Central District of California
Press releases recorded for this federal judicial district.
Convicted Murderer Sentenced to over 15 Years in Federal Prison for Role in Prison-Based Drug Smuggling Ring that Involved Prison CookRead the Press Release
LOS ANGELES – A convicted murderer serving a life sentence in California state prison was sentenced today to 188 months in federal prison for his involvement in a drug-trafficking conspiracy that smuggled narcotics into the prison with the help of the prison’s then-cook and others.
Lamont Devault, 49, a.k.a. “Mont,” was sentenced by United States District Judge R. Gary Klausner. Devault’s federal prison sentence will begin if he is paroled from his state prison term, which began in 2002. He will be eligible for parole from state prison in March 2031, according to the California Department of Corrections and Rehabilitation.
After a three-day trial in February, a federal jury found Devault guilty of three felonies: conspiracy to distribute methamphetamine and other controlled substances, possession with intent to distribute methamphetamine, and possession with intent to distribute heroin.
According to the evidence presented at trial, Devault was an inmate at Centinela State Prison in Imperial County in 2017. Devault recruited his son, co-defendant Lamont Devault II, 26, of Long Beach, to obtain narcotics outside the prison supplied by an associate of another inmate, co-defendant Steve Bencom, 39, a.k.a. “Risky” and “Risky Business,” of East Los Angeles. Devault’s son then supplied the drugs to co-defendant and then-prison cook Lance Medina, 33, a.k.a. “Droop,” of El Centro, so that Medina could smuggle the drugs into the prison by concealing them in his underwear.
Devault, who coordinated the conspiracy by using a contraband cell phone in prison, then oversaw the distribution of those drugs within the prison through other inmates, including co-defendant Deandre McIntosh, 43, a.k.a. “Casper D,” of Long Beach.
In November 2017, Medina was caught smuggling nearly 54 grams of methamphetamine into the prison. Medina had another 131 grams of methamphetamine and 91 grams of heroin at his home that he was planning to smuggle into the prison at Devault’s direction.
Devault concealed the conspiracy’s illicit financial gains with the help of co-defendant LaShawn Anderson, 50, of Downey, then a civilian employee of the Los Angeles County Sheriff’s Department.
On January 27, Anderson pleaded guilty to one count of conspiracy to engage in money laundering. In her plea agreement, Anderson admitted that she conspired with Devault and others to launder the illicit proceeds. Her sentencing hearing is scheduled for August 3, at which time she will face a statutory maximum sentence of 20 years in federal prison.
Bencom pleaded guilty on January 22 to one count of conspiracy to distribute methamphetamine and was sentenced to 10 years in federal prison, consecutive to his state sentence, which he is serving for a robbery conviction.
McIntosh was found guilty at trial alongside Devault of one count of conspiracy to distribute methamphetamine and awaits a July 20 sentencing hearing, at which time he will face a mandatory minimum sentence of five years in federal prison and a maximum sentence of 40 years’ imprisonment.
The other defendants in the case have pleaded guilty to federal charges and will be sentenced in the coming months.
This case was investigated by the Drug Enforcement Administration, as part of the High Intensity Drug Trafficking Areas (HIDTA) program, and was conducted with the support of the Organized Crime Drug Enforcement Task Force (OCDETF). The California Department of Corrections and Rehabilitation provided assistance.
This matter was prosecuted by Assistant United States Attorneys Puneet V. Kakkar and Benedetto L. Balding of the International Narcotics, Money Laundering, and Racketeering Section.
Arcadia Woman Arrested on Complaint Alleging She Swindled Investors of Coachella Hotel Complex Out of More Than $20 MillionRead the Press Release
LOS ANGELES – A San Gabriel Valley woman was arrested this morning on a criminal complaint alleging she fraudulently solicited $21.6 million in funds for a condominium and hotel complex in the Coachella Valley, then spent a significant portion of her victims’ money on her own lavish living expenses, including luxury cars, travel, and designer clothing.
Ruixue “Serena” Shi, 36, of Arcadia, was taken into custody by special agents of the FBI. She has been charged with one count of wire fraud and is expected to make her initial appearance this afternoon in United States District Court.
According to an affidavit filed with the complaint filed Wednesday and unsealed today, between November 2015 and July 2018, Shi solicited investments for the Hyde Resorts and Residences Coachella Valley. Hyde Resorts was to be a 207-unit luxury condominium and hotel complex that was supposed to have a total of 95,000 square feet of on-site conference facilities, a pool, spa, fitness center and other amenities.
Shi was the president and owner of Global House Buyer (GHB), a China-based real estate development company, and also was CEO of the Beverly Hills-based company Hyde Morgan Development, LLC, the affidavit states. The Hyde complex was to be developed by GHB while Hyde Morgan solicited investments.
Shi contacted prospective investors in the Hyde complex – who mostly were based in China – through sales presentations she gave at hotels, radio advertisements, and through the solicitation of investments over forums on WeChat, a Chinese messaging, social media, and mobile payment application, according to the affidavit.
Among the false representations Shi allegedly made to her victims to induce them to invest was that the Hyde development was scheduled to begin construction in 2017. Investors were told they would be purchasing condos ranging in price from $400,000 to $700,000, according to the affidavit. Investors were required to pay 40 percent of the total purchase price upfront as a down payment, but Shi promised that GHB would help them finance the remaining balance with loans from U.S.-based banks when the project was completed.
Chinese investors in the Hyde project were falsely told that their investments with Shi would enable them to obtain visas through the EB-5 Immigrant Investor Program, the affidavit states. EB-5 is a federal program that allows foreign investors to secure a U.S. visa by investing a large sum of money to finance a business in the United States that employs American workers. One victim told law enforcement that Shi told her that Shi would procure a long-term visa for her through the EB-5 Program if she invested $500,000 in the Hyde project, the affidavit states.
Shi also allegedly told investors that GHB had purchased a 47-acre lot of land in Coachella Valley where the Hyde development was to be built. In reality, Shi purchased only 20 acres of that property, the affidavit states. Shi also falsely told investors that GHB had obtained the required city development approvals for the Hyde development, which included the re-zoning of the land she purportedly had purchased, when no such approvals had been given.
When some victim-investors began demanding refunds after hearing GHB no longer was in operation in the United States, Shi allegedly offered them partial refunds if they signed a contract purporting to prevent them from disclosing they had received the refund. She also allegedly sent investors phony photographs purporting to be of construction that was underway. In truth, GHB never began construction on the Hyde development and never purchased the entire plot of land where the development was to be built, the affidavit states.
Bank records allegedly show that Shi transferred the victims’ funds to her personal accounts and then misappropriated a significant portion of victims’ money for her own expenses. For example, she allegedly used $2.2 million of investor money to pay a company that provided luxury travel and concierge services, nearly $295,000 to purchase two Mercedes-Benz automobiles, and hundreds of thousands of dollars to buy clothes, restaurant meals, and hotel stays in Beverly Hills, France, Thailand and China.
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, Shi would face a statutory maximum sentence of 20 years in federal prison.
The FBI investigated this matter.
This case is being prosecuted by Assistant United States Attorney Alexander C.K. Wyman of the Major Frauds Section.
San Bernardino County Man Who Made Threats to Injure Congressional Staffers and Intern Sentenced to One Year in PrisonRead the Press Release
LOS ANGELES – A Twentynine Palms man was sentenced today to 12 months and one day in federal prison for making harassing telephone calls to government offices and for threatening to injure congressional staffers and an intern who answered the calls.
Robert Eric Stahlnecker, 48, was sentenced by United States District Judge Stephen V. Wilson.
At a two-day trial in February, a federal jury found Stahlnecker guilty of one count of making threats by interstate commerce and five counts of anonymous telecommunications harassment. The jury acquitted him of two counts of threatening federal employees.
According to the evidence presented at trial, on September 26, 2019, Stahlnecker made eight telephone calls within a seven-minute span to the Washington, D.C., office of Sen. Sherrod Brown of Ohio. During the calls, Stahlnecker berated the intern who answered the call, insulted the intern by using vulgar language and, finally, threatened to come to the senator’s office to kill her.
Between September and November 2019, Stahlnecker made multiple abusive telephone calls to staff members and interns of multiple members of Congress. Stahlnecker made more than 10,000 calls to government agencies and elected officials between January and November of last year, according to court documents. More than half of defendant’s telephone calls in 2019 were to the Veterans Affairs complaint line (3,600 calls) and the two United States senators from California (2,500 calls), court papers state.
Stahlnecker has been in federal custody since his arrest in this case in December 2019.
“Since 2007…Stahlnecker has been convicted five times for verbally abusing and threatening government employees,” prosecutors wrote in their sentencing memorandum. “The convictions in this case represent a small fraction of defendant’s decade-long campaign to abuse and threaten government employees.”
The United States Capitol Police and the Department of Veterans Affairs, Office of Inspector General investigated this case.
This case was prosecuted by Assistant United States Attorneys Peter H. Dahlquist and Robert S. Trisotto of the Riverside Branch Office.
Lompoc Man Charged with Involuntary Manslaughter in Connection with Fatal Car Accident Near Vandenberg Air Force BaseRead the Press Release
LOS ANGELES – A Santa Barbara County man was charged today with involuntary manslaughter for allegedly crashing a stolen Jeep near Vandenberg Air Force Base while under the influence of drugs, killing one motorist and severely injuring another.
Michael James Culligan, 29, of Lompoc, was arrested on June 16 and is scheduled to make his initial appearance this afternoon in United States District Court. He is charged in a federal criminal complaint filed today with one felony count of involuntary manslaughter within federal jurisdiction.
According to an affidavit filed with the complaint, on June 16, law enforcement responded to a report of a traffic collision on Santa Lucia Canyon Road, near Vandenberg Air Force Base. There, law enforcement found two cars – a 2016 Lexus whose driver was dead and whose passenger was badly injured, and an unoccupied 2013 Jeep, the affidavit states.
From the Jeep, law enforcement allegedly recovered empty alcoholic beverage containers and Culligan’s California identification card. Law enforcement also determined that the Jeep had been reported stolen and that the Jeep’s license plates belonged to a different car.
An eyewitness at the crash scene said the driver of the Jeep appeared to have lost control, drove into the oncoming lane of traffic, then crashed head-on into the Lexus, the affidavit states. The Jeep’s driver then fled the scene of the accident, the eyewitness said.
Approximately three hours later, Culligan was apprehended about 1.5 miles from the scene of the collision at a nearby train station. Culligan allegedly admitted to using drugs before operating the Jeep, crashing the Jeep into another car, and fleeing the scene.
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 this charge, Culligan would face a statutory maximum sentence of eight years in federal prison.
This matter was investigated by the United States Air Force Office of Special Investigations with the California Highway Patrol and Santa Barbara County Sheriff’s Office providing substantial assistance.
This case is being prosecuted by Assistant United States Attorney Joseph D. Axelrad of the Violent and Organized Crime Section.
Department of Justice Observes 15th Annual World Elder Abuse Awareness Day by Reiterating Commitment to Protect SeniorsRead the Press Release
LOS ANGELES – United States Attorney Nick Hanna today joined the entire Department of Justice in observing the 15th Annual World Elder Abuse Awareness Day. The Justice Department echoes voices around the world condemning elder abuse, neglect and exploitation.
“As some of the most vulnerable among us, senior citizens, unfortunately, are a prime target for criminals,” Mr. Hanna said. “The elder fraud cases brought by my office highlight our ongoing determination to bring unscrupulous actors to justice and put them in prison where they belong. Our outreach efforts demonstrate our commitment to protecting the rights of elderly residents and giving them tools to prevent exploitation.”
The COVID-19 pandemic has created unprecedented challenges for our country and the world, and senior citizens are among the most severely affected by the threat of the novel virus. During this time, when seniors are most vulnerable and isolated from their families and loved ones, criminals are exploiting the health crisis to prey on the elderly through a host of scams and fraud schemes. In April, federal prosecutors from the four United States Attorney’s Offices in California and special agents with the FBI participated in a telephonic town hall that provided thousands of California senior citizens with information to help them identify and avoid fraudulent schemes related to coronavirus and COVID-19.
As the world takes this day to remember the elderly during these uncertain times, the Department of Justice remains committed, through its department-wide Elder Justice Initiative, to prevent and prosecute fraud on America’s seniors. The United States Attorney’s Office in Los Angeles is one of six offices participating in the Transnational Elder Fraud Strike Force, which was established last year to focus on investigating and prosecuting individuals and entities associated with foreign-based fraud schemes targeting American seniors.
The United States Attorney’s Office for the Central District of California has brought federal charges in numerous cases involving elder fraud. Some recent cases targeted:
- Paul Horton Smith Sr., 56, of Moreno Valley, was arrested last month and charged with wire fraud for allegedly engineering a $10 million Ponzi scheme that targeted elderly and retired victims.
- Mehmet Fatih Biyikoglu, 53, the former CEO of an Irvine-based financial services firm, was sentenced in March to more than 10 years in federal prison for stealing over $3.5 million from elderly victims whom he conned into believing their money was being invested in a certificate of deposit at a major bank.
- In March, Clifford Kirstein, 29, and Mark El Bernachawy, 43, both Canadian nationals, each were sentenced to 41 months in federal prison for their roles in a telemarketing scam that conned U.S. senior citizens by impersonating their grandchildren over the telephone and asking for financial help to get the purportedly distressed relatives out of trouble in a foreign country.
Combating elder abuse and financial fraud targeted at seniors is a key priority of the Department of Justice. Elder abuse – an intentional or negligent act that causes harm or a serious risk of harm to an older adult – is a serious crime that affects at least 10 percent of older Americans every year. The Department of Justice is steadfastly committed to combating all forms of elder abuse and financial exploitation through enforcement actions, training and resources, research, victim services and public awareness.
Four Mexican Nationals Charged with Transporting More Than 2,100 Kilograms of Marijuana Aboard Panga Boat to Goleta BeachRead the Press Release
LOS ANGELES – Four Mexican nationals today were named in a federal grand jury indictment charging them with possessing and intending to distribute more than 2,100 kilograms (4,700 pounds) of marijuana, which they allegedly transported on a fishing boat that landed on a Santa Barbara County beach.
The indictment returned this afternoon charges four men, all of Sinaloa, Mexico, with one count of possession with intent to distribute at least 1,000 kilograms of marijuana, a crime that carries a statutory maximum sentence of life imprisonment and mandatory minimum sentence of 10 years in federal prison:
- Alejo Garcia-Moreno, 54;
- Benito Garcia-Moreno, 59, Alejo Garcia-Moreno’s brother;
- Mario Sainz-Aranzubia, 44, a cousin of Alejo and Benito Garcia-Moreno; and
- Benny Zazueta-Sainz, 28, Sainz-Aranzubia’s nephew.
According to an affidavit filed with a criminal complaint in this matter, on the evening of March 11, a law enforcement airplane observed an open-bowed fishing vessel known as a “panga boat,” loaded with suspected narcotics and traveling toward Goleta. The four defendants later were identified as being the boat’s crewmembers.
The panga boat landed at Hollister Ranch Beach in Goleta at approximately 1:15 a.m. on March 12, the affidavit states. In addition to the crew members on the panga boat that officers aboard the airplane previously observed, law enforcement saw 14 additional individuals on the beach, as well as two other people on a hill who appeared to be conducting counter-surveillance of law enforcement activity, according to the affidavit. Once the boat landed, the 14 non-crew members on the beach offloaded bales of marijuana from the boat and moved the bales to multiple vehicles waiting nearby, according to court documents.
Law enforcement entered Hollister Ranch Beach around 3 a.m. and the suspected narcotics traffickers scattered and fled. Officers pursued the suspects and arrested a total of 21 people, including the four defendants named in today’s indictment. The other 17 people were released.
Following the arrests, law enforcement recovered a total over 200 bales of marijuana from the panga boat, the Hollister Ranch Beach area, and the van, according to statements made in court. In total, the four defendants are charged with possessing with intent to distribute 2,138.5 kilograms (4,714.6 pounds) of marijuana, 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.
Homeland Security Investigations, U.S. Border Patrol, U.S. Customs and Border Protection, the Santa Barbara County Sheriff’s Office, California State Parks, California Highway Patrol, and the United States Coast Guard investigated this matter.
This case is being prosecuted by Assistant United States Attorney Jamari Buxton of the Public Corruption and Civil Rights Section.
Federal Grand Jury Indicts Orange County Man in Investment Fraud Scheme Centering on Bogus Claims of COVID-19 CureRead the Press Release
LOS ANGELES – A federal grand jury this afternoon indicted a Huntington Beach man on fraud charges that allege he solicited people around the nation to invest in a companies that would market pills he claimed would prevent coronavirus infections and produce an injectable cure for those already suffering from COVID-19.
Keith Lawrence Middlebrook, 52, was named in an indictment that charges him with 11 counts of wire fraud stemming from solicitations he allegedly made to potential investors in Nevada, New York, Texas and Colorado.
“Through text messages, videos, and statements sent to potential investors and posted on the internet, including on Instagram and YouTube, defendant Middlebrook falsely claimed to have developed a cure for the COVID-19 virus, which he called ‘QC20,’ and a treatment that prevented a person from being infected by the COVID-19 virus, which he called ‘QP20,’” according to the indictment.
The FBI arrested Middlebrook in this case on March 25 after Middlebrook delivered pills – purportedly the treatment that prevents coronavirus infection – to an undercover agent who was posing as an investor. Two of the charges in the indictment relate to communications with the undercover agent.
The indictment alleges that Middlebrook claimed to have personally developed a “patent-pending” cure and a treatment to prevent coronavirus infection, even though “[g]overnmental and non-governmental health organizations both within the United States and abroad confirmed that there was no vaccine or specific antiviral medicine then known to prevent or treat COVID-19,” according to the indictment.
Middlebrook fraudulently solicited investments in companies he called Quantum Prevention CV Inc. (also called QP20) and Quantum Cure CV 2020 Inc. (also known as QC20) with a series of false promises. Those fraudulent claims included miraculous results from the prevention product and the cure, risk-free and 100 percent guaranteed “enormous returns” on investments,” and that Earvin “Magic” Johnson was a director and/or officer of QC20, the indictment alleges.
“To bolster these claims, defendant Middlebrook falsely represented that an unnamed party in Dubai had offered to purchase the companies for $10 billion, and this offer would secure the victim-investors’ investments in QP20 and/or QC20; and that he had secured funding from seven investors who had each already invested between $750,000 and $1,000,000,” the indictment alleges.
Following his arrest at the March 25 meeting in El Segundo, Middlebrook remained in custody until May 6, when he was freed on a $150,000 bond. His arraignment on the indictment has not yet been scheduled.
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 of the 11 counts of wire fraud alleged in the indictment carries a statutory maximum penalty of 20 years in federal prison.
The investigation in this matter is being conducted by the FBI.
This case is being prosecuted by Assistant United States Attorneys Valerie Makarewicz and James Hughes of the Major Frauds Section.
Members of the public are urged to report suspected fraud schemes related to the coronavirus and COVID-19 by calling the National Center for Disaster Fraud (NCDF) hotline at 1-866-720-5721 or completing an online complaint form.
Glendale Man Pleads Guilty to Bank Fraud for Setting up Accounts that Laundered $1.9 Million in Falsely Obtained Tax RefundsRead the Press Release
LOS ANGELES – A Glendale man pleaded guilty today to a federal fraud charge for opening more than a dozen bank accounts, knowing that they would be used to launder fraudulently obtained tax refunds obtained by filing tax returns under stolen identities.
Armen Martirosyan, 62, pleaded guilty to one count of bank fraud. After federal agents interviewed him in connection with this case, Martirosyan fled the United States before he was named in a federal grand jury indictment filed in November 2017. He ultimately was arrested in Colombia and was extradited to the United States in August 2018 to face the criminal charges in this case.
Martirosyan admitted in his plea agreement that in April 2009 he opened a bank account in his name at a Bank of America branch in Glendale, knowing that it would be used to deposit tax refunds that had been fraudulently obtained using stolen identities. The IRS deposited $189,000 in 24 fraudulently obtained tax refunds into that account. Martirosyan signed blank checks from that account, which he then gave to other schemers.
According to the plea agreement, Martirosyan opened 14 other bank accounts that were similarly used in the scheme. He also admitted to using some of the money in those accounts for personal expenditures, including credit card payments, rent and Amazon.com charges.
According to court records, the bank accounts that Martirosyan had opened were used to receive and launder more than $1,866,000 in stolen tax refund proceeds.
In addition, Martirosyan admitted to filing a false federal income tax return for himself for tax year 2012, which falsely reported that he had worked for a national retailer. The false tax return resulted in a fraudulent refund of $9,900.
United States District Judge John F. Walter scheduled an August 24 sentencing hearing, at which time Martirosyan will face a statutory maximum sentence of 30 years in federal prison.
This case is related to an underlying Stolen Identity Refund Fraud (SIRF) scheme that involved conspirators who used false identities and fake Republic of Armenia passports to open hundreds of bank accounts used to launder funds fraudulently received from the IRS. Approximately 20 defendants, including ex-Wells Fargo Bank manager Hakop Zakaryan and Glendale lawyer Arthur S. Charchian, have been charged in that scheme, which involved approximately 7,000 fraudulent tax returns that cumulatively sought about $38 million in refunds. The IRS issued about $14 million in fraudulent refunds. The fraudulent tax returns were filed and the bank accounts were opened with personal identifying information that had been stolen from thousands of victims.
The federal investigation into the SIRF scheme has resulted in 12 convictions, and the seizure of at least five residential properties worth millions of dollars, and more than $700,000 from bank accounts. Four defendants remain fugitives from justice, and one defendant is scheduled to go to trial later this year.
This matter was investigated by IRS Criminal Investigation, the FBI, and Homeland Security Investigations. IRS Criminal Investigation and HSI attachés in Bogota and Columbian law enforcement provided considerable assistance relating to the capture of Martirosyan. The United States Marshals Service assisted in the extradition of Martirosyan.
This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.
Inland Empire Man Sentenced to 10 Years in Federal Prison for Third Conviction of Possessing Child PornographyRead the Press Release
RIVERSIDE, California – A San Bernardino man who was on federal supervised release when he was found with hundreds of videos and still images depicting child pornography has been sentenced to 10 years in federal prison.
Theron Charles Barron, 28, was sentenced on Monday by United States District Judge Jesus G. Bernal – the same judge who sentenced him in his first child pornography case.
In October and November 2018, Barron possessed a total of 319 videos and 47 images of child pornography. One of the videos depicted a toddler being victimized by an adult male.
During a traffic stop in October 2018, deputies of the San Bernardino County Sheriff’s Department seized from Barron a smartphone and a digital storage device that contained child pornography. The next month, during a search of Barron’s residence, authorities recovered another storage device that contained additional videos and images depicting child pornography.
Barron pleaded guilty in December 2019 to two counts of possession of child pornography. Once he completes the 10-year prison sentence in this case, he will be on supervised release for 15 years and he will be required to register as a sex offender.
Barron was convicted in federal court of possessing child pornography in 2014 and was sentenced to one year and one day in prison. His second conviction came in 2018 in Los Angeles Superior Court.
The latest case against Barron was investigated by Homeland Security Investigations.
This case was prosecuted by Assistant United States Attorney Eli A. Alcaraz of the Riverside Branch Office.
Statement of United States Attorney Nick HannaRead the Press Release
LOS ANGELES – In the midst of the COVID-19 crisis, our country is now dealing with the traumatic aftermath of the brutal killing of George Floyd. That fatal encounter with police in Minneapolis was a horrifying incident that understandably caused outrage, sadness and pain. An untold number of people across the United States have taken to the streets to engage in peaceful protests, demand justice for Mr. Floyd and others who have died violently at the hands of law enforcement, and call for systemic change. As the U.S. Attorney sworn to uphold the constitutional rights of all 20 million residents of this district, I fully support the First Amendment rights of protestors to express these sentiments peacefully.
As we mourn with Mr. Floyd’s family and look forward to the day when justice is done, we send words of encouragement to the local Minnesota prosecutors who are pursuing the case and to our Justice Department colleagues investigating potential violations of federal civil rights law.
The killing of Mr. Floyd has brought to the fore painful memories of mistreatment, recent and historical, of the African American community by law enforcement and others. These memories are especially raw in Los Angeles, which has a very difficult history of police-community tensions that have erupted into violence.
The U.S. Attorney’s Office in Los Angeles has a long and proud history of fighting to protect civil rights and of aggressively pursuing allegations of misconduct by law enforcement. Over the years, we have convicted a string of corrupt law enforcement officials, including those who engaged in excessive force. This office played the lead role in the convictions of police officers who beat Rodney King. We convicted former Orange County Sheriff Mike Carona on corruption charges. We convicted 22 members of the Los Angeles Sheriff’s Department, including Sheriff Lee Baca, who engaged in civil rights abuses or obstruction of justice. We continue to enforce a consent decree that has led to significant reforms at the L.A. County jails. And we are working with the Los Angeles Sheriff’s Department to implement reforms to its policing of the Antelope Valley.
We will never shy away from confronting crimes committed by law enforcement officers. These are among the most difficult cases to prosecute, but we bring these important cases in pursuit of justice for the victims and to send a clear message that police misconduct and civil rights violations cannot be tolerated in a society based on laws.
As United States Attorney, it is my job to ensure that federal laws are enforced without fear or favor, regardless of the identity of the perpetrator. That includes cases against law enforcement officers who violate the trust we place in them, as there is no greater betrayal of that trust than when a citizen is killed by the unlawful actions of those sworn to protect and serve. Being a police officer is one of the most difficult jobs in America. It requires dedication to duty, courage and self-sacrifice. The few who cross the line tarnish the badge for the overwhelming majority of good and decent officers who work tirelessly to protect us.
The United States Attorney’s Office will continue its mission of protecting the public from violence and lawlessness. In doing so, we remain steadfast in our commitment to assisting our law enforcement partners to adopt and employ best policing practices, and to working with our community partners for the fair administration of justice. Together, we must use this moment to reaffirm our guiding principles and ensure equal justice for all.
Riverside Medical Clinic Agrees to Settle Allegations It Violated Federal Law by Not Providing Access to the Deaf or Hard of HearingRead the Press Release
LOS ANGELES – Riverside Medical Clinic, a company that operates seven medical offices in Riverside County, has agreed to resolve allegations that it violated the Americans with Disabilities Act (ADA) by failing to provide effective communication to deaf and hard-of-hearing patients.
The settlement resolves allegations that Riverside Medical Clinic failed to provide a qualified sign language interpreter or other appropriate form of auxiliary aid or service to a patient who is deaf and her family, instead relying on a video remote interpretation system that often failed to work.
The ADA requires medical providers to ensure effective communication for patients who are deaf or hard of hearing. The settlement requires the company to provide appropriate auxiliary aids and services free of charge so that people who are deaf or hard of hearing have full and equal access to treatment at its offices.
Under the settlement agreement, Riverside Medical Clinic must:
- provide appropriate auxiliary aids and services necessary for effective communication to patients and their companions who are deaf or hard of hearing;
- advertise the availability of auxiliary aids and services;
- 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 $5,000 in compensation to the complainant and a $1,000 civil penalty to the United States.
Riverside Medical Clinic fully cooperated with the government’s investigation.
Assistant United States Attorney Matthew E. Nickell of the Civil Division’s Civil Rights Section handled this matter.
This year marks the ADA’s 30th Anniversary. The Department of Justice plays a central role in advancing the nation’s goal of equal opportunity, full participation, independent living and economic self-sufficiency for people with disabilities.
For more information on the ADA or this settlement agreement, 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.
Former Chinese Official Extradited to the United States to Face Charges of Laundering Millions of Dollars of Stolen MoneyRead the Press Release
LOS ANGELES – A former Chinese official who was a fugitive for over five years has been extradited from Sweden to Los Angeles to face federal charges that allege he laundered millions of dollars of stolen money, using some of the funds to purchase two properties in a suburban Los Angeles-area community.
Jianjun Qiao (喬建軍), 56, arrived at Los Angeles International Airport on Friday after being extradited by Sweden. Qiao was taken into custody by the U.S. Marshals Service and was held in federal custody over the weekend. He is expected to be arraigned this afternoon in United States District Court in downtown Los Angeles.
A federal grand jury in July 2014 indicted Qiao and his ex-wife, alleging two separate schemes. A superseding indictment against Qiao returned in December 2018 charges him with conspiracy to commit immigration fraud and international transport of stolen money, conspiracy to commit money laundering, and three counts of engaging in financial transactions in criminally derived property.
As the director of a grain storehouse in Zhoukou City, Henan Province, China, from 1998 to 2011, Qiao allegedly laundered millions of dollars in proceeds related to fraudulent transactions through banks in China, Hong Kong, and Singapore. The indictment further alleges that Qiao then used the stolen funds to, among other things, purchase two properties in Monterey Park.
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.
Qiao’s ex-wife, Shilan Zhao (趙世蘭), 56, of Newcastle, Washington, pleaded guilty in January 2017 to conspiring with her husband to falsely portray themselves as still married and lying about the source of Zhao’s foreign investment, which was required under the EB-5 immigrant investor program to obtain U.S. immigrant visas. Zhao is scheduled to be sentenced in this case on August 17.
If he were to be convicted of the five charges alleged in the indictment, Qiao would face a statutory maximum sentences of five years in federal prison for the charge of conspiracy to commit international transport of stolen money, 20 years for the money laundering conspiracy charge, and 10 years for each count of engaging in financial transactions in criminally derived property.
This case is the product of a joint investigation conducted by Homeland Security Investigations and IRS Criminal Investigation, which received assistance from U.S. Citizenship and Immigration Services.
The Office of International Affairs of the Justice Department’s Criminal Division provided substantial assistance in extraditing Qiao from Sweden to the United States. The Justice Department extends its gratitude to the government of Sweden for making the extradition possible.
This case is being prosecuted by Assistant United States Attorneys Roger A. Hsieh of the Major Frauds Section and John J. Kucera of the Asset Forfeiture Section.
Federal Authorities in Los Angeles Responding to Looting and Other Criminal Acts Unrelated to Peaceful ProtestsRead the Press Release
LOS ANGELES – In the wake of widespread looting and arson across the Southland, federal law enforcement officials are working closely with local authorities to identify instances in which criminals unrelated to legitimate protestors may be subject to federal prosecution.
At the direction of Attorney General William P. Barr, the United States Attorney’s Office and the FBI are employing the FBI’s Joint Terrorism Task Force (JTTF) to identify organizers, instigators and participants in serious criminal activity. Federal authorities are also coordinating federal resources with state and local partners, and will consider bringing federal criminal cases where appropriate.
“The outrage and meaningful protests resulting from the death of George Floyd are completely understandable. We support and will protect those who wish to demonstrate peacefully,” said United States Attorney Nick Hanna. “But some have chosen to act with violence by destroying property, ransacking businesses and setting fires. The criminals who have caused havoc in neighborhoods across Southern California appear to be exploiting a situation in which other citizens are exercising their First Amendment rights to assemble and express their viewpoints. We are confronting this outlaw behavior by providing federal resources and working closely with local police to identify cases in which federal charges could be appropriately filed.”
“The FBI supports and works diligently to safeguard legitimate protests and Constitutionally-protected free speech,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI does not tolerate crossing the legal line into criminal activity at the expense of innocent citizens and business owners, and we will work with our local partners to pursue federal prosecution, where warranted.”
Mr. Hanna and ADIC Delacourt commend the men and woman who serve the public in local police and sheriff’s departments. While protecting us from the chaos on the streets, these officers and deputies are demonstrating true bravery and professionalism.
The FBI is asking members of the public to provide information that could be used to help identify actors who are actively instigating violence in the wake of Mr. Floyd’s death. The FBI is accepting tips and digital media depicting violent encounters surrounding the civil unrest that is happening throughout the country. If you witness or have witnessed unlawful violent actions, you are urged to submit any information, photos or videos that could be relevant at fbi.gov/violence. You may also call 1-800-CALL-FBI (800-225-5324) to verbally report tips and/or information.
Former Aide to L.A. City Councilmember Agrees to Plead Guilty to RICO Charge Stemming from ‘Pay-to-Play’ Corruption SchemeRead the Press Release
LOS ANGELES – The former special assistant to a member of the Los Angeles City Council has agreed to plead guilty to a federal racketeering charge stemming from a “pay-to-play” bribery scheme where real estate developers and their proxies provided over $1 million in financial benefits, including cash, to the councilmember and others to ensure certain real estate projects received favored treatment.
George Esparza, 33, of Boyle Heights, agreed to plead guilty to one count of conspiring to violate the Racketeer Influenced and Corrupt Organization (RICO) statute.
Esparza was charged with the racketeering offense in a criminal information filed today in United States District Court. In addition to the charging document, federal prosecutors filed a plea agreement in which Esparza committed to entering a guilty plea and agreed to continue cooperating in the ongoing investigation into political corruption in the City of Los Angeles.
In the court documents filed today, Esparza admitted to participating in a criminal enterprise called the Council District A Enterprise (CD-A Enterprise), which was led by his one-time boss, who was chair of the City Council’s Planning and Land Use Management (PLUM) Committee and is described as “Councilmember A.”
“Members and associates of the CD-A Enterprise conspired with one another to facilitate bribery schemes that would provide Councilmember A and other City officials financial benefits and keep Councilmember A in power and maintain the CD-A Enterprise’s political stronghold in the City,” according to the plea agreement.
Esparza admitted that he was a member of the criminal enterprise from early 2013 through November 2018, which is when Esparza began cooperating with federal authorities and after the FBI executed multiple search warrants related to the investigation. According to the plea agreement, during the time of the conspiracy, Esparza and Councilmember A accepted financial benefits and agreed to perform official acts, including:
- filing motions and voting on projects, including matters before the City Council;
- taking, or not taking, action on the PLUM Committee to influence the approval process and project costs;
- negotiating with and exerting pressure on labor unions and other city entities to resolve issues on projects;
- exerting pressure on developers with projects pending before the city; and
- taking official action to enhance the professional reputation and marketability of businesspersons in Los Angeles.
While a member of the criminal enterprise, Esparza participated in several schemes, he admitted in his plea agreement. One scheme centered on a massive downtown project described as “Project E,” which was being developed by a Chinese company run by a Chinese billionaire called “Chairman E” in court papers.
“Chairman E provided defendant Esparza and Councilmember A financial benefits in over a dozen trips to casinos in Las Vegas and Australia,” according to the plea agreement. “Between June 2014 and January 2018, defendant Esparza personally accepted at least approximately $32,000 in gambling chips, plus flights on private jets and commercial airlines, stays at luxurious hotels, expensive meals and alcohol, spa services, event tickets, and escort services from Chairman E.”
The plea agreement also states that, at the urging of another city official described as “Individual 1,” Chairman E agreed to facilitate a $600,000 payment to help Councilmember A confidentially resolve a sexual harassment lawsuit filed against Councilmember A during a 2014 re-election campaign.
In exchange for the $600,000 from Chairman E, Councilmember A routinely assisted with Chairman E’s requests. For example, Councilmember A introduced and secured the passage of a resolution before the City Council that recognized Chairman E’s “achievements and contributions to the economy of CD-A,” the plea agreement states.
Furthermore, Chairman E provided bribes to Esparza and Councilmember A because Councilmember A was poised to significantly benefit plans to redevelop Property E and “transform it into a 77-story skyscraper, making it the tallest building west of the Mississippi River,” according to the plea agreement. This included meeting with Chairman E and his team to discuss tax rebates and other incentives from the City, as well as Councilmember A providing assistance in hiring a consultant to work on Project E. At one point, Esparza told another member of the CD-A staff that Chairman E had “leverage” over Councilmember A because of the financial benefits Chairman E provided. According to court documents, “Chairman E provided over $1 million in bribes to Councilmember A so that Councilmember A would benefit Chairman E’s plans to redevelop his property in CD-A.”
A second bribery scheme described in the plea agreement centers on Project C and a $500,000 cash bribe funded by Developer C to secure Councilmember A’s help in resolving a labor organization’s appeal, which halted the approval process of the real estate development. This bribe, which was facilitated by political fundraiser Justin Jangwoo Kim, was designed to obtain Councilmember A’s influence “to pressure Labor Organization A to withdraw, abandon, or otherwise lose its appeal opposing Project C,” which would allow the project to move forward and would save Developer C $30 million in development costs, the plea agreement states. Esparza admitted that he played a role in negotiating the bribe, as well as having discussions with representatives of Labor Organization A.
In March, Kim agreed to plead guilty to a bribery charge for his role in this scheme. Esparza admitted that he and Kim kept some of the money paid in 2017 as kickbacks for facilitating the bribe, and that he hid $200,000 in cash for Councilmember A. In mid-2017, Esparza asked an employee of Chairman E to conceal the $200,000, as well as other illicit cash, because Esparza feared law enforcement would search his house and discover the money.
In another scheme related to the criminal enterprise, Esparza admitted accepting money from “Businessman A,” who asked Esparza and Councilmember A to use their official positions to make introductions to developers and advocate that they use Businessperson A’s business. For approximately the first six months of 2017, Esparza accepted monthly cash payments of approximately $8,000 to $10,000, with Businessperson A sometimes paying Esparza in the bathroom during meetings in restaurants, according to the plea agreement. Esparza also went on a Businessman A-funded trip to Las Vegas in June 2017 – a trip also attended by then-City Councilman Mitchell Englander, who also has agreed to plead guilty in this investigation related to lying to the FBI about cash and other benefits received from Businessperson A on that trip.
In his plea agreement, Esparza also admitted to lying to special agents with the FBI during interviews in June and July of 2017 by falsely stating, among other things, that he had no knowledge of any city official helping on a project in exchange for money, gifts or campaign contributions.
The court has not scheduled a date for Esparza to enter his guilty plea. Once he does formally enter the guilty plea, he will face a statutory maximum sentence of 20 years in federal prison.
The case against Esparza is part of an ongoing public corruption investigation being conducted by the FBI and the U.S. Attorney’s Office.
The case against Esparza is being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorney Veronica Dragalin of the Public Corruption and Civil Rights Section.
Esparza is the fourth person to agree to plead guilty to a federal felony related to this ongoing investigation. Kim is scheduled to enter his guilty plea on June 3, and Englander is set to plead guilty on June 4. Real estate development consultant George Chiang earlier this month agreed to plead guilty to a RICO charge for participating in the pay-to-play scheme and is set to enter his guilty plea on June 26.
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.
L.A. County Man Previously Convicted of Child Sex Abuse Pleads Guilty to Federal Child Pornography Possession ChargeRead the Press Release
LOS ANGELES – A Cudahy man who previously was convicted in state court of child sex abuse offenses has pleaded guilty in federal court to one count of possession of child pornography, the Justice Department announced today.
Jesse Beltran, 35, entered his guilty plea on Wednesday before United States District Judge Philip S. Gutierrez.
According to his plea agreement, Beltran was convicted in 2008 in Los Angeles Superior Court of two counts of committing lewd and lascivious acts on a child younger than 14 years of age. He was sentenced to eight years in California state prison for those offenses.
Beltran was on parole for that conviction in May 2019 when FBI agents executed a search warrant at his home and recovered a smartphone containing 256 images and 14 videos of child pornography.
The victims in the sexually explicit images and videos included prepubescent children, Beltran admitted in his plea agreement.
Judge Gutierrez scheduled an August 10 sentencing hearing, at which time Beltran will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of 20 years in federal prison.
The FBI investigated this matter.
This case is being prosecuted by Assistant United States Attorney Jeremiah M. Levine of the General Crimes Section.
Hollywood Film Producer Charged with $1.7 Million COVID-Relief FraudRead the Press Release
A California man has been charged with allegedly filing bank loan applications fraudulently seeking more than $1.7 million dollars in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
William Sadleir, 66, of Beverly Hills, California, was charged in a federal criminal complaint filed in the Central District of California with wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.
“This defendant allegedly used Paycheck Protection Program loans to pay off his personal credit card debts and other personal expenses, rather than using the funds for legitimate business needs,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “As the department has made clear, those who defraud the PPP to line their own pockets at the expense of the American people will be brought to justice.”
“This film producer allegedly made a series of misrepresentations to a bank and the Small Business Administration to illegally secure taxpayer money that he then used to fund his nearly empty personal bank account,” said U.S. Attorney Nick Hanna of the Central District of California. “The Paycheck Protection Program was implemented to help small businesses stay afloat during the financial crisis, and we will act swiftly against those who abuse the program for their own personal gain.”
“These funds were designed to be a lifeline to businesses struggling to stay afloat during the current crisis,” said Assistant Director in Charge Paul Delacourt of the FBI’s Los Angeles Field Office. “The FBI is committed to maintaining the integrity of the PPP and will hold accountable those who cheat the system at the expense of American taxpayers.”
“SBA OIG applauds due diligence by SBA’s lending partners to maintain the integrity of the lending programs,” said Special Agent in Charge Weston King of the SBA Office of Inspector General (SBA OIG) Western Region. “Providing false statements to gain access to SBA’s programs will be aggressively investigated by our office in partnership with our law enforcement counterparts. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”
“Today’s charges hold the defendant responsible for his alleged actions to swindle money out of a federal program intended to help those in need during a pandemic crisis,” said Special Agent in Charge Wade V. Walters of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG). “When an individual cheats the Paycheck Protection Program out of money, it deprives hard-working Americans and deserving small businesses. The FDIC OIG is committed to working with our law enforcement partners to investigate financial crimes in order to preserve the integrity of the nation’s banking sector.”
According to court documents unsealed today in U.S. District Court in Los Angeles, Sadleir allegedly obtained over $1.7 million in forgivable loans guaranteed by the SBA by falsely representing that the funds would be used to support payroll expenses for three film production and distribution companies, when, in fact, Sadleir intended to use and did use a significant portion of the funds for personal and non-business-related expenses, including personal credit cards and a car loan. Sadleir allegedly used three entities he controlled to obtain over $1.7 million in PPP loans guaranteed by the SBA for COVID-19 relief.
The applications submitted to the lenders certified that the funds would be used for payroll expenses and other specific business-related expenses, such as utilities or rent payments. According to the complaint, these certifications were false. As soon as Sadleir obtained the funds, he allegedly transferred over half the money to a personal bank account and began using and attempting to use the funds to pay off personal credit card debts totaling more than $80,000 and a car loan totaling approximately $40,000, among other personal expenses.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75 percent of the forgiven amount for payroll.
A federal criminal complaint is merely an accusation. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Trial Attorney Amanda R. Vaughn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Alex Wyman for the Central District of California are prosecuting the case.
The Justice Department acknowledges and thanks the FBI, the SBA OIG, and the FDIC OIG for their efforts investigating this matter.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Hollywood Executive Arrested on Federal Fraud Charges that Allege He Pocketed Money from COVID-19 Relief ProgramRead the Press Release
LOS ANGELES – The recently ousted head of Aviron Pictures was arrested this morning on federal fraud charges that allege he applied for $1.7 million in loans under the Paycheck Protection Program (PPP), falsely certified that the money would be used to finance the operations of other Aviron entities, and then used some of the relief funds for his personal expenses.
William Sadleir, 66, of Beverly Hills, was taken into custody without incident by special agents with the FBI, the Small Business Administration’s Office of Inspector General (SBA OIG), and the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG). Sadleir is expected to make his initial court appearance this afternoon in United States District Court in downtown Los Angeles.
Sadleir was arrested pursuant to a criminal complaint that accuses him of fraudulently filing bank loan applications that sought more than $1.7 million dollars in forgivable PPP loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Sadleir allegedly obtained the forgivable loans by falsely representing that the funds would be used to support payroll expenses, when, in fact, Sadleir intended to use and did use a significant portion of the funds for personal and non-business-related expenses
The complaint, which was filed Thursday and unsealed after his arrest today, charges Sadleir with wire fraud, bank fraud, making false statements to a financial institution, and making false statements to the Small Business Administration.
According to the affidavit in support of the complaint, Sadleir last month caused applications for PPP loans to be submitted to JPMorgan Chase on behalf of Aviron Group, LLC; Aviron Licensing, LLC; and Aviron Releasing, LLC dba Regatta. The bank approved the loans, and Sadleir received more than $1.7 million. “[I]mmediately upon receiving the funds a significant amount was diverted to Sadleir’s personal accounts and used for personal expenses,” the complaint alleges.
Sadleir was terminated from Aviron Pictures in late 2019, and people associated with the film production company told investigators that Sadleir currently had no role in Aviron Pictures or the related entities, according to the affidavit, which notes that Aviron Group, Aviron Licensing and Aviron Releasing are not engaged in any ongoing operations.
“This film producer allegedly made a series of misrepresentations to a bank and the Small Business Administration to illegally secure taxpayer money that he then used to fund his nearly empty personal bank account,” said United States Attorney Nick Hanna. “The Paycheck Protection Program was implemented to help small businesses stay afloat during the financial crisis, and we will act swiftly against those who abuse the program for their own personal gain.”
“This defendant allegedly used Paycheck Protection Program loans to pay off his personal credit card debts and other personal expenses, rather than using the funds for legitimate business needs,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “As the department has made clear, those who defraud the PPP to line their own pockets at the expense of the American people will be brought to justice.”
“These funds were designed to be a lifeline to businesses struggling to stay afloat during the current crisis,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI is committed to maintaining the integrity of the PPP and will hold accountable those who cheat the system at the expense of American taxpayers.”
Authorities have linked Sadleir to the three PPP loan applications made on behalf of the three Aviron entities. All three applications claimed each company had 33 employees and monthly payroll expenses of well over $200,000. On April 30, JPMorgan Chase approved the loan applications, and the next day money was wired to nearly empty JPMorgan Chase bank accounts associated with the three entities.
Within days, nearly $1 million of the PPP loan money was transferred into Sadleir’s personal account at JPMorgan Chase, the affidavit alleges. Investigators have determined that some of this money was used to pay personal expenses, including payments to Sadleir’s and his wife’s American Express cards. One payment allegedly made with PPP loan proceeds – a $40,000 payment on Sadleir’s car loan – was reversed and JPChase Morgan froze the accounts associated with the alleged scheme.
The CARES Act, which was enacted on March 29, was designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. Last month, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75 percent of the forgiven amount for payroll.
“SBA OIG applauds due diligence by SBA’s lending partners to maintain the integrity of the lending programs,” said Special Agent in Charge Weston King of the SBA OIG Western Region. “Providing false statements to gain access to SBA’s programs will be aggressively investigated by our office in partnership with our law enforcement counterparts. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”
“Today’s charges hold the defendant responsible for his alleged actions to swindle money out of a federal program intended to help those in need during a pandemic crisis,” said FDIC OIG Special Agent in Charge Wade V. Walters. “When an individual cheats the Paycheck Protection Program out of money, it deprives hard-working Americans and deserving small businesses. The FDIC OIG is committed to working with our law enforcement partners to investigate financial crimes in order to preserve the integrity of the nation’s banking sector.”
A complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The four charges alleged in the criminal complaint collectively carry a maximum statutory penalty of 82 years in federal prison.
The case against Sadleir is being investigated by the FBI, the SBA’s Office of Inspector General, and the Federal Deposit Insurance Corporation Office of Inspector General.
This case is being prosecuted by Assistant United States Attorney Alex Wyman of the Major Frauds Section and Justice Department Trial Attorney Amanda R. Vaughn of the Criminal Division’s Fraud Section.
Sadleir’s arrest this morning was also pursuant to a separate criminal complaint filed by federal prosecutors in New York. That complaint charges Sadleir with engaging in multiple fraudulent schemes relating to investments in Aviron Pictures and its affiliated entities. The United States Securities and Exchange Commission today announced a civil lawsuit related to the New York criminal case.
Anyone with information about allegations of fraud related to COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Texas Woman Pleads Guilty to Narcotics and Money Laundering Conspiracy Charges for Opioid Pill Mill that Shipped Drugs InterstateRead the Press Release
LOS ANGELES – A Texas woman who helped lead an interstate narcotics trafficking ring pleaded guilty today to federal criminal charges arising out of an opioid buy-back scheme in which a doctor at a Los Angeles clinic prescribed opioids to putative patients that the clinic bought back and sold on the black market in California and Texas.
Angela Gillespie-Shelton, a.k.a. “Boss Lady” and “Angotti”, 54, of Houston, pleaded guilty to one count of conspiracy to distribute controlled substances and one count of conspiracy to engage in money laundering.
According to her plea agreement, from October 2012 to January 2015, Gillespie-Shelton and her co-conspirators ran Southfork Medical Clinic, located in the Harvard Heights neighborhood of Los Angeles. At the time, Gillespie-Shelton primarily was based in Texas, but she frequently traveled to California.
At the clinic, Gillespie-Shelton’s co-conspirator – Dr. Madhu Garg, 69, of Glendora – saw “patients” and regularly prescribed them narcotics. The drugs included oxycodone and hydrocodone (commonly sold under the brand names Vicodin, Norco and Lortab), alprazolam (best known by the brand name Xanax), carisoprodol (a muscle relaxant sold under the brand name Soma) and promethazine with codeine (a cough syrup sold on the street as “purple drank” and “sizzurp”). After the “patients” filled the prescriptions, Gillespie-Shelton and her co-conspirators bought the drugs from their “patients” and shipped them to Texas, where they were sold on the black market. Gillespie-Shelton’s co-conspirators also stole a physician’s identity to issue falsified prescriptions to obtain additional narcotics.
In Texas, Gillespie-Shelton used two pharmacies that she controlled as a front to sell the drugs shipped from Southfork on the black market. Under Gillespie-Shelton’s control, the pharmacies in Texas also filled false or fraudulent prescriptions and received kickbacks from the fake prescriptions.
Gillespie-Shelton also laundered more than $1 million from the diversion schemes through numerous accounts. She used some of the money to further the narcotics trafficking conspiracy, which included paying rent for the Southfork Clinic and a stash house in Los Angeles, as well as paying Garg more than $200,000 for writing the illegal prescriptions.
Garg pleaded guilty in February 2016 to illegally distributing oxycodone and money laundering, and she served an 18-month prison sentence.
United States District Judge John A. Kronstadt has scheduled an October 1 sentencing hearing, at which time Gillespie-Shelton will face a statutory maximum sentence of 40 years in federal prison.
The case against Gillespie-Shelton was investigated by the Drug Enforcement Administration, IRS Criminal Investigation, the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the California Department of Justice, and the Texas Department of Public Safety. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force.
The prosecution of Gillespie-Shelton is being handled by Assistant United States Attorney Chelsea Norell of the International Narcotics, Money Laundering, and Racketeering Section.
Inland Empire Man Arrested on Wire Fraud Charge that He Engineered $10 Million Ponzi Scheme Targeting Elderly and Retired VictimsRead the Press Release
RIVERSIDE, California – A Riverside County man was arrested this morning on a federal criminal complaint alleging he swindled dozens of his clients, many of them elderly retirees, in a long-running Ponzi scheme that took in more than $10 million in victim-investor money.
Paul Horton Smith Sr., 56, of Moreno Valley, was taken into custody today by the FBI and is expected to make his initial appearance this afternoon in United States District Court in Los Angeles.
The complaint charges Smith with one count of wire fraud, a crime that carries a statutory maximum sentence of 20 years in federal prison.
According to the affidavit filed with the complaint, from at least 2013 until the present, Smith offered 75 clients an investment he called “Northstar,” which he said was a private annuity contract that was a safe alternative to the stock market and provided a generous annual rate of return of between 5 percent and 6 percent. Instead, Smith used his victim investors’ money as lulling payments to earlier investors.
Smith, who advertised himself on his website as a chartered senior financial planner, is the owner of several businesses in the Riverside area, including Planning Services, Inc. and Northstar Communications LLC.
He also conducted free seminars via Planning Services at various locations around the Riverside area where he discussed estate planning, trust creation to protect assets, and other financial matters. Smith solicited some of his victims at this seminar, the affidavit states.
One victim, a 70-year-old woman who had known Smith from their mutual church association in the 1990s, sold a home in Arizona in August 2016 and wrote a $175,000 check to Northstar for investment. Instead of investing the victim’s money, Smith transferred her funds to other investors and he used her money to pay off the other investors’ tax bills with the IRS and the Franchise Tax Board, according to the affidavit.
In November 2019, another victim, an 86-year-old woman who had known Smith for many years, invested approximately $169,126 in Northstar from the sale of a rental property. The following day, Smith took $134,863 of the victim’s money to pay off another victim investor.
A review of bank records show that these victims have transferred more than $10 million to Smith’s business entities since 2013 and there is evidence that this scheme goes back to the early 2000s, 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.
The FBI investigated this matter. The Securities and Exchange Commission provided substantial assistance.
This case is being prosecuted by Assistant United States Attorney Benjamin J. Weir of the Riverside Branch Office.
Encino Man Sentenced to 9 Years in Prison for Leading Conspiracy to Distribute Opioids via Sham Clinics and Corrupt DoctorsRead the Press Release
LOS ANGELES – A San Fernando Valley man was sentenced today to 108 months in federal prison for leading a conspiracy to distribute powerful prescription opioids via sham medical clinics that hired corrupt doctors who wrote fraudulent prescriptions to black market customers.
Minas Matosyan, a.k.a. “Maserati Mike,” 40, of Encino, was sentenced by United States District Judge Philip S. Gutierrez. Matosyan pleaded guilty in April 2019 to one count of conspiracy to distribute a controlled substance.
Matosyan was arrested in August 2017 pursuant to a federal grand jury indictment charging him and 12 other defendants with scheming to divert at least 2 million controlled prescription pills for sale on the black market. According to his plea agreement, Matosyan and his co-conspirators controlled the sham clinics and hired corrupt doctors who allowed their names to be used on fraudulent prescriptions in exchange for kickbacks. Matosyan also admitted that he and his co-conspirators stole the identities of other doctors and then issued prescriptions in those doctors’ names, either by personally acquiring prescription pads in the doctors’ names or by arranging for other co-conspirators to do so.
As part of the scheme, Matosyan staffed receptionists at the clinics who would falsely verify the phony prescriptions to pharmacists who called to check on their veracity. He also sold narcotic prescriptions to black market customers – either directly or through couriers – and bulk quantities of hydrocodone and oxycodone he had acquired from phony prescriptions filled at pharmacies by other customers.
In May 2016, Matosyan offered a doctor a “very lucrative position” where the doctor would “sit home making $20,000 a month doing nothing,” according to Matosyan’s plea agreement. After the doctor declined the offer, Matosyan stole the doctor’s identity, sending a co-conspirator a text message containing the doctor’s full name, medical license number and national provider identifier number that the co-conspirator used to order prescription pads in the doctor’s name. Over the next two months, Matosyan and his co-conspirators sold fraudulent prescriptions, purportedly issued by the victim doctor, for at least 9,450 pills of oxycodone and 990 pills of hydrocodone.
Matosyan also admitted in the plea agreement that he conspired with others, including a lawyer, Fred Minassian, 53, of Glendale, to obstruct justice, by providing falsifying medical records to police to thwart an investigation into the seizure of a load of Vicodin from one of the conspiracy’s major customers.
This case so far has resulted in 11 convictions. Minassian is scheduled to go on trial on July 7.
The investigation was conducted by the Drug Enforcement Administration; IRS Criminal Investigation; the U.S. Department of Health and Human Services - Office of Inspector General; the Ventura County Sheriff’s Office, Pharmaceutical Crimes Unit; and Homeland Security Investigations. Substantial assistance was provided by the Los Angeles County Sheriff’s Department, the Los Angeles Police Department, the California Department of Justice, and the Orange Police Department.
This matter was prosecuted by Assistant United States Attorney Benjamin R. Barron, Chief of the Santa Ana Branch Office.
Los Angeles-Area Nursing School Agrees to Comply with Federal Law by Allowing Deaf Students to Attend Its Training ProgramsRead the Press Release
LOS ANGELES – Angeles Institute, a for-profit nursing school based in Artesia, has agreed to comply with the Americans with Disabilities Act (ADA) by allowing individuals who are deaf or hard of hearing to enroll. As part of a settlement agreement with the United States, the school also agreed to provide auxiliary aids and services necessary to ensure effective communication to these students.
The settlement, which was finalized today, resolves allegations that Angeles Institute denied a prospective student admission to its nursing assistant program because he is deaf. The ADA prohibits public accommodations, including private educational institutions like Angeles Institute, from denying access to their programs or services to individuals with disabilities.
Under the settlement agreement, Angeles Institute must:
- modify its policies to clarify that prospective students cannot be denied admission because of a disability;
- provide interpreters or other auxiliary aids and services free of charge when necessary to ensure effective communication with students and prospective students;
- modify its courses if necessary to ensure they are accessible to individuals with disabilities;
- appoint an ADA Coordinator to ensure that students with disabilities have equal access to the school’s programs and services; and
- pay $10,000 to the complainant and a $5,000 civil penalty to the United States.
Assistant United States Attorney Matthew Nickell of the Civil Division’s Civil Rights Section handled this matter.
Angeles Institute fully cooperated with the government’s investigation.
This year marks the ADA’s 30th anniversary. The Department of Justice plays a central role in advancing the nation’s goal of equal opportunity, full participation, independent living and economic self-sufficiency for people with disabilities.
Koreatown Man Pleads Guilty to Child Pornography Charges after Coercing Minor Girls to Send Him Sexually Explicit ImagesRead the Press Release
LOS ANGELES – A Koreatown man today pleaded guilty to two child exploitation charges for convincing teenage girls to send him sexually explicit images, and then coercing victims to send more with threats of publishing the images he initially obtained.
Francisco Sanchez, 31, pleaded guilty to two counts of production of child pornography.
In a plea agreement filed in United States District Court, Sanchez admitted that he used websites and computer applications to “meet” minor girls. From 2014 through September 2016, Sanchez used the pseudonym “Eddie Nash” to pose as a teenage boy and develop 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.
Sanchez “intentionally targeted girls that he knew to be suicidal or despondent, because [he] believed they would be easier to manipulate and control,” Sanchez admitted in the plea agreement.
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 is scheduled to be sentenced on September 15 by United States District Judge Dolly M. Gee.
Each charge of production of child pornography carries a 15-year mandatory minimum sentence and a maximum statutory penalty of 30 years in federal prison.
After he is released from prison, Sanchez will be required to register as a sex offender.
This matter was investigated by the FBI and the Los Angeles Child Exploitation and Human Trafficking Task Force.
This case is being prosecuted by Assistant United States Attorneys Damaris Diaz of the Violent and Organized Crime Section, and Julia S. Choe of the Cyber and Intellectual Property Crimes Section.
Federal Law Enforcement Leaders Address Discrimination During the Coronavirus PandemicRead the Press Release
LOS ANGELES – During the coronavirus pandemic, the Justice Department is continuing its mission to detect, investigate and prosecute wrongdoing. United States Attorney Nick Hanna and FBI Assistant Director in Charge Paul Delacourt today stressed that a crucial part of this mission is ensuring that all citizens are free from harassment or discrimination because of their ethnicity.
“Federal law enforcement is dedicated to working with our colleagues on the state level and the entire community we serve to prevent acts of bias, especially violent acts or threats,” Mr. Hanna said. “Everyone in the United States has felt the effects of the ongoing emergency, and we want to ensure that no one suffers further disruption due to fear, prejudice or xenophobia.”
“While we are made up of many ethnicities and backgrounds in this country, particularly in a multi-cultural city like Los Angeles, we must always be cognizant that we are all Americans and must respect the fundamental civil rights which unite us,” said Mr. Delacourt, who is in charge of the FBI’s Los Angeles Field Office. “The FBI is concerned about the potential for hate crimes by individuals and groups targeting minority populations whom they wrongly believe are responsible for the spread of the virus. While the FBI routinely reaches out to community organizations in the areas we serve, we want to reach the community directly by asking anyone who has been victimized by a crime inspired by hatred or discrimination to contact their nearest FBI office to make a report.”
There is a significant disparity between hate crimes that actually occur and those reported to law enforcement. It is critical to report hate crimes not only to show support for the people directly impacted, but also to send a clear message that the community will not tolerate these kinds of crimes. Reporting also enables law enforcement to fully understand the scope of the problem in a community and assign resources toward preventing and addressing crimes of bias and hate.
Members of the public are encouraged to report crimes motivated by bias or hate to law enforcement. If you or someone you know are in immediate danger, call 911. If you believe you have been the target or victim of a hate crime or other violation of your civil rights, please contact your local FBI field office. You may reach the FBI’s Los Angeles Field Office 24 hours a day at (310) 477-6565 or you may submit an online tip at https://www.fbi.gov/tips.
The United States Attorney’s Office for the Central District of California and the FBI’s Los Angeles Field Office serve approximately 20 million residents in the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo. The United States Attorney’s Office and the FBI have dedicated civil rights units that vigorously investigate and prosecute allegations of hate crimes against victims targeted because of their race or ethnicity.
United States Attorney’s Office Increases Efforts to Combat Sexual Harassment in Housing During the COVID-19 PandemicRead the Press Release
LOS ANGELES – United States Attorney Nick Hanna is asking anyone who has witnessed or experienced sexual harassment by a landlord, property manager, maintenance worker, or anyone with control over housing to report that conduct to the Department of Justice.
The COVID-19 pandemic has impacted the ability of many people to pay rent on time and has increased housing insecurity. The Department of Justice has received reports of housing providers trying to exploit the crisis to sexually harass tenants. Sexual harassment in housing is illegal, and the Department of Justice stands ready to investigate such allegations and pursue enforcement actions where appropriate.
“Sexual harassment in housing is reprehensible and contrary to the rule of law,” Mr. Hanna said. “My office works closely with state and local partners to identify incidents of sexual harassment in housing and will use all available enforcement tools against perpetrators.”
Sexual harassment in housing includes demands for sex or sexual acts in order to buy, rent or continue renting a home. It also includes other unwelcome sexual conduct that makes it hard to keep living in or feel comfortable in your home.
The Justice Department’s Sexual Harassment in Housing Initiative (Iniciativa del DOJ para Combatir el Acoso Sexual en Vivienda) was launched in 2017 and has resulted in the filing of lawsuits across the nation alleging a pattern or practice of sexual harassment in housing. As part of the initiative, the Justice Department filed a lawsuit in January alleging that the property manager of two apartment buildings in Los Angeles violated the Fair Housing Act by sexually harassing female tenants for more than a decade. The lawsuit alleged that the owners of the property are also responsible for his conduct.
The Department of Justice, through the Civil Rights Division and the U.S. Attorney’s Offices, enforces the Fair Housing Act, which prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Sexual harassment is a form of sex discrimination prohibited by the Act.
The Justice Department encourages anyone who has experienced sexual harassment in housing, or knows someone who has, to contact the Civil Rights Division by calling (844) 380-6178 or emailing [email protected]. Individuals may also report housing discrimination or other civil rights violations to the Civil Rights Section in the Civil Division of the United States Attorney’s Office by calling (213) 894-2879, emailing [email protected], or completing and submitting this form in English or Spanish.
Individuals may also file a complaint alleging harassment or discrimination in housing with the Department of Housing and Urban Development through its website or by calling (800) 669-9777.
Two Arrested on Federal Criminal Complaint Alleging They Participated in Murderous Cross-Border Kidnapping ConspiracyRead the Press Release
LOS ANGELES – A former Colton resident and her boyfriend have been arrested on a federal criminal complaint alleging they collected ransom money as part of a kidnapping conspiracy where California residents were kidnapped in Mexico and two of them were murdered, the Justice Department announced today.
Leslie Briana Matla, 20, a United States citizen who now is a resident of Mexico, was arrested Thursday in San Diego pursuant to a complaint that charges her and her boyfriend, Juan Carlos Montoya Sanchez, 25, of Tijuana, Mexico, with one count of money laundering conspiracy.
Sanchez was arrested in San Diego on Sunday and is expected to make his initial appearance this afternoon in United States District Court in Los Angeles. Matla made her initial court appearance on Friday and remains in federal custody.
The complaint alleges that Matla crossed the border from Mexico into the United States to pick up ransom payments from kidnapped victims’ family members at locations predetermined by her co-conspirators.
According to an affidavit filed with the complaint, on March 28, April 13 and April 22, three men – residents of San Diego, Norwalk and Pasadena – were kidnapped in Tijuana while on business or visiting family. The victims’ families were notified via a caller with a Mexican telephone number to deposit ransom money at a specific location.
Mexican authorities found the San Diego victim’s body on March 29 – one day after the victim’s adult son placed a bag containing $25,000 inside the women’s restroom of a McDonald’s restaurant in San Ysidro. The body of the Norwalk victim was found in Mexico on April 14, one day after the victim’s family tried, but did not succeed, to pay a $25,000 ransom to a woman whom law enforcement believes was Matla, at a Lowe’s parking lot in Norwalk, according to court documents.
On April 22, a Pasadena woman called law enforcement to report a family member had been kidnapped in Mexico with a ransom demand of $20,000. One of the kidnappers, calling from a Mexican phone number, informed the victim’s family that a pregnant woman would pick up the ransom money at a Food 4 Less parking lot in Lynwood. That same day, law enforcement rescued the victim, who was being held hostage at the same Tijuana hotel as the first two kidnapping victims, according to cell phone records. Nine suspects were arrested by Mexican authorities at the hotel.
A review of U.S.-Mexico border crossing records, security camera videos from the various pickup locations, and social media led law enforcement to identify Matla, as the woman sent to San Ysidro, Norwalk, and Lynwood to pick up the ransom money on the dates in question, the affidavit states.
Records show that Sanchez received wire transfers from two of the kidnapping victims, the complaint alleges.
If convicted of this charge, Matla and Sanchez would face statutory maximum sentences of life in federal prison.
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 FBI investigated this matter.
This case is being prosecuted by Assistant United States Attorneys Jeffrey M. Chemerinsky and Joseph D. Axelrad of the Violent and Organized Crime Section.
Chino Real Estate Agent Pleads Guilty to Charge for Coordinating Multi-Million-Dollar Scheme that Funded Marijuana Grow HousesRead the Press Release
LOS ANGELES – A Chino real estate agent pleaded guilty today to a federal criminal charge for coordinating a scheme that used millions of dollars to purchase nine residential homes in San Bernardino County that were then converted into illegal marijuana grow houses.
Lin Li, a.k.a. Aaron Li, 38, pleaded guilty to one count of conspiracy to manufacture, possess and distribute at least 1,000 marijuana plants.
Between May 2013 and September 2017, Li facilitated the purchase by Chinese investors of nine residential homes in Chino, Chino Hills and Ontario. While exercising control over these properties, Li converted or allowed the conversion of the houses to marijuana grow operations. Li also admitted in his plea agreement that the conspiracy trafficked marijuana, with most of the processed marijuana being sold to customers in California, Nevada and New York.
Between October 2016 and September 2018, Li also created and signed false lease documents naming straw tenants for seven of the homes so they could be used to grow marijuana without being traced back to him or the other marijuana growers, according to Li’s plea agreement. Some of the false leases contained clauses prohibiting marijuana cultivation.
The down payments for most of the grow houses were traced back to wire transfers from China. The titles for most of the homes were transferred, shortly after they were purchased, to limited liability companies associated with Li, who served as the homes’ property manager.
Li and his co-conspirators physically diverted electricity directly from power lines, thus stealing power from the electric companies, hiding the grow houses’ high power usage from law enforcement, and creating fire risks in neighborhoods, according to court documents.
In early 2018, a neighbor complained to law enforcement about the “overwhelming” smell of marijuana coming from one of the Chino Hills homes and how no one seemed to live there, court papers state.
Law enforcement officials executed search warrants in 2018 and 2019 at Li’s home and the nine marijuana grow houses in San Bernardino County. As a result of the searches, authorities seized approximately 4,342 marijuana plants and 91.72 kilograms of processed marijuana from the grow houses, as well as approximately $89,995 in drug proceeds from Li’s house.
The total purchase price for the seven homes, which were bought between July 2013 and September 2017, was $4,067,882, according to court documents.
Li also admitted in his plea agreement that these marijuana grows violated California law because they were not licensed to cultivate or sell marijuana, and all of the grow houses were in cities that prohibited commercial marijuana activity.
United States District Judge George H. Wu has scheduled a March 22, 2021 sentencing hearing. As a result of today’s guilty plea, Li faces a statutory maximum sentence of life imprisonment.
A second defendant in this case – Jimmy Yu, 45, of Pasadena, an alleged grow house caretaker – is scheduled to go to trial in this matter in February 2021.
Ben Chen, 43, of Alhambra, who also took care of the marijuana grows, pleaded guilty in May 2019 to one count of conspiracy to manufacture, distribute, and possess with intent to distribute marijuana. Chen is scheduled to be sentenced on August 17.
This matter was the result of an investigation initiated by the San Bernardino County Sheriff’s Department, which later was joined by Homeland Security Investigations. This case is being prosecuted in conjunction with the Organized Crime Drug Enforcement Task Force.
This case is being prosecuted by Assistant United States Attorneys A. Carley Palmer of the Criminal Appeals Section and Jonathan S. Galatzan of the Asset Forfeiture Section.
Omnicare Agrees to Pay over $15 Million to Resolve Allegations It Improperly Dispensed Opioids at Long-Term Care FacilitiesRead the Press Release
LOS ANGELES – Omnicare, Inc., a subsidiary of CVS Health and a provider of pharmacy services to long-term care facilities, has agreed to pay the United States a $15.3 million civil penalty to resolve allegations that it violated federal law by, among other things, allowing opioids and other controlled substances to be dispensed without a valid prescription, United States Attorney Nicola T. Hanna announced today.
The Cincinnati-based Omnicare operates “closed door” pharmacies – meaning they were not open to the public – that deliver controlled substances to nursing homes and other long-term care facilities (LTCFs). Omnicare makes daily deliveries of prescription medications to residents of LTCFs, and it also pre-positions limited stockpiles of controlled substances at LTCFs in “emergency kits,” which are to be dispensed to patients on an emergency basis. These emergency kits, which often include opioids and other controlled substances that are commonly abused and diverted, remain part of Omnicare’s inventory and must be tightly controlled and tracked. The controlled substances may be dispensed only pursuant to a valid prescription.
The United States alleged that Omnicare violated the federal Controlled Substances Act in its handling of emergency prescriptions, its controls over the emergency kits, and its processing of written prescriptions that lacked required elements such as the prescriber’s signature or DEA number. The federal investigation found that Omnicare failed to control emergency kits by improperly permitting LTCFs to remove opioids and other controlled substances from emergency kits days before doctors provided a valid prescription. The investigation also revealed that Omnicare had repeated failures in its documentation and reporting of oral emergency prescriptions of Schedule II controlled substances.
As part of the settlement agreement announced today, Omnicare agreed to pay the $15.3 million civil penalty and entered into a Memorandum of Agreement with the Drug Enforcement Administration that will require Omnicare to increase its auditing and monitoring of emergency kits placed at LTCFs.
“Omnicare dispensed powerful opioids without valid prescriptions and failed to inform federal authorities of significant losses of opioids and other drugs,” United States Attorney Hanna stated. “With the opioid crisis still a very real concern, every entity that handles dangerous drugs will be held accountable to ensure powerful narcotics are properly dispensed and not diverted to the black market.”
“Omnicare failed in its responsibility to ensure proper controls of medications used to treat some of the most vulnerable among us,” said DEA Acting Administrator Uttam Dhillon. “DEA is committed to keeping our communities safe by holding companies like Omnicare accountable for such failures, while ensuring continuity of care and necessary access to emergency prescription drug supplies.”
This matter was investigated by the DEA’s Field Divisions in Denver, Los Angeles, San Francisco and Seattle, in conjunction with five United States Attorney’s Offices: the Central District of California, the Eastern District of California, the District of Colorado, the District of Oregon, and the District of Utah. The settlement agreement, which was finalized on May 6, resolves Omnicare’s civil liability for the alleged CSA violations in those five districts.
The claims settled by this civil agreement are allegations. In entering into this settlement agreement, Omnicare did not admit to any liability.
The United States Attorney’s Office for the Central District of California was represented in this matter by Assistant United States Attorney Charles E. Canter of the Civil Division's Civil Fraud Section.
Consultant Agrees to Plead Guilty to RICO Offense Related to Bribery Scheme that Enriched L.A. City Councilmember and AssociatesRead the Press Release
LOS ANGELES – A real estate development consultant has agreed to plead guilty to a federal racketeering offense for participating in a wide-ranging “pay-to-play” scheme in which developers bribed public officials – including a member of the Los Angeles City Council – to secure official acts that would benefit their projects.
George Chiang, 41, of Granada Hills, agreed to plead guilty to one count of conspiring to violate the Racketeer Influenced and Corrupt Organization (RICO) statute.
Chiang was charged with participating in the RICO conspiracy in a criminal information filed today in United States District Court. In conjunction with the charging document, federal prosecutors also filed a plea agreement in which Chiang agreed to fully cooperate in the government’s ongoing investigation into political corruption in the City of Los Angeles.
In the court documents, Chiang admitted that he participated in a criminal enterprise called the Council District A Enterprise (CD-A Enterprise). The enterprise was led by a member of the Los Angeles City Council and involved individuals engaged in a course of conduct – including bribery and honest services fraud – designed to enrich themselves, to conceal their activities from authorities and the public, and to maintain and advance their political power.
The public officials involved in the CD-A Enterprise received cash; consulting and retainer fees; political contributions; tickets to concerts, shows, and sporting events; and other gifts in exchange for affecting the success of development projects.
In early 2014, Chiang was a real estate broker who was recruited by “Individual 1” – a longtime employee of the City of Los Angeles, who eventually became the Deputy Mayor for Economic Development – to be a consultant who would interface with Chinese companies that were developing real estate projects in Los Angeles, according to court documents.
As he started providing consulting services, Chiang became a close political ally of “Councilmember A,” who was a member of the Planning and Land Use Management Committee and member of the Economic Development Committee, according to court documents. Chiang also became a close ally of Councilmember A’s special assistant. Through these relationships, Chiang developed a business relationship with Justin Jangwoo Kim, a fundraiser for Councilmember A. Kim previously agreed to plead guilty to a bribery offense involving Councilmember A and the special assistant.
“Members and associates of the CD-A Enterprise conspired with one another to facilitate bribery schemes that would provide Councilmember A and other City officials financial benefits and keep members in power to maintain the CD-A Enterprise’s political stronghold in the City,” according to Chiang’s plea agreement. “In exchange, Councilmember A, Individual 1, and members and associates of the CD-A Enterprise, would take official action to ensure certain development projects and CD-A Enterprise associates received favored treatment from the City and thereby secure their bribe-financed influence. In addition, members and associates of the CD-A Enterprise sought political contributions from developers and their proxies (e.g., lobbyists, consultants, etc.) to benefit Councilmember A and his allies in exchange for official acts to benefit those developers and their proxies, including defendant Chiang.”
Chiang’s plea agreement contains a 22-page “factual basis” that details certain activities of the CD-A criminal enterprise. According to the factual basis, Councilmember A accepted bribes from “Company D,” a China-based real estate development company, which employed Chiang as a consultant. Among other things, Company D funneled $66,000 to an associate of Councilmember A and pledged $100,000 to a political action committee to benefit a relative of Councilmember A running for the CD-A seat on the City Council. In exchange, Councilmember A filed motions and voted to approve Company D’s “Project D” at City hearings.
In addition, Chiang agreed to pay Individual 1 a share of the lucrative consulting proceeds he received from Company D in exchange for Individual 1 shepherding Project D through the approval process in Individual 1’s capacity as Deputy Mayor, according to the plea agreement’s factual basis. Individual 1 directly and indirectly accepted more than $100,000 from Chiang for assisting in obtaining approvals for Project D, including by exerting pressure on other City officials who could influence the project’s success, according to court documents.
The court has not scheduled a date for Chiang to enter his guilty plea. Once he does formally enter the guilty plea, he will face a statutory maximum sentence of 20 years in federal prison.
The case against Chiang is part of an ongoing public corruption investigation being conducted by the FBI and the U.S. Attorney’s Office.
Chiang is the third person to agree to plead guilty to a federal felony related to this ongoing investigation. In addition to Kim, former Los Angeles City Councilmember Mitchell Englander has agreed to plead guilty to a charge of scheming to falsify material facts related to his cover up of cash payments and other gifts offered from a Los Angeles businessperson. Kim is scheduled to enter his guilty plea on June 3, and Englander is set to plead guilty on June 4.
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.
The case against Chiang is being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorney Veronica Dragalin of the Public Corruption and Civil Rights Section.
Santa Monica Man Admits Orchestrating Online Romance Scam that Conned Four Women into Investing in His Bogus CompaniesRead the Press Release
LOS ANGELES – A Santa Monica man has agreed to plead guilty to a federal fraud charge for a romance scam in which he deceived women he met online and elsewhere into investing tens of thousands of dollars into his sham sound design and software companies, only to take the money and spend it on himself.
Antonio Mariot Wilson, a.k.a. “Dr. Tony Mariot” and “Brice Carrington,” 57, agreed to plead guilty to one count of wire fraud, according to a plea agreement filed today in United States District Court.
Between May 2015 and October 2018, Wilson met four women, including on Bumble and other dating apps, and convinced them to engage in romantic relationships with him before conning them into giving him hundreds of thousands of dollars for his purported businesses, according to his plea agreement. One of Wilson’s victims, whom he met at a gym where he worked as a manager, was actress Jenifer Lewis, whose credits include the television series, “Black-ish.”
To create a false impression of legitimacy and prestige, Wilson falsely claimed to be a Navy SEAL, an Oxford University graduate, and an Oxford professor teaching biblical antiquities at UCLA.
Relying on the intimacy he created in his victims through these false impressions, Wilson induced his victims to invest in one of his two companies: Ultimate FX, which he claimed was a sound design company, and 2nd Life, a purported software business designed to provide animated instruction on applying for government benefits.
Wilson conned the victims to invest in these companies by making false statements, such as claiming that the ABC television network and EA Sports video game developer had used Ultimate FX for their shows and games. Wilson also falsely claimed that investors – real people whose identities he used without authorization – had valued 2nd Life at more than $30 million and wanted to invest in the company. Wilson also falsely stated that 2nd Life had a present valuation of $3.2 million, court documents state.
But in reality, Wilson stole the victims’ money and used it to fund his own lifestyle and pay his own personal expenses, concealing the fact that he previously pleaded guilty to carrying out a very similar scheme to defraud Ultimate FX investors. Wilson served a four-year term in federal prison after pleading guilty in 2009 to wire fraud and tax evasion charges in the Northern District of California.
Wilson also admitted that he sold unregistered 2nd Life securities by distributing “shareholder agreements” and “stock purchase agreements” to the victims. After accepting his victims’ funds, Wilson used the money to pay off his credit card debt, pay his rent and buy luxury items.
Through this scheme, Wilson received a total of $387,000 from his victims.
Wilson will face a statutory maximum sentence of 20 years in federal prison upon entering his guilty plea, which will occur at a hearing to be set in the coming weeks.
The FBI investigated this matter.
This case is being prosecuted by Assistant United States Attorney Alexander C.K. Wyman of the Major Frauds Section.
Inland Empire Man Agrees to Plead Guilty to Charge that He Produced Dozens of Sexually Explicit Images and Videos of ChildrenRead the Press Release
RIVERSIDE, California – A San Bernardino County man has agreed to plead guilty to a federal criminal charge that he produced dozens of sexually explicit images and videos of children, including of one victim who was 3 years old at the time, the Justice Department announced today.
Chaunta A. Bashir, a.k.a. “taytheonly,” 26, of Chino, agreed to plead guilty to one count of production of child pornography, according to a plea agreement filed Monday in United States District Court. A hearing where Bashir will enter his guilty plea is expected to be set in the coming weeks.
In his plea agreement, Bashir admitted that from June 2015 to October 2018, he produced multiple images and videos of child pornography. Bashir admitted that in October and November 2017, he took sexually exploitative images and videos of a 3-year-old child, including of himself sexually abusing the child.
From April to September 2018, Bashir produced additional sexually explicit images and videos of children ranging in age from 4 years old to 14 years of age, according to the plea agreement. Some of those videos were recorded on his Snapchat and Facebook social media accounts.
During a search of Bashir’s home in October 2018, law enforcement officials recovered more than 600 images and videos from his electronic devices that depicted minors engaged in sexually explicit conduct.
Upon entering his guilty plea, Bashir will face a maximum sentence of 30 years in federal prison and a mandatory minimum sentence of 15 years in federal prison.
This matter was investigated by Homeland Security Investigations with assistance from the Chino Police Department.
This case is being prosecuted by Assistant United States Attorney Tritia L. Yuen of the Riverside Branch Office.
United States Reaches Settlement to Recover More Than $49 Million of Assets Acquired with Funds Misappropriated from 1MDBRead the Press Release
LOS ANGELES – The Department of Justice has reached a settlement of its civil forfeiture cases against more than $49 million worth of assets acquired by Khadem al-Qubaisi using funds allegedly misappropriated 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.
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 penthouse in New York City that al-Qubaisi allegedly acquired with funds traceable to misappropriated 1MDB monies.
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 civil forfeiture ever concluded by the Justice Department.
“This settlement is another milestone in the asset forfeiture cases related to the 1MDB money laundering scheme – cases that have already led to the recovery of well over $1 billion,” said United States Attorney Nick Hanna. “Funds stolen from the people of Malaysia were used to acquire high-end properties, including residences each worth tens of millions of dollars. The cases resolved today continue to demonstrate our commitment to protecting the integrity of American financial institutions and ensuring that corrupt players cannot use our nation to conceal stolen riches.”
“As alleged in the forfeiture complaints, Khadem al-Qubaisi and others laundered billions of dollars embezzled from 1MDB, a Malaysian investment fund. Instead of benefitting the people of Malaysia, as intended, these funds were used by the co-conspirators to finance lavish acquisitions of personal property, luxury real estate and business investments in the United States and elsewhere,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “This settlement agreement ensures that nearly $50 million in stolen funds will be recouped, and sends a clear signal that the Department of Justice is committed to tracing, seizing, and forfeiting criminal proceeds that are laundered through the U.S. financial system.”
Under the terms of the settlement, the Atlantic Property Trust, which oversees the assets at issue in these forfeiture actions, agreed to forfeit all assets subject to pending forfeiture complaints in which they have a potential interest. The trustee, who is the wife of al-Qubaisi, is also required to cooperate and assist the Justice Department in the orderly transfer, management and disposition of the relevant assets.
“As this case demonstrates, when it comes to corruption, the FBI’s reach is long and uncompromising,” said Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division. “Our extensive investigation into Khadem al-Qubaisi and his co-conspirators has directly led to the return of over $1 billion to the people of Malaysia. The FBI, through our International Corruption Squads, shows this same level of commitment in all our international corruption investigations. Let this stand as a message to anyone who may consider using United States markets for money laundering: you will not prosper and you will be investigated and brought to justice.”
“This settlement is another step in our ongoing effort to return the embezzled funds misappropriated from 1Malaysia Development Berhad to the people of Malaysia,” said Chief Don Fort of IRS Criminal Investigation. “While tens of millions of dollars were appropriately surrendered by al-Qubaisi’s family, the real win is the unprecedented international cooperation shown in this case that will have a lasting impact for the people in Malaysia now and well into the future.”
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, including al-Qubaisi, through a criminal conspiracy involving international money laundering and bribery. 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.
The FBI’s International Corruption Squads in New York City and Los Angeles and IRS Criminal Investigation are investigating the case.
The case is being prosecuted by Assistant United States Attorneys John Kucera, Michael R. Sew Hoy and Steven R. Welk of the Asset Forfeiture Section, along with 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 (MLARS) at the Department of Justice. The Criminal Division’s Office of International Affairs is providing substantial assistance.
The Justice Department 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 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.
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.
United States Reaches Settlement to Recover More Than $49 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 Khadem al-Qubaisi using funds allegedly misappropriated 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 $49 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, Khadem al-Qubaisi and others laundered billions of dollars embezzled from 1MDB, a Malaysian investment fund,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Instead of benefitting the people of Malaysia, as intended, these funds were used by the co-conspirators to finance lavish acquisitions of personal property, luxury real estate and business investments in the United States and elsewhere. This settlement agreement ensures that nearly $50 million in stolen funds will be recouped, and sends a clear signal that the Department of Justice is committed to tracing, seizing, and forfeiting criminal proceeds that are laundered through the U.S. financial system.”
“This settlement is another milestone in the asset forfeiture cases related to the 1MDB money laundering scheme – cases that have already led to the recovery of well over $1 billion,” said U.S. Attorney Nick Hanna of the Central District of California. “Funds stolen from the people of Malaysia were used to acquire high-end properties, including residences each worth tens of millions of dollars. The cases resolved today continue to demonstrate our commitment to protecting the integrity of American financial institutions and ensuring that corrupt players cannot use our nation to conceal stolen riches.”
“As this case demonstrates, when it comes to corruption, the FBI's reach is long and uncompromising,” said Assistant Director Calvin Shivers of the FBI's Criminal Investigative Division. “Our extensive investigation into Khadem al-Qubaisi and his co-conspirators has directly led to the return of over $1 billion to the people of Malaysia. The FBI, through our International Corruption Squads, shows this same level of commitment in all our international corruption investigations. Let this stand as a message to anyone who may consider using United States markets for money laundering: you will not prosper and you will be investigated and brought to justice.”
“This settlement is another step in our ongoing effort to return the embezzled funds misappropriated from 1Malaysia Development Berhad to the people of Malaysia,” said Chief Don Fort of IRS Criminal Investigation (IRS-CI). “While tens of millions of dollars were appropriately surrendered by al-Qubaisi’s family, the real win is the unprecedented international cooperation shown in this case that will have a lasting impact for the people in Malaysia now and well into the future.”
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, including al-Qubaisi, through a criminal conspiracy involving international money laundering and bribery. 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 Atlantic Property Trust, which oversees the assets at issue in these forfeiture actions, agreed to forfeit all assets subject to pending forfeiture complaints in which they have a potential interest. The trustee, who is the wife of al-Qubaisi, is 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 penthouse in New York City that al-Qubaisi allegedly acquired with funds traceable to misappropriated 1MDB monies.
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, Joshua L. Sohn and Jonathan Baum of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorneys John Kucera, Michael R. Sew Hoy and Steven R. Welk of the Central District of California are prosecuting the case. The Criminal Division’s Office of International Affairs is providing 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.
Texas Woman Agrees to Plead Guilty to Defrauding Bank of America by Posing as Customers to Make Withdrawals at SoCal BranchesRead the Press Release
SANTA ANA, California – A Houston woman has agreed to plead guilty to federal charges stemming from a scheme in which she and a second defendant posed as customers of Bank of America to fraudulently obtain debit cards while wearing braces on their arms to explain why their signatures differed from those of the legitimate account holders.
In a plea agreement filed Saturday in United States District Court, Rhonda Denise Zorka, 54, agreed to plead guilty to one count of bank fraud and one count of aggravated identity theft.
The second defendant in this case – Leia Kay Barnett, 41, of Belville, Texas – pleaded guilty on January 31 to one count of bank fraud and one count of aggravated identity theft.
In her plea agreement, Zorka admitted that she and Barnett obtained stolen identities of Bank of America accountholders living in Florida. Zorka admitted that she and Barnett then separately went to Bank of America branches in Southern California and Illinois, where they presented fraudulent identification to obtain temporary debit cards and PINs, and withdrew funds from victims’ accounts.
“[Zorka] and Barnett wore braces over their right wrists and forearms in order to explain any differences between their signatures at the time of the withdrawal and the actual accountholder’s signature on file with [Bank of America],” according to the plea agreement.
Zorka specifically admitted to making a fraudulent withdrawal of approximately $6,500 at a Bank of America branch in Burbank.
She also admitted that the scheme caused Bank of America to suffer losses of $121,949 through more than 50 withdrawals on more than 30 accounts at over 20 branches in California and Illinois.
When Barnett pleaded guilty, she specifically admitted making a fraudulent withdrawal of approximately $5,500 from a Bank of America branch in Irvine.
United States District Judge Josephine L. Staton will schedule a hearing – likely in June – for Zorka to formally enter her guilty pleas.
Barnett is scheduled to be sentenced by Judge Staton on August 28.
Zorka and Barnett each will face a statutory maximum sentence of 30 years in federal prison for the bank fraud charge and a mandatory, consecutive two-year sentence for the aggravated identity theft offense.
Barnett has been in federal custody since her arrest in Texas in June 2019. Zorka has been in custody since she was arrested in October 2019 in Illinois.
This case was investigated by the United States Secret Service.
This matter is being prosecuted by Assistant United States Attorney Daniel S. Lim of the Santa Ana Branch Office.
High Desert Man Who Robbed Eight Southern California Banks During a Six-Week Spree Sentenced to over 7 Years in Federal PrisonRead the Press Release
LOS ANGELES – A San Bernardino County man who threatened to shoot tellers and others when he robbed eight banks in Southern California over a six-week span was sentenced today to 92 months in federal prison.
Gregory Walter Barnes, 40, of Piñon Hills, was sentenced by United States District Judge Michael W. Fitzgerald, who also ordered Barnes to pay $41,931 in restitution.
Barnes pleaded guilty on February 10 to one count of bank robbery.
According to his plea agreement, between May 22, 2018 and July 6, 2018, Barnes, wearing a hat and sunglasses as a disguise, robbed one U.S. Bank branch in Victorville and seven Chase Bank branches in Fontana, Reseda, Woodland Hills, Temecula, Glendale, Hesperia, and Ventura.
In all eight of those robberies, Barnes threatened to use a gun against the bank teller, other bank employees, or people in the bank branch’s lobby. For example, Barnes passed a handwritten note to one teller asking for money and saying, “If I even think that you are grabbing any [dye packs or GPS trackers] I’ll pull out [my] Gun,” according to court documents. During another robbery, Barnes told the bank teller, “I have a gun and will not hesitate to pull it out and use it on your fellow employee out here.”
The total loss to the banks was $41,931 – most of which was suffered by Chase.
Barnes’s bank robbery spree in Southern California was followed by a ninth bank robbery in Las Vegas on July 9, 2018, where he was arrested for that crime. For that robbery, Barnes was convicted and sentenced in Nevada state court to three to 10 years’ imprisonment. He was transferred to federal custody in December 2019 after being charged in this case.
This matter was investigated by the FBI in collaboration with the San Bernardino County Sheriff's Department, the Fontana Police Department, the Riverside County Sheriff’s Department, the Los Angeles Police Department, the Glendale Police Department, and the City of Ventura Police Department, and with assistance from the Las Vegas Metropolitan Police Department.
This case was prosecuted by Assistant United States Attorney Eli A. Alcaraz of the Riverside Branch Office.
Attorney Agrees to Plead Guilty to a String of Crimes, Including Paying Bribes to Two Federal Law Enforcement OfficialsRead the Press Release
LOS ANGELES – A Calabasas man has agreed to plead guilty to five federal offenses – one related to a credit card “bust-out” scheme, and the others related to more than $250,000 in bribes he paid to two federal agents for assistance that included sensitive law enforcement information.
Edgar Sargsyan, 39, an attorney with law offices in Beverly Hills, was charged today with conspiracy to commit bank fraud, two counts of bribing a public official, and two counts of making false statements to federal investigators. In a plea agreement also filed today in United States District Court, Sargsyan agreed to plead guilty to the five felony counts, which cumulatively carry a statutory maximum penalty of 50 years in federal prison.
In the plea agreement, Sargsyan admitted paying tens of thousands of dollars from the beginning of 2015 through early 2017 to a special agent with Homeland Security Investigations (HSI) and a special agent with the Federal Bureau of Investigation.
Sargsyan paid the HSI agent at least $32,000 in checks and at least $45,000 to $50,000 in cash in return for assistance that included the HSI agent searching law enforcement databases to corruptly obtain information that he passed to Sargsyan, according to the plea agreement. The HSI agent also altered a Department of Homeland Security database to make it “more likely” that a foreign national who was a client of Sargsyan’s law firm would be allowed to enter the United States. In another corrupt act detailed in the plea agreement, the HSI agent prepared a document on HSI letterhead in an unsuccessful attempt to have one of Sargsyan’s relatives from Armenia admitted into the United States.
Sargsyan also admitted he paid the FBI agent monthly cash bribes of up to $10,000 beginning in 2015 in exchange for the agent providing “protection,” which included running queries on law enforcement databases and warning Sargsyan to “stay away” from certain individuals who were the targets of criminal investigations. The agent, who worked out of the FBI’s San Francisco Field Office, accepted the cash payments on trips to Southern California, where he stayed at luxury hotels that were paid for by Sargsyan. The FBI agent also accepted from Sargsyan a $36,000 racing motorcycle as a “bonus” for running database checks on a particular person. Sargsyan also gave the FBI agent a $30,000 cashier’s check that was made to appear to be a payment to the agent’s business, according to court documents.
Sargsyan also agreed to plead guilty to two counts of making false statements to federal investigators. These charges stem from interviews in September 2017 by the Department of Justice Office of Inspector General, when Sargsyan falsely stated that the $30,000 check to the FBI agent was a loan, and in December 2018, when he falsely told special agents with the FBI and HSI that he did not pay bribes to the FBI agent.
In his plea agreement, Sargsyan also admitted he participated in a conspiracy that defrauded financial institutions by fraudulently obtaining credit cards in the names of aliens who had previously been in the United States on J1 visitor visas. Once the credit cards were issued by the financial institutions, Sargsyan and his co-conspirator charged “purchases,” including more than $941,000 that Sargsyan personally charged at two businesses he controlled, Pillar Law Group and Regdalin Group.
Sargsyan has been directed to make his initial court appearance in this case on June 9.
This matter was investigated by the FBI’s Eurasian Organized Crime Task Force, which includes agents from HSI, the FBI, the U.S. Department of Health and Human Services – Office of Inspector General, the United States Secret Service, the Glendale Police Department, the Los Angeles County Sheriff’s Department, and the California Department of Health Care Services. The Los Angeles Police Department provided substantial assistance.
This case is being prosecuted by Assistant United States Attorneys Jeff Mitchell of the Major Frauds Section and Ruth C. Pinkel of the Public Corruption and Civil Rights Section.
Ex-FBI Agent Arrested on Conspiracy Charge Alleging He Accepted Bribes Paid by Lawyer Linked to Armenian Organized Crime FigureRead the Press Release
LOS ANGELES – A Bay Area man who retired from the FBI last year after 20 years as a special agent was arrested today on a federal criminal charge alleging he conspired to accept more than $200,000 in cash bribes and gifts in exchange for providing sensitive law enforcement information to a lawyer with ties to Armenian organized crime.
Babak Broumand, 53, of Lafayette, California, was arrested near his residence by special agents with the FBI and the Department of Justice Office of the Inspector General. Broumand is expected to make his initial appearance Monday morning, via telephone from jail, in federal court in San Francisco.
Broumand was charged in a criminal complaint filed under seal Tuesday in United States District Court in Los Angeles. The complaint charges Broumand with one count of conspiracy to commit bribery of a public official. It outlines a scheme in which the lawyer made regular bribe payments to and purchased gifts for Broumand while he was an FBI agent assigned to the San Francisco Field Office working on national security matters and the development of confidential sources.
During the course of the scheme, which started in early 2015 and continued through most of 2017, Broumand allegedly accepted bribe payments averaging approximately $10,000 per month. The bribes were paid by a man who became a licensed lawyer in 2016, according to the complaint, which refers to this man as CW1, or cooperating witness 1. The complaint outlines cash deposits to several banks accounts, as well as various gifts, including hotels, transportation and escort services, that total well over $200,000.
“Broumand and CW1 conspired and agreed that Broumand would perform official acts and omit to do acts, query law enforcement databases, provide CW1 with non-public law enforcement sensitive information and protection, and assist CW1 in CW1’s efforts to evade detection by law enforcement,” according to the affidavit in support of the complaint.
Many of the bribe payments were made in cash, but one payment was a $30,000 cashier’s check made payable to a company called Love Bugs, a hair lice treatment business that Broumand owned with his wife, the complaint alleges. Broumand used this money – which he later attempted to falsely characterize alternatively as a boat sale or a loan – as part of a down payment on a $1.3 million vacation home near Lake Tahoe.
“Our nation is based on the premise that public officials – especially federal law enforcement officials – place the country and her people above their own self-interest. This former FBI agent stands accused of violating this sacred trust by providing help to criminals simply to fund his lavish lifestyle,” said United States Attorney Nick Hanna. “The complaint outlines a long-running and multi-faceted scheme that tarnished the badge that was the symbol of his oath to uphold the law.”
“The FBI takes allegations of misconduct or criminal activity by its personnel very seriously,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “While these are disturbing allegations, we found no evidence to suggest this went beyond an isolated incident. The agents who investigated this case did so with professionalism and objectivity.”
“The public needs to have confidence that law enforcement officials conduct their work with integrity and honesty. When law enforcement officials participate in bribery schemes, they tarnish the reputations of their colleagues who work tirelessly to keep our communities safe. This kind of alleged conduct will not be tolerated,” said James K. Cheng, Special Agent in Charge of the Department of Justice Office of the Inspector General, Los Angeles Field Office.
CW1 met Broumand at a private cigar lounge in Beverly Hills in the fall of 2014, and later that year CW1 invited Broumand to a party he was hosting at a rented house in Las Vegas. After noticing Broumand’s “expensive tastes…and his affinity for luxury goods and services,” including the Rolex watch and Gucci belt that he was wearing, “CW1 saw this as an opportunity to recruit Broumand to help CW1 evade detection by law enforcement,” the affidavit states.
After CW1 cultivated a friendship with Broumand, the relationship turned corrupt in 2015 when CW1 informed Broumand that he was engaged in criminal activity and asked the agent if he was interested in doing “something on the side” – an offer that Broumand accepted, according to the complaint. CW1 then began paying Broumand approximately $10,000 per month “for information and protection.”
CW1 initially asked Broumand to search for his name in an FBI database and to “defuse” any law enforcement interest in him, the complaint alleges. In return, Broumand allegedly informed CW1 that he had been the subject of an FBI investigation into credit card fraud in 2008 or 2009, something that would only be known if Broumand had searched for CW1 in a law enforcement database.
Soon after the bribery scheme began, CW1 allegedly asked Broumand to query the FBI database for Levon Termendzhyan, an Armenian organized crime figure for whom CW1 had worked. The database search “rang all the bells” and revealed an FBI investigation in Los Angeles, according to the affidavit, which notes that Broumand accessed the FBI case file on Termendzhyan repeatedly in January 2015. Broumand also allegedly accessed the Termendzhyan FBI case file in May 2016.
(Termendzhyan, who is also known as Lev Aslan Dermen, was convicted last month in federal court in Salt Lake City on charges related to a $1 billion renewable fuel tax credit fraud scheme.)
After providing information on another client to ensure that person was not involved in terrorist activities, CW1 purchased a Ducati motorcycle and accessories valued at $36,000 for Broumand as a “bonus,” according to the affidavit.
In exchange for these benefits, Broumand allegedly queried between 10 and 20 names provided by CW1 because CW1 was going to engage in legal or illegal business with them. Broumand warned CW1 to “stay away from” a person who also was a member of the cigar lounge, and this information was validated when that person was arrested in a health care fraud case, according to the affidavit.
The complaint also alleges that Broumand obstructed an FBI investigation into Felix Cisneros Jr., a corrupt special agent with Homeland Security Investigations who also had ties to Termendzhyan.
Broumand allegedly also engaged in structured cash deposits to conceal the cash bribes, failed to report income from both the bribe payments and the lice salon business on his federal tax returns, made false statements to the FBI, and made false statements on loan applications.
The conspiracy charge alleged in the indictment carries a statutory maximum penalty of five years in federal prison.
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 ongoing investigation into Broumand is being conducted by the FBI, the Department of Justice Office of the Inspector General, and IRS Criminal Investigation.
This matter is being prosecuted by Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section.
Covina Man Arrested on Federal Charge Alleging He Cyberstalked and Threatened Violence Against Teenage Girls via Social MediaRead the Press Release
LOS ANGELES – Special agents with the FBI this morning arrested a San Gabriel Valley man and online promoter of the involuntary celibate (incel) subculture on a federal cyberstalking charge that he conducted an internet harassment campaign against two teenage girls who rejected his sexual advances.
Carl Bennington, 33, of Covina, was arrested pursuant to a criminal complaint unsealed today in United States District Court in Los Angeles. Bennington will remain in federal custody pending the outcome of detention hearing scheduled for Thursday. His arraignment is scheduled for May 11.
The complaint alleges that, from at least February 2016 to March 2020, Bennington repeatedly used various social media accounts to harass young girls and women, including by sending hundreds of messages threatening to commit acts of physical and sexual violence against them if they did not submit to his sexual advances.
Neither victim ever met Bennington in person, according to the complaint. When one of the victims demanded that Bennington stop harassing her, Bennington replied that he was going to kill her and her family.
Social media records show that, in addition to the threatening and harassing messages he sent to young women and girls, Bennington frequently made statements on internet groups promoting incel ideology. According to court documents, incels are persons who are unable to find a willing sex partner. Incel ideology promotes the view that women oppress men and have too much freedom to choose their own sexual partners. The ideology ranges in tone from sad and self-loathing to advocating the “absolute hatred” of women, according to court documents.
The complaint charges Bennington with cyberstalking, a felony offense that carries a statutory maximum sentence of five years in federal prison.
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 FBI’s Joint Terrorism Task Force investigated this matter.
This case is being prosecuted by Assistant United States Attorney David T. Ryan of the Terrorism and Export Crimes Section.
Chipotle Mexican Grill Agrees to Pay $25 Million Fine to Resolve Charges Stemming from More Than 1,100 Cases of Foodborne IllnessRead the Press Release
LOS ANGELES – Chipotle Mexican Grill, Inc. has agreed to pay a $25 million criminal fine and institute a comprehensive food safety program to resolve criminal charges that it adulterated food that sickened more than 1,100 people across the United States from 2015 to 2018.
The Justice Department today charged the Newport Beach-based Chipotle with two counts of violating the Federal Food, Drug, and Cosmetic Act by adulterating food while held for sale after shipment in interstate commerce.
In conjunction with the criminal information filed in United States District Court in Los Angeles, prosecutors also filed a deferred prosecution agreement (DPA) in which Chipotle agreed to pay $25 million – the largest fine ever imposed in a food safety case.
The criminal charges stem, in part, from incidents related to outbreaks in Chipotle restaurants of norovirus, a highly contagious pathogen that can be easily transmitted by infected food workers handling ready-to-eat foods and their ingredients. Norovirus can cause severe symptoms, including diarrhea, vomiting and abdominal cramping.
“Chipotle failed to ensure that its employees both understood and complied with its food safety protocols, resulting in hundreds of customers across the country getting sick,” said United States Attorney Nick Hanna. “Today’s steep penalty, coupled with the tens of millions of dollars Chipotle already has spent to upgrade its food safety program since 2015, should result in greater protections for Chipotle customers and remind others in the industry to review and improve their own health and safety practices.”
“This case highlights why it is important for restaurants and members of the food services industry to ensure that managers and employees consistently follow food safety policies,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will vigorously enforce food safety laws in order to protect public health.”
“The FDA will hold food companies accountable when they endanger the public’s health by purveying adulterated food that causes outbreaks of illness,” said FDA Commissioner Stephen M. Hahn, M.D. “We will continue to investigate and bring to justice any company whose food products present a health hazard to consumers.”
As the company admitted in the DPA: “From approximately 2015 to 2018, Chipotle faced at least five food safety incidents at various restaurants around the country, which stemmed primarily from store-level employees’ failure to follow Chipotle’s food safety policies and procedures, including the policy requiring the exclusion of restaurant employees who were sick or recently had been sick, as well as a failure by restaurant employees to hold food at appropriate temperatures to prevent and control for the growth of foodborne pathogens.” These incidents primarily stemmed from store-level employees’ failure to follow company food safety protocols at company-owned restaurants in Los Angeles; Simi Valley, California; Boston; Sterling, Virginia; and Powell, Ohio.
In August 2015, 234 consumers and employees of a Chipotle restaurant in Simi Valley reported becoming ill. On August 19, 2015, an employee of that restaurant was sent home because he vomited. Although company policies required the restaurant to report such illnesses to Chipotle safety officials and to implement food safety procedures, the restaurant did not do so until two days afterward – and only after multiple consumers reported illnesses.
In December 2015, over the course of nine days, 141 people reported illness related to a norovirus incident at a Chipotle restaurant in Boston, most likely the result of an ill employee who was ordered to continue working after vomiting inside the restaurant – a clear violation of company policy. Two days later, the apprentice manager returned to work and helped package a catering order for a Boston College basketball team, whose members were among the consumers sickened by the outbreak.
In July 2018, over the course of at least eight days, approximately 647 people who dined at a Chipotle restaurant in Powell, Ohio reported illness related to Clostridium perfringens, a bacteria that grows rapidly when food is not held at appropriate temperatures. The local health department determined that the restaurant had critical violations of the local food regulations, including those specific to time and temperature controls for lettuce and beans.
Some Chipotle employees reported stressful working conditions, as well as inadequate staffing and training opportunities, according to the DPA. During the period from 2015 to 2018, store-level Chipotle employees, many of whom were teenagers and young adults, felt that they could not stay at home when they were sick. Due to the pressure of not wanting to let their teammates down, or of finding people to cover their work shifts, these employees reported feeling pressure to work while sick, even though this was against Chipotle’s sick-exclusion policies.
In the DPA, Chipotle also agreed to develop and follow a comprehensive food safety compliance program. As part of this program, Chipotle will work with its Food Safety Council to evaluate, among other things, the company’s food safety audits, restaurant staffing and employee training to mitigate the issues that led to the outbreaks from 2015 to 2018. If the company complies with the deferred prosecution agreement for three years, the government will move to dismiss the criminal information.
This matter was investigated by the Food and Drug Administration’s Office of Criminal Investigations.
This case is being prosecuted by Assistant United States Attorney Joseph O. Johns, Chief of the Environmental and Community Safety Crimes Section; Assistant United States Attorney Mark A. Williams and Special Assistant United States Attorney Sonia W. Nath, both of the Environmental and Community Safety Crimes Section; and Trial Attorney Daniel E. Zytnick of the Justice Department’s Consumer Protection Branch.
Chipotle Mexican Grill Agrees to Pay $25 Million Fine and Enter a Deferred Prosecution Agreement to Resolve Charges Related to Foodborne Illness OutbreaksRead the Press Release
Chipotle Mexican Grill Inc. will pay $25 million to resolve criminal charges related to the company’s involvement in foodborne illness outbreaks that sickened more than 1,100 people between 2015 and 2018, the Department of Justice announced today.
A criminal information filed today in federal court in Los Angeles charges Chipotle with adulterating food in violation of the Federal Food, Drug, and Cosmetic Act. The Newport Beach, California-based company agreed to a three-year deferred prosecution agreement (DPA) that will allow it to avoid conviction if it complies with an improved food safety program. Chipotle also agreed to pay the $25 million criminal fine, the largest ever in a food safety case, as part of the DPA.
“This case highlights why it is important for restaurants and members of the food services industry to ensure that managers and employees consistently follow food safety policies,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will vigorously enforce food safety laws in order to protect public health.”
“Chipotle failed to ensure that its employees both understood and complied with its food safety protocols, resulting in hundreds of customers across the country getting sick,” said U.S. Attorney Nick Hanna for the Central District of California. “Today’s steep penalty, coupled with the tens of millions of dollars Chipotle already has spent to upgrade its food safety program since 2015, should result in greater protections for Chipotle customers and remind others in the industry to review and improve their own health and safety practices.”
“The FDA will hold food companies accountable when they endanger the public’s health by purveying adulterated food that causes outbreaks of illness,” said Food and Drug Administration Commissioner Stephen M. Hahn, M.D. “We will continue to investigate and bring to justice any company whose food products present a health hazard to consumers.”
The charges stem in part from incidents related to outbreaks of norovirus, a highly infective pathogen that easily can be transmitted by food workers handling ready-to-eat foods and their ingredients. Norovirus can cause severe illness, including diarrhea, vomiting, nausea, and stomach pain.
According to the factual statement in the DPA, which the company agreed was true, Chipotle was implicated in at least five foodborne illness outbreaks between 2015 and 2018 connected to restaurants in the Los Angeles area, Boston, Virginia, and Ohio. These incidents primarily stemmed from store-level employees’ failure to follow company food safety protocols at company-owned restaurants, including a Chipotle policy requiring the exclusion of employees who were sick or recently had been sick.
For example, in August 2015, 234 consumers and employees of a Chipotle restaurant in Simi Valley, California reported becoming ill. Although company policies required the restaurant to report certain employee illnesses to Chipotle safety officials and to implement enhanced food safety procedures, the restaurant did not pass along information regarding an ill employee until multiple consumers already had reported being sick.
In December 2015, a norovirus incident at a Chipotle restaurant in Boston sickened 141 people. According to the DPA, that outbreak likely was the result of an ill apprentice manager who was ordered to continue working in violation of company policy after vomiting in the restaurant. Two days later, the same employee helped package a catering order for a Boston College basketball team, whose members were among the consumers sickened by the outbreak.
In July 2018, approximately 647 people who dined at a Chipotle restaurant in Powell, Ohio reported illness related to Clostridium perfringens, a pathogen that grows rapidly when food is not held at appropriate temperatures. The local health department found critical violations of local food regulations, including those specific to time and temperature controls for lettuce and beans.
As set out in the DPA, some store-level Chipotle employees from the 2015 to 2018 time period reported inadequate staffing and food safety training. Employees also reported pressure to work while sick, even though that was against Chipotle’s sick-exclusion policies.
Chipotle agreed in the DPA to develop and follow an improved, comprehensive food safety compliance program. Chipotle agreed to work with its Food Safety Council to evaluate the company’s food safety audits, restaurant staffing, and employee training, among other areas, to mitigate the issues that led to the outbreaks.
This investigation was conducted by the Food and Drug Administration-Office of Criminal Investigations. The government is represented by Trial Attorney Daniel E. Zytnick of the Justice Department’s Consumer Protection Branch, and Assistant U.S. Attorneys Joseph O. Johns and Mark A. Williams and Special Assistant U.S. Attorney Sonia W. Nath of the U.S. Attorney’s Office for the Central District of California’s Environmental and Community Safety Crimes Section.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca.
Pastor of Orange County Church Agrees to Plead Guilty to Orchestrating $33 Million Fraud that Conned InvestorsRead the Press Release
SANTA ANA, California – The pastor of the Westminster-based Church of the Healthy Self has agreed to plead guilty to federal criminal charges that he orchestrated a church-based investment scam that took in more than $33 million, United States Attorney Nick Hanna announced today.
Kent R.E. Whitney, 38, of Newport Beach, has agreed to plead guilty to a two-count information charging him with mail fraud and filing a false federal income tax return. The criminal information and a related plea agreement were filed Wednesday in United States District Court.
According to his plea agreement, from September 2014 until April 2019, Whitney engaged in a scheme to defraud investors through the Church of the Healthy Self (CHS), a non-profit corporation, and its related entities, including CHS Asset Management, Inc. Whitney founded these entities, operated them out of a strip mall in Westminster, and claimed to be the pastor of CHS.
At Whitney’s direction, CHS representatives appeared on television and at live seminars at CHS offices to solicit investments in CHS Trust, the church’s investment arm. Recordings of these appearances frequently were uploaded onto YouTube.
In these appearances, at Whitney’s direction, CHS representatives made false or misleading claims, including:
- CHS Trust guaranteed an annual rate of return of 12 percent;
- CHS Trust guaranteed a return of principal with no risk because it was federally insured;
- The worst return received during the previous five years was a 1.5 percent profit for the month of January 2015;
- Traders used by CHS had not lost money in 15 years; and
- CHS was audited by accounting firm KPMG.
In reality, little investor money went into any trading accounts, according to court documents.
Relying on these false statements, victim-investors sent more than $33 million to CHS from 2014 to 2019. As part of the scheme, Whitney directed that monthly statements be sent to victims that contained false reports of investment returns. Whitney intended to lull victims into believing their money had been invested and was consistent with the false claims made by CHS representatives.
Whitney also admitted in his plea agreement that he knowingly and willfully signed and filed a false federal income tax return that reported that his total income for the tax year 2018 was $17,539. In fact, as Whitney knew, his true income for that year was at least $452,872, of which approximately $435,333 was obtained via Whitney’s CHS fraud. The resulting tax loss was at least $130,808, the plea agreement states.
When Whitney enters his guilty plea, he will face a statutory maximum sentence of 23 years in federal prison.
The FBI and IRS Criminal Investigation investigated this matter. The Securities and Exchange Commission provided substantial assistance with the investigation.
This case is being prosecuted by Assistant United States Attorney Gregory W. Staples of the Santa Ana Branch Office.
Federal Prosecutors Team up with AARP to Provide Californians with Information on Scams Related to Coronavirus and COVID-19Read the Press Release
LOS ANGELES – Prosecutors from the four United States Attorney’s Offices in California, along with representatives from the FBI, will be participating in a telephonic town hall being coordinated by AARP to provide information to California residents to help them identify and avoid fraudulent schemes related to Coronavirus and COVID-19.
The telephonic town hall will happen on Monday, April 20 from 10 a.m. until 11 a.m. PDT. During the event, a special agent from the FBI and a federal prosecutor will make presentations, and participants from across California will be allowed to ask questions to a panel of Assistant United States Attorneys from the four offices that serve California.
AARP’s Fraud Watch Network is providing the infrastructure for the event. Approximately 100,000 AARP members will receive a phone call Monday morning inviting them to participate in the town hall. Those who wish to receive an invitation may sign up here.
During the current health crisis, federal investigators and prosecutors continue to fulfill their critical mission of protecting public safety. Federal officials have prioritized the disruption, investigation and prosecution of crimes related to Coronavirus and COVID-19, including fraudulent schemes, unapproved treatments, and scams related to stimulus money. During the town hall, federal officials will discuss the types of schemes currently being seen, along with tips on how to avoid becoming a victim.
“As part of our ongoing efforts to enhance security across our district, we are participating in this town hall to provide valuable information to help residents avoid scams that could cost them their hard-earned money,” said United States Attorney Nick Hanna. “Unfortunately, during a time when all Americans are coming together, there are some individuals who seek to exploit the current health emergency and prey on our seniors. Our public outreach efforts are designed to provide knowledge that will increase everyone’s level of safety.”
Soon after the town hall event, a recording will be available at https://vekeo.com/aarpcalifornia/#.
Nick Hanna is the United States Attorney for the Central District of California, which is comprised of seven counties – Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo.
U.S. Repatriates $300 Million to Malaysia in Proceeds of Funds Misappropriated from 1Malaysia Development BerhadRead the Press Release
The Department of Justice announced today that it has repatriated to Malaysia approximately $300 million (RM 1.292 billion) in additional funds misappropriated 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.
Combined with other funds that the department previously returned to Malaysia in May 2019, the United States has returned or assisted Malaysia in recovering over $600 million (RM 2.6 billion) of funds misappropriated from 1MDB. The department’s efforts to recover funds misappropriated from 1MDB are continuing.
In 2019, the U.S. District Court for the Central District of California entered judgments forfeiting more than $700 million in assets acquired by Low Taek Jho, aka Jho Low, and his family located in the United States, the United Kingdom and Switzerland. To date, the United States has recovered or assisted in the recovery of more than $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.
“We are pleased to make this latest repatriation of an additional $300 million in stolen 1MDB funds,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The payment reflects the United States’ continuing commitment to the Malaysian people to hunt down, seize, forfeit, and return assets that were acquired in connection with this brazen scheme.”
“The repatriation of these stolen funds to the citizens of Malaysia is the result of the tireless efforts of prosecutors and federal agents to prevent foreign kleptocrats and their associates from using the United States as a playground where they can enjoy the fruits of their pilfered wealth,” said U.S. Attorney Nick Hanna of the Central District of California. “The amount of money stolen from the people of Malaysia is staggering, and we have been relentless in recovering assets that always should have been used for their benefit.”
“The FBI’s International Corruption Squads are dedicated to protecting the United States from criminals attempting to benefit from our economy using their illicit, ill-gotten funds,” said Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division. “The repatriation announced today is a direct result of an FBI international corruption investigation, conclusively demonstrating that criminals will not be allowed to prosper in the United States. This money is now being returned to its rightful place – the country and people of Malaysia.”
“This extraordinary sum of money is going back to the people of Malaysia where it belongs and where it can finally be used for its original intended purpose—to better the lives of everyday Malaysians,” said Chief Don Fort of IRS-Criminal Investigations (IRS-CI). “Mr. Low attempted to launder these assets through multiple international jurisdictions and a web of shell corporations, but his greed finally caught up with him. This case is a model for international cooperation in significant cross-border money laundering investigations.”
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, including Low, through a criminal conspiracy involving international money laundering and bribery. 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. The assets subject to the 2019 judgments include high-end real estate in Beverly Hills, New York and London; a luxury boutique hotel in Beverly Hills; and tens of millions of dollars in business investments that Low allegedly made with funds traceable to misappropriated 1MDB monies.
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 and Assistant U.S. Attorneys John Kucera, Michael R. Sew Hoy and Steven R. Welk of the Central District of California are prosecuting the case. The Criminal Division’s Office of International Affairs is providing 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 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 U.S. 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.
U.S. Repatriates $300 Million to Malaysia in Proceeds of Funds Misappropriated from 1MDB Investment FundRead the Press Release
LOS ANGELES – The Department of Justice announced today that it has repatriated to Malaysia approximately $300 million in additional funds misappropriated 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.
Combined with other funds that the department previously returned to Malaysia in May 2019, the United States has returned or assisted Malaysia in recovering more than $600 million misappropriated from 1MDB. The department’s efforts to recover funds misappropriated from 1MDB are continuing.
In 2019, a federal judge in Los Angeles entered judgments forfeiting more than $700 million in assets acquired by Low Taek Jho, aka Jho Low, and his family located in the United States, the United Kingdom and Switzerland. To date, the United States has recovered or assisted in the recovery of more than $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.
“The repatriation of these stolen funds to the citizens of Malaysia is the result of the tireless efforts of prosecutors and federal agents to prevent foreign kleptocrats and their associates from using the United States as a playground where they can enjoy the fruits of their pilfered wealth,” said United States Attorney Nick Hanna. “The amount of money stolen from the people of Malaysia is staggering, and we have been relentless in recovering assets that always should have been used for their benefit.”
“We are pleased to make this latest repatriation of an additional $300 million in stolen 1MDB funds,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The payment reflects the United States’ continuing commitment to the Malaysian people to hunt down, seize, forfeit, and return assets that were acquired in connection with this brazen scheme.”
“The FBI’s International Corruption Squads are dedicated to protecting the United States from criminals attempting to benefit from our economy using their illicit, ill-gotten funds,” said Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division. “The repatriation announced today is a direct result of an FBI international corruption investigation, conclusively demonstrating that criminals will not be allowed to prosper in the United States. This money is now being returned to its rightful place – the country and people of Malaysia.”
“This investigation sends a clear message that criminals cannot evade law enforcement authorities by laundering money through multiple international jurisdictions and a web of shell corporations,” said Ryan L. Korner, the Special Agent in Charge for IRS Criminal Investigation in Los Angeles. “This case represents a model for international cooperation in significant cross-border money laundering investigations. We are proud to have worked alongside our domestic and international law enforcement partners on this complex financial investigation, and to be able to return the stolen funds to the Malaysian people.”
According to the civil forfeiture complaints filed in United States District Court in Los Angeles, 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, including Low, through a criminal conspiracy involving international money laundering and bribery. 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. The assets subject to the 2019 judgments include high-end real estate in Beverly Hills, New York and London; a luxury boutique hotel in Beverly Hills; and tens of millions of dollars in business investments that Low allegedly made with funds traceable to misappropriated 1MDB monies.
The FBI’s International Corruption Squads in New York City and Los Angeles and the IRS-CI are investigating the case. The cases that led to the recoveries in the 1MDB matter are being litigated by Assistant United States Attorney Steven R. Welk, Chief of the Asset Forfeiture Section; Assistant United States Attorneys John Kucera and Michael R. Sew Hoy of the Asset Forfeiture Section; and 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. The Office of International Affairs at the Department of Justice is providing substantial assistance.
The Department of Justice 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.
U.K. National Charged with Shipping Mislabeled and Unapproved ‘Treatments’ for Patients Suffering from COVID-19Read the Press Release
LOS ANGELES – A British man was named today in a federal criminal complaint that charges him with smuggling into the United States mislabeled drugs purported to be a treatment for those suffering from COVID-19, the disease caused by the novel coronavirus.
Frank Richard Ludlow, 59, of West Sussex, United Kingdom, was charged with one count of introducing misbranded drugs into interstate commerce, a felony offense that carries a statutory maximum sentence of three years in federal prison.
According to an affidavit filed with the complaint, beginning on March 1, as the coronavirus global health crisis worsened, Ludlow repackaged preexisting “Trinity Remedy” kits as “Trinity COVID-19 SARS Antipathogenic Treatment” kits, even though the kits had not been approved by the U.S. Food and Drug Administration to treat COVID-19 – or for any other use.
Every major health authority has warned that there is no specific antiviral treatment for COVID-19 and no vaccine to prevent coronavirus infection. New drugs may not be legally introduced or delivered for introduction into interstate commerce without prior FDA approval.
“Hucksters who hawk ‘treatments’ for this deadly disease put consumers’ lives at risk by peddling unapproved drugs,” said United States Attorney Nick Hanna. “We are aggressively investigating all types of criminal activity associated with the current health emergency, and anyone attempting to cheat the public during this time will face severe penalties.”
“The FDA is actively and aggressively monitoring for unproven COVID-19 products including those attempting to be imported into the country— as part of our ongoing efforts to protect Americans during this pandemic. Unproven health claims, tests, and medical products can pose serious health risks and may keep people from seeking care or delay necessary medical treatment,” said Catherine A. Hermsen, Assistant Commissioner for Criminal Investigations, FDA Office of Criminal Investigations. “The FDA will continue to take appropriate action to protect consumers from bad actors who take advantage of a pandemic to increase their profits while jeopardizing the public health.”
“Drugs and medical devices are strictly regulated in order to protect the American consumer,” said David A. Prince, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “Individuals who circumvent those regulations potentially expose patients to unsafe products that could cause serious harm. HSI will continue to target those whose actions put the health and safety of our citizens at risk.”
Ludlow, who is not a doctor, allegedly smuggled the kits from the United Kingdom to the United States by shipping mislabeled parcels containing the kits to individuals in California and Utah. Ludlow’s business relationship with his Utah connection dates back to May 2017 when he sold her “Trinity Remedy,” a “miracle cure” for her severe medical issues, the affidavit states.
This “cure” – later rebranded as “Trinity Mind, Body & Soul” – allegedly contained vitamin C, an enzyme mix, potassium thiocyanate, and hydrogen peroxide. Consumers were instructed to add 18 ounces of water, say a prayer, drink half of the solution, take a probiotic along with bee pollen, and then ingest the remainder of the solution, according to the affidavit.
Between May 2017 and March 2020, Ludlow sold his Utah connection between 300 and 400 of these “treatments” for $50 per kit, many of which she gave away, but some of which she sold for as much as $200, the affidavit states.
In February or March of 2020, Ludlow began selling kits named “Trinity COVID-19 SARS Antipathogenic Treatment,” and these kits had the same ingredients as “Trinity Mind, Body & Soul,” according to court documents. Ludlow allegedly shipped the kits from the United Kingdom to Ogden, Utah and to the Forestville, California home of the Utah woman’s boyfriend. Ludlow allegedly also shipped kits to the Draper, Utah home of his Utah connection’s parents. Federal law enforcement intercepted the kits before they reached their intended destinations.
On March 23, British law enforcement arrested Ludlow and charged him with violating drug laws. He remains in custody in the U.K.
This matter was investigated jointly by the Food and Drug Administration’s Office of Criminal Investigations and Homeland Security Investigations, with assistance from U.S. Customs and Border Protection and the United States Postal Inspection Service.
This case is being prosecuted by Assistant United States Attorneys Matthew W. O’Brien and Mark A. Williams of the Environmental and Community Safety Crimes Section.
Train Operator at Port of Los Angeles Charged with Derailing Locomotive Near U.S. Navy’s Hospital Ship MercyRead the Press Release
LOS ANGELES – A train engineer at the Port of Los Angeles was arrested this morning on federal charges for allegedly running a locomotive at full speed off the end of rail tracks near the USNS Mercy.
Eduardo Moreno, 44, of San Pedro, was charged today in a criminal complaint with one count of train wrecking as a result of an incident Tuesday afternoon.
According to the criminal complaint filed in United States District Court, Moreno admitted in two separate interviews with law enforcement authorities that he intentionally derailed and crashed the train near the Mercy.
Moreno ran the train off the end of tracks, and crashed through a series of barriers before coming to rest more than 250 yards from the Mercy. No one was injured in the incident, and the Mercy was not harmed or damaged in any way. The incident did result in the train leaking a substantial amount of fuel oil, which required clean up by fire and other hazardous materials personnel.
The train crash was witnessed by a California Highway Patrol officer, who took Moreno into custody as he fled the scene. The Los Angeles Port Police then took custody of Moreno, conducted an interview and obtained permission to search his residence. The FBI’s Joint Terrorism Task Force and the Port of Los Angeles Police are now leading the investigation.
The CHP officer who witnessed the crash reported seeing “the train smash into a concrete barrier at the end of the track, smash into a steel barrier, smash into a chain-link fence, slide through a parking lot, slide across another lot filled with gravel, and smash into a second chain-link fence,” according to the affidavit in support of the criminal complaint. When the CHP officer contacted Moreno, he made a series of spontaneous statements, including, “You only get this chance once. The whole world is watching. I had to. People don’t know what’s going on here. Now they will.”
In his first interview with the Los Angeles Port Police, Moreno acknowledged that he “did it,” saying that he was suspicious of the Mercy and believing it had an alternate purpose related to COVID-19 or a government takeover, the affidavit states. Moreno stated that he acted alone and had not pre-planned the attempted attack. While admitting to intentionally derailing and crashing the train, he said he knew it would bring media attention and “people could see for themselves,” referring to the Mercy, according to the affidavit.
In a second interview with FBI agents, Moreno stated that “he did it out of the desire to ‘wake people up,’” according to the affidavit. “Moreno stated that he thought that the U.S.N.S. Mercy was suspicious and did not believe ‘the ship is what they say it’s for.’”
The Los Angeles Port Police reviewed video recorded from the locomotive’s cab, according to the affidavit. One video shows the train clearly moving at a high rate of speed before crashing through various barriers and coming into close proximity to three occupied vehicles. A second video shows Moreno in the cab holding a lighted flare.
Moreno was held overnight on local charges, and he was turned over to FBI agents this morning. Moreno is expected to make an initial appearance in federal court this afternoon.
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 train wrecking charge alleged in the criminal complaint carries a statutory maximum penalty of 20 years in federal prison.
This case is being prosecuted by Assistant United States Attorneys Reema M. El-Amamy, Christine M. Ro and William M. Rollins of the Terrorism and Export Crimes Section with support from Trial Attorney Taryn Meeks of the Counterterrorism Section at the Department of Justice’s National Security Division.
Former USC Admissions Official Agrees to Plead Guilty to Running Fraudulent Scheme to Admit Unqualified International StudentsRead the Press Release
LOS ANGELES – A former University of Southern California admissions official has agreed to plead guilty to a wire fraud charge in a scheme to obtain USC graduate school admission slots for unqualified international students in exchange for thousands of dollars in cash.
In a plea agreement filed this afternoon, Hiu Kit David Chong admitted that he caused false college transcripts with inflated grades, phony letters of recommendation and fraudulent personal statements to be placed in the students’ admissions packets.
Chong, a 36-year-old Arcadia resident, agreed to plead guilty to a one-count criminal information charging him with wire fraud. He will be summoned to appear in United States District Court on a future date.
Chong, who was an assistant director in USC’s Office of Graduate Admissions from September 2008 to March 2016, represented to Chinese nationals that he could assist them in obtaining admission into a graduate degree program at the university. Chong also furthered his scheme by founding and running the now-defunct Monterey Park-based academic consulting company, So Cal International Group, Inc.
According to his plea agreement, from February 2015 to December 2018, Chong solicited and received payments – ranging from approximately $8,000 to $12,000 – from unqualified international students or from others who were acting on behalf of the unqualified students.
Chong purchased phony college transcripts purporting to be from Chinese universities and instructed his supplier to create transcripts to show falsely inflated grade point averages. Chong admitted he submitted and caused the submission of the phony documents in the international students’ USC application packets, including fraudulent letters of recommendation and fabricated personal statements purportedly written by the applicants.
Chong also offered to research how to arrange for a surrogate test taker to take the Test of English as a Foreign Language (TOEFL), the results of which USC would consider when making decisions regarding admissions applications, according to court documents. In his plea agreement, Chong admitted that he concealed from the university that the applicants paid him to facilitate their admission.
Chong admitted to helping three unqualified international students gain admission to USC using fraudulent application materials. Chong was paid a total of $38,000 from international students and people he believed were working with international students, including an undercover law enforcement official. He also received additional payments from other international students as part of the scheme, resulting in his ill-gotten gains of approximately $40,000.
When Chong enters his guilty plea, he will face a statutory maximum penalty of 20 years in federal prison.
The FBI investigated this case.
This matter is being prosecuted by Assistant United States Attorney Steven M. Arkow of the Major Frauds Section.
Ex-Los Angeles City Councilman Agrees to Plead Guilty to Federal Charge Related to Obstructing Public Corruption InvestigationRead the Press Release
LOS ANGELES – A former Los Angeles city councilman has agreed to plead guilty to a federal criminal charge stemming from his obstruction of a public corruption investigation related to his acceptance of gifts – including cash, hotel rooms and expensive meals – from a businessman during trips to Las Vegas and Palm Springs in 2017.
In a plea agreement filed this morning in federal court, Mitchell Englander, 49, of Santa Monica, agreed to plead guilty to one count of scheming to falsify material facts.
Englander represented Los Angeles Council District 12 in the San Fernando Valley from July 2011 until he resigned on December 31, 2018, when he had almost two years left on his term. Among his other duties, Englander served as the Council President Pro-Tempore and was on the Planning and Land Use Management (PLUM) Committee, which oversees many of the most significant commercial and residential development projects in the City of Los Angeles.
According to his plea agreement, Englander schemed to cover up cash payments, expensive meals, escort services and other gifts offered to him from a businessman – identified in court documents as Businessperson A – who operated companies in Los Angeles relating to major development projects and sought to increase his business opportunities in the city. Two months after the Las Vegas trip, Businessperson A began cooperating with the FBI in a public corruption investigation focused on suspected “pay-to-play” schemes involving Los Angeles public officials, including by making covert recordings of Englander’s interactions with him.
From August 2017 until December 2018, Englander knowingly and willfully falsified and concealed material facts pertaining to this federal public corruption investigation, the plea agreement states. Specifically, Englander admitted he covered up facts that he had accepted items of value during June 2017 trips to Las Vegas and Palm Springs.
On that trip, when he was accompanied by two city staffers, a lobbyist and a real estate developer, Englander accepted from Businessperson A an envelope with $10,000 in cash, hotel rooms, $1,000 in casino gambling chips, $34,000 in bottle service at a nightclub, and a $2,481 dinner. Businessperson A also paid for two female escorts to arrive at their hotel and later instructed one of the escorts to go to Englander’s room, according to the plea agreement.
At a golf tournament in Palm Springs on June 12, 2017, Englander accepted an envelope containing $5,000 in cash from Businessperson A, according to the plea agreement. Shortly after the trips, Englander arranged for Businessperson A to pitch his business to a friend of Englander’s who was a developer.
In August 2017, after he learned about the FBI’s public corruption investigation, Englander sent an encrypted message to Businessperson A, via the online messaging service Confide, indicating that he wanted to reimburse him for portions of the June 2017 Las Vegas trip.
On at least three occasions, Englander attempted to coordinate statements he made to the FBI and federal prosecutors with Businessperson A, and Englander counseled Businessperson A how to lie to and mislead the FBI agents and federal prosecutors conducting the public corruption investigation, the plea agreement states. Englander admitted that on February 6, 2018, he told Businessperson A how to answer certain questions from the FBI and to withhold material information from the FBI, including questions about escort services provided by Businessperson A and Englander’s purported attempts to reimburse Businessperson A. On February 12, 2018, Englander met Businessperson A in Englander’s car and, after Englander turned up the car stereo, Englander again repeatedly told Businessperson A how to respond to FBI questions while driving in a circle around the block.
Englander also admitted to making false statements to the FBI and federal prosecutors on three separate occasions in 2017 and 2018. For example, on February 7, 2018, Englander falsely stated that he and Businessperson A had not discussed the FBI or its investigation, and that he did not tell anyone what to say to the FBI. On December 31, 2018, the day he resigned from the Los Angeles City Council, Englander again met with the FBI and federal prosecutors, and made additional false statements about receiving personal benefits from Businessperson A, and also falsely stated that he encouraged Businessperson A to “be transparent, and share everything” with the FBI.
The court has not scheduled a date for Englander to enter his guilty plea. Once he does formally enter the guilty plea, he will face a statutory maximum sentence of five years in federal prison.
The case against Englander is part of an ongoing public corruption investigation being conducted by the FBI and the U.S. Attorney’s Office. Englander is the second person to agree to plead guilty to a federal felony related to this ongoing investigation. Justin Kim has agreed to plead guilty to a bribery offense for facilitating a cash payment of hundreds of thousands of dollars intended for a different Los Angles City Councilmember.
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.
This case is 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 E. Mills of the Public Corruption and Civil Rights Section.
Southland Man Arrested on Federal Charges Alleging Fraudulent Investment Scheme Featuring Bogus Claims of COVID-19 CureRead the Press Release
LOS ANGELES – Special agents with the FBI this evening arrested a Southern California man on a federal fraud charge alleging he solicited investments in a company he claimed would be used to market pills that would prevent coronavirus infections and an injectable cure for those already suffering from COVID-19.
Keith Lawrence Middlebrook, 53 – who is associated with several addresses, including residences in Westwood, Newport Beach and Murrieta – was arrested pursuant to a criminal complaint filed late this afternoon in United States District Court in Los Angeles. The complaint charges Middlebrook with one count of attempted wire fraud, a felony offense that carries a statutory maximum penalty of 20 years in federal prison.
The complaint alleges that Middlebrook claimed to have personally developed a “patent-pending cure” and a treatment that prevents coronavirus infection, even though every major health authority has warned that there is no specific antiviral treatment for COVID-19 and no vaccine to prevent coronavirus infection.
Middlebrook was arrested during a meeting in which he delivered pills – purportedly the treatment that prevents coronavirus infection – to an undercover agent who was posing as an investor.
Middlebrook fraudulently solicited funds with promises of massive profits for a company he called Quantum Prevention CV Inc. (QP20), and he falsely claimed to at least one potential investor that Earvin “Magic” Johnson was a member of the board of directors, according to the affidavit in support of the complaint. Mr. Johnson confirmed to investigators that he knew nothing about Middlebrook’s company.
QP20, according to Middlebrook, would mass produce the pills he claimed would prevent COVID-19. Upon receipt of investor funds, Middlebrook would issue shares in both QP20 and Quantum Cure CV 2020 (QC20), another alleged corporation Middlebrook claimed would market the serum that could cure COVID-19 patients within two to three days, the complaint alleges.
In communications with a cooperating witness, Middlebrook said, “I have Developed the Cure for the Coronavirus COVID-19…*LA Patient tested Positive for Coronavirus got up and walked out 51 hours after my Injection,” according to the affidavit. In the same text message, Middlebrook also wrote, “Investors who come in at ground level say $1M will parachute with $200M - $300M…Conservative Minimum.”
“During these difficult days, scams like this are using blatant lies to prey upon our fears and weaknesses,” said United States Attorney Nick Hanna. “While this may be the first federal criminal case in the nation stemming from the pandemic, it certainly will not be the last. I again am urging everyone to be extremely wary of outlandish medical claims and false promises of immense profits. And to those who perpetrate these schemes, know that federal authorities are out in force to protect all Americans, and we will move aggressively against anyone seeking to cheat the public during this critical time.”
“There’s a particular opportunistic cruelty in seeking to profit based on the fear and helplessness of others,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “As the country reacts to the current crisis, and while many suffer from losing a loved one or losing their livelihood, the last thing Americans need are con-artists who hawk miracle cures they know are not tested, guaranteed, nor approved. The FBI is using a variety of tools to identify anyone who exploits the current crisis through investment frauds or a variety of cyber schemes – and is proactively warning investors to thoroughly research any salesperson or any product claiming to save lives, before losing their money, or creating false hope.”
Middlebrook will be held in federal custody until his initial court appearance, which is expected to be Thursday afternoon in United States District Court in downtown Los Angeles.
In a video posted eight days ago to his Instagram account, Middlebrook stated that he had created the cure for COVID-19, and he showed viewers a syringe with a clear liquid and described how his cure worked, according to the affidavit. Accompanying the video is text that reads, in part:
Yes I have Developed the Cure for the Coronavirus COVID-19. After 6 Weeks of Intense Focus and Development (and very little sleep). I am currently going into Mass Production. … The CDC, WHO and Mainstream Media have created a Pandemonium environment. To answer this (just because it’s what I do) I have created a Coronavirus Prevention Pill” (After 3 Days of taking it the person is Immune to the Virus and STAYS immune as long as they continue taking it once a day it the morning) and also the COVID-19 Formula Vaccine Cure to Satisfy the Physiological and Phycological Need at large.
The affidavit states that as of March 24 the video had been viewed more than 633,000 times.
In another Instagram video that was viewed more than 1 million times over approximately three days, Middlebrook shows a pill he says prevents him from contracting COVID-19 and “states that if he took the pill and walked into the Staples Center filled with COVID-19 positive individuals, he could not contract the virus,” according to the criminal complaint.
The affidavit focuses on communications – both written and over the phone – between Middlebrook and two people he thought were potential investors, the cooperating witness and an undercover FBI agent. Middlebrook made a series of claims and promises to the undercover agent, including guaranteeing that a $300,000 investment would yield $30 million, a promise that was secured “by a current $10 billion offer from an unnamed buyer in Dubai,” according to the affidavit.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The ongoing investigation in this matter is being conducted by the FBI.
This case is being prosecuted by Assistant United States Attorneys Valerie Makarewicz and James Hughes of the Major Frauds Section.
Reseda Man Arrested on Federal Charges Alleging Storage Unit Burglaries and Sale of Stolen Firearms to Convicted FelonsRead the Press Release
LOS ANGELES – A San Fernando Valley man has been arrested on federal charges alleging he and two other men broke into self-storage units in Los Angeles County, stole dozens of firearms, and sold at least some of the weapons to convicted felons.
Rick Eric Herst, 34, a.k.a. “Loyal,” of Reseda, was taken into federal custody Monday by special agents with the FBI and deputies with the Los Angeles County Sheriff’s Department.
Herst was arrested pursuant to an eight-count indictment that was unsealed at his arraignment late Monday in United States District Court in downtown Los Angeles. He pleaded not guilty to the charges, and a May 19 trial date was set.
Herst is named in the indictment along with Jeffrey James LaFraniere, 37, of the San Fernando Valley, and Alan Elperin, 29, of Mission Hills, both of whom were arrested by local law enforcement in June 2019 on separate cases and are now in federal custody.
All three defendants are charged with one count of conspiracy, one count of dealing firearms without a license, and two counts of selling stolen firearms.
In addition to these charges, LaFraniere and Herst face charges of selling firearms to convicted felons, and each being a felon in possession of a firearm.
The indictment alleges that from December 2018 to September 2019, LaFraniere, Herst and Elperin burglarized multiple self-storage units in Glendale, Valencia, Culver City, West Los Angeles and elsewhere, where they stole firearms and other valuables. The men allegedly offered the stolen firearms for sale to customers either in person or via text message. LaFraniere and Herst sold the firearms to buyers they knew were convicted felons, according to the indictment.
For example, on May 30, 2019, the men allegedly burglarized a self-storage facility in Valencia and stole 35 firearms, including multiple .45-caliber pistols, 12-gauge shotguns, and high-powered rifles, the indictment alleges. On the same day as the Valencia burglary, LaFraniere and Herst allegedly sold two of the stolen firearms – a .45-caliber pistol and a .40-caliber pistol – to a buyer.
In total, the defendants stole 47 firearms, according to the indictment.
LaFraniere has multiple felony convictions in Los Angeles Superior Court between July 2007 and August 2016 for offenses such as burglary, identity theft and possession of methamphetamine for sale, according to the indictment. Herst’s criminal history includes two felony convictions in Los Angeles Superior Court in 2009 for vehicle theft, the indictment states.
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, LaFraniere and Herst would face a statutory maximum sentence of 60 years in federal prison, and Elperin would face a statutory maximum sentence of 30 years in federal prison.
This case was investigated by the FBI Eurasian Organized Crime Task Force and the Los Angeles County Sheriff’s Department.
This matter is being prosecuted by Assistant United States Attorney Ian V. Yanniello of the International Narcotics, Money Laundering, and Racketeering Section.
U.S. Attorney’s Office Continues Its Critical Public Safety Functions and Urges Public to Report Suspected COVID-19 FraudRead the Press Release
LOS ANGELES –The United States Attorney’s Office continues to fulfill its critical mission of protecting public safety during the current health emergency thanks to the tireless efforts of federal prosecutors and the brave work of our law enforcement partners.
“Our primary goal is to maintain safety and security across the seven counties we serve,” said United States Attorney Nick Hanna. “Even as we come together as a nation to deal with the threat of COVID-19, there are individuals among us and across the globe who are attempting to use this crisis as an opportunity to exploit our fears and take advantage of our generosity.”
Members of the public are urged to report suspected fraud schemes related to the coronavirus and COVID-19 by calling the National Center for Disaster Fraud (NCDF) hotline at 1-866-720-5721 or sending complaints to the NCDF e-mail address, [email protected].
The NCDF enters complaints into a centralized system that can be accessed by all Justice Department prosecutors and law enforcement components (such as the FBI) to identify, investigate and prosecute fraud schemes. The NCDF coordinates complaints with 16 additional federal law enforcement agencies, as well as state attorneys general and local authorities.
U.S. Attorney Hanna said his office is following the direction of U.S. Attorney General William Barr to prioritize the investigation and prosecution of coronavirus fraud schemes, including the online sale of bogus COVID-19 cures, the solicitation of donations for illegitimate or non-existent charitable organizations, and the distribution of ransomware from malicious websites and apps that promise to share coronavirus-related information.
United States Attorney Hanna has appointed Assistant United States Attorney Joseph O. Johns to be the office’s Coronavirus Fraud Coordinator. AUSA Johns will serve as the legal counsel in the Central District of California on matters relating to the coronavirus, direct the prosecution of coronavirus-related crimes, and conduct outreach and awareness activities. AUSA Johns is the longtime chief of the office’s Environmental and Community Safety Crimes Section.
To find more about Department of Justice resources and information, please visit www.justice.gov/coronavirus.
The United States Attorney’s Office for the Central District of California serves approximately 20 million residents in the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo.