Central District of California
Press releases recorded for this federal judicial district.
Ex-‘Arsenio Hall Show’ Musical Director Sentenced to over 2 Years in Prison for Embezzling Nearly $1 Million Intended for Charity ConcertRead the Press Release
LOS ANGELES – The former musical director of “The Arsenio Hall Show” was sentenced today to 27 months in federal prison for embezzling nearly $1 million from a charity concert intended to raise money for children made homeless by wars.
Robin DiMaggio, 49, of Woodland Hills, was sentenced by United States District Judge Dolly M. Gee, who described his actions as “a despicable crime of sheer greed.” Judge Gee also ordered DiMaggio to service one year of home confinement once he has finished serving his prison sentence. A restitution hearing in this case will be scheduled in the coming months.
During the summer of 2016, DiMaggio promised to help the Bulgaria-based non-profit organization Peace for You Peace for Me Foundation organize a concert in the Bulgarian capital of Sofia. The concert was intended to raise money to help children who lost their homes because of global conflicts.
DiMaggio, a professional drummer who also had served as a musical director for the United Nations, offered to get world-famous musicians and celebrities to perform at the concert, and he claimed to need money to book these artists. Relying on these promises, the foundation’s financial sponsor wired nearly $1 million to DiMaggio.
Rather than use the money for the charity concert, DiMaggio instead used it to fund his personal lifestyle and pay his debts. Within weeks of the last wire transfer of $750,000, he used $251,370 of the funds to purchase a Calabasas home for his ex-wife. DiMaggio also bought his mother a $35,000 car and bought his son a $24,000 car. He also wired $150,000 of the funds to a bank account in the name of his company, DiMagic Entertainment Inc. None of the transfers was sent to artists or their management in connection with the charity concert in Bulgaria.
“The concert never happened and this much-needed money was never raised for this charitable cause,” prosecutors wrote in their sentencing memorandum. “[DiMaggio] lined his own pockets at the expense of [the foundation’s financial sponsor] and the children that would have benefited from the concert’s proceeds.”
The sponsor later sued DiMaggio in Los Angeles Superior Court, where DiMaggio continued to lie in court proceedings that someone else had stolen the money. DiMaggio also forged bank documents and deleted correspondence while this civil litigation was pending, and he ultimately filed for Chapter 7 bankruptcy protection. In his September 2017 bankruptcy filing, DiMaggio made false statements that he had not made alimony payments or given any gifts worth more than $600 to any person in the prior two years.
The FBI investigated this matter.
This case was prosecuted by Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.
Santa Monica Woman Admits Price Gouging in Sale of Scarce N95 Masks She Sold at Huge Markups over List Price During PandemicRead the Press Release
LOS ANGELES – A Santa Monica day spa owner was charged today in federal court with accumulating N95 respirators in anticipation of the COVID-19 pandemic and then price gouging by selling the scarce masks at vastly inflated prices – sometimes nearly 1,100 percent over list price.
Niki Schwarz, 55, of Santa Monica, the owner of Tikkun Holistic Spa, was named in a criminal information charging her with one count of hoarding and price gouging. In a plea agreement also filed today, Schwarz agreed to plead guilty to the misdemeanor offense.
In the plea agreement, Schwarz admitted that in February she began accumulating N95 respirators in anticipation of a shortage that would be caused by a global pandemic resulting from the spread of the novel coronavirus. From the beginning of February until the end of June, Schwarz accumulated nearly 20,000 N95 masks that had been manufactured by 3M (list price ranging from $1.02 to $1.27) and Alpha Pro (list price of 86 cents).
In March, the United States government designated N95 respirators as “scarce materials” under the Defense Production Act of 1950 due to the overwhelming need of health care providers dealing with COVID-19 patients to use personal protective equipment.
Schwarz admitted that she obtained the N95 respirators for the purpose of reselling them at above-market rates, and that she sold the masks for up to $15 each.
Schwarz “accumulated and resold the masks at prices in excess of the prevailing market prices willfully, that is, with knowledge that masks had been designated as scarce materials and with knowledge that accumulation of the designated materials to resell in excess of prevailing market prices was unlawful,” according to the plea agreement.
On March 1, an associate informed Schwarz that the associate was going to stop selling N95 masks because she believed it was crime – and that price gouging could result in one year in prison – but Schwarz continued to sell the masks at inflated prices.
The hoarding and price gouging offense that Schwarz admits in the plea agreement carries a statutory maximum sentence of one year in federal prison.
Schwarz will receive a summons directing her to make an initial appearance in United States District Court, likely in early November.
This matter was investigated by the United States Postal Inspection Service.
The case is being prosecuted by Assistant United States Attorney Jeff Mitchell of the Major Frauds Section, who is a regional coordinator of the Justice Department’s COVID-19 Hoarding and Price Gouging Task Force.
O.C. Man Faces Federal Charges for Allegedly Setting Santa Monica Police Department Vehicle on Fire During Civil Disturbances in MayRead the Press Release
LOS ANGELES – An Irvine man was taken into federal custody today on charges alleging he set fire to a Santa Monica Police Department car during civil unrest that accompanied widespread protests in late May.
Nathan Wilson, 27, is charged in a federal criminal complaint with malicious damage to property owned by an institution or organization receiving federal financial assistance.
Wilson was linked to the May 31 fire that destroyed the unmarked Santa Monica Police car when a witness told law enforcement they had driven Wilson to Santa Monica on that day and they believed he had set fire to a police car.
Publicly available social media posts show that the person who set fire to the police car parked at the loading dock of the Santa Monic Civic Center was wearing certain clothing and accessories, had an American flag bandana over his face, and had a distinctive tattoo of a rifle on his left arm, according to an affidavit filed with the complaint. The witness directed authorities to one of Wilson’s social media accounts – an Instagram account under the handle “yup_i_eat_crayons” – where Wilson had posted a “selfie” taken in Santa Monica on May 31. In his Instagram selfie, Wilson appeared exactly like the person seen in other social media posts who stoked the fire that destroyed the police car, the affidavit alleges.
In early June, the FBI and the Santa Monica Police Department issued a wanted poster for the person later identified as Wilson. After receiving tips and conducting investigations, law enforcement was not able to identify the perpetrator who caused the fire that destroyed the police car.
That changed when Wilson became a suspect in a September 28 vehicle arson that occurred in Irvine, according to the affidavit. Following a domestic dispute that culminated with a fire in a vehicle owned by Wilson’s live-in partner, authorities obtained information that linked Wilson to the May 31 fire in Santa Monica.
Wilson was taken into custody on October 9 when Santa Monica Police officers, in conjunction with the Irvine Police Department and the FBI, executed a search warrant at the Irvine residence and found Wilson hiding in a mattress box spring in the bedroom. During that search, authorities recovered items of clothing that appear to be the same seen on Wilson in the various photos taken near the destroyed police car.
After Wilson was taken into custody by Santa Monica Police officers, the federal criminal complaint was signed by a United States magistrate judge late on October 9. Wilson was taken into federal custody this morning, and he 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.
If convicted of the malicious damage offense alleged in the complaint, Wilson would face a mandatory minimum sentence of five years in federal prison and a statutory maximum sentence of 20 years.
This matter was investigated by the SAFE LA Task Force, which includes representatives of the FBI and the Santa Monica Police Department. The Irvine Police Department and the Orange County Fire Authority provided substantial assistance.
This case is being prosecuted by Assistant United States Attorney Sara B. Milstein of the Violent and Organized Crime Section.
Menifee Woman Arrested on Identity Theft Charges Involving over $500,000 in Fraudulently Obtained COVID-19 Unemployment ReliefRead the Press Release
SANTA ANA, California – A Riverside County woman was arrested today on federal charges that she defrauded California’s unemployment insurance system by using stolen personal information obtained from the dark-net to fraudulently receive more than a half-million dollars in COVID-19 unemployment benefits.
Cara Marie Kirk-Connell, 32, of Menifee, was named in a federal criminal complaint that charges her with identity theft, mail fraud, and access device fraud. She is expected to make her initial appearance on October 13 in United States District Court in Riverside.
According to an affidavit filed with the complaint, on September 11, Murrieta police conducted a traffic stop of Kirk-Connell. A search of the car resulted in the seizure of eight debit cards that contained unemployment benefits in other people’s names, as well as more than $30,000 in cash and several driver’s licenses for other motorists, the affidavit states. When interviewed by police, Kirk-Connell allegedly admitted that she and others would go onto the “dark web” to gather identifying information of other individuals.
She allegedly then used this information to apply for unemployment benefits from the California Employment Development Department, which distributes the benefits under the Coronavirus Aid, Relief, and Economic Security Act, passed by Congress in March. The CARES Act expanded unemployment benefits to cover those who were previously ineligible, including business owners, self-employed workers, and independent contractors, who were put out of business or significantly reduced their services because of the COVID-19 pandemic.
In addition, Kirk-Connell admitted that once she had applied for those benefits in other people’s names, she would have the debit cards sent to an address where she would receive them, the affidavit states. Once she received the debit cards, she said, she would activate them by using the victims’ Social Security numbers as well as PINs she had chosen, and then make numerous ATM withdrawals and other expenditures, according to the affidavit.
EDD records showed that the cards and identities that Kirk-Connell possessed had been used to apply for and authorize approximately $534,149 in COVID-related unemployment benefits from California’s EDD program, of which nearly $270,000 had already been spent, the affidavit states. Further, EDD records showed that some of the individual cards had more than $17,000 loaded on them when 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, Kirk-Connell would face a statutory maximum sentence of 32 years in federal prison.
This investigation, which is a result of the Department of Justice’s National Unemployment Insurance Fraud Task Force, was conducted by the U.S. Department of Labor – Office of Inspector General, IRS Criminal Investigation, and the United States Postal Inspection Service. California EDD Criminal Investigations and the Murrieta Police Department provided substantial assistance.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office is prosecuting this case.
OC Man Who Fraudulently Obtained VA Benefits by Falsely Claiming to Be a Wounded Marine Sentenced to over One Year in PrisonRead the Press Release
LOS ANGELES – An Orange County man who falsely held himself out to be a United States Marine Corps combat veteran and two-time Purple Heart recipient to fraudulently obtain veterans’ health care and housing benefits was sentenced today to 16 months in federal prison.
James Stiles, 43, of Orange, was sentenced by United States District Judge John A. Kronstadt, who also ordered him to pay $167,234 in restitution. Stiles pleaded guilty on June 18 to one count of health care fraud.
In November 2012, Stiles applied for health care benefits through the United States Department of Veterans Affairs (VA) by submitting and signing a fraudulent application. On the form, Stiles falsely claimed that he had served in the Marine Corps from 1995 to 2005, and that he was awarded the Purple Heart after being wounded in combat.
Once he was enrolled in the VA’s health care benefit program, Stiles scheduled medical appointments at will. From December 2012 to March 2016, Stiles received 692 outpatient treatments, primarily at the Tibor Rubin VA Medical Center in Long Beach.
Stiles admitted in his plea agreement that in December 2015 he also applied for housing benefits intended for homeless veterans, and he submitted forms where he falsely claims to be the recipient of two Purple Hearts. As a result of this application, Stiles was accepted into the HUD-Veterans Affairs Supporting Housing program. The Orange County Housing Authority, HUD's local housing partner in Orange County automatically provided his landlord with vouchers on Stiles’s behalf each month beginning in February 2016.
Also, in February 2016, Stiles submitted a form to the VA for the purpose of obtaining disability benefits in which he falsely claimed that he was a veteran.
Stiles’s scheme to defraud ended in April 2016 when the VA confronted him, and he admitted he had never served in the U.S. military and was not entitled to receive VA benefits.
The total loss in this case was $167,234, with a loss of $162,900 to the Veterans Health Administration and a $4,334 loss to the Orange County Housing Authority.
In a sentencing memorandum, prosecutors cited a March 2016 audio recording where Stiles falsely told a religious outreach group for veterans “that he was a captain in the Marine Corps, that he served for 10 years, that he was simultaneously shot in the head by a 5-year-old ‘kid’ and in the back by a sniper, that he was subsequently in a coma for approximately two years, and that he still lives with the bullet in his head.”
“His comments have no basis in the truth,” prosecutors wrote. “[Stiles’s] statements are deeply offensive to those that have actually served in the United States military.”
This matter was investigated by the U.S. Department of Veterans Affairs – Office of Inspector General and the Department of Housing and Urban Development – Office of Inspector General.
This case was prosecuted by Assistant United States Attorney Eli A. Alcaraz of the Riverside Branch Office.
Moreno Valley Man Indicted on Federal Robbery Charges for Month-Long Pharmacy Crime Spree in Inland EmpireRead the Press Release
RIVERSIDE, California – A Riverside County man who allegedly wore medical masks over his face during a month-long robbery spree of Inland Empire pharmacies was indicted today on federal criminal charges.
David Anthony Battle, 50, of Moreno Valley, is charged in a federal grand jury indictment with six counts of interference with commerce by robbery (Hobbs Act robbery) and two counts of attempted Hobbs Act robbery.
Battle was arrested by local law enforcement on August 10 and was transferred over to federal custody on August 23. He has been ordered jailed without bond while he awaits trial. His arraignment is scheduled for October 13 in United States District Court in Riverside.
According to the indictment, from July 6 to August 4, Battle robbed six pharmacies in Moreno Valley, Colton and San Bernardino. He allegedly attempted to rob two other Moreno Valley pharmacies on July 10 and August 10.
During each incident, Battle allegedly wore similar clothing – including wearing medical masks covering his nose and mouth – and used a similar method of brandishing what appeared to be a handgun by pulling it out from his waistband and holding it at his side. He then demanded that money in the cash register be placed in a bag and handed over, according to an affidavit filed with the complaint in this case.
Law enforcement reviewed store surveillance videos, which led them to arrest Battle, court documents state. During Battle’s arrest, a black BB-gun-style pistol was found on the ground near him, the affidavit states.
Battle allegedly netted $5,453 in illicit gains from the robberies, though $3,200 of that came from the July 6 robbery of a Walgreens store in Moreno Valley.
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, Battle would face a statutory maximum sentence of 160 years in federal prison.
The FBI, the Riverside County Sheriff’s Department, the San Bernardino Police Department, and the Colton Police Department investigated this matter.
This case is being prosecuted by Assistant United States Attorney Peter Dahlquist of the Riverside Branch Office.
Federal Grand Jury Charges 8 Defendants with Trafficking Kilograms of Cocaine by Mail and Airline from Southern California to AlaskaRead the Press Release
LOS ANGELES – Law enforcement in several states today arrested six defendants charged in a federal grand jury indictment alleging they participated in a Southern California-based outfit that trafficked kilogram quantities of cocaine to Alaska via commercial air flights and the mail.
The defendants arrested today made their initial appearances in United States District Court in Los Angeles, Anchorage, Chicago and Seattle. One defendant is in state custody in California while another is expected to surrender to federal law enforcement in the coming week.
The indictment alleges that, from July 2014 to August 2016, the defendants conspired to traffic kilogram quantities of cocaine – along with other drugs such as heroin and methamphetamine – out of Southern California. The drugs and resulting cash proceeds were transported via commercial air travel and by mail to Alaska, the indictment alleges.
Specifically, the indictment alleges on October 23, 2015 in Los Angeles County, law enforcement seized from lead defendant and the organization’s alleged narcotics supplier Raul Cisneros Jr., 42, of Compton, nearly 24 kilograms of cocaine, more than 3.5 kilograms of methamphetamine, and $568,357 in cash, along with various firearms and ammunition.
The indictment also alleges that nearly two kilograms of cocaine and more than $12,000 in cash were seized in a motel parking lot in Anchorage on June 11, 2015. The cocaine had been mailed to Natasha Monique Bushner, 31, of Los Angeles, who delivered it to Margus Gipson, a.k.a. “Melly Mel,” 35, of Compton, the indictment alleges.
All of the defendants are charged with conspiracy to distribute controlled substances, an offense that carries a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment.
Cisneros is charged with seven additional drug- and firearm-related felonies. Asia Dawnta Williams, 27, of Chicago; Damon Eugene Smith, a.k.a. “Big Head,” 37, of Compton; Margus Gipson and his brother, Dawaun Darnell Gipson, a.k.a. “Caddy,” 36, of Compton; are charged with possession with intent to distribute heroin, which carries a five-year mandatory minimum sentence and a 40-year statutory maximum sentence.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The FBI and Drug Enforcement Administration investigated this matter. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force (OCDETF).
This case is being prosecuted by Assistant United States Attorneys Chelsea Norell of the International Narcotics, Money Laundering, and Racketeering Section, and Kathy Yu of the Violent and Organized Crime Section.
Chinese Company’s SoCal Subsidiary Agrees to Pay More Than $1 Million to Resolve Criminal Investigation into Bribe Payments to Jose Huizar and Illegal Contributions to Other Political FiguresRead the Press Release
LOS ANGELES – A Chinese company’s Arcadia subsidiary, established to redevelop a downtown Los Angeles hotel, has agreed to pay $1,050,000 to resolve an investigation into the company’s conduct with public officials in the City of Los Angeles, including bribery, honest services fraud, and foreign and conduit campaign contributions.
A three-year non-prosecution agreement (NPA) with Jia Yuan USA Co., Inc. is the latest development in the ongoing investigation into a wide-ranging “pay-to-play” scheme in which developers bribed Los Angeles city officials to secure official acts to benefit their real estate projects.
The China-based Shenzhen Hazens established Jia Yuan to acquire, operate and redevelop the Los Angeles Luxe City Center Hotel, which it purchased in 2014 for more than $100 million. Jia Yuan “planned a massive redevelopment that would include retail space, residential units, and hotel rooms, valued at approximately $700 million,” according to a “statement of facts” accompanying the NPA.
The NPA was executed on Monday and announced today by United States Attorney Nick Hanna and FBI Assistant Director in Charge Kristi Koons Johnson.
Under the NPA, Jia Yuan will pay the monetary penalty within two weeks and will continue to cooperate with the FBI’s ongoing public corruption probe. The NPA also requires the cooperation of Jia Yuan’s parent company, as well as other Hazens subsidiaries in the Los Angeles-area.
The NPA details several reasons why the government agreed not to prosecute the company for three years, as long as it refrains from any criminal conduct. Those reasons include the company’s timely acceptance of responsibility for its conduct; remedial measures, including terminating George Chiang as a consultant and improving its compliance program; robust and timely cooperation with the investigation, which included proactively providing the government with records located in China and in the personal possession of its chairman, as well as making the chairman available for an interview while he was located outside the reach of U.S. law enforcement; and agreeing to continue to cooperate with the United States Attorney’s Office and the FBI as the agencies continue to investigate and prosecute cases that may touch upon the company’s conduct.
The statement of facts outlines Jia Yuan’s conduct in relation to former Los Angeles City Councilmember Jose Huizar, who faces a trial in June on a 34-count racketeering indictment, and real estate development consultant George Chiang, who is scheduled to be sentenced in February after pleading guilty earlier this year to participating in a Huizar-led racketeering enterprise.
In the statement of facts, Jia Yuan admits a series of acts, including:
- a Jia Yuan employee provided Katy Perry concert tickets to Huizar soon after Huizar and “Individual 1” – previously identified as the city’s deputy mayor for economic development – intervened in a compliance issue at a Hazens-owned hotel;
- Jia Yuan employees made campaign contributions to several U.S. political candidates, some of which were later reimbursed by the company at the direction of a foreign national, who was prohibited from participating in U.S. elections;
- Jia Yuan provided in-kind contributions to several U.S. political candidates by hosting reduced-cost fundraising events at the Luxe Hotel, some of which took place at the direction of a foreign national who was prohibited from participating in U.S. elections;
- the chairman of the Hazens companies facilitated an introduction that resulted in a contract that paid indirect bribe payments to Huizar, who, in his official capacity, introduced and voted on a motion to benefit the Luxe Hotel project; and
- Chiang organized a Huizar family trip to China that Hazens partially subsidized.
After receiving all of these benefits, Huizar voted to approve the Luxe Hotel project before the city’s Planning and Land Use Management Committee, which he chaired until shortly after federal agents executed search warrants at his Boyle Heights home and city offices in November 2018.
The statement of facts also details how Chiang and Individual 1 asked the Hazens chairman on several occasions to make a $100,000 contribution to a political action committee established to benefit a Huizar relative who was planning to run for his City Council seat. While the chairman did not authorize the donation, Chiang told Huizar that Hazens would make the $100,000 donation, which prompted Huizar to take additional officials acts to approve the Luxe Hotel project.
The NPA does not preclude or limit the investigation or prosecution of individuals, including any current or former Jia Yuan officer, employee or agent.
The matter involving Jia Yuan and the criminal cases stemming from the investigation are being handled 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 J. Mills, also of the Public Corruption and Civil Rights Section.
Any member of the public who has information related to this investigation 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.
Jersey/Swiss Financial Services Firm Admits to Conspiring with U.S. Taxpayers to Hide Assets and Income in Offshore AccountsRead the Press Release
LOS ANGELES – Strachans SA in Liquidation has pleaded guilty to conspiring with U.S. taxpayers and others to hide income and assets in offshore entities and bank accounts from the IRS, the Justice Department announced today.
The now-defunct financial services firm pleaded guilty Monday to one count of conspiracy to defraud the United States and was immediately sentenced by United States District Judge Otis D. Wright II to pay a $500,000 fine.
According to documents filed in Los Angeles federal court, Strachans was an independent firm providing administration to offshore structures for clients residing in a range of countries, including citizens and residents of the United States. The services provided included the formation of trusts and offshore companies, administration, bookkeeping and accounting. However, Strachans also helped U.S.-based clients hide assets from the IRS and evade taxes by:
- managing undeclared assets for U.S.-based clients that were held by nominee sham entities belonging to the U.S.-based clients;
- facilitating frequent cash collections by U.S.-based clients knowing that they had no intention of declaring the funds to the IRS;
- providing mechanisms for U.S.-based clients to access their undeclared offshore funds in a secret manner, including fake loans, fake consultancy agreements, and dummy invoicing; and
- for a limited number of U.S.-based clients who sought an extraordinary level of confidentiality, holding funds in the personal accounts of Strachans’ shareholders to conceal the true beneficial ownership of funds from the IRS.
Strachans accepted responsibility for its conduct by pleading guilty, stipulating to the accuracy of an extensive Statements of Facts. The guilty plea is the direct result of Strachans’ voluntary disclosure of its criminal conduct in May 2014, and its full and ongoing cooperation with the Department of Justice in connection with its criminal investigations. Strachans conducted an internal review to identify and collect data and information regarding its U.S.-taxpayer accounts, reported its findings to the department, and provided documentation supporting its findings. Strachans also assisted the Justice Department in preparing treaty requests for information regarding undeclared account holders.
This matter was investigated by IRS Criminal Investigation.
This case was prosecuted by Senior Litigation Counsel Nanette Davis and Mark Daly of the Justice Department’s Tax Division, and Assistant U.S. Attorney Robert F. Conte of the Tax Division.
Jersey/Swiss Financial Services Firm Admits to Conspiring with U.S. Taxpayers to Hide Assets and Income in Offshore AccountsRead the Press Release
Strachans SA in Liquidation pleaded guilty yesterday to conspiring with U.S. taxpayers and others to hide income and assets in offshore entities and bank accounts from the IRS, and was sentenced in accordance with the guilty plea, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, U.S. Attorney Nicola T. Hanna, and Chief James Lee of the Internal Revenue Service, Criminal Investigation (IRS-CI).
According to documents filed in Los Angeles federal court, Strachans was an independent firm providing administration to offshore structures for clients residing in a range of countries, including citizens and residents of the United States (U.S.-based clients). This included the formation of trusts and offshore companies, administration, bookkeeping, and accounting. Strachans additionally, however, helped U.S.-based clients hide assets from the IRS and evade taxes through the following:
- Managing undeclared assets for U.S.-based clients that were held by nominee sham entities belonging to the U.S.-based clients.
- Facilitating frequent cash collections by U.S.-based clients knowing that they had no intention of declaring the funds to the IRS.
- Providing mechanisms for U.S.-based clients to access their undeclared offshore funds in a secret manner, including fake loans, fake consultancy agreements, and dummy invoicing.
- For a limited number of U.S.-based clients, who sought an extraordinary level of confidentiality, holding funds in the personal accounts of Strachans’ shareholders to conceal the true beneficial ownership of funds from the IRS.
Strachans accepted responsibility for its conduct by pleading guilty, stipulating to the accuracy of an extensive Statements of Facts, and paying a fine of $500,000. Yesterday’s guilty plea is the direct result of Strachans’ voluntary disclosure of its criminal conduct in May 2014, and its full and ongoing cooperation with the Department of Justice in connection with its criminal investigations. Strachans conducted an internal review in order to identify and collect data and information regarding its U.S.-taxpayer accounts. Strachans reported its findings to the department, and provided documentation supporting its findings. Strachans also assisted the department in preparing treaty requests for information regarding undeclared account holders.
Principal Deputy Assistant Attorney General Zuckerman, U.S. Attorney Hanna, and Chief Lee commended special agents of IRS-Criminal Investigation, who investigated this case, and Senior Litigation Counsel Nanette Davis and Mark Daly of the Tax Division, and Assistant U.S. Attorney Robert Conte of the U.S. Attorney’s Office for the Central District of California, who prosecuted this case.
Trucking School Owner Sentenced to 4 Years in Federal Prison for Fraudulently Obtaining $4.1 Million in Veterans’ Education BenefitsRead the Press Release
LOS ANGELES – The owner of a San Fernando Valley trucking school was sentenced today to 48 months for leading a sophisticated scheme to defraud the United States Department of Veterans Affairs out of more than $4 million in education benefits involving over 100 veterans who did not attend classes.
Emmit Marshall, 53, of Woodland Hills, was sentenced by United States District Judge Stephen V. Wilson, who also ordered him to pay $4.1 million in restitution. Marshall pleaded guilty in July 2019 to five counts of wire fraud.
At the hearing, Judge Wilson stated that this “was a very serious fraud on the government,” which involved “calculated, criminal acts that cannot be condoned.”
Marshall is the owner and president of the Chatsworth-based Alliance School of Trucking (AST). Marshall and a co-defendant, AST Vice President Robert Waggoner, 57, of Canyon Country, recruited eligible veterans to take trucking classes paid under the Post-9/11 GI Bill. AST was certified to offer classes under the Post-9/11 GI Bill, including a 160-hour Tractor Trailer & Safety class and a 600-hour Select Driver Development Program.
Under the Post-9/11 GI Bill, the VA paid tuition and fees directly to the school at which veterans were enrolled. The VA also paid a housing allowance to veterans enrolled full-time in an approved program, and, in some cases, the VA paid for books and supplies for veterans’ benefit.
From July 2011 to April 2015, Marshall and Waggoner convinced more than 100 veterans to participate by telling them they were entitled to VA education benefits, even if they did not attend classes. Despite not taking classes, the veterans who agreed to join the scheme accepted education benefits for housing while AST collected the benefits for tuition, resulting in a total loss to the VA of at least $4.1 million.
In addition, Marshall resorted to occasionally using veterans’ personal information to sign them up for benefits, forging signatures, sometimes without the veterans’ permission. Finally, in an attempt to obfuscate the overall scheme and the forgeries of student enrollment paperwork, Marshall directed the veteran-students to lie to VA investigators and ordered the destruction of AST paperwork by co-schemers.
“[Marshall] profited most from this conduct, pocketing nearly $1 million himself, which he used for jewelry, a cruise, a trip to Hawaii, property taxes on his Woodland Hills residence, purchase of a Ford F-150 and purchase of semi-tractor trailers for a new business,” prosecutors wrote in their sentencing memorandum.
Waggoner pleaded guilty on February 24 to five counts of wire fraud. His sentencing hearing is scheduled for March 15, 2021, at which time he will face a statutory maximum sentence of 100 years in federal prison.
This matter was investigated by the U.S. Department of Veterans Affairs Office of Inspector General, the U.S. Department of Justice Office of the Inspector General, and the FBI.
This case was prosecuted by Assistant United States Attorney Kimberly D. Jaimez of the Major Frauds Section.
Sex Offender Arrested at LAX Attempting to Leave U.S., Allegedly Failed to Provide Authorities Notice of His International Travel PlansRead the Press Release
LOS ANGELES – A registered sex offender has been charged in a criminal complaint alleging he attempted to travel from Los Angeles to Egypt without giving law enforcement advance notice of his foreign travel plans as required by federal law, the Justice Department announced today.
Jehovany Sanchez, 36, of South Gate, was charged on Friday with one count of committing an international travel reporting violation. Sanchez made his initial court appearance on late Friday afternoon in United States District Court. His bond was set at $50,000 and his arraignment has been scheduled for October 22.
According to an affidavit filed with the complaint, on September 30, without providing to law enforcement any notice of foreign travel, Sanchez allegedly attempted to fly from Los Angeles International Airport to Cairo with a layover in Paris. Sanchez allegedly boarded the Paris-bound flight, which left its gate and prepared for takeoff, but was directed by law enforcement to return to the gate. Law enforcement had been notified that Sanchez was a ticketed passenger and sex offender on the flight who had not notified them of his foreign travel plans, the affidavit states. Sanchez was ordered to exit the airplane and he was arrested at the gate, according to the affidavit.
In 2012, Sanchez was convicted in Ventura County Superior Court of committing a lewd act upon a child. According to his arrest report in that case, Sanchez – then 27 years old – engaged in illicit sexual contact with a 15-year-old girl. He was sentenced to two years in state prison and is required to register as a sex offender for life under the federal Sex Offender Registration and Notification Act (SORNA).
On Sanchez’s signed sex offender registry document dated March 30, he initialed next to a statement that reads, “Federal law requires me to notify my registering agency no less than 21 days before I intend to travel internationally,” 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, Sanchez would face a statutory maximum sentence of 10 years in federal prison.
This case was investigated by the United States Marshals Service, United States Customs and Border Protection, the South Gate Police Department, and the Los Angeles Airport Police. The Drug Enforcement Administration provided substantial assistance.
This matter is being prosecuted by Assistant United States Attorney Jeremiah M. Levine of the General Crimes Section.
San Gabriel Valley Woman Faces Federal Charges of Running Sex Trafficking Operation that Targeted Immigrant WomenRead the Press Release
LOS ANGELES – A federal grand jury today returned a superseding indictment that charges a San Gabriel Valley woman with sex trafficking five immigrant women by hiring them to work at massage parlors and forcing them to engage in commercial sex acts.
Mei Xing, 59, a.k.a. “Xing Mei,” “Anna,” and “Boss,” of San Gabriel, is charged with five counts of sex trafficking by force, fraud, or coercion. Xing previously was indicted on June 12 on one count of sex trafficking, and today’s charging document adds four additional victims.
According to the superseding indictment, from July 2016 to October 2018, Xing ran a sex trafficking operation that targeted immigrant women. An affidavit previously filed in this case alleges that Xing owned and operated several massage parlors in the San Gabriel Valley cities of El Monte and South El Monte.
The victims reported that Xing pressured them into performing commercial sex acts at the massage parlors, court papers state. Xing allegedly coerced victims by all manner of threats, including threating to report their prostitution to police, threatening to expose their immigration status, and implicitly threatening to have them murdered. Xing allegedly told the victims she could make good on her threats because of her relationships with the government, the police, and the criminal underworld, according to court documents.
Xing has been in federal custody since her arrest in this matter in April. She is expected to be arraigned on the superseding indictment in the coming weeks. A December 15 trial date previously was set in this case by United States District Judge Otis D. Wright II.
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, Xing would face a mandatory minimum sentence of 15 years in federal prison for each count and a statutory maximum sentence of life imprisonment.
The investigation was conducted by the Los Angeles Regional Human Trafficking Task Force, which included agents with the FBI and deputies with the Los Angeles County Sheriff’s Department.
This case is being prosecuted by Assistant United States Attorneys Damaris Diaz and Scott M. Lara of the Violent and Organized Crime Section.
Two Iranian Men Charged by Federal Grand Jury in Scheme to Send Export-Controlled Computer Servers to IranRead the Press Release
LOS ANGELES – A federal grand jury has indicted two Iranian men with participating in a conspiracy to procure and illegally send export-controlled computer servers to Iran.
Ebrahim Azadegan, 42, and Alireza Alvandi, 45, were named in a 10-count indictment returned on September 25 that charges them with violating the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations, which restrict the export of goods and services from the United States to foreign nations. Azadegan and Alvandi were also charged with conspiracy, wire fraud, smuggling goods out of the United States, and money laundering.
According to the indictment, from January 2013 through July 2017, Azadegan, Alvandi, Dana Point resident Johnny Tourino, and Spectra Equipment, Inc. purchased, sent, and attempted to send computer servers to Iran without obtaining licenses from the U.S. government that are required under IEEPA. Tourino and Spectra were previously indicted in a separate case in 2018 and are scheduled to go on trial in January.
The computer servers were dual-use commercial goods, meaning they had both a commercial application and a military or strategic one. The computers were controlled by the Commerce Control List for anti-terrorism and national security reasons.
Azadegan, Alvandi, and Tourino allegedly falsely told the manufacturer that the computer servers were intended for Slovenia, when they knew they were intended for Bank Mellat, an Iranian financial institution.
Under IEEPA, it is crime to willfully export or attempt to export items to Iran without a license from the U.S. government. According to the U.S. Department of Commerce, the computer servers are items that could be detrimental to regional stability and national security.
Azadegan and Alvandi are both believed to be in Iran.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The 10 charges in the indictment carry a statutory maximum sentence of 190 years in prison.
This case is the result of an ongoing investigation being conducted by the FBI, the U.S. Department of Commerce’s Office of Export Enforcement, and IRS Criminal Investigation.
The case against Azadegan and Alvandi is being prosecuted by Assistant United States Attorney Mark Takla of the Terrorism and Export Crimes Section and William Mackie from the Counterintelligence and Export Control Section of the Justice Department’s National Security Division.
Filipino Seaman Who Allegedly Stabbed to Death Fellow Crewmember on Container Ship Faces Federal ChargesRead the Press Release
LOS ANGELES – A crewmember on a container ship has been arrested and charged with a federal offense stemming from the fatal stabbing of a fellow crewmember.
Michael Dequito Monegro, 41, a resident of the Philippines, was named in a criminal complaint filed today that charges him with one count of performing an act of violence against a person onboard a ship that is likely to endanger the safe navigation of the ship.
The complaint, which was filed in federal court in Los Angeles, alleges that Monegro used two knives to repeatedly stab the victim on the MSC Ravenna on September 20 while the vessel was travelling to the Port of Los Angeles, its destination after a voyage from China. The victim, also a citizen of the Philippines, died from the stab wounds. Other members of the crew witnessed the attack, after which the captain of the ship convinced Monegro to surrender the knives, according to the complaint. Monegro was then detained in a cabin aboard the ship, where other members of the crew took turns guarding him.
Personnel from the FBI and the United States Coast Guard Investigative Service (CGIS) responded to the Liberian-flagged Ravenna on September 22 after the ship had docked. After obtaining consent from the ship’s owner, the investigators boarded the vessel, took custody of the victim’s body and recovered two knives identified by witnesses as the murder weapons. “Based on an initial assessment of the body, it appears that [the victim] was stabbed approximately 17 times, had multiple defensive wounds to his hands, and lacerations to his throat, face, and leg,” according to an affidavit in support of the complaint.
During a shipboard interview by two FBI agents on September 22, Monegro admitted to stabbing the victim repeatedly, according to the affidavit.
The homicide had a significant impact on the ship’s operations, including forcing the captain and other crew members to deal with the aftermath of the attack, restrain Monegro and interact with the Coast Guard to obtain information on securing the crime scene and storing the victim’s body, according to the affidavit. The incident also appears to have traumatized some of the crew members who witnessed the attack, the affidavit states.
On Sunday, special agents with the FBI and Coast Guard Investigative Service arrested Monegro, who had remained onboard the Ravenna. Monegro 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 to be innocent until and unless proven guilty in court.
The felony offense charged in the indictment carries a statutory maximum sentence of death or life in federal prison.
This case is the result of an ongoing investigation being conducted by the FBI and the CGIS.
The case against Monegro is being prosecuted by Assistant United States Attorneys Matthew O’Brien and Mark Williams of the Environmental and Community Safety Crimes Section and Jeffrey Chemerinsky of the Violent and Organized Crime Section.
California’s Four US. Attorneys Announce $33 Million in Domestic Violence Funding from DOJ’s Office on Violence Against WomenRead the Press Release
LOS ANGELES – The Justice Department’s Office on Violence Against Women (OVW) will direct more than $33 million in grant funding to California to support efforts to curb domestic violence throughout the state, announced U.S. Attorney for the Central District of California Nicola T. Hanna, U.S. Attorney for the Eastern District of California McGregor W. Scott, U.S. Attorney for the Northern District of California David L. Anderson, and U.S. Attorney for the Southern District of California Robert S. Brewer Jr.
As the state grapples with the COVID-19 pandemic, reports indicate that many cities are experiencing surges in domestic violence. The OVW grants will provide resources to local prosecutors, victim service providers, healthcare professionals, training organizations, and academic researchers, including several with national scope. Even with limited prosecutorial authority in domestic violence cases, the federal government remains committed to working with all of its partners to end the scourge of domestic violence.
Disturbing research shows that intimate partner homicides are common. According to the CDC, roughly 1 in 6 homicide victims are killed by an intimate partner. In 2019, California law enforcement received 161,123 domestic violence-related calls for assistance, and 47 percent of those calls involved a weapon. Research 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.
Given these troubling statistics, Attorney General William P. Barr formed a Domestic Violence Working Group in June 2019 to encourage prosecution of armed domestic violence offenders. Federal law bars domestic violence offenders – those subject to certain protective orders or convicted of domestic violence misdemeanors or felonies – from possessing firearms. Districts across the nation, including all four districts in California, have prioritized their own initiatives designed to keep guns out of the hands of abusers.
“Domestic violence crimes, especially those involving firearms, are a horrific victimization of some of the most vulnerable among us,” said U.S. Attorney Hanna. “These grants will provide substantial assistance to an array of entities, including those that provide immediate assistance to victims and others that are seeking long-term solutions. We value our ongoing partnerships with these community organizations and look forward to assisting, where we can, by filing federal domestic violence cases.”
“We remain committed to reducing domestic violence through enforcement and prevention, working together with our local law enforcement partners and service providers,” said U.S. Attorney Scott. “We must do everything we can to combat the rise in domestic violence during COVID, and these grants will be of great assistance.”
“We are proud to stand with the Office on Violence Against Women in announcing these grants to deter domestic violence throughout the state,” said U.S. Attorney Anderson. “These tens of millions of dollars in grants will result in a better trained and more effective law enforcement community and will strengthen the coordination between the federal government and our state and local partners when confronted with domestic violence issues.”
Among the $33 million in awards that will be issued to organizations and government agencies in California are:
- $14.77 million to the state to support law enforcement, prosecutors, victim services providers, and courts to respond to domestic and sexual violence, including over $1 million to improve criminal justice responses in Marin and Alameda counties;
- $4.2 million to domestic violence organizations to provide legal service to victims, including $600,000 to the Los Angeles-based Peace Over Violence to provide no-cost legal assistance to victims of domestic violence, including those with disabilities;
- $4.13 million for improving criminal justice responses grant program also known as the Arrest Program, including $999,700 to Sacramento County and $1 million to Tulare County;
- $1.5 million to advocacy groups to help culturally and linguistically specific services programs, including $300,000 to the Sacramento-based My Sister’s House;
- $2.1 million to domestic violence shelters to provide transitional housing and therapy services, including $450,000 to Crisis Intervention Services dba Tahoe SAFE Alliance;
- $91,000 to the California Partnership to End Domestic Violence and $552,000 to the California Coalition Against Sexual Assault, two statewide organizations working to address violence against women; and
- $400,000 to promote enhanced training and services to end violence and abuse of elderly women in Contra Costa County.
“Putting an end to domestic violence requires effort from everyone in a community and OVW is proud to support the work being done in California,” said OVW Principal Deputy Director Laura L. Rogers. “Our funding supports law enforcement, prosecutors and brings people together to work for a common cause. These strong partnerships lead to creative solutions to prevent violence.”
New projects to provide training and technical assistance throughout the country include:
- The $5 million National Violence Against Women Law Enforcement Training and Technical Assistance Consortium, a project with the Institute for Intergovernmental Research, in Florida, that will deliver training on investigating and responding to domestic violence, sexual assault, and stalking;
- $675,000 to continue the work of the San Diego-based Alliance for HOPE’s Training Institute for Strangulation Prevention, which provides education on investigating and prosecuting nonfatal strangulation in domestic violence cases; and
- $400,000 to the International Association of Forensic Nurses, headquartered in Maryland, to develop a national protocol to guide medical-forensic care for domestic violence victims who seek treatment for their injuries.
For more information on the Justice Department’s Office on Violence Against Women, visit: https://www.justice.gov/ovw.
Inland Empire Man Who Teaches at San Bernardino Middle School Arrested on Federal Child Pornography ChargesRead the Press Release
RIVERSIDE, California – A Fontana man is expected to make his initial court appearance late this afternoon after being charged today with federal child pornography offenses for allegedly uploading explicit images to the internet.
Josue Gamaliel Vidal Quintanilla, 28, who teaches mathematics at Shandin Hills Middle School in San Bernardino, was arrested Wednesday morning by authorities during the execution of a search warrant at his residence.
According to a federal criminal complaint filed today, Vidal was arrested after he admitted using various online platforms to send, receive and possess child pornography. Evidence obtained by agents with Homeland Security Investigations (HSI) and officers with the Fontana Police Department’s Internet Crimes Against Children Task Force indicates that Vidal used Kik Messenger and Snapchat for the past year to transmit child pornography.
Vidal also admitted he posed as a minor boy on the internet and solicited “many” minors – some as young as 10 years old – to engage in sexually explicit behavior in online meetings that took place as recently as Tuesday night, according to the affidavit in support of the complaint.
“A preliminary search of Vidal’s Toshiba laptop revealed approximately 20 image files depicting the sexual exploitation of children, as well as multiple video files with titles indicative of child pornography,” according to the affidavit by an HSI special agent. “Similarly, I conducted a preliminary review of online accounts that Vidal consented for me to search, and I found communications that Vidal engaged in where he sent and received child pornography images and videos as well as sent hyperlinks to downloadable child pornography videos.”
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 criminal complaint charges Vidal with one count of transportation of child pornography and one count of possession of child pornography. If convicted of these two charges, Vidal would face a statutory maximum sentence of 40 years in federal prison. Additionally, the transportation count carries a mandatory minimum penalty of five years in federal prison.
The ongoing investigation in this case is being conducted by HSI and the Fontana Police Department. The San Bernardino County Sheriff’s Department provided substantial assistance in this investigation.
This case is being prosecuted by Assistant United States Attorney Sonah Lee of the Riverside Branch Office.
Venice Man Sentenced to 13 Years in Federal Prison for Selling Fentanyl that Caused Victim’s Fatal Drug OverdoseRead the Press Release
LOS ANGELES – An admitted drug dealer was sentenced today to 156 months in federal prison for selling a fatal dose of the powerful opioid fentanyl to a 19-year-old man who had been residing at a sober living home.
Julian Miles Mayers-Johnson, 33, of Venice, was sentenced by United States District Judge Otis D. Wright II. Mayers-Johnson pleaded guilty in October 2019 to one count of possession with intent to distribute fentanyl.
On October 19, 2018, outside a McDonald’s restaurant in Venice, Mayers-Johnson sold one-half gram of fentanyl to the victim, who was residing at a sober living home in the Beverlywood neighborhood of Los Angeles. The victim suffered a fatal drug overdose the following day after ingesting the fentanyl that Mayers-Johnson supplied.
A search of the victim’s cell phone resulted in law enforcement determining that Mayers-Johnson sold the fatal dose of fentanyl to the victim.
In April 2019, Mayers-Johnson was arrested on a federal criminal complaint in this matter and has remained in federal custody since then.
“Less than two months after (the victim’s) death, (Mayers-Johnson) was still dealing drugs, including fentanyl,” prosecutors wrote in their sentencing memorandum. “(Mayers-Johnson’s) criminal history demonstrates his unwillingness to conform his behavior to the laws of his community – even after causing someone’s death.”
This matter was investigated by the Drug Enforcement Administration and the High Intensity Drug Trafficking Area (HIDTA) Opioid Response Team, which is tasked with investigating suspected opioid-related overdose deaths in Los Angeles County.
This case was prosecuted by Assistant United States Attorneys J. Jamari Buxton of the Public Corruption and Civil Rights Section, and Ali Moghaddas of the General Crimes Section.
San Marino Man Accused of Truck Attack on Pasadena Protesters Arrested on Charge of Illegally Obtaining and Transporting FirearmsRead the Press Release
LOS ANGELES – A San Gabriel Valley man who allegedly drove his truck into a crowd of peaceful demonstrators on May 31 in Pasadena was arrested today on a federal criminal complaint charging him with conspiring to violate firearms laws.
Benjamin Jong Ren Hung, 28, of San Marino, is charged with one count of conspiracy to transport firearms across state lines and to make a false statement in acquisition of firearms.
At his initial appearance this afternoon in United States District Court, Hung was ordered detained pending a Monday hearing to determine his bail status. Hung’s arraignment is scheduled for October 15.
According to an affidavit filed with the complaint, Pasadena Police officers arrested Hung on May 31 after he intentionally drove his pickup truck into a crowd of protesters demonstrating in Old Town Pasadena. The crowd scattered as the truck approached, and no injuries were reported in the incident, the affidavit states.
During a search of Hung’s truck on May 31, police found a loaded semiautomatic handgun, multiple high-capacity magazines loaded with ammunition, an 18-inch machete, $3,200 in cash, a long metal pipe, and a megaphone, according to the affidavit.
Hung allegedly acquired the firearm from a friend who purchased it for him in Oregon and then transported it to California. When the friend purchased the firearm, he falsely represented that he was the actual transferee of the gun, rather than Hung, the affidavit states. Hung and his friend then allegedly conspired to transport the firearm to California, where Hung kept the firearm at his San Marino home prior to bringing it to the May 31 demonstration.
The affidavit further alleges that in March Hung purchased at least three additional firearms in Oregon and then transported them to California. He also allegedly amassed other firearms and tactical equipment from suppliers throughout the United States and used his family’s vineyard in Lodi, California as a training camp to prepare to engage in civil disorders.
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, Hung would face a statutory maximum sentence of five years in federal prison.
This matter was investigated by the FBI’s Los Angeles Joint Terrorism Task Force and Civil Rights squads and the Pasadena Police Department.
This case is being prosecuted by Assistant United States Attorneys Frances S. Lewis of the Public Corruption and Civil Rights Section, and David T. Ryan of the Terrorism and Export Crimes Section.
Department of Justice Begins Second Distribution of Funds Recovered Through Asset Forfeiture to Compensate Victims of Western Union Fraud Scheme, Bringing Total to over $300 MillionRead the Press Release
The Department of Justice announced today that the Western Union Remission Fund began its second distribution of approximately $148 million in funds forfeited to the U.S. government from the Western Union Company (Western Union) to approximately 33,000 victims located in the United States and abroad. These victims, many of whom were elderly victims of consumer fraud and abuse, will be recovering the full amount of their losses.
This is the second in a series of payment distributions to occur in the Western Union remission. The first distribution paid approximately $153 million to over 109,000 victims in March of this year. The Department of Justice anticipates authorizing compensation for many more victims in the coming months. The department is accepting petitions on an ongoing basis and will be providing potential victims who have not applied for remission the opportunity to apply.
“Through the tireless work of the Department of Justice, today 33,000 more individuals, including many elderly victims of the criminals who exploited Western Union’s deficient anti-money laundering controls, are being made whole through this distribution of an additional $148 million,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “Together with the first distribution, the department has now remitted more than $300 million to over 142,000 victims of this fraud. These results reinforce the department’s commitment to compensating victims whenever possible.”
“After the first distribution of funds to victims of these nefarious scammers, I said that it was a good start,” said U.S. Attorney David J. Freed. “Today’s announcement marks another important event in this lengthy and complicated case. While ensuring fair business practices and anti-fraud programs is certainly a worthy goal, our aim is always to compensate our victims. We credit the innovative and industrious efforts of our investigative partners and thank them for their sustained efforts to make the victims whole.”
“We are very pleased to deliver $148 million to provide financial justice for these thousands of victims,” said Damon E Wood, Inspector in Charge of the U.S. Postal Inspection Service’s (USPIS) Philadelphia Division. “This brings the total returned to victims to over $300 million. Especially in these difficult times, the monies will hopefully provide relief for those who were scammed. The Postal Inspection Service will continue to be at the forefront of protecting Americans from the scams that harm our most vulnerable citizens and delivering justice for all.”
In 2017, Western Union entered into a deferred prosecution agreement (DPA) with the United States. Pursuant to the DPA, Western Union acknowledged responsibility for its criminal conduct, which included violations of the Bank Secrecy Act and aiding and abetting wire fraud, and agreed to forfeit $586 million, which has been made available to compensate victims of the international consumer fraud scheme through the remission process. Western Union simultaneously resolved a parallel civil investigation with the Federal Trade Commission.
In this scheme, fraudsters targeted consumers, including seniors, through multiple scams. Three specific scams directed towards seniors include the grandparent scam, where the fraudster would pose as the victim’s relative in need of immediate money to avoid personal harm, lottery or sweepstakes scams, where the fraudster would tell the victim that they had won a large cash prize but had to pay fees such as taxes to claim the prize, and romance scams, where the fraudster would pose as an online love interest and request funds for a visit or for another purpose. In each of these scams the fraudsters convinced their victims to send money through Western Union.
Certain owners, operators or employees of Western Union agent locations were complicit in the schemes. Western Union aided and abetted the fraud scheme by failing to suspend or terminate complicit agents and by allowing them to continue to process fraud-induced monetary transactions. Western Union fulfilled its obligations under the DPA and the court granted the motion to dismiss the information this year.
The Justice Department, through the Asset Forfeiture Program, works diligently to restore lost funds to victims of crime and acknowledges the significant assistance of the USPIS Philadelphia Division’s Harrisburg, Pennsylvania Office in the Western Union remission. The victim compensation payments in the Western Union case would not have been possible without the extraordinary efforts of the Criminal Division’s Money Laundering and Asset Recovery Section; the U.S. Attorneys’ Offices for the Middle District of Pennsylvania, the Central District of California, the Eastern District of Pennsylvania, and the Southern District of Florida. The FBI’s Los Angeles Field Office, IRS-Criminal Investigation, U.S. Immigrations and Customs Enforcement’s Homeland Security Investigations, the Federal Reserve Board and the Consumer Financial Protection Bureau Office of Inspector General, and the Department of the Treasury Office of Inspector General provided valuable assistance.
More information about the Western Union remission and its compensation to victims is available on the Western Union remission website at www.westernunionremission.com. Further questions may be directed to the Western Union Remission Administrator by phone at 844-319-2124 or by email at [email protected].
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.
Two Active-Duty Marines Charged in Indictment Alleging Drug Trafficking Conspiracy After Fellow Marine’s Fatal Drug OverdoseRead the Press Release
LOS ANGELES – Two active-duty United States Marines stationed at Camp Pendleton were arrested today on a federal grand jury indictment charging one Marine and three civilians with conspiring to distribute narcotics – including oxycodone pills laced with fentanyl – to civilians and members of the United States Marine Corps, one of whom suffered a fatal drug overdose in May. The second Marine is charged in the indictment with being an accessory after the fact.
The 14-count superseding indictment charges five defendants:
- Jordan Nicholas McCormick, 26, of Palmdale, the lead defendant and the conspiracy’s alleged supplier who provided LSD, ecstasy, cocaine, and oxycodone pills laced with fentanyl to co-conspirators;
- Gustavo Jaciel Solis, 24, of Sylmar, who allegedly distributed McCormick’s drugs to civilians and military personnel;
- Anthony Ruben Whisenant, 20, a lance corporal in the United States Marine Corps, who allegedly distributed narcotics to active service members, including an active-duty Marine who died after ingesting an oxycodone pill laced with fentanyl purchased from Solis;
- Jessica Sarah Perez, 23, of Pacoima, who allegedly distributed narcotics including fentanyl and cocaine to the conspiracy’s civilian customers; and
- Ryan Douglas White, 22, a lance corporal in the United States Marine Corps, who is charged with being an accessory after the fact for allegedly attempting to hinder law enforcement’s apprehension of Whisenant and Solis.
Whisenant and White were taken into federal custody today and are expected to make their initial appearances this afternoon in United States District Court in Los Angeles.
On August 11, Solis and Perez were indicted on fentanyl and cocaine distribution charges, and Solis was indicted on firearms-related charges. They have pleaded not guilty to these charges and their trial date is scheduled for October 27. Solis is in federal custody and Perez is free on $25,000 bond. Today’s superseding indictment adds McCormick, Whisenant and White as defendants, in addition to adding charges to the original indictment. McCormick also is in federal custody.
According to the indictment, the conspiracy lasted from November 2019 to September 2020 and involved multiple sales of fentanyl-laced oxycodone to an undercover buyer, often for amounts exceeding $1,000 per buy.
On May 22, Solis sold 10 pills of oxycodone laced with fentanyl to an active-duty Marine who died of a drug overdose in the early morning hours of May 23, the indictment alleges.
In addition to the conspiracy charge, McCormick, Solis, Whisenant and Perez face substantive charges of distribution of narcotics, including fentanyl. McCormick and Solis are also charged with possessing firearms in furtherance of drug crimes.
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, McCormick and Solis would face a mandatory minimum of 15 years in federal prison and a statutory maximum sentence of life imprisonment. Whisenant and Perez would face a statutory maximum of 20 years in federal prison if convicted. White, if convicted, would face a statutory maximum sentence of 10 years in federal prison.
This matter was investigated by the Naval Criminal Investigative Service, the Drug Enforcement Administration, the FBI, the United States Postal Inspection Service, and the Ventura County Sheriff’s Office.
This case is being prosecuted by Special Assistant United States Attorney Patrick Castañeda and Assistant United States Attorneys Jenna Williams and Gregg E. Marmaro of the General Crimes Section.
International Law Enforcement Operation Targeting Opioid Traffickers on the Darknet Results in over 170 Arrests Worldwide and the Seizure of Weapons, Drugs and over $6.5 MillionRead the Press Release
Today, the Department of Justice, through the Joint Criminal Opioid and Darknet Enforcement (JCODE) team joined Europol to announce the results of Operation DisrupTor, a coordinated international effort to disrupt opioid trafficking on the Darknet. The operation, which was conducted across the United States and Europe, demonstrates the continued partnership between JCODE and Europol against the illegal sale of drugs and other illicit goods and services. Operation DisrupTor builds on the success of last year’s Operation SaboTor and the coordinated law enforcement takedown of the Wall Street Market, one of the largest illegal online markets on the dark web.
Following the Wall Street Market takedown in May 2019, U.S. and international law enforcement agencies obtained intelligence to identify Darknet drug traffickers, resulting in a series of complementary, but separate, law enforcement investigations. Operation DisrupTor actions have resulted in the arrest of 179 Darknet drug traffickers and fraudulent criminals who engaged in tens of thousands of sales of illicit goods and services across the United States and Europe.
This operation resulted in the seizure of over $6.5 million in both cash and virtual currencies; approximately 500 kilograms of drugs worldwide; 274 kilograms of drugs, including fentanyl, oxycodone, hydrocodone, methamphetamine, heroin, cocaine, ecstasy, MDMA, and medicine containing addictive substances in the United States; and 63 firearms. Darknet vendor accounts were identified and attributed to real individuals selling illicit goods on Darknet market sites such as AlphaBay, Dream, WallStreet, Nightmare, Empire, White House, DeepSea, Dark Market and others. By leveraging complementary partnerships and surging resources across the U.S. government and Europol, Operation DisrupTor was used to significantly disrupt the online opioid trade and send a strong message that criminals operating on the Darknet are not beyond the reach of law enforcement.
Operation DisrupTor led to 121 arrests in the United States including two in Canada at the request of the United States, 42 in Germany, eight in the Netherlands, four in the United Kingdom, three in Austria, and one in Sweden. A number of investigations are still ongoing to identify the individuals behind dark web accounts.
“Criminals selling fentanyl on the Darknet should pay attention to Operation DisrupTor,” said Deputy Attorney General Jeffrey Rosen. “The arrest of 179 of them in seven countries—with the seizure of their drug supplies and their money as well—shows that there will be no safe haven for drug dealing in cyberspace.”
“With the spike in opioid-related overdose deaths during the COVID-19 pandemic, we recognize that today’s announcement is important and timely,” said FBI Director Christopher Wray. “The FBI wants to assure the American public, and the world, that we are committed to identifying Darknet drug dealers and bringing them to justice. But our work does not end with today’s announcement. The FBI, through JCODE and our partnership with Europol, continues to be actively engaged in a combined effort to disrupt the borderless, worldwide trade of illicit drugs. The FBI will continue to use all investigative techniques and tools to identify and prosecute Darknet opioid dealers, wherever they may be located.”
“The 21st century has ushered in a tidal wave of technological advances that have changed the way we live,” said DEA Acting Administrator Timothy J. Shea. “But as technology has evolved, so too have the tactics of drug traffickers. Riding the wave of technological advances, criminals attempt to further hide their activities within the dark web through virtual private networks and tails, presenting new challenges to law enforcement in the enduring battle against illegal drugs. Operation DisrupTor demonstrates the ability of DEA and our partners to outpace these digital criminals in this ever-changing domain, by implementing innovative ways to identify traffickers attempting to operate anonymously and disrupt these criminal enterprises.”
“U.S. Immigration and Custom’s Enforcement’s (ICE) Homeland Security Investigations (HSI) has played an integral role in Operation DisrupTor which has effectively removed opioids from our communities,” said ICE Acting Deputy Director Derek Benner. “It has been an honor to work alongside our domestic and international law enforcement partners and pursue bad actors hiding on the Darknet. Our trained cyber analysts and investigators have conducted undercover efforts that target dark website operators, vendors and prolific buyers of these dangerous drugs. HSI special agents employ unique investigative capabilities to trace and identify the proceeds stemming from the distribution and online sales of fentanyl and other illicit opioids. These efforts will continue to thwart a significant amount of criminal drug sale activity and deter criminals believing they can operate with anonymity on the Darknet.”
“The U.S. Postal Inspection Service has worked diligently for years to rid the mail of illicit drug trafficking and preserve the integrity of the mail,” said Chief Postal Inspector Gary Barksdale. “Most importantly, these efforts provide a safe environment for postal employees and the American public. Today’s announcement serves as an outstanding example of the worldwide impact Postal Inspectors can make through our ever-growing partnerships with federal and international law enforcement agencies. On behalf of the U.S. Postal Service, we offer our sincere appreciation to all of our partners in this operation who helped protect the nation’s mail, and we pledge to never relent in our pursuit of criminals seeking to exploit the U.S. mail.”
“Law enforcement is most effective when working together, and today’s announcement sends a strong message to criminals selling or buying illicit goods on the dark web: the hidden internet is no longer hidden, and your anonymous activity is not anonymous,” said Edvardas Šileris, the Head of Europol’s European Cybercrime Centre (EC3). “Law enforcement is committed to tracking down criminals, no matter where they operate – be it on the streets or behind a computer screen.”
The extensive operation, which lasted nine months, resulted in over dozens of federal prosecutions including:
- The Los Angeles JCODE Task Force, in conjunction with the U.S. Attorney’s Office for the Central District of California, successfully dismantled a drug trafficking organization that used online monikers such as “Stealthgod” to sell methamphetamine and MDMA on multiple Darknet marketplaces. Investigators have linked the crew to more than 18,000 illicit drug sales to customers in at least 35 states and numerous countries around the world. During law enforcement actions in Southern California earlier this year, members of JCODE arrested five defendants and seized approximately 120 pounds of methamphetamine, seven kilograms of MDMA and five firearms. Two of the five – Teresa McGrath, 34, of Sunland-Tujunga, and Mark Chavez, 41, of downtown Los Angeles – have since pleaded guilty to narcotics-trafficking and other offenses, and each faces a 15-year mandatory minimum sentence. As the investigation continued, the Los Angeles JCODE Task Force made additional seizures, including $1.6 million in cryptocurrency, 11 pounds of methamphetamine and 14 pounds of pills pressed with methamphetamine. Andres Bermudez, 37, of Palmdale, California, who allegedly was a main supplier of methamphetamine to the “Stealthgod” crew, was charged last week with a narcotics-trafficking offense that carry a 10-year mandatory minimum sentence. He is considered a fugitive.
- Arden McCann, 32, of Quebec, Canada, was charged with conspiring to import drugs into the United States and money laundering conspiracy, in a four-count indictment returned by a grand jury in Atlanta, Georgia. According to court documents, the defendant is alleged to have imported alprazolam, fentanyl, U-47700, and fentanyl analogues such as carfentanil, furanyl fentanyl, 4-fluoroisobutyryl fentanyl, acryl fentanyl, and methoxyacetyl fentanyl into the United States from Canada and China. The superseding indictment alleges that fentanyl analogues the defendant imported into the United States resulted in a non-fatal overdose in April 2016, and fentanyl the defendant imported into the United States resulted in an overdose death in December 2016.
- Khlari Sirotkin, 36, of Colorado; Kelly Stephens, 32, of Colorado; Sean Deaver, 36, of Nevada; Abby Jones, 37, of Nevada; and Sasha Sirotkin, 32, of California, were charged with drug trafficking and money laundering conspiracy, in a 21-count indictment returned by a grand jury in Cincinnati, Ohio. According to court documents, the defendants are alleged to be members of one of the most prolific online drug trafficking organizations in the United States and allegedly specialized in the manufacturing and distribution of more than one million fentanyl-laced counterfeit pills and laundered approximately $2.8 million over the course of the conspiracy. The pressed fentanyl pills, along with heroin, methamphetamine and cocaine, were shipped to the Southern District of Ohio and throughout the country. FBI, DEA, FDA, HSI and USPIS agents seized 2.5 kilograms of fentanyl; 5,095 pressed xanax; 50 suboxone; 16.5 grams of cocaine; 37 grams of crystal meth; 12 grams of black tar heroin; an industrial pill press; 5,908 pounds of dried marijuana with an estimated street value of $9 million; $80,191 in cash, 10 firearms and one pound of fentanyl.
- The FBI Washington Field Office’s Hi-Tech Opioid Task Force, in conjunction with the U.S. Attorney’s Office for the Eastern District of Virginia, successfully thwarted a firebomb attack plot involving explosives, firearms, the Darknet, prescription opioid trafficking, cryptocurrency, and sophisticated money laundering. William Anderson Burgamy, 33, of Hanover, Maryland, and Hyrum T. Wilson, 41, of Auburn, Nebraska, pleaded guilty in the Eastern District of Virginia to charges related to a conspiracy to use explosives to firebomb and destroy a competitor pharmacy in Nebraska. Burgamy, who is not a pharmacist, operated as the Darknet vendor NeverPressedRX (NPRX) since at least August 2019. Wilson, who was a licensed pharmacist, illegally mailed to Burgamy over 19,000 dosage units of prescription medications, including opioids, from his pharmacy in Nebraska. Burgamy illegally sold prescription drugs through his Darknet vendor account to customers nationwide, and claimed at one point that he made nearly $1 million total. Burgamy and Wilson agreed that Burgamy and another individual would carry multiple firearms during the attack operation and use explosives, specifically Molotov cocktails enhanced with Styrofoam as a thickening agent, to burn the victim pharmacy down in furtherance of their drug trafficking scheme. Law enforcement agents seized thousands of opioid pills, eight unsecured firearms, including two loaded AR-15 assault rifles with high capacity magazines, and over $19,000 cash. Prior to Burgamy’s arrest in April 2020, which uncovered and thwarted the firebombing plot, Burgamy and Wilson fully intended on the attack occurring after COVID-19 restrictions were lifted.
- Aaron Brewer, 39, of Corsicana, Texas, was charged with conspiracy to possess with intent to distribute a controlled substance and distribution of a controlled substance in a two-count indictment returned by a grand jury in the Northern District of Texas. According to court documents, the defendant allegedly sold cocaine, heroin, and other drugs via the dark web. He allegedly accepted payment in cryptocurrency, primarily bitcoin, and then shipped the drugs to customers’ addresses through the U.S. mail and other shipping services. Following Mr. Brewer’s arrest on July 2, agents with the U.S. Postal Inspection Service and FBI Dallas Field Office seized roughly 650 grams of black tar heroin, cocaine, and OxyContin, two computers, and more than $870 in postage stamps, as well as a ledger outlining 757 drug shipments sent to 609 unique addresses between December 2019 and March 2020.
An indictment and criminal complaint merely alleges that crimes have been committed. The defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Operation DisrupTor was a collaborative initiative across JCODE members, including the Department of Justice; Federal Bureau of Investigation (FBI); U.S. Drug Enforcement Administration (DEA); U.S. Postal Inspection Service (USPIS); U.S. Immigration and Customs Enforcement (ICE)’s Homeland Security Investigations (HSI); U.S. Customs and Border Protection (CBP); Financial Crimes Enforcement Network (FinCEN); Bureau of Alcohol, Tobacco, and Firearms (ATF); Naval Criminal Investigative Service (NCIS) and Department of Defense (DOD). Local, state and other federal agencies also contributed to Operation DisrupTor investigations. The investigations leading to Operation DisrupTor were significantly aided by essential support and coordination by the Department of Justice’s multi-agency Special Operations Division, the Criminal Division’s Computer Crime and Intellectual Property Section, Narcotic and Dangerous Drug Section, and Organized Crime and Gang Section, the Justice Department’s Office of International Affairs, the National Cyber Joint Investigative Task Force (NCJITF), Europol and its Dark Web team and international partners Eurojust, Austrian Federal Investigation Bureau (Bundeskriminalamt), Cyprus Police (Αστυνομία Κύπρου), German Federal Criminal Police Office (Bundeskriminalamt), Canada’s Royal Canadian Mounted Police, Portuguese Judicial Police (Polícia Judiciária), Dutch Police (Politie), Swedish Police (Polisen), the British National Crime Agency, Australia's Western Australia Police Force and Australian Criminal Intelligence Commission.
Federal prosecutions are being conducted in more than 20 Federal districts, including: the Central District of California, the Eastern District of California, the Northern District of California, the Southern District of California, the District of Colorado, the District of Columbia, the District of Connecticut, the Middle District of Florida, the Southern District of Florida, the Northern District of Georgia, the District of Hawaii, the Western District of Missouri, the District of New Jersey, the Western District of North Carolina, the Northern District of Ohio, the Southern District of Ohio, District of Oregon, the Western District of Pennsylvania, the Northern District of Texas, the Eastern District of Virginia, the District of the Virgin Islands and the Western District of Washington.
JCODE is an FBI-led Department of Justice initiative, which works closely with the DEA-led, multi-agency, Special Operations Division to support, coordinate and de-conflict investigations targeting for disruption and dismantlement of the online sale of illegal drugs, especially fentanyl and other opioids. Additionally, JCODE targets the trafficking of weapons and other illicit goods and services on the internet. Operation DisrupTor illustrates the investigative power of federal and international partnerships to combat the borderless nature of online criminal activity.
Documents related to this announcement can be viewed here.
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.
- The Los Angeles JCODE Task Force, in conjunction with the U.S. Attorney’s Office for the Central District of California, successfully dismantled a drug trafficking organization that used online monikers such as “Stealthgod” to sell methamphetamine and MDMA on multiple Darknet marketplaces. Investigators have linked the crew to more than 18,000 illicit drug sales to customers in at least 35 states and numerous countries around the world. During law enforcement actions in Southern California earlier this year, members of JCODE arrested five defendants and seized approximately 120 pounds of methamphetamine, seven kilograms of MDMA and five firearms. Two of the five – Teresa McGrath, 34, of Sunland-Tujunga, and Mark Chavez, 41, of downtown Los Angeles – have since pleaded guilty to narcotics-trafficking and other offenses, and each faces a 15-year mandatory minimum sentence. As the investigation continued, the Los Angeles JCODE Task Force made additional seizures, including $1.6 million in cryptocurrency, 11 pounds of methamphetamine and 14 pounds of pills pressed with methamphetamine. Andres Bermudez, 37, of Palmdale, California, who allegedly was a main supplier of methamphetamine to the “Stealthgod” crew, was charged last week with a narcotics-trafficking offense that carry a 10-year mandatory minimum sentence. He is considered a fugitive.
Corona Woman Sent Back to Prison for Executing Celebrity-Based Scam Soon After Release from Custody in Prior Fraud CasesRead the Press Release
LOS ANGELES – A Corona woman who recently completed a 79-month federal prison sentence stemming from a $15 million bank fraud scheme was ordered back to prison on Monday for executing a similar fraud scheme in which she lied to a victim about celebrities such as LeBron James supporting her supposed venture.
Carolyn Marie Jones, 57, was sentenced Monday afternoon to 20 months in prison by United States District Judge Michael W. Fitzgerald after she admitted violating the terms of her supervised release. Once she completes this prison stint, Jones will be on supervised release for 40 months.
At Monday’s hearing, Jones admitted that she violated the terms of her supervised release by defrauding a victim in violation of California law. While still in custody and then immediately after being placed on supervised release, Jones fraudulently obtained a $13,000 investment “through a myriad of lies, false pretenses, and material omissions,” court documents state.
According to documents filed by prosecutors, Jones purported to be a successful and well-connected denim jeans entrepreneur, claiming that numerous celebrities supported her denim brand, including the Kardashian and Jenner families, Taylor Swift, Floyd Mayweather, Chrissy Teigen, Will Smith, and Jada Pinkett Smith. Jones also falsely claimed that LeBron James had offered her $500,000 for equity in her company.
“In the wake of the helicopter crash that killed Kobe Bryant and one of his daughters, [Jones] used their deaths as a way to prop up her company and bolster her carefully-crafted image of being a well-connected entrepreneur,” the government’s sentencing memorandum states. Text messages show that Jones falsely told the victim that she was in contact with the Bryant family after the crash, consoling them, and that prior to his death, Bryant had wanted his daughters to be the “face” of her denim brand.
Jones admitted on Monday that she violated other terms of her release by failing to disclose an open line of credit, failing to disclose an open bank account, and engaging in a business involving the solicitation of funds without the express prior approval of her probation officer.
As he ordered her back to federal prison, Judge Fitzgerald told Jones: “This is the final chance.” If Jones violates any term of her supervised release again, Judge Fitzgerald said that he would give her the “harshest sentence” permitted by law.
The prison sentence completed earlier this year was the result of two cases against Jones – one involving bank loans and bankruptcy fraud, and another involving a wire fraud scheme Jones perpetrated while free on bond in the first case. Both indictments stemmed from Jones’s false portrayal of herself as a successful and well-connected denim jeans entrepreneur. Jones’s fraud schemes related to her company, DDI, sometimes known as Diamond Decisions, Inc., which sold high-end jeans under the labels Privacywear and PRVCY Premium.
Jones pleaded guilty in February 2015 to one count of bank fraud and one count of concealing assets in bankruptcy. Jones “executed not one, but two, fraud schemes of epic proportions resulting in a loss to Union Bank and numerous investors of $15,124,100,” prosecutors wrote in a sentencing memorandum.
When she received the 79-month sentence in December 2015, Judge Fitzgerald characterized Jones as “truly a greedy, awful person.”
This case was investigated by IRS Criminal Investigation and the United States Secret Service.
The cases against Jones were handled by Assistant United States Attorneys Ruth C. Pinkel and Lindsey Greer Dotson of the Public Corruption and Civil Rights Section.
Anyone who has information about Jones’s conduct or thinks they may be a victim of Jones is encouraged to contact IRS Criminal Investigation’s Los Angeles Field Office at (213) 372-4490.
Alleged Southern California Narcotics Traffickers Among Those Charged in International Crackdown Targeting Dark-net DealersRead the Press Release
LOS ANGELES – As part of an international effort to disrupt narcotics trafficking on the dark-net, members of the Los Angeles Joint Criminal Opioid and Dark-net Enforcement (JCODE) Task Force today announced cases brought as a result of Operation DisrupTor. The cases charge members of a Southern California drug trafficking organization who allegedly distributed methamphetamine and other illicit narcotics to thousands of customers in at least 35 states and numerous countries around the world.
An alleged methamphetamine trafficker who was a key supplier to the Los Angeles-based organization is being sought after being charged last week with possession with the intent to distribute methamphetamine. Earlier this year, five other members of the narcotics ring were arrested on federal charges, and authorities made substantial seizures of narcotics and cryptocurrency.
Operation DisrupTor builds on the success of prior actions targeting dark-net vendors, including the takedown of Wall Street Market, which was one of the world’s largest dark web marketplaces. Following the Wall Street Market takedown in May 2019 and the filing of federal charges in Los Angeles against the administrators, law enforcement in the United States and Europe obtained intelligence that allowed them to identify dark-net drug traffickers.
“These online black market websites use a variety of technologies, including the Tor network and other encryption technologies, to ensure that communications and transactions are shielded from interception and monitoring,” according to court documents filed last week in Los Angeles. “A famous dark web marketplace, Wall Street Market, operated similar to legitimate commercial websites such as Amazon and eBay, but offered illicit goods and services” in exchange for virtual currencies, such as Bitcoin.
“Through the outstanding efforts of the JCODE Task Force, we have been able to unmask those hiding on the dark-net, bringing to justice a wide array of criminals, including those operating online marketplaces, laundering cryptocurrency, and spreading drugs around the world,” said United States Attorney Nick Hanna. “My prosecutors and their JCODE partners will continue to rein in illegal dark web activities by disrupting other traffickers and those who help them access their illicit cryptocurrency.”
“American citizens endure the unfortunate consequences of dark-web marketplaces where criminals get rich by exploiting those suffering through an opioid epidemic while evading law enforcement scrutiny,” said John F. Bennett, the Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case and others should send a message that law enforcement has infiltrated the perceived anonymity of the dark-web and possesses the tools to identify and hold accountable individuals and groups responsible for illegal trafficking and the devastating toll it takes on humanity in the United States and abroad.”
“Together with our partners, HSI remains at the forefront of combating narcotics trafficking, financial crimes and illicit activities purveyed by online black markets,” said David A. Prince, Special Agent in Charge for Homeland Security Investigations (HSI) in Los Angeles. “We have proven, once again, that these illicit activities on the dark-net will not be tolerated in the United States. While criminal operators may continue to grow the reach of their businesses through these dark web marketplaces, the fact is that no matter how or where these crimes are committed, nothing is beyond the reach of the law.”
“Members of the Stealthgod crew have discovered that not even the dark-net could shield their criminal activities from the watchful eyes of Postal Inspectors and our law enforcement partners,” said Inspector in Charge Patricia Armstrong of the U.S. Postal Inspection Service, Los Angeles Division. “The alleged drug traffickers miscalculated when they chose to use the U.S. Mail to further their crimes, and they will face a very severe price.”
During Operation DisrupTor, the Los Angeles JCODE Task Force successfully dismantled a drug trafficking organization that used online monikers such as “Stealthgod” to sell methamphetamine and MDMA on multiple dark-net marketplaces, including Wall Street Market. Investigators have linked the crew to more than 18,000 illicit drug sales to customers around the world. During an operation earlier this year, members of JCODE executed search warrants that led to the seizure of more than 60 parcels containing narcotics that were ready to be shipped to more than 35 states around the nation.
Andres Bermudez, 37, of Palmdale, who allegedly was a key supplier of methamphetamine to the “Stealthgod” crew, was named in a criminal complaint filed on September 18. An affidavit in this case outlines how Bermudez allegedly supplied methamphetamine to the “Stealthgod” drug trafficking organization and details negotiations involving transactions of 30 pounds and 40 pounds of methamphetamine. Bermudez is currently a fugitive being sought by federal authorities.
During law enforcement actions in the City of Los Angeles in February, members of JCODE arrested five defendants allegedly at the center of the “Stealthgod” organization and seized approximately 120 pounds of methamphetamine, seven kilograms of MDMA (“ecstasy”), and five firearms (photo of seizure). The five defendants arrested on federal charges are:
- Teresa McGrath, 34, of Sunland-Tujunga, who allegedly delivered dozens of narcotics-laden packages to a post office in Sunland;
- Rane Melkom, 35, of Sunland-Tujunga, who shared a residence with McGrath where authorities seized more than 50 pounds of methamphetamine, nearly 15 pounds of MDMA, approximately 30,000 Adderall pills, cash, and three loaded handguns;
- Mark Chavez, 41, of downtown Los Angeles, whose bedroom yielded nearly 40 pounds of methamphetamine and two handguns during a search in February;
- Matthew Ick, 51, of downtown Los Angeles, who is linked in court papers to a narcotics shipment to the organization; and
- Thomas Olayvar, 43, of downtown Los Angeles, who allegedly was involved in the shipment of narcotics through the United States Postal Service.
McGrath has pleaded guilty to conspiracy to distribute methamphetamine and MDMA, possession of a firearm in furtherance of drug trafficking, and cryptocurrency money laundering, admitting that over the course of about six months she received approximately $161,916 in Bitcoin and helped disburse this money to her co-conspirators.
Chavez has pleaded guilty to conspiring to distribute methamphetamine and MDMA, as well as possessing a firearm in furtherance of drug trafficking.
McGrath and Chavez are scheduled to be sentenced next year, when each will face a mandatory minimum sentence of 15 years in federal prison.
Melkom, Ick, and Olayvar face various narcotics charges alleged in criminal informations. These defendants are currently scheduled to go on trial next year.
The cases stemming from the investigation into the “Stealthgod” organization are being prosecuted by Assistant United States Attorneys Puneet Kakkar and Keith Ellison of the International Narcotics, Money Laundering, and Racketeering Section.
As the investigation into the “Stealthgod” crew continued, the Los Angeles JCODE Task Force made additional seizures, including $1.6 million in cryptocurrency, three firearms, 11 pounds of methamphetamine and 14 pounds of pills pressed with methamphetamine.
In addition to the Operation DistrupTor cases related to “Stealthgod,” federal prosecutors in Los Angeles have filed cases against other alleged dark-net narcotics traffickers and those who help them convert bitcoin into fiat currency. For example:
· Kais Mohammad, 36, of Yorba Linda, is scheduled to plead guilty on Thursday to federal charges stemming from the operation of 17 Bitcoin kiosks across Southern California. In his plea agreement, Mohammad admitted that he knew that at least one of his clients was engaged in illicit activity on the dark web. This matter is being prosecuted by Assistant United States Attorney Puneet Kakkar.
· Earlier this year, three people linked to the online moniker “Aeirla” were sentenced to federal prison for conspiring to distribute methamphetamine and cocaine to customers who negotiated transactions on the dark-web. Those defendants are:
• Anh Pham, 49, of Hawaiian Gardens, was sentenced to 80 months in federal prison;
• Joseph Michael Gifford, 43, of La Crescenta, was sentenced to three years’ imprisonment; and
• Carlos Miguel Gallardo, 60, Hawaiian Gardens, was sentenced to serve 18 months in federal prison.
Pham sold pound quantities of methamphetamine on the dark-net, while Gifford and Gallardo packaged them – in toys, a beach ball, and boxes of Christmas cards and chocolates – and shipped them to customers nationwide. The “Aeirla” case was prosecuted by Assistant United States Attorney Christopher Kendall of the International Narcotics, Money Laundering, and Racketeering Section.
· Five defendants are scheduled to be tried in October 2021 in United States District Court in Los Angeles on various narcotics trafficking charges that allege they used the monikers “Drugpharmacist” and “RickandMortyShop” to sell cocaine, heroin, methamphetamine and crack cocaine on Wall Street Market and another dark-net marketplace called Dream. Members of the conspiracy allegedly shipped narcotics in small vials concealed inside stuffed animals. The defendants scheduled to go on trial are: Jerrell Eugene Anderson, 30, of Inglewood; Christopher Canion Van Holton, 33, of Valencia; Adan Sepulveda, 28, of Lancaster; Kenneth Lashawn Hadley, 33, of Lancaster; and Jackie Walter Burns, 22, of Lancaster. Anderson and Sepulveda face a charge of distribution of heroin resulting in death in relation to a shipment of heroin to a customer in Knoxville, Tennessee, who suffered a fatal overdose. This case is being prosecuted by Assistant United States Attorneys Khaldoun Shobaki and Lauren Restrepo of the Cyber and Intellectual Property Crimes Section.
· Kunal Kalra, 26, of Westwood, was sentenced in March to 18 months in federal prison after pleading guilty to federal narcotics and anti-money laundering charges related to his unlicensed money transmitting business that he used to exchange virtual currency for cash for dark-net vendors. This matter, which was prosecuted by Assistant United States Attorney Puneet Kakkar, was the first federal case in the nation charging an unlicensed money remitting business that used a Bitcoin kiosk.
· A father and his son who distributed methamphetamine on the dark-net using monikers such “Quartersandup,” “Tenderwoodcock,” “Colsandersdream,” and “colonelsanders” were sentenced to federal prison last year. William Glarner III, 65, of Huntington Beach, was convicted at trial and sentenced to 15 years. His son, William Glarner IV, 35, of Irvine, pleaded guilty and was sentenced to 10 years. This case was prosecuted by Assistant United States Attorneys Puneet Kakkar and Kathy Yu.
· Tyler Reeves, a 30-year-old Irvine man who sold narcotics on Wall Street Market under the moniker “Platinum45,” was sentenced last year to 10 years in federal prison. This matter was prosecuted by Assistant United States Attorney Puneet Kakkar.
Indictments and criminal complaints contain allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The “Stealthgod” cases are the result of an investigation by the Los Angeles JCODE Task Force, which is comprised of several federal agencies, including the FBI, Homeland Security Investigations and the United States Postal Inspection Service.
The Drug Enforcement Administration provided substantial support during the “Stealthgod” investigation. The Los Angeles Police Department and Los Angeles Sheriff’s Department also participated in the “Stealthgod” investigation. The United States Attorney’s Office for the Northern District of California also provided assistance.
The dark-net investigations discussed in this announcement were conducted with the support of the Organized Crime Drug Enforcement Task Force (OCDETF).
San Gabriel Woman Linked to Spate of Drug Overdoses in Pasadena Charged with Federal Narcotics Trafficking OffenseRead the Press Release
LOS ANGELES – Prosecutors today filed a criminal complaint against a San Gabriel woman who allegedly sold narcotics to several individuals in Pasadena who suffered overdoses on September 11.
Marisol Bolanos Hernandez, 35, was charged today with one count of drug distribution resulting in serious bodily injury.
Bolanos allegedly sold narcotics to a man who, along with a friend, was found unresponsive at a Pasadena location on the evening of September 11. The two victims were transported to local hospitals, where one recovered, but another died two days later. Pasadena Police officers seized white powder residue from the location of the overdoses, but that material has yet to be tested, according to the affidavit in support of the complaint.
At the hospital, the surviving victim, identified as A.C., responded to Narcan, indicating there were opioids present, and his urine samples were positive for cocaine. A.C. was released from the hospital the following day and told Pasadena Police that he purchased cocaine from “Mari,” shared some of the drugs with the deceased victim, and lost consciousness after taking the purported cocaine, according to the affidavit. Investigators have determined that Mari is Bolanos through evidence that includes A.C. identifying her out of a six-photo lineup, the affidavit states.
The narcotics distribution charge in the complaint relates to the drugs allegedly sold to A.C.
The affidavit also alleges that Bolanos sold purported cocaine to two other overdose victims on September 11. Both of these victims required hospitalization and survived. Phone records link Bolaros to another fatal overdose on September 11, according to the affidavit.
Pasadena Police detained Bolanos on September 16. During an interview she admitting selling what she believed to be cocaine to three of the overdose victims, including A.C., on September 11, according to the affidavit.
Bolanos was taken into federal custody on Thursday by special agents with the Drug Enforcement Administration. She is expected to make her 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.
The charge of drug distribution resulting in serious bodily injury carries a mandatory minimum sentence of 20 years in federal prison and a maximum sentence of life imprisonment.
The case against Bolanos is the result of an ongoing investigation by the DEA and the Pasadena Police Department.
This matter is being prosecuted by Assistant United States Attorney Brittney M. Harris of the International Narcotics, Money Laundering, and Racketeering Section.
U.S. Seeks to Recover More Than $300 Million in Additional Assets Traceable to Funds Allegedly Misappropriated from Malaysian Sovereign Wealth FundRead the Press Release
The Justice Department announced today the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than $300 million in additional assets allegedly associated with an international conspiracy to launder funds misappropriated from 1Malaysia Development Berhad (1MDB), a Malaysian sovereign wealth fund.
Acting Assistnat Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division, and Chief Don Fort of IRS-Criminal Investigation made the announcement.
Combined with earlier civil forfeiture complaints filed beginning in July 2016, the United States has sought the forfeiture of more than $2.1 billion in assets traceable to funds embezzled from 1MDB. To date, as a result of these actions, the United States has recovered or assisted Malaysia in recovering nearly $1.1 billion in assets associated with the 1MDB international money laundering and bribery scheme. These actions represent collectively the largest action brought under the department’s Kleptocracy Asset Recovery Initiative as well as the largest civil forfeiture action ever instituted in the Justice Department’s history.
The complaints filed today in the Central District of California identify additional assets traceable to the 1MDB money laundering and bribery scheme. These assets include four dozen promotional movie posters that Riza Aziz acquired with more than $4 million in funds traceable to assets embezzled from 1MDB as well as an escrow account maintained in the United Kingdom holding more than $300 million. As alleged in the complaint, the funds in this escrow account are traceable to a line of credit extended by Petroleos de Venezuela S.A. (PDVSA) to PetroSaudi Oil Services (PetroSaudi) in connection with the use of two drill ships that PetroSaudi acquired with funds fraudulently obtained from 1MDB. As alleged in the complaint, PetroSaudi’s chief executive officer is Tarek Obaid, a citizen of Saudi Arabia and Switzerland.
According to the complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1MDB were allegedly misappropriated by high-level officials of 1MDB and their associates. 1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people.
As alleged in the complaints, the members of the conspiracy – which included officials at 1MDB, their relatives and other associates – diverted more than $4.5 billion in 1MDB funds. Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and shell companies with bank accounts located in the United States and abroad. These transactions allegedly served to conceal the origin, source and ownership of the funds, and ultimately passed through U.S. financial institutions to then be used to acquire and invest in assets located in the United States and overseas.
As alleged in the earlier complaints, in 2009, 1MDB officials and their associates embezzled approximately $1 billion that was supposed to be invested to exploit energy concessions purportedly owned by a foreign partner. Instead, the funds were allegedly transferred through shell companies and were used to acquire a number of assets, as set forth in the complaints. The complaints also allege that the co-conspirators misappropriated close to $1.4 billion in funds raised through bond offerings in 2012, and more than $1.2 billion following another bond offering in 2013. The complaints also allege that in 2014, the co-conspirators misappropriated approximately $850 million in 1MDB funds under the guise of repurchasing certain options that had been given in connection with a guarantee of the 2012 bonds.
The FBI’s International Corruption Squads in New York City and Los Angeles and the IRS-CI are investigating the case. Deputy Chief Woo S. Lee and Trial Attorneys Barbara Levy, Joshua L. Sohn and Jonathan Baum of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case. Assistant U.S. Attorney Jonathan Galatzan of the U.S. Attorney’s Office for the Central District of California provided substantial assistance. The Justice Department’s Office of International Affairs provided substantial assistance in this matter.
The department also expresses its deep appreciation for the significant assistance provided by the United Kingdom authorities, Office of the Attorney General and the Federal Office of Justice of Switzerland, the Attorney General’s Chambers of Singapore, the Singapore Police Force-Commercial Affairs Division, the Attorney General’s Chambers of Malaysia, the Royal Malaysian Police, the Malaysian Anti-Corruption Commission, the judicial investigating authority of the Grand Duchy of Luxembourg, the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg, and the International Anti-Corruption Coordination Centre (IACCC).
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] (link sends e-mail) or https://tips.fbi.gov/.
A civil forfeiture complaint is merely an allegation that money or property was involved in or represents the proceeds of a crime. These allegations are not proven until a court awards judgment in favor of the United States.
Operation 'Black Phoenix' Leads to Federal Charges Against 25 Who Allegedly Engaged in Illegal Narcotics and Firearms SalesRead the Press Release
LOS ANGELES – Members of an FBI-led task force this morning arrested 18 individuals named in a series of federal indictments that allege narcotics trafficking and firearms offenses, including the illegal sale of five AR-15-style “ghost guns.”
Operation “Black Phoenix” resulted in seven indictments that were issued earlier this year by a federal grand jury. The indictments charge a total of 25 defendants, 18 of whom were arrested this morning, and four of whom were already in custody. Authorities continue their attempts to arrest the remaining three defendants.
During the course of the investigation, authorities seized approximately 28 pounds of methamphetamine, about a quarter-pound of cocaine and crack cocaine, and 16 firearms. Six of the indictments allege at least one transaction involving pound-quantities of methamphetamine. One of the indictments alleges a series of methamphetamine sales that include two one-pound deals and four two-pound transactions.
Two indictments allege illegal gun sales. Defendants Dau Quay Duong, 53, of Ontario, and Christopher Nguyen, 47, also of Ontario, are charged with illegal firearm sales for allegedly selling a total of five ghost guns, specifically five AR-15-type rifles with no make, model or serial number. In another indictment, defendant Jonathan Domingo Go, 47, of Torrance, is charged will illegally selling three firearms – two .40-caliber pistols and 5.56-caliber assault pistol that is described as a ghost gun with no manufacturing mark and no serial number.
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 indictments carry a variety of charges, including conspiracy to possess with the intent to distribute narcotics and substantive narcotics trafficking offenses such as distribution of methamphetamine. If they are convicted, most of the defendants will face mandatory minimum sentences of 10 years in federal prison, and some will face decades in federal prison because of their extensive criminal histories.
The cases announced today are the result of an investigation conducted by the FBI, the Los Angeles Police Department and the Los Angeles County Sheriff’s Department. Substantial assistance was provided by the Monterey Park Police Department, the Drug Enforcement Administration and Homeland Security Investigations.
These cases are being prosecuted by Assistant United States Attorney Shawn T. Andrews of the Violent and Organized Crime Section.
Koreatown Man Sentenced to 17½ Years in Prison for Coercing Girls He Met Online into Sending Him Sexually Explicit ImagesRead the Press Release
LOS ANGELES – A Koreatown man was sentenced today to 210 months in federal prison for posing online as a teenager and targeting girls for sexual exploitation.
Francisco Sanchez, 31, was sentenced by United States District Judge Dolly M. Gee. Sanchez pleaded guilty on May 20 to two counts of production of child pornography.
Sanchez used websites and computer applications to “meet” minor girls. From 2014 to September 2016, Sanchez used the pseudonym “Eddie Nash” to pose as a teenage boy and develop online romantic relationships with his victims so that he could obtain sexually explicit images and videos from them.
In some cases, Sanchez convinced his victims to engage in sexually explicit conduct during video chats, which allowed him to take pornographic screen shots of the minors. In other cases, Sanchez threatened to commit suicide to coerce the victims into sending him pictures or videos.
After obtaining sexually explicit images from the girls, Sanchez threatened to publish or otherwise expose the victims if they did not send additional images or videos.
While Sanchez pleaded guilty to two counts – related to victims who were 13 and 14 – he admitted in his plea agreement that he victimized another five teenage girls.
Sanchez further admitted that he cyberstalked two victims – which included threatening to make one girl “internet famous” by publishing child pornography depicting her – and that he distributed child pornography on a peer-to-peer file-sharing network.
“(Sanchez) victimized real children – manipulated and exploited them for his sexual pleasure – with total disregard for the consequences and effects upon them,” prosecutors wrote in their sentencing memorandum.
After he is released from federal prison, Sanchez will be required to register as a sex offender and must serve a lifetime period of supervised release.
The FBI and the Los Angeles Child Exploitation and Human Trafficking Task Force investigated this matter.
This case is being prosecuted by Assistant United States Attorneys Julia S. Choe of the Cyber and Intellectual Property Crimes Section, and Damaris Diaz of the Violent and Organized Crime Section.
Man Who Tried to Procure Ricin Sentenced to 3½ Years in PrisonRead the Press Release
LOS ANGELES – A La Crescenta man was sentenced today to 42 months in federal prison for attempting to obtain ricin from an online source that he admitted was intended to be used as a weapon.
Steve S. Kim, 41, was sentenced today by United States District Judge Terry J. Hatter Jr. Kim pleaded guilty in September 2019 to one count of violating a criminal statute called prohibition with respect to biological weapons.
During today’s hearing, prosecutors argued that, according to Kim’s own statements, he intended to use the deadly biological toxin to murder an individual who weighed 110 pounds, likely his wife.
Over a two-month period in late 2018, Kim attempted to obtain ricin from an online vendor, that, unbeknownst to Kim, was an FBI undercover operative. During online sale negotiations, Kim stated that he wished to procure the ricin to use on an individual he described as weighing 110 pounds and who would consume the deadly toxin in a drink, according to court documents. The investigation revealed that Kim’s wife weighed approximately 110 pounds, Kim and his wife were experiencing marital difficulties, and a computer seized from Kim showed internet searches for strategies to manage anger issues.
Kim purchased the ricin using Bitcoin for the approximate value of $350. Kim directed the ricin to be delivered to his office via the United States Postal Service and, on November 29, 2018, the FBI delivered an inert powder concealed in package. That evening, Kim took the parcel home, accessed the inert powder, and was immediately arrested.
While the parties dispute Kim’s intended use of the ricin, the act of attempting to obtain the deadly toxin constituted “incredibly dangerous conduct without regard to the safety of others,” according to sentencing papers filed by prosecutors. One sentencing memo quotes a pre-sentence report by the United States Probation Office: “Defendant’s conduct had the potential of endangering the community. Kim caused what he believed to be a lethal biological toxin to be shipped through the United States Postal Service where it was delivered at his place of employment. Had Kim been successful in obtaining ricin, he could have seriously harmed many people who unknowingly came into contact with the hazardous package.”
This matter was investigated by the FBI’s Joint Terrorism Task Force, which received assistance from the United States Postal Inspection Service.
The prosecution is being handled by Assistant United States Attorney Reema M. El-Amamy of the Terrorism and Export Crimes Section, with assistance from the Department of Justice’s Counterterrorism Section.
Palm Desert Man Charged in Firebomb Attack on Republican ClubRead the Press Release
LOS ANGELES – A Palm Desert man was named today in a federal criminal complaint that charges him with attempted arson in the May 31 firebombing of the East Valley Republican Women Federated (EVRWF) office in La Quinta.
Carlos Espriu, 23, who is currently in state custody, is expected to be taken into federal custody later today and make an initial appearance Friday afternoon in United States District Court.
The criminal complaint alleges that, just after 1:15 a.m. on May 31, a masked Espriu used a metal baseball bat to break windows at the EVRWF headquarters, and then he lighted an improvised incendiary device constructed of three bottles that he tossed through the windows before fleeing. Several minutes later, surveillance video shows Espriu returning to the EVRWF office, smashing more windows with the bat and reaching into building to retrieve the Molotov cocktails before walking away with the device. According to the complaint, Espriu returned to the EVRWF office about 30 seconds later, this time without a mask, and threw the set of bottles into the facility, which immediately caused a fire to start.
EVRWF offered a reward for information about the firebombing, which prompted several members of the public to come forward with information that allowed law enforcement officials to identify Espriu as the man seen in surveillance video taken by EVRWF and a nearby business, according to the complaint.
The affidavit in support of the complaint outlines steps taken by investigators to link Espriu to the firebombing. Law enforcement identified social media accounts believed to belong to Espriu, including a Twitter account that, three days before the EVRWF arson, tweeted: “I wanna go burn shit n get hit with tear gas.” They also observed Espriu repeatedly using a vehicle closely resembling one seen on the surveillance footage.
The complaint also outlines the results of search warrants executed at Espriu’s residence in July that led to the recovery of a green lighter very similar to the one used to light the Molotov cocktails, as well as audio recordings from a dashboard camera in which Espriu tells a woman in late June that he shaved his facial hair after seeing some of the surveillance video broadcast on local news. In the audio recordings, Espriu tells the woman how he manufactured the Molotov cocktails by filling three bottles with gasoline and inserting a towel into one bottle, and then he recounts the details of the firebombing as seen on the surveillance video, according to the complaint.
The firebombing caused limited damage to the EVRWF headquarters.
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 complaint charges Espriu with one count of attempted arson. If he were to be convicted of the offense, Espriu would face a mandatory minimum sentence of five years in federal prison and statutory maximum sentence of 20 years.
The investigation in this matter is being conducted by the FBI’s Inland Empire Joint Terrorism Task Force.
William M. Kelly, M.D., Inc. and Omega Imaging, Inc. Agree to Pay $5 Million to Resolve Alleged False Claims for Unsupervised and Unaccredited Radiology ServicesRead the Press Release
RIVERSIDE, California - William M. Kelly Inc. and Omega Imaging Inc., together, operate 11 radiology facilities in Southern California, have agreed to pay the United States $5 million to resolve allegations that they violated the False Claims Act (FCA) by knowingly submitting claims to Medicare and the military healthcare program, TRICARE, for unsupervised radiology services and services provided at unaccredited facilities, the Department of Justice announced today.
“Today’s settlement demonstrates the department’s unrelenting commitment to protect the public fisc and patient safety,” said Acting Assistant Attorney General Jeffrey Clark of the Department of Justice’s Civil Division. “The department will aggressively pursue unscrupulous healthcare providers who cut corners that could jeopardize the health and safety of Medicare and TRICARE beneficiaries.”
“Patients rightly expect that medical providers follow the proper procedures and protocol when administering complex treatments to ensure patient safety,” said Timothy B. DeFrancesca, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Working with our law enforcement partners we remain steadfast in our commitment to uphold the integrity of government health programs.”
The settlement resolves allegations that the defendants submitted claims for CT scans and MRIs involving contrast injections that were not properly supervised by a physician. Applicable program rules require a physician to be present in the office suite when a patient undergoes an examination that involves the administration of intravenous contrast material. The defendants allegedly performed and billed for these procedures when no supervising physician was present in the office suite. The settlement also resolves allegations that a certain number of the defendants’ facilities lacked accreditation.
Contemporaneous with the settlement, William M. Kelly, Inc. and Omega Imaging Inc. entered into a three-year Integrity Agreement (IA) with the Department of Health and Human Services Office of Inspector General requiring, among other things, the implementation of a risk assessment and internal review process designed to identify and address evolving compliance risks. The IA requires training, auditing, and monitoring designed to address the conduct alleged in the case.
The settlement, which was based on the defendants’ ability to pay, resolves allegations originally brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the FCA by Syd Ackerman, who was formerly employed by the defendants. The FCA permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The FCA permits the United States to intervene in such a lawsuit, as it did in part here. Mr. Ackerman will receive approximately $925,000 of the settlement proceeds.
This settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Office for the Central District of California; the Department of Health and Human Services, Office of Counsel to the Inspector General and Office of Investigations; the Defense Criminal Investigative Service; and the Defense Health Agency Office of General Counsel. The qui tam case is captioned United States ex rel. Syd Ackerman v. William M. Kelly, M.D., Inc. and Omega Imaging, Inc., No. EDCV 13-02195 JGB (DTBx) (C.D. Cal.).
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Ventura County Man Indicted for Allegedly Threatening Woman During Decades-Long Harassment Campaign Targeting Her FamilyRead the Press Release
LOS ANGELES – A Port Hueneme man was named today in a federal grand jury indictment that charges him with making threats to rape and kill a student who is the daughter of a woman he allegedly began stalking and harassing in 1991.
Serge Agopian, 49, was named in a three-count indictment that charges him with sending threatening communications in an email and letters sent through the U.S. Mail.
The charges against Agopian stem from three identical threatening communications he allegedly sent anonymously to the student in April. The victim is the daughter of a woman Agopian began harassing when they attended the University of California, Santa Barbara, according to a criminal complaint previously filed in this case.
During the investigation, FBI agents interviewed the victim’s mother, who described how Agopian apparently saw her at a party in 1991, contacted her “out of the blue” even though they had never met, and began sending “unsolicited roses, cassette tapes with recorded love songs, poetry, letters, and condoms to her residence,” according to the affidavit in support of the criminal complaint. The victim’s mother told investigators that she asked Agopian to stop all communications, but she believed he continued to send packages anonymously after she moved to her parents’ residence – including roses with dog feces and an item that resembled a bomb.
The victim’s mother obtained restraining orders against Agopian that were in effect for nearly 10 years. Nevertheless, Agopian continued to contact her, including in the fall of 1991 in the UCSB bookstore, where he pushed her into a shelf of books, resulting in Agopian’s arrest, according to the affidavit.
Agopian later filed a defamation lawsuit against the victim’s mother. For many years after the lawsuit was resolved, the victim’s mother and her family received “very vulgar, lewd, and obscene letters,” which she believed came from Agopian, according to the affidavit.
The criminal complaint notes that one of the letters sent to the victim in April had a fingerprint that matched fingerprints obtained from Agopian during the restraining order proceedings.
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 indictment charges Agopian with one count of threats by interstate communications and two counts of mailing threatening communications, each of which carries a statutory maximum penalty of five years in federal prison.
Agopian was arrested on August 5 pursuant to a criminal complaint that alleged one count of making threats by interstate communication. Agopian is scheduled to be arraigned on the indictment on September 15.
This matter is being investigated by the FBI and the Los Angeles Police Department.
This case is being prosecuted by Assistant United States Attorney Damaris Diaz of the Violent and Organized Crime Section.
Ventura County Man Arrested on Federal Indictment for Alleged Attempted Enticement of Minors to Produce Child PornographyRead the Press Release
LOS ANGELES – A Ventura County man was arrested today by FBI special agents on a five-count federal grand jury indictment charging him with using the Skype internet messenger service to pay facilitators overseas to live-stream the sexual and physical abuse of female minors.
William Hayes, 57, of Newbury Park, whose online aliases include “ko hong,” “hokong69,” and “brianwilson2461,” is charged with one count of attempted production of child pornography, two counts of attempted enticement of a minor to engage in criminal sexual activity, and two counts of possession of child pornography.
Hayes is expected to make his initial appearance in United States District Court this afternoon.
According to the indictment, from April 2017 to August 2019, Hayes used Skype to attempt to entice underage girls to engage in illicit sexual activity that would be live-streamed on the internet for him to watch. Hayes allegedly offered to pay money after the acts were live-streamed. In other messages, he offered to pay to have acts of torture and cruelty inflicted on the minors, the indictment alleges.
Hayes also allegedly possessed images child pornography – depicting prepubescent minors – on his personal computer and a hard drive.
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, Hayes would face a statutory maximum sentence of life in federal prison and a mandatory minimum sentence of 15 years.
The FBI investigated this case. Anyone with information concerning this matter is encouraged to contact the FBI’s Los Angeles field office at (310) 477-6565.
This matter is being prosecuted by Assistant United States Attorneys Jeffrey M. Chemerinsky and Kevin J. Butler of the Violent and Organized Crime Section.
Marina del Rey Man Agrees to Plead Guilty to Wire Fraud Charge that His Forex Trading Business Instead Was $3.3 Million Ponzi SchemeRead the Press Release
LOS ANGELES – An accountant has agreed to plead guilty to a federal charge that he ran a $3.3 million Ponzi scheme that falsely promised generous returns for foreign exchange currency investors, and he facilitated the scheme in part with money he embezzled from his former employer, the Justice Department announced today.
Steven F. Brown, 52, of Marina del Rey, agreed to plead guilty to a one-count criminal information charging him with wire fraud. The criminal information and a related plea agreement were filed on August 28 in United States District Court in downtown Los Angeles, where Brown is scheduled to make his initial court appearance on September 15.
According to his plea agreement, Brown controlled and operated Alpha Trade Analytics, Inc., a financial consulting and investment company he largely ran out of his home. Neither Brown nor Alpha Trade was a registered broker or dealer in securities. Brown also served as the accountant for a non-profit organization providing dance and theater arts education to children and young adults in Los Angeles, and had access to its bank accounts.
From April 2014 to May 2018, Brown solicited investments in Alpha Trade, including from people he encountered through his position with his employer, and through his relationship with its executives and employees, which afforded him access to high-net-worth individuals.
To encourage those individuals to invest with Alpha Trade, Brown falsely promised that their investments would only be used for foreign exchange (Forex) currency trading and that they would receive guaranteed monthly payouts of around 10%. He also falsely represented that he had extensive experience in Forex investing, regularly made profitable trades, and achieved substantial and growing rates of return that exceeded the industry average.
Contrary to his representations to investors, Brown only used a small portion of the total amount invested in Alpha Trade for Forex trading, mostly in 2015. Instead, he routinely used investor funds for other purposes, including his rent, car payments, restaurant and retail expenses, and lulling payments to other investors, the plea agreement states.
In order to induce investors to maintain or supplement their investments with Alpha Trade and to conceal his scheme, Brown periodically provided investors with account statements that reflected fabricated investment returns that often showed steady, significant gains.
Brown admitted he made some of the promised recurring payouts and provided demanded refunds, not based on any Forex investment returns, but instead from money stolen from new investors and through funds he embezzled from the dance academy through unauthorized wire transfers, credit card advances, and cash withdrawals he was able to make by virtue of his position as the dance academy’s accountant.
In total, Brown caused losses of approximately $3,313,346 to more than 10 victims, including nearly $700,000 in losses to his former employer based on the money he embezzled from it, according to the plea agreement.
When Brown enters his guilty plea, he will face a statutory maximum sentence of 20 years in federal prison.
The Securities and Exchange Commission today announced a settlement agreement with Brown in relation to his Ponzi scheme.
The FBI investigated this matter.
This case is being prosecuted by Assistant United States Attorney Kristen A. Williams of the Major Frauds Section.
3 Santa Clarita Valley Residents Charged in Indictment Alleging $1.7 Million Embezzlement via Sham Diversity Recruitment CompaniesRead the Press Release
LOS ANGELES – Two Santa Clarity Valley residents were arrested today on a federal indictment accusing them of scheming to defraud a company out of more than $1.7 million earmarked for diversity recruitment by using two fake businesses that billed for services that were never performed.
The 17-count grand jury indictment contains wire fraud, mail fraud and conspiracy charges. The two defendants arrested this morning are:
- Judith Fernandez-Adelugba, 43, of Stevenson Ranch, the former human resources manager at Company-1, a Santa Clarita-based business that provided a technical and operations center for high performance racing programs, specializing in the design and development of racing engines and various high-performance automotive parts; and
- Alex Lawrence Wilkison, 47, a.k.a. “Alex Wilkerson,” of Canyon Country, the registered owner of Engineering Talent Connect (ETC), a fictitious business name registered to an address in Mission Hills.
The defendants are expected to make their initial appearances this afternoon in United States District Court in downtown Los Angeles.
A third defendant, George Albert Fernandez, 73, also of Stevenson Ranch, the father of Fernandez-Adelugba and the president and chief executive officer of the Stevenson Ranch-based Business Solutions Services (BSS), is currently out of state and is expected to be taken into custody soon.
According to the indictment, Fernandez-Adelugba was responsible for diversity recruitment, which included implementing and managing programs to encourage persons from diverse gender, racial, ethnic, and other backgrounds to apply for jobs with her employer. She also had the authority to approve the payment of invoices of up to $25,000, the indictment states.
From March 2015 until her resignation from Company-1 in February 2018, Fernandez-Adelugba, her father, and Wilkison, who was married to a colleague and friend of Fernandez-Adelugba at Company-1, allegedly used BSS and ETC to embezzle Company-1 funds and divert this misappropriated money for their own personal enrichment.
The defendants allegedly submitted and caused to be submitted to Company-1 fake invoices issued by BSS and ETC that requested payment for diversity recruitment-related services purportedly performed. These “services” included posting job openings, placing job-related advertisements, searching for candidates, and successfully recruiting candidates for Company-1, according to the indictment.
Fernandez-Adelugba approved the fake invoices for payment, delivered them to Company-1’s accounting department, and followed up to request and facilitate payment of the fake invoices, the indictment alleges.
After Company-1 issued payments on the fake invoices, the defendants allegedly used their illicit gains for personal expenditures such as credit card bills, dining at restaurants, items bought at grocery stores, pool supplies, and cash withdrawals.
Between April 2015 and January 2018, based on these fake invoices, the defendants caused Company-1 to transfer $1,562,364 to BSS and $183,600 to ETC. The total loss to Company-1 was $1,745,964, according to the indictment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Each charge of mail fraud and wire fraud carries a statutory maximum sentence of 20 years in federal prison. If convicted of all charges, Fernandez-Adelugba would face more than 300 years in federal prison.
The FBI investigated this matter.
This case is being prosecuted by Assistant United States Attorney Scott Paetty of the Major Frauds Section.
United States Reaches Settlement to Recover more than $60 Million Involving Malaysian Sovereign Wealth FundRead the Press Release
The Department of Justice has reached a settlement of its civil forfeiture cases against assets acquired by Riza Aziz utilizing funds allegedly embezzled from 1Malaysia Development Berhad (1MDB), Malaysia’s investment development fund, and laundered through financial institutions in several jurisdictions, including the United States, Switzerland, Singapore and Luxembourg.
These assets are estimated to be worth more than $60 million. With the conclusion of this settlement, together with the prior disposition of other related forfeiture cases, the United States will have recovered or assisted in the recovery of nearly $1.1 billion in assets associated with the 1MDB international money laundering and bribery scheme. This represents the largest recovery to date under the department’s Kleptocracy Asset Recovery Initiative and the largest civil forfeiture ever concluded by the Justice Department.
“As alleged in the forfeiture complaints, Riza Aziz and others collectively laundered billions of dollars pilfered from 1MDB, an investment fund intended to benefit the Malaysian people,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “Aziz and his co-conspirators allegedly diverted these funds for their own benefit and used them to acquire luxury real estate in New York and London and to make personal investments. The forfeiture of these assets will add to the almost $1.1 billion stolen from 1MDB that the U.S. Department of Justice has so far helped recover and return to the Malaysian people. This forfeiture sends a clear signal that the Department will not allow wrongdoers to use the U.S. financial system to launder the proceeds of their illegal activity.”
“With more than $1 billion forfeited as a result of our 1MDB-related asset forfeiture cases, we continue to shed light on the massive fraud and money laundering scheme that brazenly stole public funds belonging to the people of Malaysia,” said U.S. Attorney Nick Hanna of the Central District of California. “The high-end properties across the nation that have now been seized and forfeited demonstrate our commitment to preventing corrupt actors from using the United States as a place to hide stolen riches.”
“This case represents significant, unwavering investigative work by the FBI's International Corruption Team and our partners,” said Assistant Director Calvin Shivers of the FBI's Criminal Investigative Division. “Riza Aziz and his co-conspirators misappropriated and laundered billions of dollars away from Malaysian people for their personal gain, and they will not be permitted to profit. The FBI is committed to bringing all those who participated in this heinous scheme to justice and holding them accountable for the illicit actions.”
“The recent seizure of $60 million is another step on the path to return embezzled funds to the people of Malaysia,” said Don Fort, Chief, IRS Criminal Investigation (IRS-CI). “IRS-CI is committed to ensuring monies stolen from 1MDB are returned to their rightful beneficiaries and used for their original intended purpose.”
According to the civil forfeiture complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1MDB were allegedly misappropriated by high-level officials of 1MDB and their associates and laundered through financial institutions in several jurisdictions by Malaysian public officials and their associates, including Aziz. 1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people.
Under the terms of the settlement, the claimants in the U.S. forfeiture actions agreed to forfeit all assets subject to pending forfeiture complaints in which they have a potential interest. Claimants are also required to cooperate and assist the Justice Department in the orderly transfer, management and disposition of the relevant assets. The assets subject to the settlement agreement include the sale proceeds of high-end real estate acquired in Beverly Hills as well as a luxury condominium in New York City; the sale proceeds of an investment made by Aziz in a Kentucky maintenance company; a luxury London townhome; and a promotional poster for the 1927 motion picture film “Metropolis.”
The assets being forfeited subject to this settlement are in addition to the more than $1 billion in assets the United States previously forfeited in connection with the Department of Justice’s 1MDB investigation. Following the conclusion of today’s settlement, several civil forfeiture complaints arising out of the 1MDB criminal conspiracy remain pending against assets associated with other alleged co-conspirators.
The FBI’s International Corruption Squads in New York City and Los Angeles and the IRS-CI are investigating the case. Deputy Chief Woo S. Lee and Trial Attorneys Barbara Levy, Jonathan Baum and Joshua Sohn of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorneys Jonathan Galatzan and Steven R. Welk of the Central District of California are prosecuting the case. The Justice Department’s Office of International Affairs provided substantial assistance.
The department also appreciates the significant assistance provided by the Attorney General’s Chambers of Malaysia, the Royal Malaysian Police, the Malaysian Anti-Corruption Commission, the Attorney General’s Chambers of Singapore, the Singapore Police Force-Commercial Affairs Division, the Office of the Attorney General and the Federal Office of Justice of Switzerland, the judicial investigating authority of the Grand Duchy of Luxembourg and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg.
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in MLARS, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] (link sends e-mail) or https://tips.fbi.gov/.
A civil forfeiture complaint is merely an allegation that money or property was involved in or represents the proceeds of a crime. These allegations are not proven until a court awards judgment in favor of the United States.
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.
United States Reaches Settlement to Recover More Than $60 Million in Assets Allegedly Acquired with Embezzled 1MDB FundsRead the Press Release
LOS ANGELES – The Department of Justice has reached a settlement of its civil forfeiture cases against assets acquired by Riza Aziz utilizing funds allegedly embezzled from 1Malaysia Development Berhad (1MDB), Malaysia’s investment development fund, and laundered through financial institutions in several jurisdictions, including the United States, Switzerland, Singapore and Luxembourg.
These assets are estimated to be worth more than $60 million. With this settlement, together with the prior disposition of other related forfeiture cases, the United States will have recovered or assisted in the recovery of nearly $1.1 billion in assets associated with the 1MDB international money laundering and bribery scheme. This represents the largest civil forfeiture ever concluded by the Justice Department.
“With more than $1 billion forfeited as a result of our 1MDB-related asset forfeiture cases, we continue to shed light on the massive fraud and money laundering scheme that brazenly stole public funds belonging to the people of Malaysia,” said United States Attorney Nick Hanna. “The high-end properties across the nation that have now been seized and forfeited demonstrate our commitment to preventing corrupt actors from using the United States as a place to hide stolen riches.”
“As alleged in the forfeiture complaints, Riza Aziz and others collectively laundered billions of dollars pilfered from 1MDB, an investment fund intended to benefit the Malaysian people,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “Aziz and his co-conspirators allegedly diverted these funds for their own benefit and used them to acquire luxury real estate in New York and London and to make personal investments. The forfeiture of these assets will add to the almost $1.1 billion stolen from 1MDB that the U.S. Department of Justice has so far helped recover and return to the Malaysian people. This forfeiture sends a clear signal that the Department will not allow wrongdoers to use the U.S. financial system to launder the proceeds of their illegal activity.”
According to the civil forfeiture complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1MDB were allegedly misappropriated by high-level officials of 1MDB and their associates. Those funds allegedly were laundered through financial institutions in several jurisdictions by Malaysian public officials and their associates, including Aziz. 1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people.
Under the terms of the settlement, the claimants in the U.S. forfeiture actions agreed to forfeit all assets subject to pending forfeiture complaints in which they have a potential interest. Claimants are also required to cooperate and assist the Justice Department in the orderly transfer, management and disposition of the relevant assets. The assets subject to the settlement agreement include the sale proceeds of high-end real estate acquired in Beverly Hills, as well as a luxury condominium in New York City; the sale proceeds of an investment made by Aziz in a Kentucky maintenance company; a luxury London townhome; and a promotional poster for the 1927 motion picture “Metropolis.”
“This case represents significant, unwavering investigative work by the FBI's International Corruption Team and our partners,” said Assistant Director Calvin Shivers of the FBI's Criminal Investigative Division. “Riza Aziz and his co-conspirators misappropriated and laundered billions of dollars away from Malaysian people for their personal gain, and they will not be permitted to profit. The FBI is committed to bringing all those who participated in this heinous scheme to justice and holding them accountable for the illicit actions.”
“The recent seizure of $60 million is another step on the path to return embezzled funds to the people of Malaysia,” said Don Fort, Chief, IRS Criminal Investigation. “IRS-CI is committed to ensuring monies stolen from 1MDB are returned to their rightful beneficiaries and used for their original intended purpose.”
The assets being forfeited subject to this settlement are in addition to the more than $1 billion in assets the United States previously forfeited in connection with the Department of Justice’s 1MDB investigation. Following the conclusion of today’s settlement, several civil forfeiture complaints arising out of the 1MDB criminal conspiracy remain pending against assets associated with other alleged co-conspirators.
The FBI’s International Corruption Squads in New York City and Los Angeles and IRS Criminal Investigation are investigating this matter.
Assistant United States Attorneys Jonathan Galatzan and Steven R. Welk of the Asset Forfeiture Section in Los Angeles are working with Deputy Chief Woo S. Lee and Trial Attorneys Barbara Levy, Jonathan Baum and Joshua Sohn of the Criminal Division’s Money Laundering and Asset Recovery Section to prosecute the cases. The Justice Department’s Office of International Affairs provided substantial assistance.
The Justice Department also appreciates the significant assistance provided by the Attorney General’s Chambers of Malaysia, the Royal Malaysian Police, the Malaysian Anti-Corruption Commission, the Attorney General’s Chambers of Singapore, the Singapore Police Force-Commercial Affairs Division, the Office of the Attorney General and the Federal Office of Justice of Switzerland, the judicial investigating authority of the Grand Duchy of Luxembourg and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg.
A civil forfeiture complaint is merely an allegation that money or property was involved in or represents the proceeds of a crime. These allegations are not proven until a court awards judgment in favor of the United States.
Civilian Navy Engineer, 3 Others Arrested on Federal Charges Alleging Theft and Sale of Government-Owned Technical InformationRead the Press Release
LOS ANGELES – Federal authorities this morning arrested four defendants across the country on charges alleging a civilian employee of the United States Navy downloaded technical drawings and manuals related to U.S. military weapons systems and sold the items to a Newport Beach company, which later resold the documents to domestic and foreign customers.
The arrests were made pursuant to a criminal complaint filed in United States District Court in Los Angeles that charges all four defendants with theft of government property. The affidavit in support of the complaint alleges that the thefts have been occurring since at least 2012, and possibly since 2008.
The four defendants arrested this morning are:
- Mark Fitting, 53, of Berlin, New Jersey, an engineer employed by the Navy at a facility in Philadelphia;
- Melony Erice, 54, of Lighthouse Point, Florida, who formerly cohabitated with Fitting in New Jersey;
- George Posey IV, 36, of Costa Mesa, an employee of Newport Aeronautical Sales Corporation (NASC), a Newport Beach company that sells technical aircraft data; and
- Dean Mirabal, 52, of Costa Mesa, another NASC employee.
All four defendants are expected to make initial appearances in federal court in the districts in which they were arrested. For example, Posey and Mirabal are expected to appear this afternoon in United States District Court in Santa Ana.
The investigation started when military investigators began looking at Fitting in relation to claims that he “was interfering with the quality assurance process for aircraft canopies intended for use in U.S. military aircraft,” according to the affidavit. The agents with the Defense Criminal Investigative Service (DCIS) and the Naval Criminal Investigative Service (NCIS) discovered two dozen emails from Fitting’s Navy email account to Erice’s Gmail account, all of which contained government-controlled technical drawings or manuals related to various military weapons systems, including aircraft.
“[S]ome of those drawings and manuals were specifically labeled with International Traffic in Arms Regulations (ITAR) distribution warnings related to export control and destruction, as well as DOD contractor proprietary markings,” the affidavit alleges.
Investigators have concluded that Fitting also had access to Erice’s Gmail account, which allowed both of them to sell the documents and drawings to NASC. “[B]etween September 21, 2012, and June 20, 2019, Fitting and Erice together unlawfully sold NASC at least 5,000 government-controlled technical manuals and drawings,” according to the affidavit.
Over the same nearly seven-year period, NASC issued Erice 150 checks totaling $509,845, but the two shared the proceeds of the sales, as evidenced by Fitting having access to one of Erice’s bank accounts and Erice being an authorized user on one of Fitting’s credit cards, according to the affidavit. Furthermore, the affidavit contains a lengthy email from Erice to Fitting obtained pursuant to a search warrant that outlines how Fitting was entitled to 75 percent of the proceeds, with the balance going to Erice.
The affidavit outlines how Fitting and Erice obtained documents and sold them to NASC, sometimes obtaining specific documents at the request of NASC. “In one such instance, on December 8, 2018, at the request of Mirabal, Fitting accessed and downloaded a government-controlled technical drawing for a military landing craft air cushion that he and ERICE sold to NASC, along with at least 16 other government-controlled technical drawings and/or manuals, for $5,025,” the affidavit states. “Knowing the drawing was unlawfully procured outside of official government channels, Posey paid Erice for the drawing,” which NASC sold to a customer.
The affidavit notes that Fitting was allowed to access military computer systems after promising to safeguard controlled data. The affidavit also notes that Posey and Mirabal “are aware of the appropriate processes to procure government-controlled technical manuals and drawings and, as a result, they know that the acquisition of such manuals and drawings from Erice and/or Fitting is unlawful.”
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 felony offense of theft of government property carries a statutory maximum sentence of 10 years in federal prison.
This case is being investigated by DCIS; NCIS; Homeland Security Investigations; and the Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement. These agencies received assistance from the U.S. Air Force’s Office of Special Investigations and U.S. Army’s Criminal Investigation Command.
This case is being prosecuted by Assistant United States Attorney Keith Ellison of the International Narcotics, Money Laundering, and Racketeering Section.
Ex-Airline Employee Pleads Guilty to Charge for Role in Scheme Where Fake Airline IDs Were Manufactured to Obtain Free FlightsRead the Press Release
LOS ANGELES – A former Mesa Airlines employee pleaded guilty today to a federal criminal charge that he schemed to manufacture counterfeit Mesa employee identification badges that were used to obtain free flights for himself and others on another airline.
Hubbard Bell, 32, of Houston, Texas, pleaded guilty via videoconference to one count of conspiracy to commit wire fraud.
According to his plea agreement, Bell worked at Mesa Airlines, a Phoenix-based regional airline, from June 2015 until October 2015. While a Mesa employee, Bell was provided access to free tickets as a job benefit. Mesa employees and their designated beneficiaries were permitted to use this benefit only while employed by Mesa Airlines.
Bell admitted that, from February 2016 to November 2017, after Mesa terminated his employment, he conspired with others to sell the stolen and unauthorized information of Mesa employees, including their names, dates of hire, and employee identification numbers that were needed to book free flights on Spirit Airlines through Spirit’s web portal for themselves and others.
For example, on June 2, 2016, Bell received via email confidential Mesa employee information for dozens of Mesa Airlines workers based in Dallas and Houston.
For himself, Bell fraudulently obtained 34 free airline tickets, which allowed him to fly interstate, including into and out of Los Angeles International Airport, despite the fact Mesa Airlines no longer employed him. Bell also admitted he and his co-conspirators manufactured and sold fraudulent Mesa employee identification cards for use by the fraudulent travelers.
United States District Judge Michael W. Fitzgerald scheduled a December 7 sentencing hearing, at which time Bell will face a statutory maximum sentence of 20 years in federal prison.
The case’s other defendants – including Kamille Jemison, 28, a former Houston resident who subsequently relocated to the Beverly Grove district of Los Angeles, and Alphonso Lloyd, 27, of Houston – are expected to go to trial in this matter in the spring of 2021.
The case was investigated by the FBI, who received substantial assistance from the Federal Air Marshal Service and the Transportation Security Administration.
This case is being prosecuted by Assistant United States Attorneys Joseph D. Axelrad of the Violent and Organized Crime Section and Poonam G. Kumar of the Major Frauds Section.
Montecito Man Sentenced to 3 Years in Federal Prison for Facebook, Twitter IPO Fraud that Caused $3.4 Million in Losses to InvestorsRead the Press Release
LOS ANGELES – A Santa Barbara County man was sentenced today to 36 months in federal prison for orchestrating a years-long scheme that defrauded investors out of more than $3.4 million with false promises to use their money to purchase shares of Facebook and Twitter prior to the companies’ initial public offerings.
Efstratios “Elias” Argyropoulos, 73, of Montecito, was sentenced by United States District Judge George H. Wu, who also ordered him to pay $3,416,628 in restitution to his victims. Argyropoulos pleaded guilty in June 2019 to one count of wire fraud.
From October 2010 to October 2015, Argyropoulos was the president and sole shareholder of Prima Ventures Corp., a Santa Barbara-based financial services firm. Argyropoulos represented to investors that he had access to “amazing” investment opportunities that would provide a high rate of return on any money invested.
During the course of the scheme, Argyropoulos misled investors by telling them that he would pool their money to purchase pre-IPO shares of companies such as Facebook and Twitter. He also falsely told investors he had access to good investment opportunities in companies such as Alibaba, Etsy, and E-Waste.
Argyropoulos further told investors that he and Prima Ventures were licensed brokers, when, in truth, neither he nor Prima Ventures was licensed by the Securities and Exchange Commission or any other regulatory authority to sell securities.
Instead of purchasing the stocks, Argyropoulos diverted the investor funds for other uses, such as day-trading in stocks unrelated to the promised investments, and personal expenses such as gambling, cars, insurance bills, travel, and his legal expenses arising out of an investigation into his activities conducted by the SEC.
Some of Argyropoulos’s victims met him at church gatherings, where he forged relationships with them and then used these relationships to recruit other unsuspecting investors, such as the victims’ work colleagues.
Argyropoulos also admitted to willfully violating a January 2015 court order in a lawsuit brought by the SEC, which was based on the fraudulent Facebook and Twitter scheme. The injunction prohibited Argyropoulos from selling fraudulent investments and acting as an unlicensed broker.
In total, Argyropoulos cheated 130 victims out of more than $3.4 million.
The FBI investigated this matter. The SEC provided substantial assistance.
This case was prosecuted by Assistant United States Attorney Scott Paetty of the Major Frauds Section.
Robbery Crew Ringleader Sentenced to Nearly 4 Years in Prison for Jewelry Heists that Netted More Than $800,000 in Stolen GoodsRead the Press Release
SANTA ANA, California – The ringleader of a prolific robbery crew that targeted traveling jewelry salespeople, following them for many miles at times and inflicting at least $835,000 in losses, was sentenced today to 45 months in federal prison.
Federico Santiago Quiroz Lucca, 52, a.k.a. Christian Sergio Alessandro Hernandez Valenzuela, of the Rampart Village neighborhood of Los Angeles, was sentenced via videoconference by United States District Judge James V. Selna, who also ordered him to pay $835,000 in restitution. Lucca pleaded guilty in December 2019 to one count of conspiracy to interfere with commerce by robbery.
From October 2017 until April 2019, Lucca and his co-conspirators surveilled and conspired to rob a series of jewelry salespeople and bank customers in the Los Angeles metropolitan area, the San Francisco Bay Area and Denver. Lucca led and organized the crew’s activities, enlisting help from several Colombian nationals who traveled to Los Angeles to participate in the conspiracy and robberies. He also used his apartment as a base of operations and meeting place where some co-conspirators lived, and equipment and stolen goods were stored.
The various heists followed a similar pattern: a member of the crew known as a “scout” identified a victim who was likely to be carrying jewelry or cash. The victims typically were jewelers conducting business at jewelry stores or malls in Orange County, the Jewelry District in downtown Los Angeles, or at various trade shows. The scout followed the victim, and would wait for an opportunity when the scout and co-conspirators could rob the jeweler.
The co-conspirators followed victims to locations such as gas stations and hotels, where the defendants used a ruse, such as puncturing a car tire to stop the victim, and then posed as a Good Samaritan, or simply used force, to rob the victims.
For example, on February 8, 2018, Lucca and his crew spent four hours following a traveling jewelry salesman making rounds on behalf of his employer to jewelry stores in Orange County. As the victim returned to his car after stopping in Cypress, he was violently pushed from behind, falling into his car door, and his bag containing approximately $400,000 in jewelry was stolen.
In a January 2019 incident, a couple who operated a jewelry business in Connecticut was participating in a jewelry show at the Los Angeles Convention Center, when a man wearing a yellow and orange safety vest asked to help them pack up their belongings. The man in the safety vest ended up pushing their large cart with all their belongings – including a bag containing approximately $400,000 in jewelry – and the bag was later discovered to be missing. Evidence subsequently developed by investigators determined that Lucca’s robbery crew had tracked the victims for days.
Lucca and two co-conspirators were arrested in April 2019 in Northern California after they surveilled various locations, including jewelry stores, a residence, and the Santa Clara Convention Center, where a jewelry show was scheduled to occur. They have been in federal custody since that time.
The total admitted losses in this case were at least $835,000.
Three of Lucca’s co-conspirators – Jose Manuel Lopez Molina, 48, a.k.a. Nestor Eduardo Munoz Laguna, of Colombia; Roberto Alonso Castellanos, 51, a.k.a. Pablo Garzon Leon, of Pomona, and; Jose Oscar Cupitre Nuñez, 48, of Australia, -- pleaded guilty to criminal charges in this case. Castellanos and Molina received prison sentences. Nuñez’s sentencing hearing is scheduled for October 26. A fifth defendant, Roberto Melendez Falcon, 54, a.k.a. Arnulfo Delgado Rengifo, of Los Angeles, is scheduled to go on trial in this matter on January 26, 2021.
The FBI and Los Angeles Police Department investigated the matter.
This case was prosecuted by Assistant United States Attorneys Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section and Joshua O. Mausner of the Violent and Organized Crime Section.
Providence Holy Cross Medical Center Agrees to Improve Access for Deaf and Hard of Hearing Patients and to Compensate FamilyRead the Press Release
LOS ANGELES – Providence Health System – Southern California, which operates Providence Holy Cross Medical Center in Mission Hills, has entered into a settlement with the United States, agreeing to comply with the Americans with Disabilities Act (ADA) by ensuring effective communication for patients who are deaf or hard of hearing.
The settlement, which was finalized today, resolves allegations that Providence failed to provide a qualified sign language interpreter or other appropriate assistance to an elderly deaf patient who went to the San Fernando Valley facility on four consecutive days for medical tests and procedures. The patient’s adult children had to take time off work – and one had to fly across the country – to interpret for the patient, including during consultations that included complex medical terms the patient’s children struggled to interpret. One of the patient’s children even had to wear a hairnet and surgical mask to interpret just before a procedure.
The settlement requires Providence to do the following:
- Provide appropriate auxiliary aids and services, including qualified interpreters, where necessary to ensure effective communication to patients and their companions who are deaf or hard of hearing;
- Advertise the availability of auxiliary aids and services;
- Designate an ADA Coordinator to ensure access to appropriate auxiliary aids and services necessary for effective communication;
- Train staff on the appropriate and timely use of auxiliary aids and services, including qualified interpreters, to ensure effective communication;
- Conduct individualized assessments for patients who are deaf or hard of hearing to determine what auxiliary aids and services are best suited for their needs; and
- Pay $100,000 in compensation to the patient and his family.
Assistant United States Attorney Matthew Nickell of the Civil Division’s Civil Rights Section handled this matter.
Providence cooperated with the government’s investigation.
This year marks the ADA’s 30th anniversary. The Justice Department will continue to use its enforcement and technical assistance tools to eliminate unlawful discrimination against individuals with disabilities.
For more information on 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.
Chinese National Charged with Destroying Hard Drive During FBI Investigation into the Possible Transfer of Sensitive Software to ChinaRead the Press Release
UPDATEPursuant to a motion by the government, the case against defendant Guan Lei described in the news release below was dismissed by the court on July 26,2021.
LOS ANGELES – A Chinese national and researcher at the University of California, Los Angeles has been arrested on federal charges of destroying evidence to obstruct an FBI investigation after he was observed throwing a damaged hard drive into a dumpster outside his apartment, the Justice Department announced today
Guan Lei, 29, of Alhambra, was arrested pursuant to a one-count criminal complaint unsealed this afternoon during his initial appearance in United States District Court.
The criminal complaint alleges that Guan, who was in the U.S. on a J-1 non-immigrant visa, threw a damaged hard drive into a trash dumpster near his residence on July 25. The FBI recovered the damaged hard drive after Guan was not allowed to board a flight to China and after Guan refused the FBI’s request to examine his computer. The affidavit in support of the complaint notes that the internal hard drive “was irreparably damaged and that all previous data associated with the hard drive appears to have been removed deliberately and by force.”
According to the complaint, Guan is being investigated for possibly transferring sensitive U.S. software or technical data to China’s National University of Defense Technology (NUDT) and falsely denying his association with the Chinese military – the People’s Liberation Army – in connection with his 2018 visa application and in interviews with federal law enforcement. Guan later admitted that he had participated in military training and wore military uniforms while at NUDT. One of Guan’s NUDT faculty advisors in China was also a lieutenant general in the PLA who developed computers used by the PLA General Staff Department, the PLA General Armament Department, Air Force, military weather forecasts, and nuclear technology. NUDT is “suspected of procuring U.S.-origin items to develop supercomputers with nuclear explosive applications” and has been placed on the Department of Commerce’s Entity List for nuclear nonproliferation reasons, according to the affidavit.
In addition to destroying the hard drive, the complaint alleges that Guan concealed digital storage devices from investigators and falsely told federal officials that he had not had any contact with the Chinese consulate during his nearly two-year stay in the U.S.
During his initial appearance this afternoon, Guan was ordered detained by a United States Magistrate Judge, who scheduled an arraignment for September 17.
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 felony offense of destruction of evidence carries a statutory maximum sentence of 20 years in federal prison.
This case is being investigated by the FBI, Homeland Security Investigations, and U.S. Customs and Border Protection. The U.S. Department of State’s Diplomatic Security Service has provided substantial assistance during the investigation.
This case is being prosecuted by Assistant United States Attorneys Will Rollins and George Pence of the Terrorism and Export Crimes Section.
Chinese National Charged with Destroying Hard Drive During FBI Investigation into the Possible Transfer of Sensitive Software to ChinaRead the Press Release
UPDATE
The government dismissed all charges alleged in the indictment described in the press release below.
A Chinese national and researcher at the University of California, Los Angeles has been arrested on federal charges of destroying evidence to obstruct an FBI investigation after he was observed throwing a damaged hard drive into a dumpster outside his apartment, the Justice Department announced today.
Guan Lei, 29, of Alhambra, was arrested pursuant to a one-count criminal complaint unsealed this afternoon during his initial appearance in United States District Court.
The criminal complaint alleges that Guan, who was in the U.S. on a J-1 non-immigrant visa, threw a damaged hard drive into a trash dumpster near his residence on July 25. The FBI recovered the damaged hard drive after Guan was not allowed to board a flight to China and after Guan refused the FBI’s request to examine his computer. The affidavit in support of the complaint notes that the internal hard drive “was irreparably damaged and that all previous data associated with the hard drive appears to have been removed deliberately and by force.”
According to the complaint, Guan is being investigated for possibly transferring sensitive U.S. software or technical data to China’s National University of Defense Technology (NUDT) and falsely denying his association with the Chinese military – the People’s Liberation Army – in connection with his 2018 visa application and in interviews with federal law enforcement. Guan later admitted that he had participated in military training and wore military uniforms while at NUDT. One of Guan’s NUDT faculty advisors in China was also a lieutenant general in the PLA who developed computers used by the PLA General Staff Department, the PLA General Armament Department, Air Force, military weather forecasts, and nuclear technology. NUDT is “suspected of procuring U.S.-origin items to develop supercomputers with nuclear explosive applications” and has been placed on the Department of Commerce’s Entity List for nuclear nonproliferation reasons, according to the affidavit.
In addition to destroying the hard drive, the complaint alleges that Guan concealed digital storage devices from investigators and falsely told federal officials that he had not had any contact with the Chinese consulate during his nearly two-year stay in the U.S.
During his initial appearance this afternoon, Guan was ordered detained by a United States Magistrate Judge, who scheduled an arraignment for Sept. 17, 2020 .
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 felony offense of destruction of evidence carries a statutory maximum sentence of 20 years in federal prison.
This case is being investigated by the FBI, Homeland Security Investigations, and U.S. Customs and Border Protection. The U.S. Department of State’s Diplomatic Security Service has provided substantial assistance during the investigation.
This case is being prosecuted by Assistant U.S. Attorneys Will Rollins and George Pence of the Terrorism and Export Crimes Section.
Monterey Park Man Sentenced to Nearly 3 Years in Prison for Role in $62 Million Compounded Medication Scam that Targeted TRICARERead the Press Release
SANTA ANA, California – A San Gabriel Valley man was sentenced today to 34 months in federal prison for fraudulently submitting more than $62 million in claims to the military’s TRICARE health care benefit program for bogus compounded medications prescriptions largely generated by the payment of large referral fees to marketers.
James Chen, 51, of Monterey Park, was sentenced by United States District Judge David O. Carter, who also ordered Chen to pay $28,283,844 in restitution. Chen pleaded guilty in June 2017 to one count of health care fraud.
Chen owned Clevis Management, Inc., a Commerce-based company that did business under the name Haeoyou Pharmacy (HY). HY hired marketers to obtain prescriptions for medications that were billed to TRICARE, a health care benefit program for military members and their families. HY also operated “Healtharchy.com,” a “telemedicine” website through which individuals could seek prescriptions for medications without being examined by a physician.
Under Chen’s supervision, HY paid referral fees to outside businesses, including Mission Viejo-based Trestles RX LLC and Trestles Pain Management Specialists LLC, and to his own in-house marketers to obtain compounded medications prescriptions. The referral fees constituted more than 50 percent of the net reimbursements that HY received from TRICARE.
Compounding medication is a practice where a physician or pharmacists alters the ingredients of a drug or multiple drugs to create a medication tailored to an individual patient, such as if a patient is allergic to a specific ingredient in a medication approved by the Food and Drug Administration.
Chen knew that none of the prescriptions arose from a bona-fide physician-patient relationship, as required by TRICARE rules. Chen also knew that a substantial number of the prescriptions were sent to HY from marketers, not physicians, though the claim forms falsely indicated otherwise. HY never attempted to collect copayments from patients, who were selected at random and denied ever seeking the compounded medications, which were of questionable medical value. All the medications were for generic pain, scarring, stretch marks, erectile dysfunction, or “metabolic general wellness” (vitamins), according to court documents.
During 2013, Chen submitted zero claims to TRICARE for reimbursement for filling compounded medication prescriptions. In December 2014, his company submitted 31 such claims to TRICARE for $81,401. During the first five months of 2015, HY submitted 2,798 such claims to TRICARE seeking a total of $62,654,938.
The claims HY submitted to TRICARE for each compounded medication prescription were astronomical compared to previous claims that HY typically submitted for reimbursement. A claim to TRICARE for a single compounded medication prescription caused TRICARE to pay HY $194,707.
Chen and his co-schemers targeted TRICARE because few, if any, insurance carriers at the time would honor reimbursement claims for similar prescriptions.
This matter was investigated by the Defense Criminal Investigative Service; the FBI; Amtrak’s Office of Inspector General; IRS Criminal Investigation, the Office of Personnel Management’s Office of Inspector General; the U.S. Department of Health and Human Services – Office of Inspector General; the U.S. Department of Labor, Employee Benefits Security Administration; and the California Department of Insurance.
This case was prosecuted by Assistant United States Attorney Mark Aveis of the Major Frauds Section.
Fashion District Outfit and Company Owner Agree to Plead Guilty to Customs Violations, Tax Offenses and Pay Nearly $118 MillionRead the Press Release
LOS ANGELES – Federal prosecutors have filed charges against a Fashion District clothing importer and the company’s owner in a scheme to undervalue imported garments and avoid paying millions of dollars in duties to the United States. The cases also allege a tax fraud scheme in which the company’s owner failed to report on tax returns millions of dollars derived from cash transactions.
In conjunction with the criminal charges filed late Tuesday, prosecutors also filed plea agreements in which Ambiance Apparel and company owner Sang Bum “Ed” Noh agreed to plead guilty to felony offenses and pay a total of $117,897,708, which includes nearly $36 million in cash seized from Ambiance and Noh in 2014.
Noh, 66, of Bel Air, agreed to plead guilty to one count of conspiracy and one count of subscribing to a false tax return, charges that carry a statutory maximum penalty of eight years in federal prison.
Ambiance Apparel – the operating name for two corporations, Ambiance U.S.A. Inc. and Apparel Line U.S.A., Inc. – agreed to plead guilty to eight counts, including conspiracy, money laundering, and customs offenses.
Court documents outline separate schemes involving Ambiance and Noh, which came to an end in September 2014 when law enforcement authorities executed dozens of search warrants as part of an investigation into money laundering and other crimes at Fashion District businesses.
In the customs fraud scheme, Ambiance imported clothing from Asian countries and submitted fraudulent invoices to U.S. Customs and Border Protection (CBP) that undervalued the shipments and allowed Ambiance to avoid paying the full amount of tariffs owed on the imports, according to court documents. At Noh’s direction, the Asian manufacturers prepared two invoices for the clothing ordered by Ambiance – one that usually reflected 60 to 70 percent of the actual price and was paid by letter of credit, and one that reflected the balance of the actual price and was paid by wire transfer. The first invoice, which fraudulently reduced the value of the shipment, was submitted to CBP and was used to calculate the tariffs due on the imports. As a result of this scheme, over the course of just over 4½ years, Ambiance undervalued imports by about $82.6 million and failed to pay more than $17.1 million in tariffs. In the plea agreement filed today, Ambiance and Noh have agreed to pay U.S. Customs and Border Protection a total of $18.42 million, which includes the unpaid tariffs and interest accrued through 2014.
In the second scheme outlined in a statement of facts filed Tuesday, Ambiance admitted it failed to file reports with the Secretary of the Treasury that documented cash transactions of more than $10,000. Ambiance employees received approximately 364 payments of more than $10,000 over a two-year period – which totaled more than $11.1 million – and the company failed to file a single Form 8300 to alert federal authorities to the cash transactions.
In conjunction with these cash transactions, Ambiance used two sets of books to record sales, one of which documented only cash transactions and was not reported to Ambiance’s outside accountants. Noh also directed some of the second set of transactions to be underreported to the accountants. The lower sales figures were reported on 2011 and 2012 tax returns filed by Noh. Noh admitted that he failed to report income for those two years and now owes the Internal Revenue Service a total more than $16.8 million, which includes unpaid taxes, penalties and interest.
Noh and Ambiance will be summonsed to appear for arraignments on September 14 in United States District Court.
Once the guilty pleas are entered on behalf of Ambiance, the company expects to be placed on probation for five years, during which time it will implement an effective anti-money laundering compliance and ethics program with an outside compliance monitor.
The case against Ambiance and Noh was investigated by Homeland Security Investigations, IRS Criminal Investigation, U.S. Customs and Border Protection, LA IMPACT, the Long Beach Police Department, the Los Angeles Police Department, the Gardena Police Department, and the West Covina Police Department.
This matter is being prosecuted by Assistant United States Attorney Lucy B. Jennings of the International Narcotics, Money Laundering, and Racketeering Section. Assistant United States Attorney Jonathan Galatzan of the Asset Forfeiture Section is also working on this case. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force.
Convicted Terrorist on Supervised Release Indicted by Federal Grand Jury on Charges of Selling Pounds of MethamphetamineRead the Press Release
RIVERSIDE, California – A federal grand jury today indicted an Orange County man for allegedly selling pound quantities of methamphetamine while he was on supervised release following a 2009 terrorism conviction.
Ahmed Binyamin Alasiri, also known as Kevin Lamar James, a 44-year-old Garden Grove resident, was charged in an indictment with two counts of distribution of methamphetamine.
Alasiri was arrested in this case on August 21, pursuant to a criminal complaint that accused him of narcotics trafficking. At a hearing on August 24, he was ordered detained pending the outcome of the case.
According to court documents, on July 24, Alasiri sold approximately one pound of methamphetamine – which later was determined to be 96 percent pure – to a buyer for $3,700. On August 6, Alasiri allegedly again sold one pound of methamphetamine to the same buyer for $3,700. Laboratory analysis of the second purchase showed that the methamphetamine was 98 percent pure.
Alasiri is currently on supervised release after completing a 16-year federal prison sentence for conspiracy to levy war against the United States through terrorism. Alasiri’s co-conspirators committed numerous armed robberies of gas stations to raise money for attacks Alasari had planned on U.S. military operations and Israeli and Jewish facilities in Southern California. Alasiri completed his prison sentence in September 2019.
Alasiri is scheduled to be arraigned on the indictment on September 14.
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 of distribution of methamphetamine carries a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment.
This case is being investigated by the FBI’s Joint Terrorism Task Force (JTTF) in Orange County, with assistance from the following JTTF agencies and other partners: the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the United States Probation Office, the United States Bureau of Prisons, the California Department of Corrections and Rehabilitation, the Garden Grove Police Department, the Drug Enforcement Administration, the Orange County Sheriff’s Department, the California Highway Patrol, the United States Department of Defense, and the Orange County Intelligence Assessment Center.
This case is being prosecuted by Assistant United States Attorney Dennise D. Willett of the Terrorism and Export Crimes Section.
Santa Maria Man Charged with Fatally Shooting Elephant SealRead the Press Release
LOS ANGELES – A Santa Barbara County man was charged today with fatally shooting a northern elephant seal on a beach near San Simeon.
Jordan Gerbich, 30, of Santa Maria, is charged in an information with one count of taking a marine mammal.
Northern elephant seals are a protected species under the Marine Mammal Protection Act. They live up and down North America’s Pacific coast and haul out on land in areas called rookeries. These rookeries are typically populated with elephant seals year-round, but populations vary throughout the year based on breeding and molting cycles.
In September 2019, the corpse of a northern elephant seal was found on a beach near San Simeon close to a popular viewing area along California Highway 1 where visitors can observe elephant seals. The animal had been shot in the head. Gerbich is charged with fatally shooting the mammal on September 28, 2019.
An information 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 misdemeanor offense alleged in the information, Gerbich would face a statutory maximum sentence of one year in federal prison.
This matter was investigated by the National Oceanic and Atmospheric Administration’s Office of Law Enforcement with substantial assistance provided by the California Department of Fish and Wildlife.
This case is being prosecuted by Assistant United States Attorney Heather C. Gorman of the Environmental and Community Safety Crimes Section.
Lobbyist Agrees to Plead Guilty in City Hall Bribery Scheme in Which City Councilman Jose Huizar Supported Developer in Exchange for PAC DonationsRead the Press Release
LOS ANGELES – Federal prosecutors today filed a criminal information charging a longtime Los Angeles City Hall lobbyist and close associate of City Councilman Jose Huizar with participating in a bribery scheme in which he brokered deals where a developer client agreed to make $50,000 in political donations in exchange for Huizar’s official actions for the developer’s benefit.
Morris Roland Goldman, a.k.a. “Morrie,” 57, of Porter Ranch, was charged today with one count of conspiring to commit bribery and honest services mail fraud.
In a plea agreement also filed today in United States District Court, Goldman agreed to plead guilty to the felony offense and cooperate in the government’s ongoing investigation.
According to the court documents, Goldman was a lobbyist for “Company M,” which had a pending development project in the city’s Arts District. Goldman was one of several people who established two political action committees, one of which purportedly supported a variety of causes, but actually was created to primarily benefit the City Council campaign of Huizar’s relative, known in court papers as “Relative A-1.” If elected, Relative A-1 would help Huizar and his associates “maintain a political stronghold in the city,” according to court documents.
In his plea agreement, Goldman admits that in September 2018 he agreed with Huizar and a Company M executive that the developer would contribute $50,000 to a PAC established to support Relative A-1’s political campaign. In exchange, Huizar would vote against a union appeal of Company M’s project in the Planning and Land Use Management Committee, which he chaired at the time.
Court documents also outline how Goldman secured commitments from Company M to contribute to PACs at Huizar’s request prior to September 2018. Between November 2016 and March 2017, Company M contributed a total of $50,000 to a PAC used to benefit Huizar’s political causes. In June 2018, Goldman secured a $25,000 contribution to the PAC designed to elect Relative A-1, as well as a commitment for an additional $25,000 contribution. Company M’s project ultimately received significant benefits in the city approval process. For example, the City Council’s approval of Company M’s request to reduce the project’s availability of low-income housing – despite its proximity to Skid Row – netted the company approximately $14 million in savings, court papers state.
Out of the $150,000 in donations agreed to by the developer, $75,000 was actually paid, with the final payments being derailed by an FBI search of Huizar’s home and offices in November 2018.
Goldman is now the sixth defendant to be charged as a result of Operation “Casino Loyale,” an FBI investigation into corruption at Los Angeles City Hall. Four defendants, including former Los Angeles City Councilman Mitchell Englander, have pleaded guilty and await sentencing.
On August 3, Huizar pleaded not guilty to charges in a 34-count racketeering indictment that alleges he led a criminal enterprise designed to enrich himself and his associates, give favorable treatment to developers involved in the payment of bribes, and elect his relative to preserve the enterprise’s power when his term expired at the end of this year. Huizar’s trial is scheduled for June 22, 2021.
Goldman has agreed to surrender in this case and make his first court appearance on September 23. Once he pleads guilty to the conspiracy count, Goldman will face a statutory maximum penalty of five years in federal prison.
The cases against Goldman, Huizar and the other defendants 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 J. 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.
Chiropractor Sentenced to Nearly 4 Years in Federal Prison for Scheme that Fraudulently Billed Labor Union Health Plan $4.8 MillionRead the Press Release
LOS ANGELES – A chiropractor was sentenced today to 46 months in federal prison for conspiring to defraud a labor union’s health care benefit plan by offering kickbacks to patients for attending the clinic and by submitting approximately $4.8 million in sham billings.
Mahyar David Yadidi, 38, of West Los Angeles, was sentenced by United States District Judge R. Gary Klausner, who also ordered him to pay $1,976,832 in restitution.
In November 2019, Yadidi pleaded guilty to one count of conspiracy to commit health care fraud.
Yadidi operated Philips San Pedro Chiropractic – formerly known as Synergy Healthcare and Wellness Center – in San Pedro. From July 2016 to October 2018, Yadidi operated a scheme to defraud the International Longshore and Warehouse Union – Pacific Maritime Association (ILWU-PMA) health care benefit plan. Yadidi worked with co-conspirators Ivan Semerdjiev, 41, of Irvine, a chiropractor who worked for Yadidi, and Julian Williams, 45, of San Pedro, a personal trainer who also worked for Yadidi.
ILWU-PMA health care plan members were induced by Yadidi to visit his clinic with offers of $50 in cash for each visit, according to a one-count criminal information filed in this case. Yadidi also paid plan members to allow him to bill the plan when members did not visit his clinic.
Yadidi offered monetary incentives to Williams, Semerdjiev, and other employees, as well as to patients, to recruit additional plan members to visit his clinic. Williams induced plan members to visit the clinic by falsely informing them that they could receive personal athletic training services from him that the plan would pay for.
Once plan members either visited Yadidi’s clinic or agreed to allow him to submit claims to the plan for non-existent visits, Yadidi billed and caused his employees to bill the plan for services that were not rendered, services that were not medically necessary, and chiropractic and physical therapy services that were performed by
Williams, who was neither licensed nor otherwise qualified to be performing those services.
At his instruction, Yadidi’s employees falsified records, including sign-in sheets that listed the dates plan members purportedly received services from Philips Chiropractic. Yadidi instructed Semerdjiev to falsify patient files to support the clinic’s fraudulent billing. Yadidi and his co-conspirators also created false entries in the name of plan members’ relatives, knowing that the union’s health care benefit plan allowed them an additional number of covered visits as well.
Yadidi continued to operate his scheme after he was terminated as an authorized provider by the ILWU-PMA plan in August 2017, six months after it conducted an audit of his clinic.
To continue the conspiracy, Yadidi changed the name of his clinic – which previously was called “Synergy” and falsely held out another person as the clinic’s primary owner and operator, when in fact, Yadidi continued to own, operate, and financially benefit from the clinic. Yadidi continued to submit claims to the plan in the sham owner’s name.
During the conspiracy’s duration, Yadidi’s clinic submitted $4,756,284 in fraudulent claims to the ILWU-PMA plan, for which the plan paid $1,976,832.
Williams and Semerdjiev each pleaded guilty to one count of conspiracy to commit health care fraud and were sentenced to six months and one year in federal prison, respectively.
This matter was investigated by the U.S. Department of Labor, Office of Inspector General, and the U.S. Department of Labor, Employee Benefits Security Administration.
This case was prosecuted by Assistant United States Attorney Alexander C.K. Wyman of the Major Frauds Section.