aircraft offense alleged in the complaint is a misdemeanor offense that carries a statutory maximum sentence of one year in federal prison.
The investigation in this matter is being conducted by the FBI’s Joint Terrorism Task Force and the LAPD, with the assistance of the Federal Aviation Administration.
This case is being prosecuted by Assistant United States Attorney Reema M. El-Amamy of the Terrorism and Export Crimes Section.
The case against Hernandez is believed to be the first criminal case in the nation alleging the unsafe operation of an unmanned aircraft. Today’s arrest comes during National Drone Safety Awareness Week, which is sponsored by the Federal Aviation Administration and seeks to promote drone safety.
Joint FBI-LAPD Investigation into South L.A. Street Gang Leads to 14 Arrests on Federal Charges of Distributing Crack Cocaine and MethRead the Press Release
LOS ANGELES – An investigation led by the FBI and the Los Angeles Police Department last night and this morning resulted in the arrest of 14 defendants linked to the Hoover Criminal Gang on federal charges alleging the distribution of narcotics, some of which were sold to customers out of two South Los Angeles storefronts.
The investigation – dubbed Operation Hoover Dam – resulted in three indictments being returned over the past few weeks by a federal grand jury. The indictments allege that the defendants – all members or associates of the street gang, or alleged drug dealers who operated in gang territory – sold methamphetamine, crack cocaine, cocaine and phencyclidine (PCP). One indictment also alleges weapons violations, including carrying a firearm in relation to a drug trafficking crime.
The main indictment charges 10 defendants, including two senior gang members who operated stores where narcotics allegedly were peddled. Bobby Lorenzo Reed, a.k.a. “Zo,” 56, the owner of the H&E Smoke and Snack Shop, and Andrew Tate, a.k.a. “Batman,” 52, the owner of the TNN Market, each sold methamphetamine, crack cocaine and powder cocaine from their respective South Los Angeles stores, referred customers to one another, supplied one another, and directed their employees to engage in drug sales and referrals, according to the indictment, which details dozens of narcotics transactions in 2017 and 2018.
The 32-count indictment further charges Tate and a second person with conspiring to distribute heroin inside Solano State Prison in Vacaville. In this conspiracy, Tate allegedly supplied heroin to Lashina Lacy, 33, of Fresno, who allegedly attempted to smuggle the contraband into the prison for an incarcerated gang member, who, in turn, intended to sell the heroin to other inmates. As a result of this part of the investigation, which included the California Department of Corrections and Rehabilitation, the heroin was intercepted before entering the prison.
The second indictment unsealed today charges three defendants with participating in a series of narcotics transactions in 2018, some involving sales of approximately one and two ounces of methamphetamine and crack cocaine.
The third indictment unsealed today charges two people with distributing street-level quantities of PCP and crack cocaine.
The three indictments charge a total of 15 defendants. After 14 arrests last night and this morning, authorities are continuing to search for one defendant, Ricky Blue, 51.
The defendants were taken into custody primarily in South Los Angeles, but arrests were also made in South Gate and Fresno.
The defendants arrested in the Los Angeles area are expected to be arraigned this afternoon in United States District Court.
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 the charges alleged in the indictments, most of the defendants would face mandatory minimum sentences of five or 10 years in federal prison.
Operation Hoover Dam was conducted by the FBI, the Los Angeles Police Department, and the California Department of Corrections and Rehabilitation
The prosecutions resulting from the investigation are being handled by Assistant United States Attorney Scott D. Dubois of the International Narcotics, Money Laundering, and Racketeering Section.
Four Members of Los Angeles-Based Fraud Ring Indicted for COVID-Relief FraudRead the Press Release
Four individuals were charged in an indictment for their alleged participation in a scheme to submit at least 35 fraudulent loan applications seeking over $5.6 million in COVID-19 relief guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, and U.S. Attorney Nicola T. Hanna of the U.S. Attorney’s Office for the Central District of California made the announcement.
Richard Ayvazyan, 42, Marietta Terabelian, 36, Artur Ayvazyan, 40, and Tamara Dadyan, 39, all of Encino, California, were charged in an indictment filed in the Central District of California with one count of conspiracy to commit bank and wire fraud, four counts of bank fraud, and six counts of wire fraud. Richard Ayvazyan was also charged with one count of aggravated identity theft.
According to the indictment, the defendants conspired together, and with others, as part of a disaster relief loan fraud ring based in and around Los Angeles, California. The defendants used fake, stolen, or synthetic identities, including “Iuliia Zhadko” and “Viktoria Kauichko,” to submit fraudulent EIDL and PPP loan applications to the SBA and federally-insured financial institutions. The defendants also submitted fraudulent EIDL and PPP loan applications in their own names, using fake or fictitious businesses. The defendants also submitted false and fictitious documents in support of some of the EIDL and PPP loan applications, including fake identity documents, tax documents and payroll records.
The indictment further alleges that once the SBA and federally-insured financial institutions approved the fraudulent EIDL and PPP loans, the defendants directed them to deposit the loan proceeds into bank accounts that the defendants controlled. The defendants then used the fraudulently obtained loan proceeds for their own personal benefit, including to purchase luxury homes. Among other things, the defendants used disaster relief loan funds as down payments on two residential properties purchased for $1,000,000 and $3,250,000, respectively. Use of disaster relief loan proceeds for such purposes is expressly prohibited under the PPP and EIDL program.
The CARES Act is a federal law enacted March 29. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is 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 one percent. Businesses must use PPP loan proceeds 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.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by the FBI, IRS – Criminal Investigation, and SBA – Office of Inspector General. Trial Attorney Christopher Fenton of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Julian L. André of the Central District of California are prosecuting the case.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Former O.C. Physician Assistant Admits to Knowingly Writing Opioid Prescriptions to Dealers Who Later Sold the Drugs on the StreetRead the Press Release
SANTA ANA, California – A former physician assistant at a Fountain Valley medical clinic pleaded guilty today to a federal charge that he conspired to issue and sell prescriptions for oxycodone, a highly addictive opioid painkiller, without a medical purpose, to drug dealers, knowing the drugs would be sold on the street.
Raif Wadie Iskander, 54, formerly of Ladera Ranch, but who now resides in Ennis, Montana, pleaded guilty via videoconference to one count of conspiracy to distribute oxycodone.
According to his plea agreement, from 2018 to April 2019, Iskander, who was a licensed physician assistant in California, wrote prescriptions for “patients” he had never met or examined, including an undercover law enforcement officer. Iskander provided to drug dealers multiple paper prescriptions that he had signed, but with the patient names left blank, to be filled in by drug dealers later.
In exchange for cash, Iskander wrote fraudulent oxycodone prescriptions for co-defendants Johnny Gilbert Alvarez, 40, a.k.a. “M.J.,” of Santa Ana, and Adam Anton Roggero, 37, of Costa Mesa, who sold the prescribed drugs on the street as well as to an undercover officer, according to the plea agreement.
Iskander admitted he knew that the oxycodone filled from the prescriptions would be sold to drug customers who were not using the oxycodone for legitimate medical purposes and whom defendant had never met or examined.
United States District Judge James V. Selna has scheduled an April 26, 2021 sentencing hearing, at which time Iskander will face a statutory maximum sentence of 20 years in federal prison.
Roggero pleaded guilty on October 20 to one count of conspiracy to distribute oxycodone. Alvarez is scheduled to go to trial on March 9, 2021.
This matter was investigated by the Drug Enforcement Administration, the Costa Mesa Police Department, and the California Department of Health Care Services.
This case is being prosecuted by Assistant United States Attorney Rosalind Wang of the Santa Ana Branch Office.
4 San Fernando Valley Residents Indicted for Fraudulently Obtaining Nearly $5 Million in COVID-Relief Loans for Fake BusinessesRead the Press Release
LOS ANGELES – Two brothers and their wives have been charged in a federal grand jury indictment alleging a scheme to submit at least 35 fraudulent loan applications seeking more than $5.6 million in COVID-19 relief loans authorized by the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Richard Ayvazyan, 42; Richard’s wife, Marietta Terabelian, 36; Richard’s brother, Artur Ayvazyan, 40; and Artur’s wife, Tamara Dadyan, 39, all of Encino, were charged in 12-count indictment returned late Tuesday by a federal grand jury. The indictment charges all four defendants with one count of conspiracy to commit bank and wire fraud, four counts of bank fraud, and six counts of wire fraud. Richard Ayvazyan was also charged with one count of aggravated identity theft.
According to the indictment, the defendants used fake, stolen or synthetic identities – including the created identities of “Iuliia Zhadko” and “Viktoria Kauichko” – 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 defendants also allegedly submitted fraudulent EIDL and PPP loan applications in their own names, using fake or fictitious businesses. In support of the fraudulent loan applications, the defendants often submitted false and fictitious documents to lenders and the SBA, including fake identity documents, tax documents and payroll records, according to the indictment.
Once financial institutions and the SBA approved the fraudulent EIDL and PPP loans, the defendants used the fraudulently obtained loan proceeds for their own personal benefit, including to purchase luxury homes. Among other things, the defendants used disaster relief loans as down payments on a $3.25 million residence in Tarzana and a $1 million home in Glendale. Use of disaster relief loan proceeds for such purposes is expressly prohibited under the PPP and EIDL programs.
The indictment alleges that the four defendants received at least $4.6 million as a result of the fraudulent PPP and EIDL applications.
Enacted in March, the CARES Act is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is 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, 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 one percent. Businesses must use PPP loan proceeds 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 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.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Artur Ayvazyan and Dadyan were arrested on November 5 pursuant to a criminal complaint previously filed in this case. They were released on bond and are scheduled to be arraigned on December 3 and 4, respectively.
Richard Ayvazyan and Terabelian were arrested in Miami on October 20 as they returned from a vacation in Turks and Caicos. They were released on bond and returned to Los Angeles, but a court hearing in Los Angeles has not yet been scheduled.
The conspiracy and bank fraud charges alleged in the indictment each carry a statutory maximum sentence of 30 years in federal prison. The wire fraud counts each a statutory maximum sentence of 20 years. The aggravated identity theft charge carries a mandatory consecutive two-year sentence.
T his case is part of an ongoing investigation being conducted by the FBI, IRS Criminal Investigation, and the Small Business Administration – Office of Inspector General.
This case is being prosecuted by Assistant U.S. Attorney Julian L. André of the Major Frauds Section and DOJ Trial Attorney Christopher Fenton of the Criminal Division’s Fraud Section.
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.
Federal Grand Jury Indictment Charges Alleged Bank Robber Arrested after Crashing Getaway Car at Vandenberg Air Force BaseRead the Press Release
LOS ANGELES – A Michigan man was taken into federal custody today on charges that he robbed a credit union in Santa Barbara County, attempted to rob a bank, and then led law enforcement on a high-speed chase that resulted in him crashing his getaway car at Vandenberg Air Force Base.
Maurice Antwion Pilgrim Jr., 19, of Detroit, is expected to be arraigned this afternoon in United States District Court in downtown Los Angeles.
A federal grand jury indictment returned on November 10 charges Pilgrim with one count of robbery and one count of attempted robbery.
According to the indictment, on October 13 Pilgrim robbed Coast Hills Credit Union in Lompoc, making off with $3,000. Two days later, he allegedly attempted to rob Mechanics Bank in Guadalupe, but fled after seeing a nearby bank security guard, according to court documents filed in this case.
After the failed bank robbery, law enforcement officials located Pilgrim driving on Highway 1 and began pursuing him, according to court documents. The high-speed chase ended when Pilgrim crashed his car near the Vandenberg Air Force Base visitor center, court papers state. Pilgrim later fled the scene on foot, but he was arrested soon afterward. Pilgrim had been in state custody until today.
After being arrested on October 15, Pilgrim made incriminating statements, according to court papers that state clothing and other items found in a Ford Taurus Pilgrim had rented in July – but was never returned – matched security camera footage and witness descriptions of him. Pilgrim also allegedly told law enforcement that, before the robbery, he used Google to research penalties for bank robbery.
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 both counts, Pilgrim would face a statutory maximum sentence of 40 years in federal prison.
This case was investigated by the FBI, the Lompoc Police Department, the Guadalupe Police Department, and the Santa Barbara County Sheriff’s Office.
This matter is being prosecuted by Assistant United States Attorney Jeremiah M. Levine of the General Crimes Section.
O.C. Tax Preparer Sentenced to Nearly 3 Years in Prison for Filing False Tax Returns that Caused Almost $5 Million in Losses to IRSRead the Press Release
SANTA ANA, California – An Orange County tax preparer who cheated the IRS out of nearly $5 million by fraudulently filing income tax returns on his clients’ behalf – and without their consent – to obtain false tax refunds was sentenced today to 34 months in federal prison.
Michael Hung Lee, 70, of Garden Grove, was sentenced by United States District Judge David O. Carter, who also ordered him to pay $4,917,035 in restitution. Lee pleaded guilty on July 27 to one count of conspiracy to aid and assist in the preparation of false tax returns.
From 2014 to March 2018, Lee was a tax preparer who owned and operated the Garden Grove-based business, 1040 U.S. Tax Center Inc. Lee conspired with others at the business to fraudulently prepare and file federal individual income tax returns on behalf of their clients.
Specifically, Lee claimed Schedule D capital losses on these fraudulent tax returns. Schedule D is a form the IRS provides to help taxpayers compute their capital gains or losses from the sale of items such as stocks, bonds and real estate, and the corresponding taxes due from them.
On these tax returns, Lee claimed capital losses that he knew his clients never approved and for which they were unqualified. The false declarations of capital losses reduced his clients’ listed taxable income. As a result, the federal government incurred a tax loss of at least $4,917,035. The tax refunds went to the customers, while Lee obtained more business as a result of the scheme.
On June 15, Mylinh Thi Lee, 50, of Garden Grove, who is Michael Lee’s step-daughter and also was a tax preparer at 1040 U.S. Tax Center, pleaded guilty to one count of aiding and assisting in the preparation of false tax returns. She will face a statutory maximum sentence of three years in federal prison at her sentencing hearing, which is scheduled for December 7.
The matter was investigated by IRS Criminal Investigation.
This case was prosecuted by Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office.
Glendale Man Sentenced to 7 Years in Federal Prison for Role in Credit Card ‘Bust Out’ Scams Used to Buy Liquor and Cemetery PlotsRead the Press Release
LOS ANGELES – A Glendale man was sentenced today to 84 months in federal prison for running a series of “bust out” scams that defrauded more than 20 banks out of nearly $5 million by, among other things, using fraudulently obtained credit cards to buy millions of dollars in liquor and cemetery plots that were later sold for a profit.
Mikayel Hmayakyan, 43, was sentenced by United States District Judge George H. Wu, who also ordered him to pay $4,906,534 in restitution. Hmayakyan pleaded guilty on June 29 to two counts of bank fraud and one count of aggravated identity theft.
A “bust out” scam is a form of fraud in which a person applies for a credit card, often using a stolen identity, with the intention of “maxing out” the card with no intention of paying off the debt.
Hmayakyan and his co-conspirators fraudulently obtained credit cards – sometimes using their real names, but also with synthetic identities created with a combination of real and fictitious information. After the cards were run up to the credit limit, members of the scheme “paid down” the cards by submitting payments from accounts with insufficient funds or through other fake accounts to restore the credit line, which allowed them to make additional fraudulent purchases.
For example, from 2014 through 2017, Hmayakyan – with no intention to pay any credit card bills – charged and directed others to charge over $3 million to buy things such as liquor, Rolex watches and Forest Lawn cemetery plots.
The liquor was purchased on behalf of the now-closed Liquor Spot in Glendale, where co-defendant Vahan Aloyan, 45, of Glendale, was a manager. During the execution of a search warrant in 2016, law enforcement seized more than 37,000 bottles of alcoholic beverages, worth approximately $300,000, from the Liquor Spot. They also seized nearly $13,000 in cash from the store, as well as nearly $13,000 in cash and 37 watches and other jewelry items from Aloyan’s residence, according to court documents.
In another set of scams, from 2010 through 2011 and again from 2015 through 2016, Hmayakyan applied for a number of loans in the name of real and fictitious people. He used the loan proceeds to finance the purchase of vehicles, but would not make the payments. Hmayakyan caused losses of more than $400,000 to the banks who gave those loans.
The total actual loss to which the financial institutions were exposed was $4,906,534.
Gayane Hakobyan, 70, of Hollywood Hills, admitted in June that she participated in the “bust-out” scheme by allowing others to open credit card accounts in her name. On October 8, Judge Wu sentenced her to two years’ probation and ordered her to pay $223,235 in restitution.
Mikayel Hovhannisyan, 38, of North Hollywood, pleaded guilty in June 2019 to one count of bank fraud, served a nine-month federal prison sentence and was ordered to pay $412,413 in restitution.
Aloyan, the case’s sole remaining defendant, is scheduled to go on trial in this matter on March 15, 2021.
The United States Secret Service, Homeland Security Investigations and the Glendale Police Department investigated this matter.
Assistant United States Attorneys Poonam G. Kumar of the Major Frauds Section and Victor A. Rodgers of the Asset Forfeiture Section prosecuted this case.
Parolee Who Allegedly Stole Humvee from Army Reserve Facility in Upland Charged in Federal Court with Theft of Government PropertyRead the Press Release
LOS ANGELES – A Pomona man who allegedly went to an Army Reserve Center in Upland, drove away with a military Humvee worth more than $200,000, and briefly led police on a chase through residential streets in Pomona was charged today in federal court with theft of United States government property.
Armando Garcia, 29, who is currently on parole after being convicted last year in state court on theft and burglary charges, was named today in a criminal complaint filed in United States District Court. Garcia, who was taken into state custody following the police chase on Monday, is expected to be turned over to the federal authorities later this month.
The complaint alleges that Garcia stole a militarized High Mobility Multipurpose Wheeled Vehicle – commonly known as a Humvee – midday on Monday. Soon after Garcia drove off with the semi-armored combat vehicle with a turret mount, Pomona Police officers saw the Humvee and attempted to make a traffic stop of the unlicensed vehicle, according to the complaint.
“During the pursuit, which lasted approximately four minutes, the Humvee traveled at excessive speeds, drove on the wrong side of the street (in the direction of oncoming traffic), failed to stop at multiple red lights and stops signs, and failed to signal for turns,” according to an affidavit filed with the complaint. Garcia stopped the Humvee in front of a residence on East Kingsley Avenue in Pomona, where he was taken into custody without further incident.
Inside the Humvee, police found a large pair of bolt cutters and an Army-approved padlock that appeared to have been cut, according to the complaint, which notes the padlock had secured a steel wire put in place to prevent the turning of the steering wheel inside the vehicle.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of the charge in the complaint, Garcia would face a statutory maximum sentence of 10 years in federal prison.
This matter is being investigated by the FBI’s San Gabriel Valley Safe Streets Task Force. The Pomona Police Department is the sponsoring agency of the Task Force and has hosted the task force since its inception in 2008.
This case is being prosecuted by Assistant United States Attorney Susan Har of the General Crimes Section.
San Pedro Man Extradited to Face Charges of Making ‘Virtual Kidnapping’ Extortion Calls While Imprisoned for Murder in MexicoRead the Press Release
LOS ANGELES – A San Pedro man has been extradited from Mexico to Los Angeles to face federal charges that he perpetrated a “virtual kidnapping” scam where at least 30 victims in Southern California and elsewhere were duped via telephone into paying thousands of dollars in ransom to free their family members, who in reality hadn’t been kidnapped at all.
Julio Manuel Reyes Zuniga, a.k.a. “Muneco,” 48, arrived at Los Angeles International Airport on Wednesday after being extradited by Mexico.
Reyes Zuniga, a reputed member of the Rancho San Pedro street gang who had been imprisoned in Mexico since 1996 for two murder convictions, was taken into custody by the United States Marshals Service. Reyes Zuniga finished serving his prison sentence in Mexico last year and has been held since for extradition on this case. He is expected to be arraigned this afternoon in United States District Court in downtown Los Angeles.
A federal grand jury in September 2019 returned a 31-count indictment against Reyes Zuniga. He is charged with one count of conspiracy to commit extortion, 27 counts of extortion, two counts of foreign communication of threats with intent to extort money, and one count of conspiracy to launder monetary instruments.
“Virtual kidnappings” happen when an unsuspecting victim is told via telephone that his or her family member has been kidnapped. When the victim answers the phone, there is typically a panicked or gasping voice on the phone pleading for help. Then, through additional deception and threats, the criminal coerces the victim to pay a ransom. The criminal also threatens harm to the purported kidnap victim if the scam victim contacts law enforcement or alerts authorities. No one is physically kidnapped in these schemes, but they are often traumatic for everyone involved. On average, the family sends thousands of dollars to the scammers before contacting law enforcement.
The indictment alleges that from September 2015 to June 2018, while he was serving a murder conviction in a prison outside Mexico City, Reyes Zuniga and others acting at his direction falsely represented to victims on the phone that they had kidnapped the victims’ child or loved one, and planned to harm them unless a ransom was paid for their release. In reality, no kidnappings had taken place.
Reyes Zuniga and others working at his direction allegedly then demanded ransom payments in the form of wire transfers, cash drops at locations, or the purchase of electronics such as iPhones or iPads. Once the funds were wired or delivered, individuals in Mexico delivered the proceeds to the imprisoned Reyes Zuniga. Investigators believe these kinds of schemes are perpetrated via cellphones smuggled into Mexican prisons, court papers state.
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, Reyes Zuniga would face a statutory maximum sentence of 20 years in federal prison for each count in the indictment.
This matter was investigated by the FBI; IRS Criminal Investigation; the FBI Mexico City Legal Attaché; IRS-CI Mexico City Legal Attaché; the U.S. Department of Justice’s Office of International Affairs; the Los Angeles Police Department; the Beverly Hills Police Department; the Orange County Sheriff’s Department; the San Diego County Sheriff’s Department; and the University of California, Los Angeles Police Department.
This case is being prosecuted by Assistant United States Attorneys Jeffrey M. Chemerinsky and Joshua O. Mausner of the Violent and Organized Crime Section.
Federal Authorities Arrest 9 Defendants Charged in Relation to Scheme that Laundered over $30 Million in Fraud ProceedsRead the Press Release
LOS ANGELES – Federal authorities this morning arrested nine defendants, most of whom allegedly were involved in a sophisticated money laundering scheme that moved tens of millions of dollars derived from tax fraud and health care fraud schemes.
Two indictments unsealed this morning allege that a total of 10 defendants participated in a large operation that laundered more than $30 million in tax refunds that had been obtained from approximately 7,000 fraudulent tax returns filed using identities stolen from thousands of American taxpayers. Seven of the 10 defendants named in these two indictments were arrested this morning, and three are still being sought by authorities.
Two additional defendants arrested this morning are charged in two other indictments that allege fraud, one involving a car leasing scam and one involving a short sale scheme involving a $2 million residence that was forfeited to the United States earlier this year. A second defendant in the real estate scam is also a fugitive.
The leader of the schemes outlined in the two money laundering indictments – Gagik Airapetian – directed other conspirators to use altered foreign passports, mostly from the Republic of Armenia, to rent mailboxes and open bank accounts to launder funds from tax fraud and health care fraud, according to the indictments. Members of the conspiracies allegedly altered Republic of Armenia passports by placing their photographs on top of the real passport holders’ photographs, and then using the altered passports to open more than 500 bank accounts.
The nine defendants were arrested this morning by special agents with the FBI and IRS Criminal Investigation.
The defendants arrested pursuant to the money laundering indictments are: Gagik Airapetian, 62, of Woodland Hills; Tigran Galstyan, 48, of Sylmar; Moses Seraydarian, 54, of Northridge; Stepan Terakopyan, 35, of Granada Hills; Petros Terakopyan, 64, of Sun Valley; Karen Pogosian, 49, of Van Nuys; and Haroutioun Demirdjian, 54, of North Hollywood.
Authorities are continuing to search for three money laundering defendants: Davit Asoyan, 29, of Granada Hills; Nikoghos Petrosyan; and Albert Andriasov, 28, of Las Vegas.
Ara Sahakyan, 54, of Reseda, was arrested pursuant to the indictment alleging the car leasing scheme in which he leased three different vehicles by falsely claiming to be a CFO earning $189,000 per year.
In relation to the indictment that alleges the short sale scheme, Armen Oganesian, 56, of Los Feliz, was arrested this morning. Arsen Abrahamyan is also charged in this case, and he is believed to have fled the United States.
Members of the money laundering conspiracies used attorneys to try to unfreeze bank accounts that banks had frozen due to suspected fraud, according to court documents. Airapetian bribed a lawyer to use his attorney client trust account – which is supposed to be used by attorneys to segregate client funds from the attorney’s money – to launder more than $500,000 in tax fraud proceeds, the indictment states. Glendale lawyer Arthur S. Charchian previously pleaded guilty to one count of money laundering and one count of making a false statement to the Social Security Administration as he admitted laundering $549,000 for the scheme.
According to one of the indictments unsealed today, defendant Galstyan bribed bank managers to unfreeze bank accounts that contained funds suspected to have been derived from fraud. Last year, a former Wells Fargo Bank manager, Hakop Zakaryan, pleaded guilty to bank fraud for his role in the scheme.
The other money laundering indictment unsealed today describes a related conspiracy, also orchestrated by Airapetian, that laundered monies derived from health care fraud. Similar to the tax fraud money laundering scheme, members of this conspiracy allegedly opened bank accounts using fraudulent identities, and Airapetian allegedly charged a 30 percent laundering fee. As detailed in the indictment, the FBI also conducted an undercover operation where the schemers laundered funds they thought were from health care fraud.
The arrests this morning are part of a continuing multi-agency investigation into a Stolen Identity Refund Fraud (SIRF) scheme – dubbed Operation “SIRF’s Up” – that involved conspirators who used false identities and fake Republic of Armenia and other former Soviet Republic passports to open hundreds of bank accounts that were used to launder tens of millions of dollars in tax refunds fraudulently received from the IRS. After the arrests this morning, federal authorities have now charged a total of 35 defendants linked to the scheme. So far, the investigation has resulted in 15 convictions, and the seizure of at least five residential properties worth millions of dollars and more than $700,000 from bank accounts. Five defendants remain fugitives from justice.
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.
f convicted of all charges, Airapetian would face a statutory maximum sentence of more than 400 years in federal prison. The other defendants in the money laundering indictments unsealed today each face prison statutory maximum sentences of more than 100 years of imprisonment.
This matter was investigated by IRS Criminal Investigation, the FBI, and Homeland Security Investigations.
This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.
Former Torrance Police Officer Agrees to Plead Guilty to Illegally Acting as Firearms Dealer and Being ‘Straw Buyer’ of ‘Off Roster’ GunRead the Press Release
LOS ANGELES – A former officer with the Torrance Police Department (TPD) has been charged with being an unlicensed firearms dealer who sold dozens of guns, as well as certifying he was the actual purchaser of a handgun, when, in fact, he was buying the gun for another person, the Justice Department announced today.
Lindley Alan Hupp, 32, of Long Beach, was named in a two-count information filed Friday in United States District Court. In conjunction with the charging document, federal prosecutors also filed a plea agreement in which Hupp agreed to plead guilty to the two felony offenses – engaging in the business of dealing in firearms without a license, and making a false statement in a federal firearm licensee’s records during purchase of a firearm.
According to the court documents, Hupp sold at least 48 firearms during an 8½-year period while employed by the TPD. Hupp sold another two guns in 2011 while serving as an auxiliary police officer with the Pasadena Police Department.
“In violation of federal law, Hupp sold firearms without a federal firearms license,” Hupp admitted in his plea agreement. “Hupp made a business of dealing firearms, in part, by abusing exemptions made available to him under California law as a sworn peace officer. Of the forty-eight (48) firearms defendant sold while employed at the TPD, thirty-six (36) firearms were ‘off roster’ firearms; that is, firearms that Hupp’s non-law enforcement customers could not have purchased directly from a licensed firearms dealer.”
While off roster firearms – which also are described in California statutes as “non-roster” or “unsafe” handguns – may be purchased by sworn law enforcement officers, who then may sell the firearms on the secondary market, Hupp admitted “repeatedly exploiting the privilege” by reselling off roster weapons soon after acquiring them. Hupp resold nearly half of the 36 off roster guns within 30 days of having initially purchased them.
In relation to the false statement count, Hupp admitted making a material false statement on a Bureau of Alcohol, Tobacco, Firearms and Explosives recertification form (Form 4473) when he purchased a Glock 9mm handgun in November 2015. After offering to sell two Glocks for sale on an online marketplace, Hupp purchased one Glock handgun from a Brea firearms dealer. When Hupp went to pick up the gun after the 10-day waiting period, he signed a Form 4473 in which he falsely certified he was “the actual transferee/buyer of the firearm” knowing that he was the “straw buyer” of the firearm on behalf on another individual who purchased the handgun from Hupp a few days later.
In exchange for Hupp’s acceptance of responsibility, cooperation with the investigation, and agreement to abandon to local law enforcement 42 firearms currently in his possession, the government has agreed to recommend a prison sentence of not more than 18 months. This recommendation, however, will not be binding on the sentencing judge, who could impose a sentence of up to 15 years in prison after Hupp pleads guilty to the two charges.
Hupp has agreed to make his initial appearance in United States District Court on December 3.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the FBI.
This case is being prosecuted by Assistant United States Attorney Elisa Fernandez of the Public Corruption and Civil Rights Section.
San Fernando Valley Man Charged by Federal Grand Jury with Cyberstalking in Case that Targeted Women with Death ThreatsRead the Press Release
LOS ANGELES – A federal grand jury today returned an indictment that charges a Chatsworth man with cyberstalking two sisters by sending them text messages that threatened them with rape and murder.
Alex Scott Roberts, 25, was named in a six-count indictment that outlines a harassment and threat campaign that spanned a three-week period this summer. The indictment charges Roberts with two counts of stalking and four counts of making threats by interstate communications, specifically text messages.
Roberts is currently in state custody serving a sentence resulting from a parole violation. A Los Angeles Superior Court judge ordered Roberts back into custody in September after the FBI executed a federal search warrant related to the cyberstalking case at his residence. Roberts is expect to finish the sentence in the parole violation matter later this month, at which time FBI agents expect to take him into federal custody.
The indictment filed today in United States District Court alleges that Roberts, starting in late July and continuing until August 18, used text messages and internet communications to place the two victims “in reasonable fear of death and serious bodily injury,” and that he intended to cause “substantial emotional distress.”
After being told by Victim 1 and her family that the woman did not want to communicate with Roberts, on July 31 he allegedly created a listing on Craigslist that offered a room for rent at Victim 1’s home and invited prospective renters to “Stop by anytime,” according to the indictment.
On August 2, Roberts allegedly sent anonymous text messages to a friend of Victim 1 that demanded Victim 1’s phone number, threatened to publish nude photographs of Victim 1, and threatened to send someone to rape Victim 1.
The indictment states that, between August 11 and August 18, Roberts sent numerous anonymous text messages to Victim 1 and Victim 2 that include a series of threats, such as, “[S]o I’m outside…I see you guys…payback is a bitch and she gets what she deserves hope you all survive there will be blood.”
Later messages included threats such as, “have either of u been raped I guess you will experience that soon,” and “I have a gun aimed right at both your mom and dad . . . If u don[’]t respond someone will die.”
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 he was convicted in this case, Roberts would face a statutory maximum sentence of five years in federal prison for each count in the indictment.
This matter is being investigated by the FBI.
This case is being prosecuted by Assistant United States Attorney Lauren Restrepo of the Cyber and Intellectual Property Crimes Section.
Ex-Financial Advisor Sentenced to More Than 3 Years in Prison for Defrauding Professional Athlete Clients in Ticket Company ScamRead the Press Release
SANTA ANA, California – A former Orange County financial advisor and lawyer was sentenced today to 37 months in federal prison for stealing millions of dollars of his pro athlete clients’ money and investing it in a cash-losing ticket company on which he was a board member.
Ash Narayan, 55, of Irvine, was sentenced by United States District Judge Josephine L. Staton, who also ordered him to pay $18,811,231 in restitution. Narayan pleaded guilty in June 2019 to a two-count information charging him with wire fraud and subscribing to a false tax return.
Narayan worked as an investment advisor at RGT Capital Management Ltd.’s Irvine office and also was a licensed California lawyer until his disbarment earlier this year. At RGT, Narayan’s clients were high-net-worth individuals who were current and former professional athletes.
In addition to his job at RGT, Narayan served on the board of directors for The Ticket Reserve Inc. (TTR), an Illinois-based technology company that allowed customers to buy an option on a ticket to future sporting events, such as playoff games, which they could cash in if their team made the postseason. TTR never was profitable and carried millions of dollars in debt.
From December 2009 to early 2016, Narayan advised his clients to invest in TTR, but failed to disclose to them his role in the company as well as the fact that it was a high-risk investment and an unprofitable business. At times, Narayan directed RGT employees to forge his clients’ signatures on wire authorizations to direct significant amounts of his clients’ money into TTR without their knowledge or consent.
Narayan left RGT in 2016 and The Ticket Reserve was put into receivership later that year.
Narayan also knowingly subscribed to a materially false federal income tax return when he reported that his total income for 2012 was $543,072, when in truth it was $1,138,072.
In a related case brought by the Securities and Exchange Commission in federal court in Dallas, Narayan was ordered to repay $1,498,000 in ill-gotten gains as well as a $350,000 civil penalty.
This matter was investigated by the FBI and IRS Criminal Investigation.
This case was prosecuted by Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office.
San Gabriel Valley Man Admits to Role in Scheme in Which He Arranged Fraudulent ‘Green Card’ Marriages for Chinese NationalsRead the Press Release
LOS ANGELES – A San Gabriel Valley man pleaded guilty today to a federal conspiracy charge and admitted that he helped orchestrate a scheme in which Chinese nationals paid up to $60,000 to enter into sham marriages with U.S. citizens in the hope of obtaining “green cards.”
Chang Yu “Andy” He, 55, of Monterey Park, the owner of Fair Price Immigration Service, pleaded guilty to one count of conspiracy to commit marriage fraud.
According to his plea agreement, from January 2018 to November 2019, He recruited United States citizens to enter into marriages with Chinese nationals, who then filed immigration documents with United States Citizenship and Immigration Services (USCIS).
Specifically, He planned to arrange fraudulent marriages for three pairs of Chinese nationals and U.S. citizens to obtain green cards. The U.S. citizens in these situations were actually undercover agents with Homeland Security Investigations (HSI). He also met with a co-defendant and two other undercover agents for the purpose of arranging the agents into sham marriages with Chinese nationals.
He admitted coaching the Chinese nationals and United States citizens on how to make their marriages appear genuine and how to pass interviews conducted by the USCIS, such as by creating a fraudulent paper trail for the couples and memorizing answers to questions immigration service officers could ask during their USCIS interviews.
According to court documents, He also instructed the “couples” to obtain joint bank accounts and joint apartment leases, keep clothes in the apartments where the couples supposedly lived together, and visit the apartment several days a week so the neighbors would see them together.
In October 2018, He introduced a U.S. citizen, who actually was an undercover federal agent, to co-defendant Xiaojun Han, 40, of Irvine, for the purpose of entering into a sham marriage to obtain a green card. He paid the undercover agent $10,000 to enter into the sham marriage and, in April 2019, met with the agent at the Rosemead Public Library to help with Han’s immigration paperwork, the plea agreement states. He admitted telling the agent that he would be paid $25,000 when Han received her green card, as well as $5,000 at the end of the immigration process.
United States District Judge Michael W. Fitzgerald has scheduled a February 1, 2021 sentencing hearing, at which time He will face a statutory maximum sentence of five years in federal prison.
Co-defendants Huanzhang Wu, 29, of St. Paul, Minnesota, Zhongnan Liu, 34, of San Diego, who paid He to arrange sham their sham marriages, each pleaded guilty to one count of conspiracy to commit marriage fraud. Wu was sentenced to one year of probation. Liu’s sentencing hearing is scheduled for November 5.
Han and Xiulan “Cindy” Wang, 47, of San Gabriel, the owner of Pacific Bizhub Consulting, have a March 16, 2021 trial date scheduled in this case.
This investigation began in March 2017 based on information provided by an anonymous source. Law enforcement authorities believe the defendants’ clients learned about the service through word of mouth and from advertisements in Chinese newspapers.
This case is the result of an undercover investigation by the Los Angeles Document and Benefit Fraud Task Force, which is led by HSI and includes representatives of the U.S. Department of State’s Diplomatic Security Service and USCIS’ Fraud Detection and National Security unit. The San Gabriel Police Department, the West Covina Police Department, and the Los Angeles County Registrar-Recorder/County Clerk assisted in the investigation.
This matter is being prosecuted by Assistant United States Attorneys Robert S. Trisotto of the Riverside Branch Office and Jerry C. Yang, Chief of the Riverside Branch Office.
San Fernando Valley Medical Supply Company that Defrauded Federal Health Care Programs Pays U.S. $565,873 to Resolve Civil ClaimsRead the Press Release
LOS ANGELES – A Canoga Park-based company that sells home medical equipment has paid $565,873 to resolve allegations that it knowingly submitted false claims to federal health care programs for medically unnecessary medical supplies and supplies never delivered to patients.
Valley Home Medical Supply, Inc., which provides medical supplies and durable medical equipment, paid the settlement on Tuesday as part of an agreement that resolves a “whistleblower” lawsuit that alleged the company defrauded the Medicare and TRICARE programs from July 2006 until May 2013. With the payment of the settlement, United States District Judge Dale S. Fischer today dismissed the lawsuit.
Valley Home Medical Supply’s former president and chief executive officer, Kenneth Greenlinger, 75, of Oxnard, pleaded guilty in May 2017 to two counts of health care fraud and served an eight-month federal prison sentence. In the criminal case, Greenlinger was ordered to pay restitution of $1,072,618.
Kari Kitamura, a former employee of Valley Home Medical Supply, filed the civil lawsuit, United States ex rel. Kitamura v. Valley Home Medical Supply, CV12-11036 DSF(AGRx), in 2012 in United States District Court in Los Angeles. The United States elected to intervene in the lawsuit in 2017.
Ms. Kitamura filed the lawsuit under the qui tam – or whistleblower – provisions of the False Claims Act, which permit private parties to sue on behalf of the United States and to receive a share of any recovery. As a result of the settlement, Ms. Kitamura will receive $124,492, which equals 22 percent of the settlement proceeds. Valley Home Medical Supply will also pay Ms. Kitamura $80,000 for attorney’s fees.
This case was handled by Assistant United States Attorney Lisa A. Palombo of the Civil Fraud Section, who worked closely with the Federal Bureau of Investigation and the U.S. Department of Health and Human Services – Office of Inspector General.
Inglewood Women Plead Guilty to Running Half Million-Dollar Scheme that Improperly Billed 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, each pleaded guilty today to a health care fraud charge for fraudulently submitting more than $500,000 in claims for services that did not qualify for reimbursement or were never provided.
Mesbel Mohamoud, 47, and her mother-in-law, Erlinda Abella, 66, also of Inglewood, pleaded guilty to one count of health care fraud in separate hearings before United States District Judge Philip S. Gutierrez.
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 had contracts to provide medically necessary substance abuse treatment services through the Drug Medi-Cal program to adults and teenagers in Los Angeles County.
According to Mohamoud’s and Abella’s plea agreements, from January 2009 to December 2015, TNYC submitted false and fraudulent bills 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 allegedly 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.
For example, 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 court documents, Mohamoud further admitted she knew that among the acts Abella directed TNYC counselors to engage in included enrolling clients in TNYC’s substance abuse treatment program even if the clients had used drugs or alcohol only occasionally or even just once.
Mohamoud and Abella admitted that 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.
Judge Gutierrez scheduled a January 25, 2021 sentencing hearing for Abella and a February 8, 2021 sentencing hearing for Mohamoud, at which time each of them will face a statutory maximum sentence of 10 years in federal prison.
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 is prosecuting this case.
San Fernando Valley Man Sentenced to 15 Years in Federal Prison for Selling Fentanyl that Resulted in Victim’s Fatal OverdoseRead the Press Release
SANTA ANA, California – A San Fernando Valley man was sentenced today to 180 months in federal prison for selling fentanyl to a 22-year-old man who suffered a fatal overdose approximately 20 minutes after ingesting the drug.
James Dorion Rodriguez, 29, of Van Nuys, was sentenced by United States District Judge Cormac J. Carney. Rodriguez pleaded guilty in December 2019 to one count of distribution of fentanyl resulting in death.
Less than one month after he had been convicted in a separate drug trafficking case, Rodriguez arranged to sell cocaine to the victim. Investigators believe that Rodriguez intended to sell cocaine to the victim, but accidentally gave him fentanyl in the March 18, 2018 transaction.
The victim then ingested the drug and drove away. Hours later, the victim was found dead in his car in a nearby parking lot in Sherman Oaks. Based on telephone records, the victim died within 20 minutes of snorting the fentanyl.
Court documents filed in this case detail how investigators used surveillance video, phone records and witness statements to determine that Rodriguez supplied the narcotics to the victim only hours before he was found dead.
Rodriguez continued to deal in fentanyl and other opioids after the victim’s death. In September 2018, investigators executed a search warrant of Rodriguez’s car and found approximately 7 grams of powder fentanyl, a digital scale, multiple notebooks documenting drug dealing, and plastic baggies. After his arrest by federal authorities later that month, Rodriguez confessed to dealing fentanyl and delivering drugs to the victim on the night of the victim’s death.
This investigation in this case was conducted by the Los Angeles Police Department and the Drug Enforcement Administration. This was the first pursuant to a law enforcement partnership established to aggressively investigate opioid overdose deaths and prosecute the responsible drug dealers.
This case was prosecuted by Assistant United States Attorney Benjamin R. Barron, Chief of the Santa Ana Branch Office.
O.C.-Based Health Care Organization Agrees to Pay over $31.5 Million to Settle Claims It Overbilled Medicaid for Prescription MedicationRead the Press Release
LOS ANGELES – Memorial Health Services, a Fountain Valley-based non-profit health care organization, has agreed to pay more than $31.5 million to resolve allegations that it overbilled Medicaid for prescription medication purchased and reimbursed under a federal drug pricing program, the Justice Department announced today.
The settlement agreement is the result of a voluntary disclosure made in October 2019 by Memorial Health, which under the name MemorialCare Health System operates Long Beach Memorial Medical Center, Miller Children's and Women's Hospital, and Orange Coast Memorial Medical Center.
After an internal audit, Memorial Health determined that its hospitals and pharmacies overbilled the United States and California, which jointly fund Medicaid – known in California as Medi-Cal – a program that helps lower-income people with their medical costs.
According to the settlement agreement, from December 2016 to October 2019, Memorial Health improperly charged higher “usual and customary” costs, rather than lower “actual acquisition costs,” as required under the 340B Drug Pricing Program. This federal program requires drug manufacturers to provide outpatient medication to eligible health care organizations at significantly reduced prices.
The overbilling allegedly resulted from Memorial Health billing for its usual costs following a federal court’s temporary stay of the implementation of the California law requiring 340B providers to bill Medi-Cal at actual acquisition cost rates. But once a court lifted the temporary ban, Memorial Health failed to implement actual acquisition cost pricing.
“Hospitals and pharmacies that participate in the 340B Program are expected to provide low-priced drugs to vulnerable patients without overcharging the federal or state government,” said United States Attorney Nick Hanna. “While we commend Memorial Health for making a voluntary disclosure of its overbilling, we expect health care entities that participate in the 340B Program to do so fairly, honestly and in full compliance with the law.”
“Today’s settlement was the result of Memorial Health coming forward, doing the right thing, and alerting the authorities of their error,” said California Attorney General Xavier Becerra. “The money from the settlement will go back where it belongs: to California’s residents, particularly low-income families and children who rely on Medi-Cal for their healthcare coverage.”
Memorial Health ultimately overbilled the United States and California $21,021,786 and the $31.5 million settlement represents 1.5 times the alleged overbilling, the agreement states. Memorial Health has agreed to pay the United States $12,613,071.60 and California $18,919,607.40 to resolve the allegations, bringing the total settlement amount to $31,532,679.
After making its voluntary disclosure, Memorial Health cooperated with the federal and state authorities’ investigation.
The settlement was negotiated by Assistant United States Attorneys John E. Lee and Abraham C. Meltzer of the Civil Fraud Section, along with the U.S. Department of Health and Human Service’s Office of Inspector General and the California Department of Justice.
The settled claims are allegations only, and Memorial Health has not admitted any wrongdoing.
U.S. Attorneys in California Join District Attorneys to Help Victims of Domestic Violence During the COVID-19 PandemicRead the Press Release
LOS ANGELES – Three of the California United States Attorneys today joined the District Attorneys for four California counties to launch an online outreach campaign to help victims of domestic violence during the COVID-19 pandemic.
“Domestic violence can be solved only by continuing to work effectively with our local partners,” said United States Attorney Nick Hanna, who is a member of the Justice Department’s Domestic Violence Working Group. “We owe victims and their families our best efforts; we owe it to their children and to the broader community as well.”
The outreach campaign was announced this afternoon in a virtual press conference by U.S. Attorney Hanna, Ventura County District Attorney Gregory Totten, U.S. Attorney McGregor Scott in Sacramento, U.S. Attorney Robert Brewer in San Diego, San Diego County District Attorney Summer Stephan, Sacramento County District Attorney Anne Marie Schubert, Alameda County District Attorney Nancy O’Malley. These law enforcement officials were joined by Daphne Young, the Chief Communications Officer for Childhelp, a national nonprofit organization aiding victims of child abuse.
The outreach campaign was created to combat an unintended consequence of COVID-19 public health measures – an alarming rise in domestic violence with victims trapped at home with their abusers under increasing stress. The National Domestic Violence Hotline has reported an increase in contacts to the hotline during COVID-19. Reports show that physicians are treating more domestic violence injuries and that these injuries are more severe. According to the CDC, roughly 1 in 6 homicide victims are killed by an intimate partner. Research further shows that abusers with a gun in the home are five times more likely to kill their partners than abusers who don’t have access to a firearm.
Under federal law, individuals with domestic violence misdemeanor and felony convictions, as well as individuals subject to domestic violence protective orders, are prohibited from possessing firearms. Earlier this month, the Department of Justice announced it has charged more than 500 domestic violence cases involving firearms during the 2020 Fiscal Year.
The campaign includes a video public service announcement and public awareness messages posted on Facebook, Twitter and other social media platforms with a new post made each day for one week. The posts provide information for victims with resources – such as 24-hour hotlines – vital to reporting abuse. The posts also provide tips for concerned friends, relatives and educators on how they can help victims of abuse.
San Gabriel Valley Man Admits Role in Conspiracy to Kidnap Chinese National Whose Remains Were Buried in Mojave DesertRead the Press Release
LOS ANGELES – A Pasadena man pleaded guilty today to a federal charge of conspiring to kidnap a Chinese national who was violently abducted from a San Gabriel parking lot, and whose parents were extorted for $2 million in ransom before the victim died from his injuries.
Anthony Valladares, 28, pleaded guilty to a single-count information charging him with conspiracy to kidnap. He has been in federal custody since July 14, when he was arrested on a criminal complaint in this case.
According to his plea agreement, Valladares admitted to conspiring with others, including Chinese nationals Guangyao Yang, 27, and Peicheng Shen, 34, to kidnap Ruochen “Tony” Liao, of Santa Ana. Valladares was the “muscle” hired to intimidate, beat, and subdue Liao during the kidnapping. Valladares agreed to accept cash for the job, court papers state.
During the summer of 2018, Shen, using an alias, met the victim several times under the pretense that Shen would help the victim collect a debt from another individual, the plea agreement states. During their third meeting, at a San Gabriel shopping center on July 16, 2018, Shen lured the victim to a minivan, where Valladares was hiding, and whose driver was Alexis Ivan Romero Velez, 24, of Azusa, whom Valladares recruited for the conspiracy.
Liao entered the minivan and spoke in Chinese with Shen, who used a specific word to signal Valladares to begin attacking the victim. Once Shen uttered the word, Valladares and Shen violently assaulted Liao, used a taser to subdue him, and ultimately bound and restrained him with a black hood and ties. Valladares admitted to helping Yang acquire the taser used in the kidnapping, and also admitted to acquiring a revolver and bullets for the kidnapping. Romero then drove the minivan to a location in Rosemead, where Liao was moved into a different car, the plea agreement states.
Shen and Yang then took the victim to a house in Corona, where they confined him by binding his legs together, taping his eyes shut, restraining his arms behind him, and confining him in a closet, court papers state.
The day after the kidnapping, the victim’s father received a demand for a $2 million ransom in exchange for the victim’s life, with the money to be deposited into three Chinese bank accounts within three hours, court documents allege. The victim’s father also received photographs of the victim, who was physically restrained in a closet, according to court documents.
Valladares was not physically present for Liao’s death, which occurred when Shen and Yang held him captive, the plea agreement states.
Shen and Yang allegedly drove to the area of Mojave, California, to bury or otherwise dispose of the victim’s body and other physical evidence involved in the crime. Further, Shen allegedly had the closet of the Corona house re-carpeted. Yang also performed internet searches to determine, in effect, how fast a corpse decomposes in soil, court papers state. Liao’s remains were discovered in Mojave late last year.
United States District Judge Fernando M. Olguin has scheduled a February 18, 2021 sentencing hearing, at which time Valladares will face a statutory maximum sentence of life in federal prison. The parties have agreed that a prison sentence of at least 12 years but no more than 25 years represents a reasonable and appropriate sentence in this case. Judge Olguin will make the final determination as to the sentence.
Yang and Shen, whose last known U.S. residences were in West Covina, are currently in custody in China on charges filed there related to the kidnapping. Last month, Romero pleaded guilty to one count of conspiracy to kidnap. His sentencing hearing is scheduled for February 4, 2021.
The FBI conducted this investigation, with significant assistance provided by members of the FBI’s Safe Street Task Force, which includes the Pasadena Police Department.
This case is being prosecuted by Assistant United States Attorneys Julia Choe of the Cyber and Intellectual Property Crimes Section and Frances Lewis of the Public Corruption and Civil Rights Section.
Northridge Man Arrested on Charges that Business Partner and He Fraudulently Obtained Nearly $2 Million in COVID-Relief PPP LoansRead the Press Release
SANTA ANA, California – A San Fernando Valley man was arrested today on federal charges alleging he and his business partner fraudulently obtained more than $1.95 million in Paycheck Protection Program (PPP) loans for their companies by submitting fake tax documents and false employee information, and then transferred hundreds of thousands of dollars of the funds into their personal bank accounts.
Steven R. Goldstein, 36, of Northridge and his business partner, Raymond Magana, 39, of Santa Clarita, were named in a federal criminal complaint charging them with making false statements to the government, fraud in connection with major disaster or emergency benefits, wire fraud, bank fraud, conspiracy, and false statements to the Small Business Administration (SBA).
Goldstein was arrested this morning and is expected to make his initial appearance this afternoon in United States District Court in Santa Ana. Magana will be summonsed to appear in federal court next month.
According to an affidavit in support of the complaint, on May 13 and June 3, Magana submitted two applications for PPP loans totaling $1.8 million to U.S. Bank and Customer’s Bank, on behalf of The Building Circle LLC, a company registered in his name.
To qualify for the PPP loans, Magana allegedly claimed that The Building Circle had 40 employees and submitted to the banks, and later to the SBA, bogus wage and tax documents that falsely reported $4.5 million in annual employee wages.
Both IRS and California Employment Development Department records showed that the company never reported paying any employees, and the underwriting packet also did not include a list of employees or associates for the company, according to the affidavit. Investigators later determined that the Pico Rivera address given as The Building Circle’s headquarters was a 980-square-foot, single-family home that appeared to be a residence, not a business. Ultimately, one of the two loan applications was approved and $940,416 was funded to Magana’s shell company, the affidavit states.
Magana allegedly also applied for and received a PPP loan of $360,415 for Forward Builders LLC, another shell company, using fake tax documents and false employee information, and falsely claiming $1.73 million in employee wages.
When a bank manager contacted Magana after one of the business accounts receiving PPP funds had been frozen because of suspicious activity, he allegedly told the bank “We have all the documents, we got approved,” and he refused to return the improperly obtained PPP funds, the affidavit states.
The affidavit further alleges that Goldstein applied for four different PPP loans to Bank of America totaling more than $1.2 million on behalf of two other companies, Beagle Real Estate and Antelope Valley Real Estate Development LLC, while also using fake tax documents and false employee information.
Two of those PPP loans ultimately were approved and Goldstein’s companies received a total of $655,000 in PPP loan funds, the affidavit details. California state business records list Magana as CEO of Antelope Valley Real Estate Development, while Goldstein is listed as its manager.
According to the affidavit, on the same day that the banks issued those PPP loan funds to Goldstein’s companies, Goldstein transferred more than half of that amount, $355,000, into his personal bank accounts.
In total, Magana and Goldstein applied for more than five separate PPP business loans totaling more than $2.5 million from various banks, of which more than $1.95 million was issued, 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 of these charges, Magana and Goldstein each would face a statutory maximum sentence of 127 years in federal prison.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is 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, Congress authorized more than $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 percent. Businesses must use PPP loan proceeds 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.
This matter was investigated by IRS Criminal Investigation and the Small Business Administration – Office of Inspector General. The FBI assisted with today’s arrests.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office is prosecuting this case.
Irvine Man Charged in Investment Scheme that Took in Millions with False Promises of Solar Panels Enhanced with NanotechnologyRead the Press Release
SANTA ANA, California – Federal prosecutors today filed criminal charges against an Irvine man whose company used high-pressure sales tactics to raise more than $9.5 million with bogus claims that the outfit’s solar panels utilized nanotechnology to generate electricity three times more efficiently than traditional solar panels.
Michael James Sweaney, 56, the founder and owner of Nanotech Engineering, Inc., was charged with one count of mail fraud in a criminal information filed in United States District Court. In a plea agreement also filed today, Sweaney, who held the title of chief financial officer at Nanotech, agreed to plead guilty to the mail fraud charge.
Nanotech, which had facilities in Irvine and Loveland, Colorado, used a team of salespeople to cold-call potential investors and pitch them with bogus claims the company had developed a compact “Nanopanel” with patent-pending nanotechnology that was one-third the cost of similar devices and would soon dominate the solar panel market. But, as Sweaney admitted in the plea agreement, the Nanopanel simply did not exist.
As part of the scheme that started just over three years ago and continued until the end of 2019, Nanotech and its salesforce not only lied to investors, it also failed to disclose pertinent facts, which included identifying the CFO as “Michael Hatton” to conceal that Sweaney had previously been convicted of securities fraud, court documents state.
In his plea agreement, Sweaney admitted that, using the “Michael Hatton alias,” he personally solicited a potential investor with lies, including that Nanotech did not pay commissions to sales personnel and that the company’s manufacturing equipment was worth $100 million. That potential investor was actually an undercover FBI agent.
During the scheme, Sweaney instructed his nephew – who was in charge of Nanotech’s Colorado facility – to create a prop to make it appear that there were functioning Nanopanels, to make a video with a hired actor showing the product outperforming a traditional solar panel, and to make it appear the Loveland facility was manufacturing Nanopanels, the court documents state. In a 2018 email to his nephew, Sweaney wrote, “We need to spend ALOT OF CASH, we need IMMEDIATELY equipment in the warehouse, without it JAIL, and that’s no joke, no equipment and using investment funds EQUALS JAIL, however spending money on equipment WILL SET US FREE.”
Once he enters the guilty plea in this case, Sweaney will face a statutory maximum sentence of 20 years in federal prison.
Sweaney admitted in his plea agreement that investor funds – which purportedly would be spent on company overhead and the manufacturing of Nanopanels – were used to fund his lavish lifestyle, which included a 46-foot yacht, two Maserati GranTurismo automobiles, a gold Cartier watch and cosmetic surgery. As part of the plea agreement, Sweaney agreed to forfeit the yacht, the cars, the watch and approximately $1.5 million in cash, bank accounts and checks previous seized by investigators.
Sweaney’s nephew – David Wayne Sweaney, 41, of Fort Collins, Colorado, who was listed on documents as Nanotech’s chief executive officer – pleaded guilty last month to one count of mail fraud. He is scheduled to be sentenced by United States District Judge Josephine L. Staton on April 2, 2021, at which time he will face a statutory maximum sentence of 20 years in prison.
According to court documents, David Sweaney assisted in the scheme orchestrated by his uncle in a number of ways, including depositing victims’ checks into Nanotech bank accounts in Colorado, purchasing and installing $300,000 in used solar panel manufacturing equipment, arranging for at least two potential victim-investors to tour Nanotech’s Colorado facility, and creating a video showing a prop Nanopanel outperforming a standard solar panel – an illusion he created by powering the purported Nanopanel with a hidden battery pack.
These cases are the result an ongoing investigation by the FBI.
This case is being prosecuted by Special Assistant United States Attorney Ryan G. Adams of the Santa Ana Branch Office.
The United States Securities and Exchange Commission has filed a civil action against Nanotech and the Sweaneys, and the agency announced three weeks ago it obtained a partial judgment against David Sweaney.
Department of Justice Files Complaint Against California Company to Stop Distribution of Adulterated Animal DrugsRead the Press Release
The United States filed a civil complaint to stop a California company from manufacturing and distributing adulterated animal drugs, the Department of Justice announced today.
The complaint, filed October 27, seeks a permanent injunction against defendants Med-Pharmex, Inc. (MPX), Gerald P. Macedo, and Vinay M. Rangnekar to prevent them from manufacturing and distributing animal drugs under conditions that fall short of the minimum regulatory requirements to ensure safety and quality. The complaint alleges that multiple inspections by the U.S. Food and Drug Administration (FDA) repeatedly showed that the defendants failed to conform to current good manufacturing practices (cGMPs), including failure to maintain sterility.
“Americans depend on animal drugs being safe and effective,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Civil Division. “We will continue working with FDA to ensure all drug manufacturers abide by public safety requirements.”
“Ensuring FDA-approved animal medications are safe, effective and manufactured using current good manufacturing practices is an important part of the FDA’s mission to protect human and animal health,” said FDA Chief Counsel Stacy Amin. “The FDA will continue to pursue actions against those who put animal patients in harm’s way by manufacturing and distributing adulterated animal drug products.”
According to the complaint, FDA issued a warning letter to MPX in 2017 regarding numerous deficiencies at the company. The complaint further alleges that the company failed to adequately investigate reports regarding the death or illness of animals receiving Med-Pharmex drugs. The complaint also alleges that FDA inspections revealed the company failed to properly clean and disinfect areas used to manufacture sterile drugs. The Justice Department filed the complaint in U.S. District Court for the Central District of California at the request of FDA.
A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.
The case is being handled by Trial Attorney Rachel E. Baron of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel James C. Fraser of the FDA’s Office of the Chief Counsel.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca.
Orange County Man Sentenced to Nearly 4 Years in Federal Prison for Short-Term Loan Investment Scam that Cost Victims over $3 MillionRead the Press Release
SANTA ANA, California – An Orange County man was sentenced today to 46 months in federal prison for running a program that purported to offer short-term loans, but was nothing more than an investment scam that caused more than $3 million in losses to victims.
J. Michael Clancy, 58, of Rancho Santa Margarita, was sentenced today by United States District Judge David O. Carter, who also ordered him to pay $3,003,084 in restitution. Clancy pleaded guilty in March 2019 to a single-count information charging him with wire fraud.
From July 2014 until July 2016, Clancy operated Multiplied Equities and Quantum Capital California LP, both located in Lake Forest, which he claimed offered short-term loans secured by real estate. Clancy sold partnership interests to investors, telling them their funds would be used to make short-term loans. Clancy further promised to sell the loans to outside investors, which would earn profits for his victims and free up funds to make additional short-term loans.
Instead of using his victims’ funds as promised, Clancy used the money to operate a house-flipping scheme, purchase a personal residence in Silverado Canyon, pay family members, and make “interest” payments to earlier investors in the scheme.
In total, 11 victims lost $3,003,084 as a result of the scheme.
This matter was investigated by the Federal Bureau of Investigation.
This case was prosecuted by Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office.
L.A. Man Sentenced to Nearly 3 Years in Federal Prison for Role in Lottery Scam that Defrauded Elderly Victims out of Almost $200,000Read the Press Release
LOS ANGELES – The final defendant in a federal fraud case was sentenced today to 33 months in prison for conning more than a dozen elderly victims out of nearly $200,000 in a scam involving fake lottery tickets.
Tito Lozada, 50, a Colombian national and Los Angeles resident, was sentenced by United States District Judge John F. Walter, who also ordered Lozada and his co-defendants to pay $190,422 in restitution. Lozada pleaded guilty on February 24 to one count of conspiracy to commit wire fraud.
From March 2017 until September 2019, Lozada and his co-defendants rented vehicles under false names and then drove in search of elderly victims – primarily Hispanic women between the ages of 65 and 85 years old. Once a victim was located, a member of the scheme approached her and lied about having a winning lottery ticket that the co-conspirator needed help cashing.
The defendants preyed on their victims’ emotions by claiming the conspirators needed help finding their way home or to a church, or by claiming they were illegally in the United States and needed help finding a lawyer or immigration services. One victim identified Lozada as the thief who stole her money and co-defendant Maria Luisa Henao, 44, a dual citizen of Colombia and the United States, as the suspect who cried as a ploy to lure her into the scheme.
To further deceive the victims, one of the co-conspirators generally telephoned a purported lottery official – actually a cohort – who then “confirmed” the phony lottery ticket was a winner that only could be released by paying a fee or cash deposit.
The defendants general drove victims to their home or bank so they could retrieve jewelry or large sums of cash to pay for the sham lottery ticket deposit. Once the co-conspirator had the victim’s money or jewelry in hand, they used a ruse in order to flee.
Victims were targeted across Southern California, including in the cities of Maywood, Long Beach, Baldwin Park, Hawaiian Gardens, Fontana, Lakewood, San Pedro, Vallejo, Garden Grove, Ontario, Santa Ana and Chula Vista.
In total, Lozada and his co-defendants defrauded at least 16 victims and caused losses of at least $190,422. They also attempted to defraud one additional victim, resulting in a total intended loss of at least $206,422.
Co-defendants Henao; Mercedes Montanez, 76; and Luisa Camargo, 40, pleaded guilty and received prison sentences of 33 months, 27 months, and time served, respectively. Montanez and Camargo are Colombian nationals who were living in Los Angeles at the time of their arrest in this case.
The FBI and the Los Angeles Police Department investigated this matter.
This case was prosecuted by Assistant United States Attorneys Anna Farias-Eisner of the General Crimes Section and Ian Yanniello of the International Narcotics, Money Laundering, and Racketeering Section.
U.S. Attorney’s Office to Monitor Los Angeles County Vote Centers for Compliance with Americans with Disabilities ActRead the Press Release
LOS ANGELES – The United States Attorney’s Office will deploy personnel to monitor Los Angeles County vote centers for their compliance with federal accessibility law for people with physical disabilities during the election period that begins October 24 and continues through November 3.
Specifically, the U.S. Attorney’s Office will monitor Los Angeles County vote centers for their compliance with the Americans with Disabilities Act (ADA) for people with mobility and vision disabilities.
The monitoring is part of the Justice Department’s ADA Voting Initiative, which focuses on protecting the voting rights of individuals with disabilities. A hallmark of the ADA Voting Initiative is its collaboration with local officials to increase accessibility at polling places. Through this initiative, the Justice Department has surveyed more than 2,200 polling places across the nation and has increased accessibility in more than three dozen jurisdictions.
Individuals who believe they might have been victims of discrimination in voting, including because of disability, may call the U.S. Attorney’s Office at (213) 894-2879, email [email protected], or complete and submit this form.
This year marks the ADA’s 30th anniversary. The Department of Justice – including the U.S. Attorney’s Office – plays a central role in advancing the nation’s goal of equal opportunity, full participation, independent living, and economic self-sufficiency for people with disabilities. The Justice Department will continue to use its enforcement and technical assistance tools to eliminate unlawful discrimination against people with disabilities.
For more information about the ADA, please call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), or access the ADA website at http://www.ada.gov.
Riverside, California Man Who Admitted Planning Mass Casualty Attacks and Purchasing Firearms Later Used in 2015 Terrorist Attack in San Bernardino Ordered to Serve 20-Year Federal Prison SentenceRead the Press Release
A Riverside man was sentenced today to 20 years in federal prison for conspiring to commit terrorist attacks in the Inland Empire and for providing assault rifles later used in the 2015 San Bernardino terrorist attack that killed 14 people.
Enrique Marquez Jr., 28, was sentenced today by U.S. District Judge Jesus Bernal.
Today’s sentencing concludes a case in which Marquez pleaded guilty in 2017 to conspiracy to provide material support and resources to terrorists, in violation of 18 U.S.C. § 2339A. In the plea agreement and in open court, Marquez admitted that he conspired with Syed Rizwan Farook in 2011 and 2012 to attack Riverside City College (RCC) and commuter traffic on the 91 Freeway.
Marquez also pleaded guilty to making false statements in connection with the acquisition of firearms, in violation of 18 U.S.C. § 922 (a)(6), by serving as the “straw buyer” of two assault rifles that he provided to Farook. More than three years later, Farook and his wife used those rifles in the shooting rampage at the San Bernardino Inland Regional Center (IRC) on Dec. 2, 2015. Hours later, both Farook and his wife were killed by law enforcement, ending what at the time was the worst terrorist attack on American soil since 9/11.
The investigation into the deadly shooting at the IRC quickly uncovered evidence that, in 2011 and 2012, Marquez purchased two rifles that Farook and his wife used in the IRC attack. According to Marquez’s plea agreement, Farook paid Marquez for the rifles. Marquez also discussed with Farook the use of radio-controlled improvised explosive devices (IEDs) during the planned attacks on RCC and State Route 91. Marquez admitted purchasing Christmas tree lightbulbs and a container of smokeless powder for use in manufacturing IEDs.
Prosecutors argued in a sentencing memorandum filed last week that Marquez “was a full, willing, and motivated participant of the conspiracy who not only provided the agreement necessary for the conspiracy to attack RCC and SR-91, but also co-designed the attacks with Farook, purchased the two firearms and ammunition to facilitate the attacks, researched bomb making and obtained explosive powder and other bomb-making materials, and visited RCC and SR-91 to sketch out how he and Farook would attack the two locations to maximize casualties.”
Marquez was arrested about two weeks after the IRC terrorist attack and has remained in custody ever since his first court appearance on Dec. 17, 2015. In imposing today’s sentence, Judge Bernal denied Marquez’s request for a five-year sentence, which essentially would have been a time-served sentence that soon would have resulted in his release from custody. In court documents, prosecutors called this request an attempt to “downplay the seriousness of his actions, and skirt that his actions contributed to the mass killing and injuring of innocent people in San Bernardino just a few years later.”
The case against Marquez was the result of an investigation by several members of the Inland Empire Joint Terrorism Task Force, including agents and detectives from the FBI; the San Bernardino Police Department; the San Bernardino County Sheriff’s Department; the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); Homeland Security Investigations; the Riverside County Sheriff’s Department; the San Bernardino County District Attorney’s Office; the Chino Police Department; the Redlands Police Department; the Ontario Police Department; the Corona Police Department; and the Riverside Police Department.
The case against Marquez was prosecuted by Assistant U.S. Attorneys Christopher D. Grigg, Chief of the National Security Division; Melanie Sartoris of the General Crimes Section; and Julius J. Nam of the Riverside Branch Office. The National Security Division’s Counterterrorism Section at the Department of Justice provided substantial assistance.
Also as a result of the investigation into the IRC attack, three people have pleaded guilty to being part of a sham marriage scheme in which a Russian woman “married” Marquez to obtain immigration benefits. Syed Raheel Farook, the brother of IRC attacker Syed Rizwan Farook; Tatiana Farook, who is Syed Raheel Farook’s wife; and Mariya Chernykh, who is Tatiana Farook’s sister, pleaded guilty to immigration fraud charges and admitted being part of conspiracy in which Chernykh paid Marquez to enter into a bogus marriage. The three defendants in the marriage fraud case are scheduled to be sentenced early next year.
In another case stemming from the investigation, the mother of Syed Rizwan Farook pleaded guilty in March to a federal criminal charge of intending to impede the federal criminal investigation by shredding a map her son made in connection with the attack. Rafia Sultana Shareef, a.k.a. Rafia Farook, of Corona, is currently scheduled to be sentenced by Judge Bernal on November 16.
Inland Empire Man Who Admitted Planning Mass Casualty Attacks and Purchasing Firearms Later Used in 2015 Terrorist Attack in San Bernardino Ordered to Serve 20-Year Federal Prison SentenceRead the Press Release
RIVERSIDE, California – A Riverside man was sentenced today to 20 years in federal prison for conspiring to commit terrorist attacks in the Inland Empire and for providing assault rifles later used in the 2015 San Bernardino terrorist attack that killed 14 people.
Enrique Marquez Jr., 28, was sentenced today by United States District Judge Jesus Bernal.
Today’s sentencing concludes a case in which Marquez pleaded guilty in 2017 to conspiracy to provided material support and resources to terrorists. In the plea agreement and in open court, Marquez admitted that he conspired with Syed Rizwan Farook in 2011 and 2012 to attack Riverside City College (RCC) and commuter traffic on the 91 Freeway.
Marquez also pleaded guilty to making false statements in connection with the acquisition of firearms by serving as the “straw buyer” of two assault rifles that he provided to Farook. More than three years later, Farook and his wife used those rifles in the shooting rampage at the San Bernardino Inland Regional Center (IRC) on December 2, 2015. Hours later, both Farook and his wife were killed by law enforcement, ending what at the time was the worst terrorist attack on American soil since 9/11.
“This defendant was an active member of a conspiracy that planned to inflict death and destruction on innocent people,” said First Assistant United States Attorney Tracy Wilkison. “Today’s sentence is the direct result of actions that enabled a terrorist and laid the foundation for an attack that took 14 innocent lives, wounded 22 others, and shook the entire nation. By his own admissions, this defendant collaborated with and purchased weapons for a man he definitively knew held radical and anti-American beliefs – and who wanted to kill innocent people.”
“Mr. Marquez could have intervened to support law enforcement instead of supporting terrorists,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “He might have thwarted the December 2nd attack, but he chose to stay silent before being captured. While the terrorists – whose names we may prefer to forget – paid for their crimes with their lives, the prison sentence imposed on Mr. Marquez today may deliver a measure of justice to the victims of the attack for which Mr. Marquez supplied the instruments leading to their deaths and injuries.”
The investigation into the deadly shooting at the IRC quickly uncovered evidence that, in 2011 and 2012, Marquez purchased two rifles that Farook and his wife used in the IRC attack. According to Marquez’s plea agreement, Farook paid Marquez for the rifles. Marquez also discussed with Farook the use of radio-controlled bombs during the planned attacks on RCC and State Route 91. Marquez admitted purchasing Christmas tree lightbulbs and a container of smokeless powder for use in bomb manufacturing.
Prosecutors argued in a sentencing memorandum filed last week that Marquez “was a full, willing, and motivated participant of the conspiracy who not only provided the agreement necessary for the conspiracy to attack RCC and SR-91, but also co-designed the attacks with Farook, purchased the two firearms and ammunition to facilitate the attacks, researched bomb making and obtained explosive powder and other bomb-making materials, and visited RCC and SR-91 to sketch out how he and Farook would attack the two locations to maximize casualties.”
Marquez was arrested about two weeks after the IRC terrorist attack and has remained in custody ever since his first court appearance on December 17, 2015. In imposing today’s sentence, Judge Bernal denied Marquez’s request for a five-year sentence, which essentially would have been a time-served sentence that soon would have resulted in his release from custody. In court documents, prosecutors called this request an attempt to “downplay the seriousness of his actions, and skirt that his actions contributed to the mass killing and injuring of innocent people in San Bernardino just a few years later.”
Once he completes his prison sentence, Marquez will be placed on supervised release for a term of 15 years.
The case against Marquez was the result of an investigation by several members of the Inland Empire Joint Terrorism Task Force, including agents and detectives from the FBI; the San Bernardino Police Department; the San Bernardino County Sheriff’s Department; the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); Homeland Security Investigations; the Riverside County Sheriff’s Department; the San Bernardino County District Attorney’s Office; the Chino Police Department; the Redlands Police Department; the Ontario Police Department; the Corona Police Department; and the Riverside Police Department.
The case against Marquez was prosecuted by Assistant United States Attorneys Christopher D. Grigg, Chief of the National Security Division; Melanie Sartoris of the General Crimes Section; and Julius J. Nam of the Riverside Branch Office. The National Security Division’s Counterterrorism Section at the Department of Justice provided substantial assistance.
Also as a result of the investigation into the IRC attack, three people have pleaded guilty to being part of a sham marriage scheme in which a Russian woman “married” Marquez to obtain immigration benefits. Syed Raheel Farook, 35, the brother of IRC attacker Syed Rizwan Farook; Tatiana Farook, 36, who is Syed Raheel Farook’s wife; and Mariya Chernykh, 30, who is Tatiana Farook’s sister, pleaded guilty to immigration fraud charges and admitted being part of conspiracy in which Chernykh paid Marquez to enter into a bogus marriage. The three defendants in the marriage fraud case are scheduled to be sentenced later this year and early next year.
In another case stemming from the investigation, the mother of Syed Rizwan Farook pleaded guilty in March to a federal criminal charge of intending to impede the federal criminal investigation by shredding a map her son made in connection with the attack. Rafia Sultana Shareef, a.k.a. Rafia Farook, 67, of Corona, is currently scheduled to be sentenced by Judge Bernal on November 16.
Trio Named in Indictment Alleging International Conspiracy to Defraud Elderly by Posing as Federal Agents Threatening ArrestRead the Press Release
RIVERSIDE, California – Two Riverside County men were arrested today on an indictment alleging they participated in an international conspiracy that deceived elderly victims into sending more than $500,000 in cash by pretending to be federal agents threatening them with arrest on bogus warrants.
The federal grand jury indictment unsealed today charges a total of three Lake Elsinore residents with conspiracy to commit mail fraud and wire fraud:
- Anuj Mahendrabhai Patel, 30, a.k.a. “Mike” and “Indio”;
- Elmer Miranda Barrios, 35, whose aliases include “Welbin Raul Mejia” and “Joe Rodriguez”; and
- William Margarito Barrios, 36, Elmer Barrios’s cousin, who faces an additional charge of being an illegal alien who re-entered the United States following deportation.
Elmer and William Barrios were taken into federal custody today and are expected to be arraigned this afternoon in United States District Court in Riverside. Patel’s arraignment is expected in the coming weeks.
According to court documents, from April 2019 until March 2020, 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 a number of false pretenses – including phony badge numbers and using spoofed government telephone numbers – the co-conspirators convinced the victims, most of whom were over the age of 55, that their identities or assets were in trouble.
For example, 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 in order 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 allegedly used tracking numbers to monitor the victims’ parcels, and communicated with couriers – Elmer and William Barrios – who used fraudulent identification documents matching the names listed on the parcels as addresses.
For example, in February 2020, Patel allegedly received a UPS parcel containing $10,000 from an 82-year-old victim that was addressed to “Victor Efrain DePaz” in Hemet.
The total loss alleged in this case is approximately $541,420 and the defendants allegedly conspired to receive more than 50 parcels sent by the scheme’s victims.
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, Patel and Elmer Barrios would face a statutory maximum sentence of 20 years in federal prison, while William Barrios’s maximum penalty would be 22 years in federal prison.
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 Assistant United States Attorney Peter 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.
Owner of Mexican Seafood Restaurants Pleads Guilty to Charges of Obstructing Investigation into Wage Violations and Federal Tax FraudRead the Press Release
SANTA ANA, California – The owner of a chain of Mexican seafood restaurants pleaded guilty this afternoon to criminal charges for obstructing a federal investigation into his failure to pay minimum wage and overtime to his employees.
Victor Hugo Guzman, 49, of La Habra, pleaded guilty this afternoon to one count of obstruction of a federal investigation and one count of filing a false tax return.
Guzman was the owner and operator of the Ostioneria Colima restaurant chain, which had locations in Orange and Los Angeles counties. Guzman admitted in a plea agreement that he failed to pay overtime wages to employees. For some employees, Guzman also paid them less than the minimum wage.
Guzman admitted that, from 2011 through 2014, some employees worked 12 hours a day, six days a week, but he only paid them a flat weekly salary of $320 – or only $4.44 per hour, well below California’s then-minimum wage of $8 per hour.
According to the plea agreement, when federal investigators began to probe suspected overtime wage violations and violations of the Fair Labor Standards Act, Guzman obstructed that investigation by hiring someone who fabricated records and by instructing employees to lie to the federal investigators about the number of hours they had worked. Guzman caused fabricated timecards to be submitted to the Department of Labor, which showed that employees had worked a maximum of only 40 hours per week, when in fact, those employees had been working 60 to 72 hours per week.
In addition to obstructing the Labor Department’s investigation, Guzman admitted he caused the filing of false payroll tax returns with the IRS for several years. Those filings underreported the amount of wages he was paying his employees, which resulted in the underpayment of federal payroll taxes. Guzman admitted that the tax loss from those false tax returns was approximately $79,000.
In addition to agreeing to pay back taxes to the IRS, Guzman agreed in his plea agreement to pay more than $200,000 in back wages to employees.
United States District Judge Josephine L. Staton scheduled a sentencing hearing on April 23, 2021, at which time Guzman will face a statutory maximum sentence of eight years in federal prison.
This matter was investigated by the U.S. Department of Labor – Office of the Inspector General and IRS Criminal Investigation. The U.S. Department of Labor, Wage and Hour Division, provided substantial assistance.
This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.
Houston Woman Sentenced to 5 Years in Federal Prison for Role in Opioid Pill Mill that Shipped Narcotics from California to TexasRead the Press Release
LOS ANGELES – A Texas woman was sentenced today to 60 months in federal prison for her leading role in an opioid buy-back scheme in which a doctor at a Los Angeles clinic prescribed opioids to “patients” who sold the narcotics back to the clinic, which later sold drugs on the black market in California and Texas.
Angela Gillespie-Shelton, a.k.a. “Boss Lady,” and “Angotti,” 54, of Houston, was sentenced by United States District Judge John A. Kronstadt, who also ordered her to pay a $10,000 fine. Gillespie-Shelton pleaded guilty on May 21 to one count of conspiracy to distribute controlled substances and one count of conspiracy to engage in money laundering.
From October 2012 to January 2015, Gillespie-Shelton and her co-conspirators ran Southfork Medical Clinic, located in the Harvard Heights neighborhood of Los Angeles. At the time, Gillespie-Shelton primarily was based in Texas, but she frequently traveled to California.
The conspiracy’s purpose was to sell prescriptions for narcotics in exchange for cash, and to later acquire those same drugs from the clinic’s “patients,” ship the narcotics to Texas and then sell them on the black market. The prescriptions were for drugs including oxycodone and hydrocodone (commonly sold under the brand names Vicodin, Norco and Lortab), alprazolam (best known by the brand name Xanax), carisoprodol (a muscle relaxant sold under the brand name Soma) and promethazine with codeine (a cough syrup sold on the street as “purple drank” and “sizzurp”).
At the clinic, Gillespie-Shelton’s co-conspirator – Dr. Madhu Garg, 69, of Glendora – saw “patients” and regularly prescribed them the narcotics, when both Gillespie-Shelton and Garg knew that the customers did not have any actual or legitimate medical need for them.
After the “patients” filled the prescriptions, Gillespie-Shelton and her co-conspirators bought the drugs from them and shipped the drugs to Texas.
In Texas, Gillespie-Shelton used two pharmacies that she controlled as a front to sell on the black market the drugs shipped from the Los Angeles clinic. Under Gillespie-Shelton’s control, the pharmacies in Texas also filled false or fraudulent prescriptions and received kickbacks from the fake prescriptions. Gillespie-Shelton’s co-conspirators also stole a physician’s identity to issue falsified prescriptions to obtain additional narcotics.
In addition, Gillespie-Shelton laundered more than $1 million from the diversion schemes through numerous accounts. She used some of the money to further the narcotics trafficking conspiracy, which included paying rent for the Southfork Clinic and a stash house in Los Angeles, as well as paying Garg more than $200,000 for writing the illegal prescriptions.
In February 2016, Garg pleaded guilty to illegally distributing oxycodone and money laundering, and she later served an 18-month prison sentence.
“[Gillespie-Shelton and her co-conspirators] made hundreds of thousands of dollars profiting off the Opioid Crisis,” prosecutors wrote in their sentencing memorandum. “The sheer amount of money [they] made over the course of this conspiracy shows that this was a crime borne of greed where the criminals trafficked lethal drugs despite the undeniable havoc they wreaked on their community.”
The case against Gillespie-Shelton was investigated by the Drug Enforcement Administration, IRS Criminal Investigation, the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the California Department of Justice, and the Texas Department of Public Safety. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force.
This matter was prosecuted by Assistant United States Attorney Chelsea Norell of the International Narcotics, Money Laundering, and Racketeering Section.
Federal Prosecutors to Serve as District Election Officers for Seven California Counties During November 3 General Election PeriodRead the Press Release
LOS ANGELES – United States Attorney Nicola T. Hanna announced today that Assistant United States Attorneys Lindsey Greer Dotson and Thomas F. Rybarczyk will serve as District Election Officers for the Central District of California during this year’s general election period, which culminates on Election Day on November 3.
As the District Election Officers, AUSAs Dotson and Rybarczyk will oversee the handling of complaints related to election fraud and voting rights concerns occurring in the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo. If complaints are received, the AUSAs will coordinate with the FBI Field Office in Los Angeles to investigate them and will consult with the Department of Justice in Washington, D.C.
The Justice Department has an important role in deterring interference or discrimination at the polls and election fraud, and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible voting rights violations and election fraud while the polls are open through Election Day.
Federal law prohibits crimes such as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters, and provides that they can vote free from acts that intimidate or harass them.
For example, actions designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law.
The FBI will have special agents available across the country to receive allegations of election fraud and other election abuses on Election Day. Agents at the FBI’s Los Angeles Field Office, which serves the same seven counties as the United States Attorney’s Office, can be reached by the public at (310) 477-6565.
In order to respond to complaints of election fraud or voting rights concerns up to and including November 3, and to ensure that such complaints are directed to the appropriate authorities, AUSAs Dotson and Rybarczyk will be on duty while the polls are open.
Complaints about possible violations of the federal voting rights laws can also be made directly to the DOJ’s Civil Rights Division in Washington, D.C., by phone at (800) 253-3931 or TTY (202) 305-0082. Individuals may also report complaints by email to [email protected] and by a complaint form on the Justice Department’s website: www.justice.gov/crt/votercomplaint.
Please note, however, in the case of a crime of violence or intimidation, please call 911 immediately and before contacting federal authorities. State and local police have primary jurisdiction over polling places, and almost always have faster reaction capacity in an emergency. These complaints should also be reported to the Justice Department after local authorities have been contacted.
Former Private Security Company Employee in Orange County Pleads Guilty to Impersonating a Federal Law Enforcement AgentRead the Press Release
LOS ANGELES – A former private security employee at an Orange County retirement community pleaded guilty today a felony charge for pretending to be a federal agent.
Donovan Pham Nguyen, 34, of Orange, pleaded guilty this afternoon to one count of impersonation of a federal officer.
According to his plea agreement, Nguyen began working at the retirement community’s private security company in 2015. While employed there, Nguyen falsely told his coworkers that he was a special agent with Homeland Security Investigations (HSI). On different occasions, Nguyen used that falsely assumed title to conduct traffic stops of his coworkers and search them, neither of which he was permitted to do as part of his actual job.
Nguyen admitted in his plea agreement that, in May 2019, he falsely claimed to be a special agent with HSI to the U.S. Department of State’s Diplomatic Security Service (DSS) as DSS agents were preparing to execute an arrest warrant on the premises of Nguyen’s job site.
He further admitted that he falsely told a Riverside County District Attorney’s Office employee in June that he was an HSI special agent, and then discussed a pending investigation – including HSI’s involvement – with the employee.
United States District Judge Dolly M. Gee has scheduled a February 3 sentencing hearing, at which time Nguyen will face a statutory maximum sentence of three years in federal prison.
This matter was investigated by HSI and U.S. Immigration and Customs Enforcement’s Office of Professional Responsibility. The Riverside County District Attorney’s Office, DSS, and the Orange Police Department provided assistance.
This case is being prosecuted by Assistant United States Attorneys John A. Balla of the Riverside Branch Office and Jerry C. Yang, Chief of the Riverside Branch Office.
Montrose Man Arrested on Wire Fraud Charge that His Adult Entertainment Website Venture Was Million-Dollar ScamRead the Press Release
LOS ANGELES – A Montrose man has been arrested on a federal grand jury indictment charging him with defrauding investors out of more than $1 million via an adult entertainment website scam, the Justice Department announced today.
Patrick Khalafian, 51, was arrested Friday on a single-count indictment charging him with wire fraud. At his arraignment this afternoon, Khalafian pleaded not guilty to the charge, a December 15 trial date was set, and he was ordered released on $50,000 bond.
The indictment alleges that, from November 2009 to October 2016, Khalafian solicited investments for businesses – including 168 Entertainment LLC, Empire Entertainment Group Inc., and EEG LLC – that purportedly developed and operated adult entertainment websites.
Khalafian allegedly represented that victims’ investments would be used for business operations, including developing software and the platform for the proposed websites, paying for servers, hiring employees and purchasing advertising. He also promised that victims’ investments would be repaid by a certain date, according to the indictment.
Instead, Khalafian allegedly used the victim investors’ funds on gambling, luxury shopping sprees, and to pay back other investors. Khalafian allegedly lied to his victims about the status of the adult entertainment websites and eventually stopped responding to victims, disconnected his phone number and changed his email address.
In July 2015, Khalafian received $1 million of ill-gotten gains wired from a victim’s bank account in Canada to a bank account he controlled in Woodland Hills, according to the indictment. Prosecutors believe this amount comprises approximately half of the money Khalafian raised via this scheme.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If convicted, Khalafian would face a statutory maximum sentence of 20 years in federal prison.
The FBI investigated this matter.
This case is being prosecuted by Assistant United States Attorney Roger A. Hsieh of the Major Frauds Section.
Inland Empire Man Sentenced to 9 Years in Prison for Leading Crew that Robbed at Least 15 AutoZone Stores at GunpointRead the Press Release
RIVERSIDE, California – A Riverside County man who led a crew that committed at least 15 armed robberies of Inland Empire AutoZone stores, sometimes using an AR-15-style rifle, was sentenced today to 108 months in federal prison.
Daeon Raishawn Cox, 22, of Moreno Valley, was sentenced by United States District Judge Jesus G. Bernal. Cox pleaded guilty in July 2019 to one count of conspiracy to interfere with commerce by robbery, and one count of brandishing a firearm in furtherance of a crime of violence.
From September 5, 2018 until December 13, 2018, when he was arrested after leading police officers on a high-speed pursuit, Cox and his co-conspirators robbed at least 15 AutoZone stores at gunpoint, making off with more than $11,000 in cash.
In many of the robberies, Cox or a co-conspirator brandished or pointed a gun at the AutoZone employees in order to gain compliance. These firearms included at least two handguns, and in some instances, an AR-15-style rifle. Cox directly participated in at least eight of the armed robberies, plus one additional attempted robbery.
“[Cox’s] actions placed innocent lives in grave danger, and inflicted immeasurable emotional trauma on the tens of employee victims whom he and his coconspirators robbed – victims who were just trying to make an honest living,” prosecutors wrote in their sentencing memorandum.
One of Cox’s co-defendants, Dashon Raymond White, 26, of Moreno Valley, pleaded guilty in July 2019 to conspiracy to one count of interfere with commerce by robbery and one count of brandishing a firearm in furtherance of a crime of violence. He is scheduled to be sentenced on March 15, 2021.
Cox, White, and co-defendant Jada Shardae Allen, 20, of Perris, were caught after their attempt to use an AR-15-style rifle to rob an AutoZone on December 12, 2018 was interrupted by Fontana police, who had been conducting surveillance at the AutoZone store in that city after learning about the string of AutoZone robberies in the Inland Empire, according to an affidavit filed with a criminal complaint in the case.
The suspects led police on a high-speed chase on Interstate 15 and threw the rifle out of the car. The chase ended when they crashed and tried to run away. Cox was found hiding in a garbage can. All three suspects were eventually apprehended by officers. Officers recovered the firearm on the side of the freeway. Allen’s trial is scheduled for January 26, 2021.
This case was investigated by the FBI, the Fontana Police Department, the San Bernardino County Sheriff’s Department, the Riverside Police Department, the Hemet Police Department, the Redlands Police Department, the Moreno Valley Police Department, the Riverside County District Attorney’s Office and the San Bernardino County District Attorney’s Office.
This matter was prosecuted by Assistant United States Attorney Jerry C. Yang, Chief of the Riverside Branch Office.
Rapper Who Bragged about Unemployment Benefits Scam in Music Video Arrested for Allegedly Bilking COVID-19 Jobless Relief ProgramRead the Press Release
LOS ANGELES – A rapper who boasted in a YouTube music video about getting rich from committing unemployment benefits fraud was arrested today on federal charges of carrying out that very scheme by fraudulently applying for more than $1.2 million in jobless benefits, including by using stolen identities.
Fontrell Antonio Baines, 31, who uses the stage name “Nuke Bizzle,” of Memphis, Tennessee and who currently resides in the Hollywood Hills, was arrested pursuant to a criminal complaint alleging a scheme to fraudulently obtain unemployment insurance benefits under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Baines is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles.
Baines allegedly exploited the Pandemic Unemployment Assistance (PUA) provision of the CARES Act, which is designed to expand access to unemployment benefits to self-employed workers, independent contractors, and others who would not otherwise be eligible.
According to an affidavit filed with the complaint, Baines possessed and used debit cards pre-loaded with unemployment benefits administered by the California Employment Development Department (EDD). The debit cards were issued in the names of third-parties, including identity theft victims. The applications for these debit cards listed addresses to which Baines had access in Beverly Hills and Koreatown.
Evidence gathered during the investigation established that at least 92 debit cards that had been pre-loaded with more than $1.2 million in fraudulently obtained benefits were mailed to these addresses, according to the affidavit. Baines and his co-schemers allegedly accessed more than $704,000 of these benefits through cash withdrawals, including in Las Vegas, as well as purchases of merchandise and services.
The affidavit further alleges that Baines bragged about his ability to defraud the EDD in a music video posted on YouTube and in postings to his Instagram account, under the handles “nukebizzle1” and “nukebizzle23.” For example, Baines appears in a music video called “EDD” in which he boasts about doing “my swagger for EDD” and, holding up a stack of envelopes from EDD, getting rich by “go[ing] to the bank with a stack of these” – presumably a reference to the debit cards that come in the mail. A second rapper in the video intones, “You gotta sell cocaine, I just file a claim….”
On September 23, Las Vegas police arrested Baines, who had in his possession eight debit cards, seven of which were in the names of other persons, the affidavit states.
A complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The criminal complaint alleges three felony offenses – access device fraud, aggravated identity theft, and interstate transportation of stolen property. If convicted of all of these charges, Baines would face a statutory maximum sentence of 22 years in federal prison.
This matter was investigated by the United States Department of Labor – Office of Inspector General, the United States Postal Inspection Service, IRS Criminal Investigation, and the California Employment Development Department. Substantial assistance was provided by the United States Marshals Service and the Las Vegas Metropolitan Police Department.
This case is being prosecuted by Assistant United States Attorney Ranee A. Katzenstein, Chief of the Major Frauds Section.
Coordinated Multi-Agency Narcotics Operation Across SoCal Nets Large Quantities of Methamphetamine, Cocaine and other Illicit DrugsRead the Press Release
LOS ANGELES – United States Attorney Nick Hanna in Los Angeles and United States Attorney Robert S. Brewer Jr. in San Diego today announced the results of a coordinated operation conducted over the last three months that resulted in hundreds of kilograms of dangerous narcotics being taken off the streets of Southern California.
State and federal law enforcement agencies worked together to plan and execute this operation, which culminated in a one-week coordinated surge in mid-September and resulted in the seizure of approximately 778 kilograms of methamphetamine, 268 kilograms of cocaine, 30 kilograms of fentanyl, 31 kilograms of heroin, and $281,000 in U.S. currency.
In addition to the substantial seizures, six individuals were arrested and charged with various federal drug trafficking offenses in Los Angeles, and numerous additional individuals were charged with federal drug trafficking offenses in San Diego.
The operation focused on identifying narcotics entering the United States through Southern California ports of entry and then being transported to various locations throughout Southern California for further distribution around the country. Numerous High Intensity Drug Trafficking Area (HIDTA) teams, comprised of both state and federal law enforcement officers and agents, worked throughout the operation to identify and arrest individuals, and to seize narcotics and drug trafficking proceeds.
“This operation underscores our significant – and successful – efforts to disrupt the smuggling routes used by international drug cartels to deliver narcotics to the United States,” said U.S. Attorney Hanna. “This concerted effort allowed us to identify shipments coming in from Mexico and being delivered to stash houses across the region. As a result of the excellent work of law enforcement agents, we were able to make substantial seizures and arrest individuals who played important roles in the distribution chain.”
“Drug traffickers and their networks are not bound by city or county boundaries, and neither are we,” said U.S. Attorney Brewer. “With the combined resources of our federal, state and local law enforcement partners, our reach is far and wide. We are seizing the drugs and dismantling the networks that are injecting our neighborhoods with poison.”
As a result of this operation, federal prosecutors in Los Angeles have filed two cases that charge six defendants.
In one case, a federal grand jury late this afternoon indicted three defendants, including an alleged drug courier who is accused of driving a car from Tijuana into the United States with 21.8 kilograms of pure methamphetamine hidden in his car doors and quarter panels. The courier drove the vehicle to Compton, where he turned it over to another man, who unloaded the drugs into the trailer where he lived, according to court documents. The indictment charges the defendants – one of whom is currently known only by the moniker “Gringo” – with several offenses, including importation of methamphetamine. If convicted, the defendants in this case would face mandatory minimum sentences of 10 years in federal prison. This case is being prosecuted by Assistant United States Attorney Scott D. Dubois of the International Narcotics, Money Laundering, and Racketeering Section.
In the second Los Angeles case resulting from this operation, a federal grand jury late last month indicted four defendants, two of whom allegedly drove a vehicle with a hidden compartment containing approximately 14.5 kilograms of methamphetamine into the United States, eventually bringing their load to a La Puente auto repair shop, where two other men helped them unload the narcotics. The owner of the shop, Juan Pablo Castro Velazquez, and the three other defendants face narcotics trafficking charges that carry a mandatory minimum penalty of 10 years in federal prison. This case is being prosecuted by Assistant United States Attorney Lindsay M. Bailey of the International Narcotics, Money Laundering, and Racketeering Section.
The three-month operation was coordinated by Assistant United States Attorney Carol Alexis Chen, Chief of the International Narcotics, Money Laundering, and Racketeering Section in Los Angeles, and Assistant United States Attorney Joseph Smith, Chief of the OCDETF Section in San Diego.
This effort is part of an ongoing Organized Crime Drug Enforcement Task Forces (OCDETF) operation jointly undertaken by law enforcement agencies and prosecutors in the Southern and Central Districts of California. OCDETF identifies, disrupts, and dismantles the highest-level transnational criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach to combat transnational organized crime. OCDETF Director Adam W. Cohen said, “We must salute the coordinated efforts led by dedicated OCDETF prosecutors from these two U.S. Attorney’s Offices to leverage our multi-agency strengths against these criminal networks.”
The investigating agencies involved in this operation were Homeland Security Investigations; U.S. Customs and Border Protection, Office of Field Operations; the Drug Enforcement Administration; the San Diego County Sheriff’s Department; LA IMPACT; and SD-NET.
Glendale Payday Loan Company Owner Pleads Guilty to Wire FraudRead the Press Release
LOS ANGELES – A payday loan company owner pleaded guilty today to a federal criminal charge for defrauding money transmitting companies by failing to remit to them, as promised, nearly $1 million of wire transfers sent on behalf of his customers over just two weeks.
Arsen Khumaryan, 41, of Glendale, pleaded guilty to one count of wire fraud. United States District Judge John A. Kronstadt has scheduled a January 28 sentencing hearing, at which time Khumaryan will face a statutory maximum sentence of 20 years in federal prison.
Khumaryan owns Ask Inter Inc. (AII), a Glendale-based company that does business as Monroe’s Payday Advance, a financial services and check-cashing store. AII was an agent of MoneyGram and Ria Money Transfer, businesses that quickly provide money for a fee to individuals and companies in need of it.
As part of AII’s contracts with MoneyGram and Ria, Khumaryan was required to deposit into a trust account the money he received from his customers. After the wire transfer requests were made, MoneyGram and Ria would use their own funds to wire money to the recipients. AII was then required remit the customers’ funds from the trust account to MoneyGram and Ria no later than one business day after the customer requested the wire transfer. In exchange for selling MoneyGram and Ria’s products, the companies paid AII a commission based on the fees collected from customers.
According to his plea agreement, on May 23, 2018, Khumaryan advertised on social media that customers at his store could wire money, using MoneyGram and Ria, anywhere in the world without paying any fees, and could cash checks from Ria without fees during the upcoming Memorial Day weekend. Khumaryan admitted he knew that MoneyGram and Ria had not agreed to waive their wire transfer fees, nor had Ria agreed to waive its check-cashing fees.
Between May 23 and June 6, 2018, Khumaryan caused MoneyGram to send approximately $795,338 to recipients through its money transfer system. He also caused Ria to send 376 wire transfers totaling approximately $130,328 to recipients through that company’s money transfer system. Khumaryan pocketed the customers’ funds rather than remit them to the companies per his contractual obligations, causing the companies to lose more than $925,000. No MoneyGram or Ria customers were affected by Khumaryan’s fraud. This case is MoneyGram’s largest loss in the United States involving an agent’s misappropriation.
In addition, Khumaryan knowingly caused 16 bogus checks totaling approximately $104,057 to be processed through Ria’s money check-cashing system, the plea agreement states.
Khumaryan also admitted to submitting approximately $137,303 in fraudulent payments on personal credit cards issued to him by a business identified in the plea agreement as Company 3 by drawing against accounts he knew had insufficient funds to cover his payments.
The total losses in this case are $1,167,026, Khumaryan admitted.
This matter was investigated by the FBI and Homeland Security Investigations.
This case is being prosecuted by Assistant United States Attorney Valerie L. Makarewicz of the Major Frauds Section.
South Bay Man Agrees to Plead Guilty to Lying About Membership in White Supremacist Groups to Obtain Employment, Security ClearanceRead the Press Release
LOS ANGELES – A former member of two white supremacist organizations has agreed to plead guilty to a felony charge that he failed to disclose his past membership in two hate groups in order to obtain a security clearance and employment at a defense contractor.
Decker Hayes Ramsay, 23, of Rolling Hills, agreed to plead guilty to a single-count information charging him with making false statements. Ramsay’s plea agreement was filed today in United States District Court.
According to his plea agreement, in April 2018, Ramsay knowingly and willfully made a materially false statement on an Electronic Questionnaire for Investigations Processing (e-QIP), which is used by the United States Office of Personnel Management’s National Background Investigations Bureau as part of its background investigation of prospective federal employees and contractors. Ramsay submitted an e-QIP as part of his application for employment at a defense contractor, named in court documents as Company 1, a job that required him to obtain a national security clearance.
As part of the background investigation, applicants for security clearances were required to certify that “I understand that a knowing and willful false statement on this form can be punished by fine or imprisonment or both,” the plea agreement states.
Ramsay admitted that he falsely represented on his e-QIP that he had never been a member of an organization that advocates or practices commission of acts of force or violence to discourage others from exercising their constitutional rights.
In reality, Ramsay previously belonged to Vanguard America, a white supremacist group that opposes multiculturalism and believes that the United States should be an exclusively white nation. He also belonged to Aryan Underground, a white supremacist group established in 2017 that upheld Nazi ideology.
Ramsay admitted that he lied on the form in order to obtain employment at Company 1. His false statement was material because, as a result of it, Ramsay obtained a security clearance that he might have otherwise not received had he been truthful about his white supremacist ties.
Ramsay is expected to make his initial court appearance in the coming weeks. Upon entering his guilty plea, he will face a statutory maximum sentence of five years in federal prison.
The FBI’s Joint Terrorism Task Force investigated this matter.
This case is being prosecuted by Assistant United States Attorney Reema M. El-Amamy of the Terrorism and Export Crimes Section.