Central District of California
Press releases recorded for this federal judicial district.
Fundraiser Agrees to Plead Guilty to Federal Corruption Charge for Delivering Hundreds of Thousands of Dollars to Bribe Member of Los Angeles City CouncilRead the Press Release
LOS ANGELES – A political fundraiser has agreed to plead guilty to a federal bribery offense for coordinating a $500,000 cash payment that was intended to secure the help of an elected member of the Los Angeles City Council in resolving a labor organization’s appeal of a major real estate development project in the councilmember’s district.
In a plea agreement filed this morning in federal court, Justin Jangwoo Kim, 53, a longtime resident of Hancock Park who recently relocated to Mar Vista, agreed to plead guilty to one count of federal program bribery. In addition to pleading guilty, Kim has agreed to cooperate with an ongoing public corruption investigation being conducted by federal authorities.
According to his plea agreement, Kim is a real estate appraiser and consultant who was one of the top fundraisers for a member of the Los Angeles City Council – “Councilmember A” – who was member of the City’s Planning and Land Use Management Committee (PLUM). Beginning in early 2017, Kim was also a close political ally of Councilmember A’s staff member, who is identified in court documents as “City Staffer A-1.” Kim admitted that he supported Councilmember A’s and City Staffer A-1’s succession plan, including the need to ensure the election of Councilmember A’s relative to the Los Angeles City Council once Councilmember A’s term expired. Kim was motivated to help Councilmember A maintain power because Kim would be poised to financially benefit from potential illicit schemes in Councilmember A’s district.
The bribery scheme was triggered in the summer of 2016, when a labor organization filed an appeal claiming a real estate project violated requirements of the California Environmental Quality Act. The appeal prevented the project from progressing through the city’s approval processes, including approvals by the PLUM Committee and City Council. After the appeal was filed, a person identified as Developer C called Kim and asked him to obtain Councilmember A’s assistance with the appeal on Developer C’s project.
On September 1, 2016, Kim met with Councilmember A, City Staffer A-1, and Developer C at a Korean karaoke establishment in Los Angeles. At this meeting, Councilmember A agreed to help Developer C with resolving the issues related to the project. At a lunch meeting the following day, City Staffer A-1 told Kim that Councilmember A would not help the project for free and that Councilmember A would require a financial benefit in exchange for help ensuring the project moved forward through the city approval process.
During a series of meetings and communications in late 2016 and early 2017, Developer C and Councilmember A – through Kim and City Staffer A-1 – negotiated a $500,000 bribe payment.
In February or March 2017, Developer C met Kim at a commercial building in Los Angeles and gave Kim $400,000 in cash in a paper bag that was intended for Councilmember A, according to the plea agreement. Kim admitted he later gave City Staffer A-1 hundreds of thousands of dollars in cash to deliver to Councilmember A, but kept some cash for himself for facilitating the bribe payment. Around the same time, City Staffer A-1 informed Kim that Councilmember A held up is end of the deal and helped resolve the appeal.
In July 2017, Developer C provided the remaining $100,000 of the agreed-upon $500,000 bribe to be paid to Councilmember A for successfully resolving the appeal. Kim admitted he met with Developer C at an office in Los Angeles and received an additional $100,000 in cash from Developer C, but Kim kept this money for himself.
Kim also admitted in his plea agreement that he made a series of false statements in recorded interviews in May and July of 2017 to FBI agents who were investigating corruption in the City of Los Angeles.
Finally, in his plea agreement, Kim admitted he failed to declare any of the cash he received from Developer C for his role in facilitating the bribery scheme on his federal income tax return for 2017.
Kim has been directed to make his initial appearance in this case on March 31 at 2:00 p.m. in United States District Court in downtown Los Angeles.
Once he enters the guilty plea to the bribery charge, Kim will face a statutory maximum sentence of 10 years in federal prison.
While Kim has agreed to plead guilty to the bribery offense alleged in the criminal information, he does not admit all of the factual allegations contained in that charging document.
The case against Kim is part of an ongoing public corruption investigation being conducted by the FBI and the U.S. Attorney’s Office. Any member of the public who has information related to this or any other public corruption matter related the City of Los Angeles is encouraged to send information to the FBI’s tip line at tips.fbi.gov or to contact their local FBI Field Office. In Los Angeles, the FBI can be reached 24 hours a day 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 Attorney Veronica Dragalin, also of the Public Corruption and Civil Rights Section.
Two San Gabriel Valley Residents Arrested in Marriage Fraud SchemeRead the Press Release
LOS ANGELES – As part of a multistate investigation, two San Gabriel Valley residents were arrested this morning on federal charges that allege they orchestrated a scheme in which Chinese nationals paid up to $60,000 to enter into sham marriages with United States citizens in the hope of obtaining lawful permanent resident status – commonly called getting a “Green Card” – that would allow them to legally reside in the United States.
In addition to the two Los Angeles-area residents, special agents with Homeland Security Investigations (HSI) arrested two Chinese nationals who each paid tens of thousands of dollars to enter into sham marriages with United States citizens to obtain Green Cards. The United States citizens in these situations were actually undercover HSI agents.
The criminal complaint that led to the arrests outlines how the sham marriages were arranged and how the participants were coached to make their marriages appear legitimate. Specifically, the arrangers recruited United States citizens to enter into marriages with Chinese nationals, and then they filed immigration documents with United States Citizenship and Immigration Services (USCIS). The arrangers coached the Chinese nationals and United States citizens on how to make their marriages appear genuine and pass interviews conducted by the USCIS, such as by creating a fraudulent paper trail for the couples and memorizing answers to questions immigration service officers could ask during their USCIS interviews.
The four defendants arrested Thursday morning are:
- Xiulan “Cindy” Wang, 46, of San Gabriel, the owner of Pacific Bizhub Consulting;
- Chang Yu “Andy” He, 54, of Monterey Park, the owner of Fair Price Immigration Service, who was taken into custody in San Diego County;
- Zhongnan Liu, 33, of San Diego, who allegedly paid for a sham marriage; and
- Huanzhang Wu, 28, of Saint Paul, Minnesota, who also allegedly paid for a “marriage” to obtain a Green Card.
A fifth defendant in this case is currently a fugitive being sought by authorities.
According to the affidavit in support of the criminal complaint, in the course of arranging the sham marriages involving the undercover HSI agents, He coached the “couples” on how to make their relationships appear legitimate to bypass U.S. immigration laws. He allegedly instructed them to obtain joint bank accounts and joint apartment leases, keep clothes in the apartments where the couples supposedly lived together, and visit the apartment several days a week so the neighbors would see them together.
The affidavit describes how the defendants went to considerable lengths to make the unions appear real. For example, He arranged one “marriage” ceremony at the Chapel of Love inside The Mall of America where Wu and an undercover agent took their wedding vows and swore under oath that the information they provided on their marriage license was true and accurate. After the ceremony and before leaving the mall, He paid the undercover agent $10,000, and then Wu and the undercover agent proceeded to file the marriage certificate with the county clerk.
The investigation in this case began in March 2017 based on information provided by an anonymous source. Law enforcement authorities believe the defendants’ clients learned about the service through word of mouth or from advertisements in Chinese newspapers.
Wang made her initial appearance this afternoon in United States District Court in Los Angeles, and she was ordered released on a $100,000 bond. Wang’s arraignment was scheduled for April 9.
Wu appeared earlier today in the District of Minnesota, where he was ordered detained pending further proceedings there on Monday. He and Wu are expected to make their first court appearances Friday in federal court in San Diego.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If they were to be convicted of the charge of conspiracy to commit marriage fraud, each defendant named in this case would face a statutory maximum sentence of five years in federal prison.
This case is the result of a three-year undercover investigation by the Los Angeles Document and Benefit Fraud Task Force, which is led by HSI and includes the U.S. Department of State’s Diplomatic Security Service, and USCIS’ Fraud Detection and National Security unit. The San Gabriel Police Department, the West Covina Police Department, and the Los Angeles County Registrar-Recorder/County Clerk assisted in the investigation.
This matter is being prosecuted by Assistant United States Attorneys Robert S. Trisotto and Jerry C. Yang of the Riverside Branch Office.
San Clemente Agrees to Comply with Federal Law Stemming from Its Replacement of Two Bus Routes with Lyft Ridesharing ServiceRead the Press Release
LOS ANGELES – The City of San Clemente has entered into a settlement agreement with the United States to ensure that individuals with disabilities have equal access to its transportation program, the Department of Justice announced today.
Since October 2016, San Clemente has provided reduced-fare rides through the Lyft ridesharing service for persons along two discontinued bus routes. The Justice Department opened a compliance review to ascertain whether San Clemente’s Lyft program complied with the Americans with Disabilities Act (ADA). From October 2016 to March 2018, persons with disabilities who needed wheelchair-accessible vehicles could not use San Clemente’s Lyft program because it did not offer such vehicles.
The settlement agreement requires San Clemente to take several steps to ensure that its program complies with the ADA. Individuals with disabilities will have equivalent access to the program, including the abilities to reserve wheelchair-accessible vehicles.
Assistant United States Attorney Acrivi Coromelas of the Civil Division’s Civil Rights Section handled this matter.
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.
This year marks the ADA’s 30th anniversary. The Department of Justice – including the U.S. Attorney’s Office – plays a central role in advancing the nation’s goal of equal opportunity, full participation, independent living, and economic self-sufficiency for people with disabilities.
Corona Lawyer Found with Unregistered Firearms, Silencers and Hand Grenade Sentenced to Two Years in Federal PrisonRead the Press Release
LOS ANGELES – A California lawyer and former Rialto Police officer was sentenced this afternoon to 24 months in federal prison for possessing unregistered firearms, silencers and a hand grenade inside his pickup truck during a law enforcement stop.
Sergio Lopez de Tirado, 44, of Corona, was sentenced by United States District Judge Fernando M. Olguin after he pleaded guilty in April 2019 to one count of possession of unregistered firearms and a destructive device.
On December 21, 2018, law enforcement found Lopez de Tirado asleep and apparently intoxicated in the passenger’s seat of a pickup truck that was parked with its doors wide open and blocking a driveway in Norco.
Upon searching the vehicle, law enforcement found two unregistered firearm silencers, including one that was attached to a semiautomatic rifle; an unregistered 9mm semiautomatic short-barreled rifle; and an unregistered hand grenade.
Law enforcement also found high-capacity magazines, ammunition, knives, a baton, brass knuckles, a Kevlar military-style helmet, and small bags containing marijuana and methamphetamine. That same evening, officers located enough bomb-making materials inside Lopez de Tirado’s home to construct several more homemade bombs.
Lopez de Tirado admitted in his plea agreement that he had not registered the short-barrel rifle, the silencers or the hand grenade with the National Firearms Registration and Transfer Record.
This case was investigated by the FBI’s Inland Empire Joint Terrorism Task Force and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Substantial assistance was provided by the Riverside County Sheriff’s Department, the Rialto Police Department, the Corona Police Department, and the California Highway Patrol.
This case was prosecuted by Assistant United States Attorney Reema M. El-Amamy of the Terrorism and Export Crimes Section.
Ex-CEO of Irvine Financial Services Firm Sentenced to over 10 Years in Prison for Stealing $3.5 Million from Mostly Elderly InvestorsRead the Press Release
LOS ANGELES – The former CEO of an Irvine-based financial services and insurance company has been sentenced to 121 months in federal prison for defrauding elderly victims who thought their money was being invested in a certificate of deposit at a major bank – but, instead, was actually used to fund his lavish lifestyle.
Mehmet Fatih Biyikoglu, a.k.a. “John B.,” 53, of Palm Desert, was sentenced late Tuesday afternoon by United States District Judge R. Gary Klausner, who also ordered him to pay $3,561,300 in restitution.
Biyikoglu, who pleaded guilty in July 2019 to one count of wire fraud, was the co-founder and chief executive officer of Five Star Financial Services of America. From 2014 through 2016, he solicited more than $4 million from investors, many of whom were elderly, retired or financially unsophisticated. Biyikoglu falsely told investors that their money would be placed in a Chase Bank certificate of deposit (CD), where it would earn 9 to 13 percent interest with little risk to the investors’ principle.
In reality, the Chase Bank CD did not exist and Biyikoglu stole the investors’ money. Biyikoglu used the pilfered funds to finance his own lavish lifestyle, including the purchase of a Rolls Royce and other luxury automobiles. By comparison, Five Star investors lost nearly everything, including one 70-year-old victim who lost nearly all of his $1.6 million investment.
To cover up his scheme, Biyikoglu created fraudulent account statements – which included the Chase Bank logo – to deceive investors into believing their money was held in a segregated account at Chase Bank and was earning interest as promised.
During the course of the scheme, 11 investors transferred just over $4 million into Five Star. These victims suffered losses of approximately $3.45 million. Another victim lost just over $100,000 to Biyikoglu.
“Biyikoglu’s conduct is reprehensible,” prosecutors wrote in their sentencing memorandum. “He targeted elderly and retired investors who would be seeking a safe vehicle for their retirement savings, knowing full well that those victims depended on those assets to support themselves during their remaining years. He has left many of his victims with nothing, forcing them to live on fixed incomes.”
In January 2019, eight months after his arrest in this case and while he was free on bond, Biyikoglu removed his location-monitoring ankle bracelet and attempted to flee to Mexico. He was arrested at the U.S.-Mexico border, carrying $1,300 in cash, 8,700 pesos and a significant amount of luggage.
Two co-conspirators charged in this case have pleaded guilty and are serving prison sentences imposed last year by U.S. District Judge Andrew J. Guilford. Anna Marie Holt, 60, of Fountain Valley, Five Star’s former president and chief operating officer, is serving a three-year federal prison sentence for conspiracy to commit wire fraud and subscribing to a false tax return.
Ida Shaghoian, 39, of Palm Desert, a sales agent with Five Star and Biyikoglu’s ex-wife, is serving a four-year prison sentence for wire fraud and subscribing to a false tax return. When she pleaded guilty, Shaghoian admitted participating in the Five Star scam, as well as running another fraud scheme that diverted investors’ retirement savings into a risky real estate venture called Island Sea LLC. Shaghoian also admitted that she defrauded an 86-year-old man out of $100,000 after meeting him at a restaurant and later leading him to believe she had become his girlfriend.
This matter was investigated by the FBI and IRS Criminal Investigation. The California Department of Insurance provided substantial assistance.
This case was prosecuted by Assistant United States Attorney Scott D. Tenley of the Santa Ana Branch Office.
West Hollywood Man Admits to Modern Art Fraud Scheme Using Fake Works for Sale, Collateral for Loans, and Write-Offs on Tax ReturnsRead the Press Release
LOS ANGELES – A West Hollywood man has agreed to plead guilty to federal criminal charges that he sold bogus art he claimed was created by artists such as Jean-Michel Basquiat, Keith Haring, Roy Lichtenstein and Andy Warhol. He also admitted using fake paintings as collateral for loans on which he later defaulted, and using fraudulent pieces for fraudulent write-offs on his income tax returns.
Philip Righter, 43, was charged today in United States District Court with wire fraud, aggravated identity theft and tax fraud. In a plea agreement also filed today, Righter agreed to plead guilty to the three felony offenses.
In total, Righter’s scheme attempted to bilk victims out of well over $6 million, and he caused losses of at least $758,265. Additionally, his fraudulent tax returns cost the United States more than $100,000, according to the plea agreement.
From 2016 until June 2018, Righter executed a scheme to defraud people, businesses and the United States by using counterfeit and fraudulent art that he asserted was genuine. Righter supported these false claims with fraudulent provenance – or chronology-of-origin – documents that he had created.
Before August 2016, Righter generally conducted these fraudulent transactions in his own name. But after the FBI and the Los Angeles Police Department interviewed him about bogus Keith Haring art he attempted to sell to a Miami art gallery, Righter began using the names of other people to execute his scheme, court documents state.
In order to make the fake artwork appear authentic, Righter ordered and used embossing stamps that appeared similar to the authentic stamps used by the estates of Basquiat and Haring authentic art by these artists. Righter admitted he used these stamps on provenance documents that he created and were later used to deceive his victims into believing the artwork was legitimate.
For example, Righter fraudulently used without authorization the name and signature of Gerard Basquiat – father and previous administrator of the artist’s estate – on fraudulent provenance documents, court documents state. Righter also falsely used the identifications of the estates of Basquiat and Haring, falsely used the names of these two artists, and falsely used the name of a legitimate gallery where Basquiat art was previously sold.
In furtherance of the scheme, Righter obtained and attempted to obtain numerous loans by using the fraudulent art and accompanying fraudulent provenance documents. For example, in October 2016, using another person’s name, Righter contacted a victim about a loan in which a purported original drawing by Basquiat would be used as collateral. Righter created a fraudulent certificate of authentication letter that purportedly came from Basquiat’s estate. The victim wired a $24,000 loan, on which Righter later defaulted. After Righter’s default, the victim attempted to auction the piece, but the auction house determined the piece was fraudulent, and the victim lost $24,000.
Righter also sold or attempted to sell numerous pieces of fake modern art. In August 2017, using another person’s name, Righter listed a purported 1983 piece of art by Basquiat with the word “Samo” written on it with an art sale website and he provided fake provenance documents. The website sold the piece for $50,000. In 2018, after the piece was determined to be fraudulent, the website had to refund the purchase price to the buyer.
Righter also admitted that he knowingly and willfully included a false W-2 and a false donation of fraudulent art to a charity on his 2015 federal income tax return, which resulted in him fraudulently receiving a refund of $54,858. Righter then signed and filed a false 2015 amended tax return, which claimed a false casualty and theft loss of $2,575,000 related to artwork he claimed had been stolen. In truth, the artwork was fraudulent and had no value. This bogus amended tax return resulted in false carryback loss refunds for 2012, 2013 and 2014 totaling $52,485, according to court documents.
Once he enters guilty pleas to the three charges, Righter will face a statutory maximum sentence of 25 years in federal prison.
Righter also currently faces charges in the Southern District of Florida for an approximately $1 million attempted art fraud on the Miami gallery. A hearing in that case is scheduled for March 11.
The FBI’s Art Crime Team, the Los Angeles Police Department, and IRS Criminal Investigation investigated this matter.
This case is being prosecuted by Assistant United States Attorneys Mark A. Williams and Erik M. Silber of the Environmental and Community Safety Crimes Section.
San Bernardino County Man Who Brought Rifle into Restaurant after Being Denied Alcohol Sentenced to 10 Years in Federal PrisonRead the Press Release
LOS ANGELES – A convicted felon who brought an assault rifle into a restaurant and brandished it at the manager after employees refused to serve him an alcoholic beverage was sentenced today to 120 months in federal prison.
Francisco Alvarado Felix, 33, of Hesperia, was sentenced by United States District Judge R. Gary Klausner.
Felix and a friend visited a BJ’s Restaurant and Brewhouse in Victorville during the early morning hours of December 29, 2018. He attempted to order an alcoholic drink, but BJ’s employees declined to serve him because he did not have proper identification. When restaurant employees later saw Felix sipping from his friend’s alcoholic beverage, the manager warned Felix he was not allowed to drink alcohol without identification and he would be forced to leave the restaurant if he did it again.
Felix then went to his car and returned with a concealed AR-15 rifle. He flashed the rifle at the manager and the two ended up in a fight on the ground, which resulted in one round being discharged from the rifle. No one was hit. Felix fled the scene with the rifle and hid until the next morning when officers executed a search warrant and arrested him at his house. During the search, officers recovered the AR-15 rifle, ammunition, and, on Felix’s person, 37.6 grams of methamphetamine packaged in two separate baggies.
In August 2019, Felix pleaded guilty to one count of being a felon in possession of a firearm and ammunition, and one count of possession with intent to distribute methamphetamine. Felix previously was convicted in San Bernardino County Superior Court for felony DUI in 2014 and of three separate felony methamphetamine-related charges in 2015 and 2016.
At the time of the scuffle with the manager at BJ’s Restaurant, Felix was out on bail in a state case. The state case stemmed from a December 5, 2018 incident at a Highland casino when a valet parking attendant found a semi-automatic pistol attached to the front console of Felix’s car next to the driver’s seat. Felix was subsequently charged by the United States Attorney’s Office in that matter, and he has pleaded guilty to one count of being a felon in possession of a firearm and ammunition. His next court hearing in that matter is March 16 before United States District Judge Dale S. Fischer, who may impose a sentence at that time. Felix faces a statutory maximum sentence of 10 years in federal prison in this second firearms-related case.
The Bureau of Alcohol, Tobacco, Firearms and Explosives, and the San Bernardino County Sheriff’s Department investigated this case.
This matter was prosecuted by Assistant United States Attorney Jerry C. Yang of the Riverside Branch Office.
Mexican National Who Ran Stash House and Laundered Money for Group Linked to Sinaloa Cartel Sentenced to over 5 Years in PrisonRead the Press Release
LOS ANGELES – A Mexican National who was charged in the first major narcotics trafficking indictment resulting from an investigation by the Los Angeles Strike Force was sentenced today to 63 months in federal prison for his role in an international narcotics network that transported 21 pounds of pure methamphetamine across the United States-Mexico border on behalf of a drug trafficking organization linked to the Sinaloa Cartel.
Edgar Limon, 39, was sentenced by United States District Judge Dale S. Fischer, who also ordered Limon to pay a $17,500 fine.
Limon pleaded guilty on July 17, 2019, to participating in a drug trafficking conspiracy and money laundering. Limon was one of 22 defendants named in a 19-count grand jury indictment that was unsealed in 2017.
The indictment outlines a scheme to import hundreds of pounds of methamphetamine, cocaine and heroin from Mexico into the United States. The narcotics were distributed throughout the country via a network of cartel associates, and the proceeds from the domestic narcotics sales were then funneled back to Mexico, according to the indictment. The drug trafficking organization stored drugs in “stash houses” in the San Gabriel Valley, one of which Limon managed.
During the two-year wiretap investigation, members of the Strike Force seized narcotics with an approximate street value in Los Angeles of more than $6 million. The seizures included approximately 290 pounds of methamphetamine, 280 pounds of cocaine, 30 pounds of heroin, and 81 pounds of marijuana.
Limon is one of nine defendants who were taken into custody pursuant to the 2017 federal grand jury indictment, and he is the last of those to be sentenced. The other eight received prison terms of up to 135 months. Several defendants charged in the indictment remain fugitives and are believed to be in Mexico.
Between June 2014 and April 2016, there was an agreement between Limon and his codefendants to distribute, and to possess with the intent to distribute, methamphetamine in the Los Angeles area. In one instance, Limon transferred more than 3 kilograms of methamphetamine in El Monte, California. Limon also maintained a stash house in Azusa that served as a distribution point for methamphetamine, heroin and cocaine.
In relation to the money laundering offense, Limon and his codefendants conducted financial transactions in the Los Angeles area and elsewhere with the intent to conceal and disguise the nature of the drug trafficking proceeds. Limon received cash that he knew to be drug proceeds, and he conducted financial transactions designed to conceal the money’s illegal origins.
Limon is the brother of Jeuri Limon Elenes, the lead defendant in the indictment who is currently a fugitive and believed to be in Mexico. Limon’s mother and cousin were also charged in the indictment, and both were sentenced to 87 months in federal prison.
The Los Angeles Strike Force investigation was led by the Federal Bureau of Investigation, in partnership with the Drug Enforcement Administration, IRS Criminal Investigation, Homeland Security Investigations, the United States Marshals Service and the Azusa Police Department.
The Los Angeles Strike Force was formed in 2014 to target Mexican drug cartels that use the Los Angeles metropolitan region as a primary hub for the distribution of narcotics across the United States. The goals of the Strike Force are to target high-level narcotics traffickers, disrupt and dismantle the cartels’ narcotics trafficking and related money laundering activities, and arrest and prosecute the cartels’ leaders and operatives.
This case is being prosecuted by Assistant United States Attorney A. Carley Palmer of the Criminal Appeals Section.
Inland Empire Man Who Stole Doctors’ Identities to Obtain Medication Later Sold on Dark-net Sentenced to 10 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Riverside County man was sentenced today to 120 months in federal prison for running a narcotics distribution outfit that, in part, stole at least nine doctors’ DEA numbers and dates of birth that he used to obtain oxycodone and other prescription medications that he later sold on the dark-net.
Christopher Lazenby, 29, of Homeland, was sentenced by United States District Judge Stephen V. Wilson.
Lazenby pleaded guilty in September 2019 to a two-count criminal information charging him with possessing with intent to distribute methamphetamine and oxycodone.
Lazenby perpetrated his scheme by stealing the identities of at least nine doctors and one physician’s assistant. He then used the Drug Enforcement Administration’s online registration system to change the addresses of eight doctors to mailboxes he had rented in South Los Angeles and Carson. Lazenby changed the address of a ninth doctor to show his medical office was a room at a Motel 6 in Inglewood, according to court documents.
With official records showing new addresses for the doctors, Lazenby forged the doctors’ signatures on counterfeit prescriptions and ordered oxycodone, hydrocodone and Adderall to be sent to the addresses he controlled, he admitted in a plea agreement. After he received the narcotics, Lazenby used the dark web and Craigslist to advertise the drugs for sale.
Lazenby was arrested on October 3, 2018 at his hotel room in Torrance, which he had rented using an alias. During searches of his hotel room and car, law enforcement seized narcotics, including 196 grams of methamphetamine, oxycodone pills, prescription pads in the names of the identity theft victims, and rubber stamps in the names of the victim doctors.
The Drug Enforcement Administration investigated this case.
This case was prosecuted by Assistant United States Attorney Benjamin R. Barron, Chief of the Santa Ana Branch Office.
Ex-Los Angeles City Councilman Surrenders to Face Federal Charges of Obstructing Public Corruption Probe, Making False StatementsRead the Press Release
LOS ANGELES – A former Los Angeles city councilman surrendered to FBI agents this morning to face criminal charges that he obstructed an investigation into him accepting cash, female escort services, hotel rooms and expensive meals from a businessman during trips to Las Vegas and Palm Springs, and later lied to the FBI about his conduct.
Mitchell Englander, 49, of Santa Monica, was taken into custody after being named in a seven-count indictment returned by a federal grand jury on January 16. Englander is expected to be arraigned this afternoon at 2:00 in the Roybal Federal Building and Courthouse.
The indictment charges Englander with one count of participating in a scheme to falsify material facts, three counts of making false statements, and three counts of witness tampering.
Englander represented Los Angeles Council District 12 in the San Fernando Valley from July 2011 until he abruptly 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.
The indictment alleges that he schemed to cover up his acceptance of cash payments, expensive meals and escort services from a businessman – identified in the indictment 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.
According to the indictment, from August 2017 through December 2018, Englander knowingly and willfully falsified and concealed material facts pertaining to this federal public corruption investigation. Specifically, Englander covered up facts that he had accepted items of value during June 2017 trips to Las Vegas and Palm Springs, the indictment alleges.
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, services from a female escort, hotel rooms, $1,000 in casino gambling chips, $34,000 in bottle service at a nightclub, and a $2,481 dinner at a restaurant, according to the indictment. Later, at a golf tournament in Palm Springs on June 12, 2017, Businessperson A allegedly gave Englander an envelope containing $5,000 in cash. 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 privately sent an encrypted message to Businessperson A via the online messaging service Confide, indicating that he now wanted to reimburse him for portions of the June 2017 Las Vegas trip, the indictment alleges.
The indictment alleges that, on at least three occasions, Englander attempted to corruptly persuade Businessperson A to provide false and misleading information, and omit relevant information from the FBI and federal prosecutors conducting the public corruption investigation. On February 6, 2018, Englander allegedly instructed Businessperson A to lie to the FBI, withhold material information from the FBI, and how to answer certain questions 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 allegedly met Businessperson A in Englander’s car and, after Englander turned up the car stereo music to a loud volume to obstruct possible listening devices, Englander again repeatedly instructed Businessperson A to lie to the FBI while driving in a circle around the block to conceal their meeting.
The indictment further alleges that Englander made 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 instruct anyone on 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 indictment alleges.
If convicted of the seven charges in the indictment, Englander would face a statutory maximum penalty of 50 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The case against Englander is part of an ongoing public corruption investigation being conducted by the FBI and the U.S. Attorney’s Office. 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 their local FBI Field Office. In Los Angeles, the FBI can be reached 24 hours a day 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.
Canadian National Who Conned U.S. Senior Citizens out of Money via ‘Grandparent Scam’ Sentenced to 41 months in Federal PrisonRead the Press Release
LOS ANGELES – A Canadian telemarketer was sentenced this morning to 41 months in federal prison for conning American 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.
Clifford Kirstein, 29, of Montreal, was sentenced by United States District Judge Cormac J. Carney, who also ordered Kirstein to pay $56,258 in restitution to eight victims.
Kirstein pleaded guilty in November to one count of wire fraud after being extradited from Canada in January 2019. Kirstein admitted in court that he and his co-conspirators contacted their elderly U.S. victims by telephone and fraudulently induced victims to send money by pretending to be a grandchild or some other relative who was in distress in a foreign nation.
As a result, frightened victims wired money as instructed to help their loved ones. The victims were directed to wire money via Western Union or MoneyGram, listing the grandchild, other relative or the name of the purported lawyer as the intended recipient.
When the victims wired the money, Kirstein and his co-conspirators converted the funds to cash as quickly as possible before the victims could discover that they had been fooled. On some occasions, Kirstein or his co-schemers called the victims again to solicit more money, falsely claiming that additional funds were needed by the grandchild or other relative to fully resolve the problem.
Canadian law enforcement executed a search warrant in 2012 at a Montreal apartment, where they found a fully operating telemarketing boiler room, a large amount of cash and a money counting machine. The individual rooms of the apartment were strewn with lead sheets, burner phones and calling cards, and the bathroom had been set up as an office with a chair in front of the sink.
“This scam was a heinous and cruel hoax, which involved threats of violence when victims did not cooperate,” prosecutors wrote in their sentencing memorandum. “[Kirstein] and his co-schemers stole not only the victims’ money, but terrified them and damaged their self-confidence.”
Kirstein admitted in his plea agreement that in February 2012 one of the scheme’s targeted victims was a Camarillo resident.
A federal grand jury charged Kirstein and four other Canadian nationals in July 2013 in a 25-count indictment alleging wire fraud. Co-conspirators Agiyl Kamaldin, 32, Mark El Bernachawy, 34, and Kelen Magael Buchan, 27, all of the Montreal area, pleaded guilty to criminal charges and received prison sentences after being extradited along with Kirstein in January 2019
The fifth defendant in this case – Peter Iacino, 31, also a Canadian national – is currently a fugitive.
The FBI, the United States Secret Service and the Royal Canadian Mounted Police investigated this matter. The Federal Trade Commission’s East Central Regional Office in Cleveland provided substantial assistance.
This case was prosecuted by Assistant United States Attorneys Monica E. Tait and Kimberly D. Jaimez of the Major Frauds Section.
The U.S. Attorney’s Office in Los Angeles is one of six offices participating in the Transnational Elder Fraud Strike Force, a joint law enforcement effort that brings together the resources and expertise of federal law enforcement and non-governmental organizations to combat international fraud schemes that disproportionately affect American seniors. Last week, the Department of Justice announced that a coordinated elder fraud sweep resulted in charges against more than 400 defendants over the past year.
San Fernando Valley Woman Sentenced to over 3 Years in Prison for Running $11.5 Million Sleep Study Scam Bilking UPS and CostcoRead the Press Release
LOS ANGELES – The former owner of a Studio City medical clinic was sentenced today to 37 months in federal prison for causing more than $11.5 million in bills to be submitted to health care benefit programs for unnecessary – and sometimes nonexistent – sleep studies, primarily for employees of United Parcel Service, Inc., and Costco Wholesale Corp.
Anna Vishnevsky, 52, of Valley Village, was sentenced by United States District Judge George H. Wu, who also ordered her to pay $2,747,071 in restitution.
Vishnevsky, who owned Atlas Diagnostic Services, Inc., pleaded guilty in November 2018 to one count of health care fraud.
From March 2014 until June 2016, Vishnevsky participated in a scheme to defraud health care benefit plans. Vishnevsky and others working at her direction recruited patients to participate in sleep study testing at Atlas by offering them cash. She also offered them additional cash if they brought in other sleep study participants, including their co-workers and relatives.
Vishnevsky recruited patients, knowing that no doctor had prescribed sleep study testing for them and regardless of whether the testing was medically necessary or appropriate. Vishnevsky did not score or interpret the data from the testing or send it to anyone who could score or interpret it, which is necessary for diagnosis and treatment.
She submitted insurance claims for sleep study testing performed on the recruited patients, listing physicians that had never treated the patients. She also billed not only for the one night of sleep study testing that the patients had purportedly undergone – regardless of medical necessity – but also for an additional, consecutive night of sleep study testing that was never performed.
In total, Vishnevsky submitted more than $11.5 million in fraudulent insurance claims to health care benefit plans. She received approximately $3 million on those claims, of which $2,747,071 is still outstanding.
“(Vishnevsky’s) criminal activity victimized not only the plans, but also plan participants recruited into the scheme, as many of them have been required to pay back fraudulent insurance claims submitted using their names (on penalty of losing their health insurance),” prosecutors wrote in their sentencing memorandum.
A co-defendant, Eddie Hernandez, 46, of Torrance, pleaded guilty in November 2018 to one count of health care fraud and is serving a 30-month federal prison sentence in this case. Hernandez was a UPS driver who helped Vishnevsky recruit people to participate in the fraudulent sleep studies.
The United States Department of Labor - Employee Benefits Security Administration, the Department of Labor - Office of Inspector General, the FBI, and the Office of Personnel Management - Office of Inspector General investigated this matter.
This case was prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.
O.C. Man Arrested on Charges of Traveling Out of State to Engage in Illicit Sexual Acts with Minors and Producing Child PornographyRead the Press Release
SANTA ANA, California – An Orange County man surrendered to federal law enforcement today to face criminal charges that he traveled out of state to engage in illicit sexual conduct and produce child pornography, including with one victim who was 6 years old.
Daniel Seibert, 28, of Lake Forest, was taken into custody this morning by special agents with Homeland Security Investigations. He is expected to make his initial appearance tomorrow afternoon in United States District Court in Santa Ana.
Seibert has agreed to plead guilty to a three-count information charging him with production of child pornography, travel with intent to engage in illicit sexual conduct, and use of a facility of interstate commerce to induce a minor to engage in criminal sexual activity.
According to his plea agreement, between March 29, 2019 and April 2, 2019, Seibert traveled from California to Michigan to engage in illicit sexual conduct with a victim who was 6 years old. The victim’s mother attempted to render the victim unconscious by using over-the-counter drugs before having Seibert engage in sex acts with the victim, according to court documents. Images later recovered during a search depicted his abuse of the victim. The victim’s mother is facing multiple child sexual abuse charges in Oregon state court.
Seibert also admitted to traveling to Utah in December 2018 and again in May 2019 to engage in illicit sexual conduct with a 14-year-old victim that he had met on the Internet.
Law enforcement also found more than 180 images and 19 videos of child exploitation images found during the November 2019 search of his residence.
Once Seibert pleads guilty to the three child exploitation charges, he will face a statutory maximum sentence of 75 years in federal prison.
This case was investigated by Homeland Security Investigations.
This matter is being prosecuted by Assistant United States Attorneys Daniel H. Ahn and Jake D. Nare of the Santa Ana Branch Office.
Mother of San Bernardino Shooter Agrees to Plead Guilty to Destroying Evidence Related to Her Son’s 2015 Terrorist AttackRead the Press Release
RIVERSIDE, California – The mother of Syed Rizwan Farook, the male shooter in 2015 San Bernardino terrorist attack, has agreed to plead guilty to a federal criminal charge of intending to impede a federal criminal investigation by shredding a map her son generated in connection with the attack.
Rafia Sultana Shareef, a.k.a. Rafia Farook, 66, of Corona, has agreed to plead guilty to a one-count information charging her with alteration, destruction, and mutilation of records. The criminal information and related plea agreement were filed Monday in United States District Court in Riverside, and the documents became publicly available today.
Shareef is scheduled to make her initial appearance in federal court in Riverside on March 16.
According to her plea agreement, on December 2, 2015, Shareef was living at a Redlands residence she shared with her son and his wife, Tashfeen Malik, and her grandchild. At approximately 8 a.m. on that day, Farook and Malik left the family home and left their infant child with Shareef, falsely telling her that they were going to a medical appointment.
Instead, Farook and Malik drove a black SUV that Farook had rented a few days earlier to the Inland Regional Center (IRC) in San Bernardino. Farook entered the IRC alone, while Malik waited inside the SUV, which was parked at the IRC parking lot. Farook placed a bag containing a bomb in a conference room where his coworkers were holding an event. After some time, Farook and Malik left the IRC, then returned at approximately 10:58 a.m. dressed in black tactical gear.
Approaching the IRC on foot from the exterior, Farook and Malik opened fire using high-powered firearms on individuals outside and inside the venue, killing 14 people and wounding at least 22 others. At approximately 11:01 a.m., Farook and Malik departed the IRC and began driving around San Bernardino. A few hours later, Farook and Malik engaged in a firefight with law enforcement officers that resulted in the wounding of one policeman and their own deaths.
Sometime between 11:43 a.m. and 3:06 p.m., while Shareef was still at her home, she learned that law enforcement had identified her son as a suspect in the IRC attack, the plea agreement states. In the presence of family members that afternoon, Shareef expressed her belief that her son and daughter-in-law had perpetrated the IRC attack, according to the plea agreement.
Prior to leaving the family home with her infant grandchild at 3:41 p.m., Shareef went into her son’s bedroom, grabbed at least one document that appeared to be a map, and fed it into a shredder, according to the plea agreement. Shareef admitted that she knew her son had produced the document, and she believed it was directly related to his planning of the IRC attack.
Once she pleads guilty to the felony charge, Shareef will face a maximum statutory sentence of 20 years in federal prison, but the plea agreement contemplates a sentence of no more than 18 months.
This matter was investigated by the FBI. This case stems from the broader investigation of the San Bernardino attack by members of the Inland Empire Joint Terrorism Task Force, which includes the FBI; the San Bernardino Police Department; the San Bernardino County Sheriff’s Department; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Homeland Security Investigations; the Riverside County Sheriff’s Department; the San Bernardino County District Attorney’s Office; the Chino Police Department; the Redlands Police Department; the Ontario Police Department; the Corona Police Department; and the Riverside Police Department.
The case against Shareef is being prosecuted by Assistant United States Attorneys Christopher D. Grigg, Chief of the Terrorism and Export Crimes Section; Melanie Sartoris of the General Crimes Section; and Julius J. Nam of the Criminal Appeals Section. Justice Department Trial Attorneys Alicia Cook and C. Alexandria Bogle of the National Security Division’s Counterterrorism Section provided substantial support.
Glendale Man Who Schemed to Impersonate Dentists to Swindle Banks Out of $2.1 Million Sentenced to over 3 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Glendale man who defrauded banks out of $2.1 million by conspiring to steal the identities of at least 11 dentists, opening sham dentist offices, and filing fraudulent claims to banks that offer lines of credit to dentists – was sentenced today to 37 months in federal prison.
Ararat Yesayan, 39, was sentenced by United States District Judge Dolly M. Gee, who also ordered him to pay $2,019,738 in restitution, and who described Yesayan’s crimes as “outrageous.”
Yesayan pleaded guilty in May 2019 to one count of conspiracy to commit bank fraud.
From October 2010 until March 2014, Yesayan and his co-conspirators impersonated dentists by stealing personal identifying information, including dental license numbers. Yesayan and others acquired commercial office space to open what looked like real dental offices in the names of victim dentists, according to his plea agreement.
Yesayan and others then submitted change of address requests to the Dental Board of California with the addresses of the newly opened sham dental office addresses so they would receive mail intended for the impersonated dentists. Using the victim dentists’ names, Yesayan and others applied for lines of credit offered by banks to dentists and, upon approval, submitted numerous fraudulent dental claims in the names of fake patients for procedures that were never performed.
Once the claims were approved, money was wired to Yesayan-controlled bank accounts. The victim lenders included Citibank and GE Capital Retail Finance Bank (now Synchrony Bank), who suffered losses of at least $2.1 million.
A second defendant in this case – Varooj Arakelian, 49, of Glendale – is scheduled to go on trial on June 23. Charges against a third defendant – Artin Sarkissians, 42, also of Glendale – are pending.
The FBI investigated this matter.
This case was prosecuted by Assistant United States Attorney Julia S. Choe of the Cyber and Intellectual Property Crimes Section.
USC Agrees to Comply with Federal Law by Expanding the USC Hotel’s Accessibility for Individuals with Mobility DisabilitiesRead the Press Release
LOS ANGELES – The University of Southern California has agreed to resolve allegations that it violated the Americans with Disabilities Act (ADA) at its USC Hotel adjacent to its campus by failing to provide a wheelchair-accessible room to a customer who needed one.
An individual who uses a wheelchair because of his disability initiated this federal complaint. The man required an accessible room with a roll-in shower, according to the settlement agreement. The complainant alleged that he used an online reservation system to book a room at the 240-room hotel, then known as the Radisson Hotel Los Angeles Midtown at USC or USC Radisson, anticipating that an accessible room would be available. He also alleged that when he arrived, he was unable to stay at the hotel because the hotel’s only wheelchair accessible room with a roll-in shower was occupied.
The United States investigated this case and determined that as of March 2018, the hotel had an insufficient number of accessible guest rooms with mobility features as defined by federal law.
The settlement agreement ensures that individuals with mobility disabilities who wish to stay at the USC Hotel can book accessible guest rooms. USC has agreed to renovate the hotel to add nine accessible guest rooms as well as an accessible registration counter. USC also agreed to ensure that the hotel’s website contains sufficient information to allow individuals with disabilities to make informed decisions when booking accessible rooms.
The claims resolved by the settlements are allegations only and there has been no determination of liability.
Assistant United States Attorney Acrivi Coromelas of the Civil Division’s Civil Rights Section handled this matter.
For more information on the ADA or this settlement agreement, please call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0308 (TDD), or access the ADA website at http://www.ada.gov.
This year marks the ADA’s 30th anniversary. The Department of Justice – including the U.S. Attorney’s Office – plays a central role in advancing the nation’s goal of equal opportunity, full participation, independent living, and economic self-sufficiency for people with disabilities. The Justice Department will continue to use its enforcement and technical assistance tools to eliminate unlawful discrimination against people with disabilities.
Santa Fe Springs ‘Shotcaller’ and Mexican Mafia Member Sentenced to Life in Prison for RICO Offenses, Including Rival Gangster’s MurderRead the Press Release
LOS ANGELES – A Mexican Mafia member and “shotcaller” of the Santa Fe Springs and Whittier-based Canta Ranas street gang was sentenced today to life plus an additional 30 years in federal prison for leading the wide-ranging criminal enterprise and for murdering a rival gangster at a San Gabriel Valley restaurant in 2016.
Jose Loza, 41, was sentenced by United States District Judge Virginia A. Phillips, who also set a June 1 hearing to determine the amount Loza will pay as restitution to his victims.
Loza is the lead defendant in a 2016 federal grand jury indictment charging 51 Canta Ranas members and associates with racketeering and other related offenses.
After a month-long trial in August 2019, a jury found Loza guilty of 12 felonies. Specifically, the jury found Loza guilty of one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act, four counts of engaging in violent crimes in aid of racketeering (VICAR), one count of conspiracy to distribute methamphetamine, one count of possession with intent to distribute methamphetamine, three counts of using a firearm during a crime of violence, one count of being a felon in possession of a firearm, and one count of money laundering conspiracy.
Loza implemented the orders of David Gavaldon, an imprisoned senior Mexican Mafia member who was himself a long-time member of the Canta Ranas street gang and who was not charged in this case as he is serving a life-without-parole sentence in Pelican Bay State Prison. Gavaldon exerted control over Canta Ranas and other gangs in Whittier, Santa Fe Springs, Riverside, and Stockton, and he received compensation in the form of “rent” or “taxes” generated by drug trafficking and other offenses committed in gang territory.
In addition to implementing Gavaldon’s orders, Loza murdered a fellow Mexican Mafia member who was marked for death by the prison gang after he was perceived as encroaching upon the territories of other Mexican Mafia members. During the April 19, 2016 incident at a restaurant in the San Gabriel Valley community of Basset, the victim was shot six times, his bodyguard was severely wounded, and an innocent restaurant patron was shot multiple times.
Loza’s accomplice in the 2016 murder, Leonardo Antolin, 25, of Whittier, pleaded guilty to five felonies in this case and has been sentenced to 40 years in federal prison for his crimes.
Prosecutors have secured 48 convictions so far in this matter, which is the result of Operation Frog Legs. During the course of that three-year investigation, law enforcement seized 56 firearms and made several narcotics seizures, including nearly one pound of methamphetamine seized during the execution of search warrants after Loza murdered the other Mexican Mafia member.
Operation Frog Legs is the result of an investigation by the Southern California Drug Task Force, which is led by the Drug Enforcement Administration as part of the High Intensity Drug Trafficking Area (HIDTA) initiative. The Task Force members that participated in Operation Frog Legs were U.S. Immigration and Customs Enforcement’s Homeland Security Investigation, the Whittier Police Department, the Los Angeles County Sheriff’s Department, IRS Criminal Investigation, and the California Department of Corrections and Rehabilitation, Office of Correctional Safety, Special Service Unit. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force (OCDETF).
This matter was prosecuted by Assistant United States Attorney Carol Alexis Chen, Chief of the International Narcotics, Money Laundering, and Racketeering Section, and Assistant United States Attorneys Kathy Yu, also of the International Narcotics, Money Laundering, and Racketeering Section and Victoria A. Degtyareva of the Cyber and Intellectual Property Crimes Section.
Ex-Gardena Police Officer Sentenced to Nearly 3 Years in Prison for Unlicensed Firearms Business, Selling Weapons to Convicted FelonsRead the Press Release
LOS ANGELES – A former Gardena Police officer was sentenced today to 33 months in federal prison for scheming to purchase “off-roster” firearms not available to the general public and then illegally reselling the firearms for profit.
Carlos Miguel Fernandez, 44, of Norwalk, was sentenced by United States District Judge S. James Otero, who stated that Fernandez’s conduct was “egregious” and “shocking.”
At a six-day trial in November 2019, a jury found Fernandez guilty of conspiracy to engage in the business of dealing firearms without a license and of substantive counts of engaging in an unlicensed firearms business. Fernandez also was found guilty of an additional conspiracy count, selling firearms to a convicted felon, and of making false statements about the sales on federal firearms licensing paperwork. Following the guilty verdict, the Gardena Police Department terminated Fernandez’s employment.
Fernandez, whose Instagram handle was “the38superman,” advertised firearms for sale – guns being offered by both himself and others – on his Instagram account. The vast majority of posts on the account contained images of firearms. Fernandez marketed firearms at gun shows. He was not licensed to engage in the business of dealing in firearms.
Fernandez exploited his position as a police officer to ensure the success of his illegal gun selling business. Specifically, Fernandez purchased “off-roster” firearms – mostly Colt .38-caliber handguns that were not available to the general public, but which could be legally purchased by law enforcement officers – and sold dozens of these weapons through private-party transfers. Through messages on Instagram and other means, Fernandez negotiated the prices and terms of firearm sales, and he accepted payment for the guns once the firearms were delivered.
Between May 2016 and December 2017, Fernandez negotiated and arranged the sale of 10 firearms to a convicted felon, Oscar Maravilla Camacho Jr., 36, of Salinas. With respect to every sale, Fernandez communicated directly with Camacho Jr. about the firearms purchases and understood that Camacho Jr., as a felon, could not legally buy the weapons. Nevertheless, Fernandez transferred the weapons to Camacho Jr. in violation of federal law. Camacho Jr. is serving a six-year federal prison sentence in this case after he pleaded guilty in November 2019 to conspiracy and cocaine distribution charges.
“(Fernandez) ignored the dangerous nature of his conduct, in flagrant disregard of his duties and oath as a law enforcement officer, and did so because he was motivated to make money,” prosecutors wrote in their sentencing memorandum.
Judge Otero today also ordered a new trial for Edward Yasushiro Arao, 49, of Eastvale, who was found guilty by the same jury that convicted Fernandez. Judge Otero ruled that his previous decision that Arao and Fernandez be tried together was erroneous. A March 18 status conference has been set to discuss a new trial date for Arao.
Six other defendants in this case have pleaded guilty to federal criminal charges for distribution of cocaine, conspiracy to dispose of firearms to a felon, and making false statements that led to the straw purchase of several firearms.
The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated this case. The Gardena Police Department provided its full cooperation during the investigation.
This case was prosecuted by Assistant United States Attorneys Katherine A. Rykken of the Major Frauds Section and Veronica Dragalin of the Public Corruption and Civil Rights Section.
Inland Empire Man Arrested on Indictment Alleging He Repeatedly Caused False Statements to Be Made in Bankruptcy Court PetitionsRead the Press Release
RIVERSIDE, California – A San Bernardino County man who worked as a bankruptcy petition preparer (BPP) was arrested today on federal criminal charges that allege he acted as an unlicensed attorney in bankruptcy cases, charged fees well over those permitted by law and then repeatedly lied to the United States Bankruptcy Court.
Richard Allen Mease, 62, of Victorville, was taken into custody this morning by special agents with the FBI. Mease is scheduled to be arraigned on an indictment this afternoon in United States District Court in Riverside.
The indictment, which was returned Wednesday by federal grand jury, charges Mease with four counts of making a false statement in a bankruptcy proceeding. The indictment alleges that, on at least four separate occasions, Mease concealed his identity as a BPP on bankruptcy petitions he prepared on behalf of clients.
Under applicable law and regulations, a BPP is permitted to charge fees of up to $200 to prepare and file a bankruptcy petition, but is not permitted to offer or provide legal advice.
Mease repeatedly violated these laws and regulations since at least September 2009, charging clients fees well over the legally permitted limit and acting as an unlicensed lawyer, the indictment alleges. In response to these violations, a bankruptcy court in 2011 barred him from acting as a BPP after he had charged a client more than $1,000 for BPP services and provided legal advice, according to the indictment. In 2013, the bankruptcy court issued another order holding Mease in contempt of court for continuing to prepare bankruptcy petitions in violation of the injunction.
But Mease allegedly continued to break the law and violate the court’s injunction against him. On four occasions between November 2016 and May 2018, Mease charged his clients multiple times over the amount permitted by law to prepare their bankruptcy petitions and caused false statements to be filed in their petitions, the indictment alleges.
For example, in November 2016, Mease allegedly charged one client $950 for BPP services. According to the indictment, Mease caused a false statement to be made under penalty of perjury in the bankruptcy petition which stated “No” to the question, “Did you pay or agree to pay someone who is not an attorney to help you fill out your bankruptcy forms?”
On another bankruptcy petition that contained a similar false statement, Mease charged his clients $1,550 in fees for BPP services, the indictment alleges.
If convicted of all charges, Mease would face a statutory maximum sentence of 20 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The case was investigated by the FBI, which received substantial assistance from the Office of the United States Trustee.
This case is being prosecuted by Assistant United States Attorney Natasha Haney of the Riverside Branch Office.
Two Los Angeles Pharmacy Owners Sentenced for Multimillion-Dollar Scheme that Billed Medicare, Cigna $11.8 Million in Fraudulent Medication ClaimsRead the Press Release
Two owners and operators of a Los Angeles pharmacy were both sentenced today to 144 months in prison for their roles in a health care fraud scheme where Medicare and CIGNA were billed more than $11.8 million in fraudulent claims for prescription drugs.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Special Agent in Charge Timothy DeFrancesca of the U.S. Department of Health and Human Services Office of the Inspector General’s (HHS-OIG) Los Angeles Regional Office, Assistant Director in Charge Paul Delacourt of the FBI’s Los Angeles Field Office, Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office and Special Agent in Charge Kris Lyle of the California Department of Justice made the announcement.
Aleksandr Suris, 51, of Sherman Oaks, California, was sentenced to 144 months in prison by U.S. District Judge S. James Otero of the Central District of California, who also ordered Suris to pay restitution of $11,826,444.65 to Medicare and $17,109.39 to CIGNA. The court ordered Suris to make an immediate partial restitution payment of $500,000. Maxim Sverdlov, 45, also of Sherman Oaks, was sentenced to 144 months in prison by Judge Otero, who ordered him to pay $11,826,444.65 in restitution to Medicare. The court ordered Sverdlov to make an immediate partial restitution payment of $500,000.
On Aug. 20, 2019, after an 11-day trial, a jury found Suris guilty of two counts of conspiracy to commit health care fraud, six counts of health care fraud, and one count of conspiracy to commit money laundering. The jury found Sverdlov guilty of one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.
Suris and Sverdlov were the co-owners and co-operators of Royal Care Pharmacy (Royal Care) in Hollywood. According to the evidence presented at trial, from 2012 to 2015, Suris and Sverdlov fraudulently billed Medicare and CIGNA for prescription medications that Royal Care did not actually purchase or dispense to beneficiaries. In order to hide the fraud, Suris and Sverdlov obtained fake drug invoices from co-conspirators to make it appear as if Royal Care had purchased the medicines for which it had billed Medicare and CIGNA, when it actually had not. Suris and Sverdlov also used these fake invoices to launder the proceeds of the fraud through a co-conspirator. In total, Suris and Sverdlov submitted more than $11.8 million in bogus claims to Medicare for prescription drugs that they never purchased or dispensed to patients.
This case was investigated by HHS-OIG, the FBI, IRS-CI and the California Department of Justice, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. Trial Attorney Robyn N. Pullio and Assistant Chief Daniel J. Griffin of the Fraud Section prosecuted the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
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.
Urologist Sentenced to Nearly Six Years in Prison for Fraudulent Billings of Nonexistent Patient Visits and Unnecessary TestsRead the Press Release
LOS ANGELES – A urologist was sentenced today to 71 months in federal prison for submitting fraudulent billings totaling more than $700,000 to Medicare for medically unnecessary and nonexistent treatments, sometimes billing for purported patient visits miles apart and occurring at the exact same time.
Mark Wilfred Tamarin, 65, of Manhattan Beach, was sentenced by United States District Judge Dale S. Fischer, who also ordered him to pay nearly $345,000 in restitution.
After a seven-day trial in July 2019, a jury found Tamarin guilty of six counts of wire fraud and one count of attempted health care fraud. He has been in federal custody since the trial’s conclusion.
According to the evidence presented at trial, from 1987 until 2014, Tamarin was a partner at Advanced Urology Medical Offices (AUMO), which had offices in Torrance and West Los Angeles.
From January 2009 until January 2013, at AUMO, where the majority of the patients were covered by Medicare, Tamarin billed Medicare for services he did not and could not have performed and also ordered medically unnecessary tests. Tamarin covered Kindred Hospital, a sub-acute medical center in Ladera Heights, for AUMO. Kindred is a facility designed for patients with serious medical problems and in need of long-term care, but for whom a traditional hospital setting is unnecessary. There, he billed for numerous patient visits that never happened and for services he never provided. The evidence presented at trial showed that on multiple occasions between 2009 and 2013, Tamarin purportedly was in two places miles apart at the same time he was treating patients in both locations.
At his office at AUMO, Tamarin ordered medically unnecessary tests for his patients. In particular, he ordered two to three times the number of post-void residual (PVR) tests and renal ultrasounds for urology patients in comparison to his three medical partners. Tamarin ordered so many PVRs that the office’s medical assistants suggested that the office purchase a second PVR machine. Tamarin ordered these tests before speaking with or seeing a patient despite the fact that the tests themselves only were appropriate in limited medical circumstances.
In total, Tamarin caused more than $700,000 in fraudulent claims to be billed to Medicare, of which Medicare paid approximately $219,934 in fraudulent Kindred claims and $124,802 in medically unnecessary PVR and renal ultrasound claims.
This matter was investigated by the FBI and U.S. Department of Health and Human Services Office of Inspector General.
This case was prosecuted by Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.
Kaiser Permanente Agrees to Settle Americans with Disabilities Act Claims and to Improve Access for Deaf or Hard of Hearing PatientsRead the Press Release
LOS ANGELES – Southern California Permanente Medical Group and Kaiser Foundation Hospitals have agreed to resolve allegations that they violated the Americans with Disabilities Act (ADA) by failing to provide a qualified sign language interpreter or other appropriate form of assistance to a deaf patient. Separately, a Riverside County doctor has agreed to settle similar claims involving a deaf patient.
The Kaiser settlement agreement ensures that individuals with disabilities at its West Los Angeles Medical Center receive appropriate auxiliary aids and services necessary for effective communication. Southern California Permanente Medical Group and Kaiser Foundation Hospitals have agreed to provide equipment and services free of charge to ensure that people who are deaf or hard of hearing have full and equal access to medical appointments, treatments, and emergency visits at this medical center. The complainant alleged he was not provided effective communication on a regular basis during visits to this medical center from 2012 through 2016.
The entities, which fully cooperated with the government’s investigation, have agreed to:
- Provide appropriate auxiliary aids and services, including qualified interpreters, when necessary to ensure effective communication with patients who are deaf or hard of hearing and their companions;
- Advertise the availability of auxiliary aids and services;
- Designate a diversity coordinator to ensure access to appropriate auxiliary aids and services necessary for effective communication;
- Provide training on auxiliary aids and services, including qualified interpreters, for the diversity coordinator, Medical Center personnel, and telephone operators; and
- Pay compensation to the complainant and civil penalties to the United States.
In a separate matter, Dr. Javier Rios, a Lake Elsinore-based physician, also agreed to comply with the ADA by providing appropriate auxiliary aids and services free of charge so people who are deaf or hard of hearing have full and equal access to appointments and treatment at his office. The settlement resolves allegations that Rios, during more than a dozen appointments from 2016 to 2018, failed to provide such services for a patient who is deaf, telling her instead that she or her insurance company should provide them. The ADA requires providers, not patients, to ensure effective communication for people who are deaf or hard of hearing. Rios fully cooperated with the government’s investigation.
“Communicating with medical professionals not only is a right under federal law, it also can be a matter of life and death,” said United States Attorney Nick Hanna. “My office will take the necessary measures to ensure that health care providers comply with the ADA and provide equal treatment for the deaf and hard of hearing.”
Assistant United States Attorney Acrivi Coromelas of the Civil Division’s Civil Rights Section handled the Kaiser matter. Assistant United States Attorney Matthew Nickell, also of the Civil Division’s Civil Rights Section, handled the Rios matter.
Copies of the settlement agreements can be found here and here. For more information on the ADA, please call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD) or access the ADA website at http://www.ada.gov.
The claims resolved by the settlements are allegations only and there has been no determination of liability.
This year marks the ADA’s 30th anniversary. The Department of Justice – including the U.S. Attorney’s Office – plays a central role in advancing the nation’s goal of equal opportunity, full participation, independent living, and economic self-sufficiency for people with disabilities. The Justice Department will continue to use its enforcement and technical assistance tools to eliminate unlawful discrimination against people with disabilities.
Wells Fargo Agrees to Pay $3 Billion to Resolve Criminal and Civil Investigations into Sales Practices Involving the Opening of Millions of Accounts without Customer AuthorizationRead the Press Release
Wells Fargo & Company and its subsidiary, Wells Fargo Bank, N.A., have agreed to pay $3 billion to resolve their potential criminal and civil liability stemming from a practice between 2002 and 2016 of pressuring employees to meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities, the Department of Justice announced today.
As part of the agreements with the United States Attorney’s Offices for the Central District of California and the Western District of North Carolina, the Commercial Litigation Branch of the Civil Division, and the Securities and Exchange Commission, Wells Fargo admitted that it collected millions of dollars in fees and interest to which the Company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information, including customers’ means of identification.
“When companies cheat to compete, they harm customers and other competitors,” said Deputy Assistant Attorney General Michael D. Granston of the Department of Justice’s Civil Division. “This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customer’s private information. The Civil Division will continue to use all available tools to protect the American public from fraud and abuse, including misconduct by or against their financial institutions.”
“Our settlement with Wells Fargo, and the $3 billion monetary penalty imposed on the bank, go far beyond ‘the cost of doing business.’ They are appropriate given the staggering size, scope and duration of Wells Fargo’s illicit conduct, which spanned well over a decade,” said U.S. Attorney Andrew Murray for the Western District of North Carolina. “When a reputable institution like Wells Fargo caves to the pernicious forces of greed, and puts its own interests ahead of those of the customers it claims to serve, my office will not sit idle. Today’s announcement should serve as a stark reminder that no institution is too big, too powerful, or too well-known to be held accountable and face enforcement action for its wrongdoings.”
“This case illustrates a complete failure of leadership at multiple levels within the Bank. Simply put, Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way,” said U.S. Attorney Nick Hanna for the Central District of California. “We are hopeful that this $3 billion penalty, along with the personnel and structural changes at the Bank, will ensure that such conduct will not reoccur.”
“Our office is committed to bringing to justice those who deliberately falsify and fabricate bank records in order to deceive regulators and the public,” said Inspector General Mark Bialek of the Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection. “I commend our agent and our law enforcement partners for their hard work and persistence that led to today’s announcement.”
“Today’s multi-billion-dollar penalty holds Wells Fargo accountable for its unlawful sales practices and pressure tactics in which it deceived millions of clients, thus causing substantial hardship for the very individuals who placed their trust in the institution,” said Inspector General Jay N. Lerner Federal Deposit Insurance Corporation. “The FDIC Office of Inspector General is committed to working with our law enforcement partners in order to investigate such financial crimes that harm customers and investors, and undermine the integrity of the banking sector.”
The criminal investigation into false bank records and identity theft is being resolved with a deferred prosecution agreement in which Wells Fargo will not be prosecuted during the three-year term of the agreement if it abides by certain conditions, including continuing to cooperate with further government investigations. Wells Fargo also entered a civil settlement agreement under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) based on Wells Fargo’s creation of false bank records. FIRREA authorizes the federal government to seek civil penalties against financial institutions that violate various predicate criminal offenses, including false bank records. Wells Fargo also agreed to the SEC instituting a cease-and-desist proceeding finding violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The $3 billion payment resolves all three matters, and includes a $500 million civil penalty to be distributed by the SEC to investors.
The 16-page statement of facts accompanying the deferred prosecution agreement and civil settlement agreement outlines a course of conduct over 15 years at Well Fargo’s Community Bank, which was then the largest operating segment of Wells Fargo, consistently generating more than half of the company’s revenue. The statement of facts outlines top Community Bank leaders’ knowledge of the conduct. As part of the statement of facts, Wells Fargo admitted the following:
Beginning in 1998, Wells Fargo increased its focus on sales volume and reliance on annual sales growth. A core part of this sales model was the “cross-sell strategy” to sell existing customers additional financial products. It was “the foundation of our business model,” according to Wells Fargo. In its 2012 Vision and Values statement, Wells Fargo stated: “We start with what the customer needs – not with what we want to sell them.”
But, in contrast to Wells Fargo’s public statements and disclosures about needs-based selling, the Community Bank implemented a volume-based sales model in which employees were directed and pressured to sell large volumes of products to existing customers, often with little regard to actual customer need or expected use. The Community Bank’s onerous sales goals and accompanying management pressure led thousands of its employees to engage in unlawful conduct – including fraud, identity theft and the falsification of bank records – and unethical practices to sell product of no or little value to the customer.
Many of these practices were referred to within Wells Fargo as “gaming.” Gaming strategies varied widely, but included using existing customers’ identities – without their consent – to open checking and savings, debit card, credit card, bill pay and global remittance accounts. From 2002 to 2016, gaming practices included forging customer signatures to open accounts without authorization, creating PINs to activate unauthorized debit cards, moving money from millions of customer accounts to unauthorized accounts in a practice known internally as “simulated funding,” opening credit cards and bill pay products without authorization, altering customers’ true contact information to prevent customers from learning of unauthorized accounts and prevent Wells Fargo employees from reaching customers to conduct customer satisfaction surveys, and encouraging customers to open accounts they neither wanted or needed.
The top managers of the Community Bank were aware of the unlawful and unethical gaming practices as early as 2002, and they knew that the conduct was increasing due to onerous sales goals and pressure from management to meet these goals. One internal investigator in 2004 called the problem a “growing plague.” The following year, another internal investigator said the problem was “spiraling out of control.” Even after senior managers in the Community Bank directly called into question the implementation of the cross-sell strategy, Community Bank senior leadership refused to alter the sales model, which contained unrealistic sales goals and a focus on low-quality secondary accounts.
Despite knowledge of the illegal sales practices, Community Bank senior leadership failed to take sufficient action to prevent and reduce the incidence of such practices. Senior leadership of the Community Bank minimized the problems to Wells Fargo management and its board of directors, by casting the problem as driven by individual misconduct instead of the sales model itself. Community Bank senior leadership viewed negative sales quality and integrity as a necessary byproduct of the increased sales and as merely the cost of doing business.
* * *
The government’s decision to enter into the deferred prosecution agreement and civil settlement took into account a number of factors, including Wells Fargo’s extensive cooperation and substantial assistance with the government’s investigations; Wells Fargo’s admission of wrongdoing; its continued cooperation in the investigations; its prior settlements in a series of regulatory and civil actions; and remedial actions, including significant changes in Wells Fargo’s management and its board of directors, an enhanced compliance program, and significant work to identify and compensate customers who may have been victims. The deferred prosecution agreement will be in effect for three years.
The global settlement also reflects coordination between the Department of Justice and the SEC to ensure a resolution that appropriately addresses the severity of the defendants’ conduct while avoiding the imposition of fines and penalties that are unnecessarily duplicative.
The deferred prosecution agreement was handled by the United States Attorney’s Offices in Los Angeles and Charlotte, with investigative support from the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation - Office of Inspector General, the Federal Housing Finance Agency - Office of Inspector General, the Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau, and the United States Postal Inspection Service.
The civil settlement agreement was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office in Los Angeles.
Wells Fargo Agrees to Pay $3 Billion to Resolve Criminal and Civil Investigations into Sales Practices Involving the Opening of Millions of Accounts Without Customer AuthorizationRead the Press Release
CIVIL SETTLEMENT AGREEMENT DEFERRED PROSECUTION AGREEMENTLOS ANGELES – Wells Fargo & Co. and its subsidiary, Wells Fargo Bank, N.A., have agreed to pay $3 billion to resolve three separate matters stemming from a years-long practice of pressuring employees to meet unrealistic sales goals – which led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities, the Department of Justice announced today.
As part of the agreements with the United States Attorney’s Offices for the Central District of California and the Western District of North Carolina, the Justice Department’s Civil Division, and the Securities and Exchange Commission, Wells Fargo admitted that it collected millions of dollars in fees and interest to which the company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information.
“This case illustrates a complete failure of leadership at multiple levels within the bank. Simply put, Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way,” said United States Attorney Nick Hanna. “We are hopeful that this $3 billion penalty, along with the personnel and structural changes at the bank, will ensure that such conduct will not reoccur.”
The criminal investigation into false bank records and identity theft is being resolved with a deferred prosecution agreement in which Wells Fargo will not be prosecuted during the three-year term of the agreement if it abides by certain conditions, including continuing to cooperate with ongoing investigations. Wells Fargo also entered a civil settlement agreement under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) based on Wells Fargo’s creation of false bank records. Wells Fargo also agreed to the SEC instituting a cease-and-desist proceeding finding violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The $3 billion payment resolves all three matters, and includes a $500 million civil penalty to be distributed by the SEC to investors.
“When companies cheat to compete, they harm customers and other competitors,” said Deputy Assistant Attorney General Michael D. Granston of the Department of Justice’s Civil Division. “This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customers’ private information. The Civil Division will continue to use all available tools to protect the American public from fraud and abuse, including misconduct by or against their financial institutions.”
“Our settlement with Wells Fargo, and the $3 billion monetary penalty imposed on the bank, go far beyond ‘the cost of doing business.’ They are appropriate given the staggering size, scope and duration of Wells Fargo’s illicit conduct, which spanned well over a decade,” said Andrew Murray, the United States Attorney for the Western District of North Carolina. “When a reputable institution like Wells Fargo caves to the pernicious forces of greed, and puts its own interests ahead of those of the customers it claims to serve, my office will not sit idle. Today’s announcement should serve as a stark reminder that no institution is too big, too powerful, or too well known to be held accountable and face enforcement action for its wrongdoings.”
The 16-page statement of facts accompanying the deferred prosecution agreement and civil settlement agreement outlines a course of conduct over 15 years at Well Fargo’s Community Bank, which was then the largest operating segment of Wells Fargo, consistently generating more than half of the company’s revenue. The statement of facts outlines top Community Bank leaders’ knowledge of the conduct. As part of the statement of facts, Wells Fargo admitted the following:
Beginning in 1998, Wells Fargo increased its focus on sales volume and reliance on annual sales growth. A core part of this sales model was the “cross-sell strategy” to sell existing customers additional financial products. It was “the foundation of our business model,” according to Wells Fargo. In its 2012 Vision and Values statement, Wells Fargo stated: “We start with what the customer needs – not with what we want to sell them.”
But, in contrast to Wells Fargo’s public statements and disclosures about needs-based selling, the Community Bank implemented a volume-based sales model in which employees were directed and pressured to sell large volumes of products to existing customers, often with little regard to actual customer need or expected use. The Community Bank’s onerous sales goals and accompanying management pressure led thousands of its employees to engage in unlawful conduct – including fraud, identity theft and the falsification of bank records – and unethical practices to sell products of no or little value to the customer.
Many of these practices were referred to within Wells Fargo as “gaming.” Gaming strategies varied widely, but included using existing customers’ identities – without their consent – to open checking and savings, debit card, credit card, bill pay and global remittance accounts. From 2002 to 2016, gaming practices included forging customer signatures to open accounts without authorization, creating PINs to activate unauthorized debit cards, moving money from millions of customer accounts to unauthorized accounts in a practice known internally as “simulated funding,” opening credit cards and bill pay products without authorization, altering customers’ true contact information to prevent customers from learning of unauthorized accounts and prevent Wells Fargo employees from reaching customers to conduct customer satisfaction surveys, and encouraging customers to open accounts they neither wanted or needed.
The top managers of the Community Bank were aware of the unlawful and unethical gaming practices as early as 2002, and they knew that the conduct was increasing due to onerous sales goals and pressure from management to meet these goals. One internal investigator in 2004 called the problem a “growing plague.” The following year, another internal investigator said the problem was “spiraling out of control.” Even after senior managers in the Community Bank directly called into question the implementation of the cross-sell strategy, Community Bank senior leadership refused to alter the sales model, which contained unrealistic sales goals and a focus on low-quality secondary accounts.
Despite knowledge of the illegal sales practices, Community Bank senior leadership failed to take sufficient action to prevent and reduce the incidence of such practices. Senior leadership of the Community Bank minimized the problems to Wells Fargo management and its board of directors, by casting the problem as driven by individual misconduct instead of the sales model itself. Community Bank senior leadership viewed negative sales quality and integrity as a necessary byproduct of the increased sales and as merely the cost of doing business.
“Our office is committed to bringing to justice those who deliberately falsify and fabricate bank records in order to deceive regulators and the public,” said Inspector General Mark Bialek of the Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection. “I commend our agent and our law enforcement partners for their hard work and persistence that led to today’s announcement.”
“Today’s multi-billion-dollar penalty holds Wells Fargo accountable for its unlawful sales practices and pressure tactics in which it deceived millions of clients, thus causing substantial hardship for the very individuals who placed their trust in the institution,” said Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation. “The FDIC Office of Inspector General is committed to working with our law enforcement partners in order to investigate such financial crimes that harm customers and investors, and undermine the integrity of the banking sector.”
“Since 2016, FBI San Francisco has prioritized our criminal investigation into the unlawful practices by Wells Fargo. Trust in our banks and financial institutions is fundamental to the security and stability of the U.S. economy,” said FBI San Francisco Special Agent in Charge John F. Bennett. “The FBI has dedicated significant resources to uncovering the truth and ensuring the protection of American consumers.”
“The United States Postal Inspection Service has a long history of successfully investigating complex fraud cases,” stated San Francisco Division Inspector in Charge Rafael E. Nuñez. “Anyone or any organization engaging in deceptive practices should know they will not go undetected and will be held accountable. The collaborative investigative work on this case conducted by Postal Inspectors, our law enforcement partners, and the United States Attorney’s Offices illustrates our efforts to protect consumers.”
The government’s decision to enter into the deferred prosecution agreement and civil settlement took into account a number of factors, including Wells Fargo’s extensive cooperation and substantial assistance with the government’s investigations; Wells Fargo’s admission of wrongdoing; its continued cooperation with investigators; its prior settlements in a series of regulatory and civil actions; and remedial actions, including significant changes in Wells Fargo’s management and its board of directors, an enhanced compliance program, and significant work to identify and compensate customers who may have been victims. The deferred prosecution agreement will be in effect for three years.
The global settlement also reflects coordination between the Department of Justice and the SEC to ensure a resolution that appropriately addresses the severity of the defendants’ conduct while avoiding the imposition of fines and penalties that are unnecessarily duplicative.
The deferred prosecution agreement was handled by the United States Attorney’s Offices in Los Angeles and Charlotte, with investigative support from the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation - Office of Inspector General, the Federal Housing Finance Agency - Office of Inspector General, the Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau, and the United States Postal Inspection Service.
This matter was prosecuted by Assistant United States Attorneys Alexander B. Schwab and Carolyn S. Small of the Major Frauds Section, along with Special Assistant United States Attorneys Benjamin S. Kingsley and Thomas D. Stout, and Assistant United States Attorney Daniel S. Ryan of the Western District of North Carolina.
The civil settlement agreement was the result of a coordinated effort between the U.S. Attorney’s Offices in Los Angeles and Charlotte, and the Commercial Litigation Branch in the Civil Division of the Department of Justice. Special Assistant United States Attorney Ellen M. London and Assistant United States Attorneys Abraham C. Meltzer of the Civil Fraud Section and David M. Harris, chief of the Civil Division, along with DOJ Senior Litigation Counsel Jamie Yavelberg and DOJ Trial Attorney Mary Chris Dobbie represented the United States in the civil matter.
Santa Monica Man Arrested on Federal Charges of Staging Cyber-attacks on Computer System of Congressional CandidateRead the Press Release
LOS ANGELES – FBI agents this morning arrested a Santa Monica man on federal charges stemming from a series of distributed denial-of-service – or DDoS – attacks on a website for a candidate who was campaigning for a California congressional seat.
Arthur Jan Dam, 32, was taken into custody this morning pursuant to a criminal complaint filed Wednesday that charges him with one count of intentionally damaging and attempting to damage a protected computer.
Dam allegedly staged four cyber-attacks in April and May of 2018 that took down the candidate’s website for a total of 21 hours. “The victim reported suffering losses, including website downtime, a reduction in campaign donations, and time spent by campaign staff and others conducting critical incident response,” according to the affidavit in support of the criminal complaint. The victim further reported spending $27,000 to $30,000 to respond to the attacks, and the candidate believes the attacks contributed to the loss in the primary election in June 2018.
“Law enforcement at all levels has pledged to ensure the integrity of every election,” said United States Attorney Nick Hanna. “We will not tolerate interference with computer systems associated with candidates or voting. Cases like this demonstrate our commitment to preserving our democratic system.”
“Today’s arrest shows the FBI’s commitment to hold accountable anyone who interferes with an American’s right to vote or who deprives a candidate the right to compete fairly in an election,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “As part of our mission to defend the democratic process, the FBI is equipped with the expertise to respond to allegations of election interference; whether by fraud, intimidation or – as in this case – cyber intrusions.”
The investigation outlined in the affidavit found that the cyber-attacks all originated from one Amazon Web Services (AWS) account, which Dam controlled, and the four attacks corresponded to logins into that AWS account from either Dam’s residence or his workplace. Furthermore, Dam had conducted “extensive research” on both the victim and cyber-attacks, the complaint alleges.
DDoS attacks typically are accomplished by flooding the targeted computer with superfluous requests in an attempt to overload systems and prevent some or all legitimate requests from being fulfilled. After the third cyber-attack, the victim increased cybersecurity measures and retained a website security company, but that was not enough to prevent a final disruption to the campaign’s website just one week before the primary election.
Dam was married to a woman who was employed by another candidate – and the eventual winner – in the congressional race, according to the complaint. The FBI has not uncovered any evidence that the winning candidate or Dam’s wife orchestrated or were involved in the series of cyber-attacks.
Dam was arrested this morning after surrendering to FBI agents at the United States Courthouse in downtown Los Angeles. Dam is expected to make his initial court appearance 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.
If he were to be convicted of the charge of intentionally damaging and attempting to damage a protected computer, Dam would face a statutory maximum sentence of 10 years in federal prison.
The FBI investigated this case.
This matter is being prosecuted by Assistant United States Attorneys Cameron L. Schroeder and Joseph B. Woodring of the Cyber and Intellectual Property Crimes Section.
North Hollywood Man Sentenced to Nine Years in Federal Prison for Smuggling Cocaine in Household Products Shipped to AustraliaRead the Press Release
LOS ANGELES – A San Fernando Valley man was sentenced today to 108 months in federal prison for smuggling more than 80 pounds of cocaine – concealed and suspended in grease – in household products that were mailed to Australia.
Vardges Markosyan, 47, of North Hollywood, was sentenced by United States District Judge Cormac J. Carney.
Markosyan – who also was known as “David Petrosov,” “Giani Oncho,” and “Laram Narman” – pleaded guilty in November 2019 to one count of conspiracy to distribute cocaine and one count of conspiracy to engage in money laundering.
Between December 2014 and October 2016, Markosyan was involved in a drug conspiracy that procured approximately 40 kilograms (88.2 pounds) of cocaine and shipped it to Australia. The cocaine was suspended in grease and placed in empty household products such as log splitters, air compressors, tankless water heaters, lampstands, and air conditioners. The wholesale value of this cocaine was at least $7 million in Australia, court papers state.
The shipped packages were sent via commercial carrier to Australia, where the drugs were distributed. Markosyan conducted “test runs” of drug shipment methods by sending packages of household products by commercial carrier to Australia to evaluate whether the drugs could be shipped without detection inside similar packages. For example, in March 2015, a co-conspirator used FedEx to send 9.87 kilograms (21.76 pounds) of cocaine hidden in a log splitter to Australia. In advance of this package, Markosyan sent a similar log splitter in a “test run” to Australia.
Markosyan also conspired with his sister, Iren Markosyan, 41, of North Hollywood, to launder the proceeds of drug trafficking and fraudulent activity. From May 2014 until January 2019, Markosyan used his sister’s name – with her knowledge – to buy properties in North Hollywood and Studio City. Markosyan and his sister obtained hard-money loans secured against these properties, and spent the net proceeds of these loans after transferring them to various accounts. In December 2018, Markosyan received $234,442 from the sale of the North Hollywood property. Markosyan also obtained, with his sister’s assistance, Medi-Cal benefits by falsely stating that he had no income, according to court documents.
“Because these loans essentially liquidated the illicit proceeds that were used to purchase these homes, there was never an intent to pay these loans back,” prosecutors wrote in their sentencing memorandum. “In total, (Markosyan) laundered up to $3.5 million in this manner.”
Markosyan has agreed to forfeit to the U.S. government his interest in the Studio City property, held in his sister’s name, as well as a 1996 Carver 38 boat and a 2005 Caribe boat also held in her name.
Iren Markosyan pleaded guilty in May 2019 to one count of conspiracy to launder monetary instruments. She will face a statutory maximum sentence of 20 years in federal prison at her sentencing hearing later this year.
This matter was investigated by the FBI, IRS Criminal Investigation, the Glendale Police Department, and the California Department of Health Care Services Investigations Branch, in conjunction with the Organized Crime Drug Enforcement Task Force (OCDETF). The United States wishes to thank its foreign partners -- the New South Wales Police Force, the New South Wales Crime Commission, and the Australian Federal Police -- for their assistance in the investigation.
This case is being prosecuted by Assistant United States Attorneys Puneet V. Kakkar of the International Narcotics, Money Laundering, and Racketeering Section, and Katharine Schonbachler of the Asset Forfeiture Section.
U.S. Attorney’s Office to Monitor Los Angeles County Vote Centers for Compliance with Americans with Disabilities ActRead the Press Release
LOS ANGELES – The U.S. Attorney’s Office will deploy personnel to monitor Los Angeles County vote centers for their compliance with federal accessibility law for people with physical disabilities during the February 22-to-March 3 election period.
The monitoring is part of the Justice Department’s Americans with Disabilities Act (ADA) Voting Initiative, which focuses on protecting the voting rights of individuals with disabilities. A hallmark of the ADA Voting Initiative is its collaboration with local officials to increase accessibility at polling places.
Through this initiative, the Justice Department has surveyed more than 1,600 polling places across the nation and has increased accessibility in more than three dozen jurisdictions.
Specifically, the United States Attorney’s Office will monitor Los Angeles County vote centers for their ADA compliance for people with mobility and vision disabilities.
Individuals who believe they might have been victims of discrimination in voting, including because of disability, may call the U.S. Attorney’s Office at (213) 894-2879, email [email protected], or complete and submit this form.
“Protecting the fundamental right to vote is essential to our democracy,” said United States Attorney Nick Hanna. “My office has pledged to ensure that all eligible voters may fully participate in the electoral process. Barriers to access must not undermine voting rights.”
This year marks the ADA’s 30th anniversary. The Department of Justice – including the U.S. Attorney’s Office – plays a central role in advancing the nation’s goal of equal opportunity, full participation, independent living, and economic self-sufficiency for people with disabilities. The Justice Department will continue to use its enforcement and technical assistance tools to eliminate unlawful discrimination against people with disabilities.
For more information about the ADA, please call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), or access the ADA website at http://www.ada.gov.
San Gabriel Valley Man Agrees to Plead Guilty to Conspiracy and Tax Evasion Charges in $147 Million Mining and Digital Currency FraudRead the Press Release
LOS ANGELES – A Bradbury man has agreed to plead guilty to federal criminal charges that he falsely promised profits to more than 70,000 victim investors worldwide in a scheme where a multinational company issued a sham digital currency purportedly asset-backed by billions of dollars’ worth of amber and other precious gemstones.
Steve Chen, 62, a.k.a. “Li Chen” and “Boss,” agreed to plead guilty to one count of conspiracy to commit wire fraud and one count of tax evasion. The criminal information and plea agreement in this case was filed late Tuesday in United States District Court, and Chen is scheduled to make his first court appearance in this case on March 10.
According to his plea agreement, Chen was the owner and chief executive officer of U.S. Fine Investment Arts, Inc. (USFIA), and six other companies that used the same Arcadia address. From July 2013 until September 2015, Chen fraudulently promoted and solicited USFIA investments, and he ultimately obtained approximately $147 million from victim-investors.
Chen admitted in his plea agreement that he falsely promoted USFIA as a successful multi-level marketing company that extracted amber and other gemstones from non-existent mines it “owned” in the United States, the Dominican Republic, Argentina and Mexico. Investors were duped into buying USFIA investments in amounts ranging between $1,000 and $30,000 each, court documents state. These “packages” purportedly were comprised of amber and other gemstones, as well USFIA “points,” which could be converted to USFIA shares when the company had its IPO in the near future. Chen admitted that he never intended for USFIA to have an IPO.
USFIA also offered other bonuses – including cash, travel, luxury cars, homes in the Los Angeles area, and EB-5 visas for immigrant investors – to investors who recruited other people to purchase these “packages,” Chen admitted.
Beginning in September 2014, Chen and others altered the promotion by substituting quantities of “Gem Coins” instead of points. They falsely promoted these “coins” as a legitimate digital currency backed by the company’s gemstone holdings. Chen also falsely represented that these “coins” already were in wide circulation in the jewelry and finance industries.
Chen also admitted that the company did not generate any significant revenue from its business operations, apart from sales of investment packages to victim-investors. The amber and other gemstones provided in the investment packages – including those displayed at USFIA’s Arcadia headquarters – were obtained from domestic and foreign commercial suppliers, assigned grossly inflated prices, and worth much less than what investors paid USFIA for them. Chen admitted that “Gem Coins” had no circulation in any industry, were not accepted by any merchants, and had no economic value.
“Mr. Chen’s promises to investors were as worthless as his non-existent mines and phony digital currency,” said United States Attorney Nick Hanna. “This case should remind all investors that trappings of success may convey legitimacy, but everyone should exercise extreme care when considering giving hard-earned money to any outfit promoting trendy products and extravagant profits.”
“Mr. Chen lured victim investors around the globe by creating a mirage made of fashionable cryptocurrency features and dynamic marketing tactics,” said Paul Delacourt, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The investing public should be aware that cryptocurrency schemes are more prevalent and more sophisticated than ever, but those who perpetrate them use the same tactics as con-artists always have - by convincing investors to risk their money in the bank based on false promises of imminent wealth.”
Chen also admitted to attempting to evade payment of federal income taxes. He reported gross income for 2014 was $138,015, when in fact his income for that year was approximately $4,816,193, upon which Chen owed $1,885,094 – before interest and penalties.
Once he pleads guilty, Chen will face a statutory maximum sentence of 10 years in federal prison.
“Steven Chen defrauded thousands of victims in order to fund his extravagant lifestyle. Chen funneled $4,816,193 of his ill-gotten gains to purchase homes and fund his gambling habit. Chen's criminal activity did not stop with stealing from his victims. Chen also defrauded the government of $1,885,094 in taxes. IRS-CI used its financial investigative expertise and critical law enforcement partnerships to untangle the web created by Chen and bring him to justice,” said Ryan L. Korner, Special Agent in Charge.
Leonard Stacy Johnson, 53, of Huntington Beach, who worked at Chen’s direction in promoting USFIA and Gem Coins, pleaded guilty in July 2019 to one count of tax evasion and one count of making a false statement on an immigration document. Johnson is scheduled to be sentenced on June 22.
The Securities and Exchange Commission successfully brought an enforcement action against Chen, USFIA, and 12 other Chen-controlled entities. A receiver has been appointed by a court in that matter, and maintains a website for victims at: http://usfiareceiver.com/
This matter was investigated by the FBI, IRS-Criminal Investigation, and Homeland Security Investigations.
This case is being prosecuted by Assistant United States Attorneys Richard E. Robinson and Katherine A. Rykken of the Major Frauds Section.
Inland Empire Man Who Used Fake IDs to Cash over $500,000 in Stolen Treasury Checks Sentenced to More Than 6 Years in PrisonRead the Press Release
LOS ANGELES – A San Bernardino County man was sentenced today to 77 months in federal prison for stealing more than half a million dollars in United States Treasury checks and then using them to defraud two major banks.
Danele Ramon Morgan, 46, of Rancho Cucamonga, was sentenced by United States District Judge Michael W. Fitzgerald, who also ordered him to pay $337,083 in restitution.
Morgan pleaded guilty in September 2019 to one count of conspiracy to commit bank fraud. He admitted in his plea agreement that he obtained stolen checks and enlisted co-conspirators to assist in opening fraudulent bank accounts in the payees’ names. Afterward, they could deposit the stolen checks and withdraw funds through cash withdrawals and debit card purchases.
In furtherance of his scheme, Morgan obtained and used fraudulent identification documents with his and his co-conspirators’ photographs, but with the payees’ personal information. Armed with these documents, Morgan and his co-conspirators personally entered banks pretending to be the payees, opened fraudulent bank accounts and deposited the stolen checks.
Morgan and his co-conspirators deposited approximately $571,681 in stolen treasury checks between June 2016 and January 2017, causing actual losses of $337,084 to Bank of America and Wells Fargo. The conspirators opened fraudulent accounts or used fraudulently obtained ATM cards were opened at Bank of America branches in Pasadena, Atascadero, Paso Robles,Castro Valley and Pleasanton, and at a Wells Fargo branch in Los Banos.
The United States Postal Service’s Office of Inspector General, the United States Treasury Inspector General for Tax Administration, and the United States Postal Inspection Service investigated this matter.
This matter was prosecuted by Special Assistant United States Attorney Patrick Castañeda of the General Crimes Section.
Former Dunbar Armored Supervisor Sentenced to 2 Years in Prison for Stealing Almost $300,000 from Company’s Cash Storage VaultRead the Press Release
LOS ANGELES – A former Dunbar Armored Inc. employee was sentenced today to 24 months in federal prison for orchestrating the theft of nearly $300,000 in cash out of Dunbar’s storage facility in Vernon.
Eric Miranda, 39, of East Los Angeles, was sentenced by United States District Judge Dolly M. Gee, who also ordered him to pay $279,369 in restitution.
Miranda pleaded guilty in March 2019 to one count of conspiracy to commit bank theft and three counts of bank theft.
At the time of the theft, Miranda was a Dunbar Armored supervisor with access privilege to company vaults. He stole cash from the Dunbar vault by using “dummy” stacks of $100 bills that he switched out for real stacks of $100,000. First, Miranda created “dummy” stacks of $100,000 by taking hundreds of $1 bills and sandwiching them between $100 bills – in order to make them appear to be stacks of $100 bills totaling $100,000.
He then smuggled the “dummy” stacks into the Dunbar vault, where he and his co-conspirator, Monique Castruita, 36, of Maywood, switched them for real stacks of $100,000. Miranda and Castruita then marked the dummy stacks to ensure they were not placed into circulation.
Finally, Miranda smuggled the real stacks of money out of the vault room by hiding it in a postal box. On three occasions between October 2017 and January 2018, Miranda smuggled a total of approximately $300,000 out of the Dunbar facility.
In March 2018, defendant’s scheme was finally exposed when a Dunbar employee discovered 19 empty money straps in the trash can of a women’s restroom. Ultimately, the loss to Dunbar totaled $279,369.
Castruita pleaded guilty in November 2018 to one count of conspiracy to commit bank theft and three counts of bank theft. Her sentencing hearing is scheduled for April 29.
“Collectively, (Miranda’s) actions reflect a blatant and deliberate abuse of his position, disregard for the integrity of financial institutions, and disrespect for the rule of law,” prosecutors wrote in their sentencing memorandum.
The FBI investigated this matter and received substantial assistance from the Vernon Police Department.
This case was prosecuted by Assistant United States Attorneys Jeffrey M. Chemerinsky and Joseph D. Axelrad of the Violent and Organized Crime Section.
Ringleader of Crew that Committed 13 Robberies of Verizon Stores in Two States Sentenced to More Than 22 Years in Federal PrisonRead the Press Release
SANTA ANA, California – A Long Beach man was sentenced today to 272 months in federal prison for leading a crew that committed 13 robberies of Verizon stores across Southern California and Arizona, netting approximately $340,000 worth of smartphones and other merchandise.
Zachary David Wade, 42, was sentenced by United States District Judge David O. Carter, who ordered him to pay $360,236 in restitution. Wade pleaded guilty in March 2019 to conspiracy to interfering with commerce by robbery, attempted interference with commerce by robbery, and brandishing a firearm in furtherance of a crime of violence.
Between July 2017 and February 2018, Wade planned, organized and supervised the armed robberies of Verizon stores in Tarzana, Torrance, Fullerton, Long Beach, Corona, San Pedro, Corona del Mar, and the Arizona cities of Tucson and Glendale.
Wade selected which Verizon stores would be robbed and instructed his co-conspirators on how the robberies should occur, including identifying entrance and exit routes. He also provided equipment such as duffle bags and loaded firearms, which his co-defendants used during the robberies.
Wade also exclusively determined how much each robbery participant would get paid. The typical robbery netted tens of thousands of dollars’ worth of smartphones and other merchandise, which Wade later sold to a buyer in Glendale, California.
On January 31, 2018, Wade planned and organized the robbery of a Verizon retailer in Tucson, Arizona. He was arrested the next day in Glendale, California while attempting to sell the stolen smartphones and other merchandise for cash.
Eight of Wade’s co-defendants have pleaded guilty to felony conspiracy, robbery, and firearms charges. They are: Daniel Joseph Smith, 31, of Long Beach; Sean Keith Rivers, Jr., 26, of Long Beach; Marques Alphonse Petty-Wright, 32, of Long Beach; Randall Lee Tate, Jr., 31, of Long Beach; Andre Dierre Stovall II, 25, of Long Beach; Drae Tamar Wright, 28, of Long Beach; Sylvester Edwards, Jr., 30, of Lancaster; and Jeffrey Kevin Duran, 51, of Bellflower.
Tate was sentenced in September 2018 to 51 months in federal prison. In September 2019, Petty-Wright was given a two-year federal prison sentence. The other defendants are expected to be sentenced in the coming weeks.
Francisco Javier Neri, 32, of Van Nuys, a former employee of an authorized Verizon retailer in Tarzana, pleaded guilty to a federal robbery charge in December 2019. Neri admitted in his plea agreement that he conspired with Wade to rob his former employer, Verizon Tarzana. Neri is scheduled to be sentenced on April 6.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
This case was prosecuted by Assistant United States Attorneys Scott D. Tenley and Daniel S. Lim of the Santa Ana Branch Office.
Inland Empire Man Convicted of Federal Criminal Charges for Making Threats Against Congressional Staffers and an InternRead the Press Release
LOS ANGELES – A San Bernardino County man has been found guilty by a jury of federal criminal charges that he made harassing telephone calls to government offices and threatened to injure congressional staffers and an intern who answered the calls.
Robert Eric Stahlnecker, 48, of Twentynine Palms, was found guilty yesterday evening 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 his two-day 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 has made more than 10,000 calls to government agencies and elected officials between January and November of last year, according to court documents.
United States District Judge Stephen V. Wilson has scheduled a May 4 sentencing hearing, at which time Stahlnecker will face a statutory maximum of five years in federal prison.
The United States Capitol Police and the Department of Veterans Affairs, Office of Inspector General investigated this case.
This matter is being prosecuted by Assistant United States Attorneys Peter H. Dahlquist and Robert S. Trisotto of the Riverside Branch Office.
Grand Jury Indicts 3 Top Administrators of Philippine Church in Scheme to Traffic Workers and Defraud Immigration SystemRead the Press Release
SANTA ANA, California – A federal grand jury has charged three top administrators of a Philippines-based church with overseeing a labor trafficking scheme that forced church members to solicit donations for a bogus charity after the defendants illegally obtained visas and other immigration documents that allowed the workers to enter and remain in the United States.
The one-count indictment returned by the grand jury late Wednesday alleges a conspiracy to commit a series of offenses, including trafficking with respect to forced labor, document servitude, immigration fraud and marriage fraud.
The three defendants were arrested last month after being named in a criminal complaint that alleged a conspiracy to commit immigration fraud. Today’s indictment expands the scope of the alleged scheme and includes new details about the immigration fraud portion of the scheme.
The core allegations of the case are that representatives of the church – the Kingdom of Jesus Christ, The Name Above Every Name (KOJC) – obtained visas for church members to enter the U.S. by claiming, for example, they would be performing at musical events. But once the church members arrived in the United States, they were required to surrender their passports and work long hours as “FTWs” (full-time workers), who solicited donations for a church non-profit called the Children’s Joy Foundation USA (CJF). While the workers raised funds by telling donors their money would benefit impoverished children in the Philippines, the indictment alleges that most or all of the money raised was used to finance KOJC operations and the lavish lifestyles of church leaders.
While some KOJC workers knew they were entering the U.S. to be fundraisers, the indictment alleges “other KOJC workers were unaware of the actual purpose until they were forced…to solicit on the streets nearly every day, year-round, working very long hours, and often sleeping in cars overnight, without normal access to over-the-counter medicine or even clothes.”
The defendants confiscated the victims’ passports and other immigration documents “to prevent and restrict…KOJC workers’ liberty to move and travel in order to maintain the labor and services of KOJC workers, some of whom were and had been a victim of a severe form of trafficking,” according to the indictment.
The three defendants charged in the indictment are:
- Guia Cabactulan, 59, the lead KOJC administrator in the United States who maintained direct communication with KOJC leadership in the Philippines;
- Marissa Duenas, 41, who allegedly secured the passports immediately after workers entered the U.S. and handled fraudulent immigration documents for KOJC workers; and
- Amanda Estopare, 48, who allegedly was in charge of tracking and reporting the money raised in the U.S. to KOJC officials in the Philippines.
All three defendants – who were arrested on January 29 and remain in federal custody – are scheduled to be arraigned on the indictment on February 20 in United States District Court in Santa Ana.
As part of the long-running scheme, the three defendants kept productive workers in the U.S. by obtaining student visas or by arranging sham marriages with KOJC workers who were U.S. citizens, the indictment alleges. To create the illusion of legitimate marriages, Duenas allegedly possessed ATM cards to show immigration officials that workers in the sham marriages had joint bank accounts. Furthermore, Cabactulan and Duenas possessed wedding rings for KOJC workers to use during their fraudulent marriage ceremonies, according to the indictment. Immigration records summarized in the criminal complaint indicate there were 82 marriages involving KOJC administrators and FTWs over the past two decades.
When authorities searched the KOJC compound in Van Nuys on January 29, Cabactulan and Duenas possessed approximately 72 Filipino passports, seven United States passports, and one Ukrainian passport that belonged to other people, according to the indictment, which also notes that Duenas possessed four male wedding rings and three female wedding rings in an office at the KOJC compound.
The search also revealed that Duenas possessed a file titled “Traitor” that contained information on KOJC members who fled the church, the indictment alleges.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The conspiracy charge alleged in the indictment carries a statutory maximum penalty of five years in federal prison.
As part of the ongoing investigation, the FBI is encouraging potential victims or anyone with information about KOJC activities to contact investigators. Those with information are asked to call the FBI’s Los Angeles Field Office at (310) 477-6565. Individuals may also contact the FBI through its website at https://www.fbi.gov/tips.
The ongoing investigation into KOJC is being led by the FBI, which is receiving substantial assistance from Homeland Security Investigations, U.S. Citizenship and Immigration Service’s Fraud Detection and National Security Unit, the U.S. Department of State’s Diplomatic Security Service, and IRS Criminal Investigation.
This matter is being prosecuted by Assistant United States Attorneys Daniel Ahn and Jake Nare of the Santa Ana Branch Office.
Former Labor Union President Convicted Conspiracy, Embezzling Union Health Plan Funds and Lying to Federal OfficialsRead the Press Release
LOS ANGELES – The former president of a Colton-based labor union has been found guilty by a jury of 14 felony charges for stealing nearly $800,000 from the union’s health plan fund, which he used to pay for personal expenses including legal bills and a car loan for his son’s Ford Mustang Shelby GT500.
John S. Romero, 73, of Loma Linda, was found guilty late yesterday afternoon of one count of conspiracy, 12 counts of theft in connection with health care, and one count of making a false statement to a government agency. United States District Judge Virginia A. Phillips scheduled an April 27 sentencing hearing, at which time Romero will face a statutory maximum sentence of 130 years in federal prison.
According to evidence presented at his five-day trial, Romero appointed himself president of United Industrial Services Workers of America (UISWA) and the trustee of the UISWA health care plan. Money paid into the plan was supposed to be used exclusively for health care benefits to its participants. Instead, Romero stole the union’s health plan funds for the benefit of himself and his immediate family.
In furtherance of his scheme, Romero appointed a sham trustee who had no prior experience with unions. He also actively misled the third-party administrators of the health plan into making improper payments from the health plan.
From 2008 to 2014, Romero embezzled health plan funds to pay a $110,000 personal civil judgment against himself and his son, John J. Romero, 55, also of Loma Linda. He also embezzled $40,000 to pay criminal defense lawyers who represented Romero in a separate case. Romero funneled more than $310,000 to himself by disguising them as rent payments on two properties he owned and held under a shell company. In addition, he stole more than $300,000 in union health care plan money to make “salary” payments to his family. He also used plan funds to pay off $25,000 loan on his son’s Ford Mustang.
Romero also was convicted of filing a false financial report with the U.S. Department of Labor in which he concealed the existence of more than $100,000 in union receipts and disbursements that Romero held in a secret bank account and from which he made regular payments to his mistress.
Following the guilty verdicts, Judge Phillips ordered Romero into custody, citing the danger he posed in light of evidence that Romero had attempted to intimidate witnesses who testified against him at trial.
Romero advanced his scheme by appointing his son the secretary and treasurer of the union, and his ex-wife, Evelyn Romero, 71, the UISWA president and trustee after 2010. At this time, Romero was serving a two-year federal prison sentence related to making false statements to federal officials made while he was president of a different labor union. Romero’s son, ex-wife, and daughter, Danae Romero, 42, of Loma Linda, have pleaded guilty to criminal charges in the current matter. They are scheduled to be sentenced in the coming months.
This case was investigated by the U.S. Department of Labor, Office of Inspector General; the U.S. Department of Labor, Employee Benefits Security Administration; and the U.S. Department of Labor, Office of Labor Management Standards.
This matter is being prosecuted by Assistant United States Attorneys Susan S. Har and Aaron B. Frumkin of the General Crimes Section.
Indictment Charges 15 Members of a Los Angeles Drug Trafficking Ring that Distributed Heroin, Methamphetamine and CocaineRead the Press Release
LOS ANGELES – Law enforcement this morning arrested 11 defendants charged in a federal grand jury indictment alleging they participated in a long-running drug trafficking operation that distributed kilograms of heroin, methamphetamine, and cocaine from multiple locations in Los Angeles County, including a storefront in the Lincoln Heights neighborhood of northeast Los Angeles.
The 20-count indictment charges a total of 15 defendants with conspiracy to distribute controlled substances and alleges a series of acts in furtherance of the conspiracy between December 2015 and December 2019.
Over the course of the investigation, law enforcement seized approximately eight kilograms of cocaine, five kilograms of heroin, 10 kilograms of methamphetamine, 10 firearms, hundreds of rounds of ammunition and more than $200,000 in suspected drug proceeds.
The 11 defendants arrested today are expected to make their initial court appearance this afternoon in United States District Court in downtown Los Angeles.
Those arrested today include Gabriel Ortega, a.k.a. “Nightowl,” 42, of Lynwood, alleged to be one of the organization’s ringleaders who allegedly directed narcotics distribution operations from his home in Lynwood and from a storefront he operated in Lincoln Heights. Ortega sold nearly one pound of methamphetamine for $2,800 on two separate occasions at his Lincoln Heights storefront between December 2015 and February 2016, the indictment alleges.
Also arrested was Raul Sanchez, a.k.a. “Rawlo,” 39, of Alhambra, another of the organization’s alleged ringleaders, who is charged with being one of the ring’s primary distributors of narcotics. Specifically, on March 21, 2018, Sanchez allegedly coordinated the delivery of 4.9 kilograms (10.8 pounds) of cocaine, 3.9 kilograms (8.6 pounds) of heroin, and 7 kilograms (15.4 pounds) of methamphetamine to a storage facility in Alhambra. He also allegedly possessed three unregistered “ghost guns,” one .45-caliber Glock pistol, and ammunition at the Alhambra location.
In addition to the conspiracy charge, Ortega and Sanchez each face individual charges of knowingly and intentionally possessing with intent to distribute controlled substances. Sanchez, who previously was convicted in Los Angeles Superior Court of four separate drug possession charges, also has been charged with being a felon in possession of firearms and ammunition.
If convicted on all counts, the defendants would face a statutory maximum sentence of life in federal prison and mandatory minimum sentences of at least 10 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The Los Angeles High Intensity Drug Trafficking Area (HIDTA) Group 51 and the Los Angeles Police Department investigated this matter. HIDTA Group 51 is comprised of members of the Drug Enforcement Administration, the FBI, Homeland Security Investigations, the Los Angeles Sheriff’s Department, and the LAPD.
This case is being prosecuted by Assistant United States Attorney Bruce K. Riordan of the Violent and Organized Crime Section.
O.C. Lawyer Arrested on Federal Grand Jury Indictment Alleging Illegal Firearms Sales and Methamphetamine DistributionRead the Press Release
LOS ANGELES – An Orange County lawyer was arrested today on a federal grand jury indictment charging her with conspiring to sell firearms without a license and distributing methamphetamine.
Melinda Romines, 41, of Anaheim, was taken into federal custody this morning. She is expected to make her initial court appearance this afternoon in United States District Court in Los Angeles.
Romines has been charged with one count of conspiracy to engage in the business of dealing in firearms without a license, one count of possession of an unregistered firearm, and two counts of distributing methamphetamine.
According to the indictment returned last week, Romines – who does not have federal firearms license issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) – found firearms available for purchase from black market firearms dealers. She then acted as a broker between the black market dealers and customers, ultimately buying the firearms from the dealers and then re-selling them to customers, the indictment alleges.
For example, in a Los Angeles parking lot in May 2018, Romines allegedly sold two firearms – a .40-caliber pistol and an AR-type .45-caliber rifle, both lacking serial numbers – as well as a silencer and a high-capacity magazine with approximately 20 rounds of ammunition in a transaction that netted her $2,600. In October 2018, in another Los Angeles parking lot, she sold a .45-caliber pistol and ammunition to a buyer for $900, the indictment alleges.
Romines also allegedly sold nearly a quarter-pound of methamphetamine in two transactions in October and November 2018.
A second defendant named in the indictment – Seaira Benson, a.k.a. “Relli,” 27, of Los Angeles – is been charged along with Romines with one count of distributing approximately 111 grams of methamphetamine. Authorities are currently seeking Benson.
The methamphetamine distribution charge charge carries a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment. If convicted of the firearms-related counts, Romines would face a statutory maximum sentence of 15 years in federal prison on those charges.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The ATF investigated this case, which was conducted with the support of the Organized Crime Drug Enforcement Task Force (OCDETF).
This matter is being prosecuted by Assistant United States Attorneys Brittney M. Harris of the International Narcotics, Money Laundering, and Racketeering Section and Rachel N. Agress of the General Crimes Section.
Ex-Marijuana Warehouse Employee Sentenced to 14 Years in Federal Prison for Planning $2 Million Armed Heist with Corrupt LASD DeputyRead the Press Release
LOS ANGELES – A Walnut man was sentenced today to 168 months in federal prison for orchestrating a $2 million armed robbery of a commercial marijuana warehouse where over half a ton of marijuana was stolen with the help of a corrupt Los Angeles County Sheriff’s Department deputy.
Christopher Myung Kim, 30, was sentenced by United States District Judge Virginia A. Phillips, who also ordered him to pay a $500,000 fine.
Following a four-day trial in November 2019, a jury found Kim guilty of five felonies: conspiracy to distribute marijuana, possession with intent to distribute marijuana, conspiracy against rights, deprivation of rights under color of law, and brandishing a firearm in furtherance of a drug trafficking crime.
Kim had worked at the downtown Los Angeles warehouse for years, but a dispute with its owners left him “bitterly disgruntled,” according to court documents. Kim left his job just weeks before the robbery and conspired with LASD Deputy Marc Antrim, 42, of South El Monte, to orchestrate the raid both for profit and to get revenge against his own bosses. Antrim was assigned to the LASD station in Temple City at the time.
Days before the robbery, Kim supplied Antrim with inside information about the robbery, including key details about the warehouse’s layout, operation and security. Kim also gave Antrim the warehouse’s blueprints, noting where security guards likely would be stationed and which rooms Antrim and their co-conspirators should “hit” to ensure that the most valuable items were stolen.
At approximately 3 a.m. on October 29, 2018, Antrim and six co-conspirators began to rob the marijuana distribution warehouse. Antrim was dressed as an armed deputy and flashed his badge and a fake search warrant to gain access to the warehouse. He then detained the warehouse’s security guards in a cage in the back of an LASD Ford Explorer.
During the two-hour robbery, Antrim and the fake law enforcement team stole more than half a ton of marijuana, two large commercial safes containing more than $600,000 in cash and money orders, and other items of value from the warehouse.
Hours after the robbery, Antrim drove a rental truck to a storage facility in Walnut, where Kim had rented a storage unit the day of the robbery. Antrim and co-conspirator Kevin McBride, 44, of Glendora, delivered $1.5 million dollars’ worth of stolen marijuana and marijuana products to Kim to resell for profit.
In the weeks following the robbery, Kim worked diligently to sell off the marijuana, trying to make as much money as he could from it and also to exact revenge against his former employers.
Kim has been in federal custody since his conviction in November 2019.
“Although not physically present during the robbery…Kim was integral to its planning, success, and profitability,” prosecutors wrote in their sentencing memorandum. “He was a leader, organizer, and knowingly made this robbery possible.”
Antrim was arrested in November 2018 and pleaded guilty in March 2019 to multiple felonies in connection with the armed robbery. At Kim’s trial, Antrim testified about how he devised and executed the robbery with Kim’s help. Antrim’s sentencing hearing is scheduled for April 13.
Five other defendants, including McBride, have pleaded guilty to criminal charges for their involvement in the robbery and will be sentenced in the coming months.
The Drug Enforcement Administration, the FBI, and the Bureau of Alcohol, Tobacco, Firearms and Explosives investigated this case. LASD’s Internal Criminal Investigations Bureau provided substantial assistance to the federal investigation.
This matter was prosecuted by Assistant United States Attorneys Lindsey Greer Dotson of the Public Corruption and Civil Rights Section and Joseph D. Axelrad of the Violent and Organized Crime Section.
Successor to L.A.’s Redevelopment Agency Reaches $3.1 Million Settlement in Case Alleging Misuse of Federal Housing FundsRead the Press Release
LOS ANGELES – CRA/LA has agreed to pay $3.1 million to resolve allegations that its predecessor violated the False Claims Act by knowingly failing to comply with federal accessibility laws when it financed and assisted in the development of affordable housing in the City of Los Angeles supported by federal funds, the Department of Justice announced today.
CRA/LA is the successor of the Community Redevelopment Agency of the City of Los Angeles, a local redevelopment agency that financed and assisted in the development of multifamily affordable housing using local tax monies and federal community development grants. In June 2011, the State of California dissolved all redevelopment agencies. CRA/LA is winding down the affairs of its predecessor.
“Despite millions of dollars of federal taxpayer money sent to Los Angeles to create affordable housing over many years, the CRA opted to lie about its failure to ensure that these projects were accessible to everyone,” said United States Attorney Nick Hanna. “This settlement resolves only a small portion of this case, and we are prepared to litigate additional allegations that the City of Los Angeles covered up its failure to comply with federal laws enacted to protect the civil rights of all citizens.”
“Today’s settlement demonstrates our continuing vigilance ensuring developers receiving federal grant money for affordable housing satisfy their legal obligations to make that housing accessible to people with disabilities,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Grant recipients who discriminate against people with disabilities using taxpayer money face serious consequences.”
“The basic tenant of fair housing translates into the premise of equal access for all, this is to include those citizens that face physical and functional challenges,” said Inspector General Rae Oliver Davis of the U.S. Department of Housing and Urban Development. “This settlement reaffirms this office’s steadfast resolve to ensure those who receive federal housing funds abide by this fundamental principle.”
Recipients of federal housing development funds must comply with federal accessibility laws, including Section 504 of the Rehabilitation Act, the Americans with Disabilities Act, and the Fair Housing Act. These laws prohibit discrimination against people with disabilities in activities receiving federal financial assistance.
For example, they require 5 percent of all units in certain federally assisted multifamily housing be accessible for people with mobility impairments and an additional two percent be accessible for people with visual and auditory impairments.
Recipients of federal funds must likewise implement accessible programs related to housing, including maintaining a publicly available list of accessible units with a description of their accessibility features, adopting policies and procedures to ensure that people who need the accessibility features of particular units occupy them, and designating at least one individual to coordinate accessibility efforts.
The settlement resolves claims against CRA/LA in a lawsuit alleging that the CRA/LA’s predecessor, along with the City of Los Angeles, received money from the U.S. Department of Housing & Urban Development based on false claims they were complying with federal accessibility laws.
As to the CRA/LA’s predecessor, the United States’ lawsuit alleged at least nine multifamily housing properties fell significantly short of federal accessibility laws since 2005. Examples of alleged defects included:
- slopes and ramps too steep for people in wheelchairs;
- tall thresholds restricting wheelchair access;
- kitchen cabinets, shelves, and surfaces outside the accessible reach range of people in wheelchairs;
- sinks, grab bars, and mailboxes mounted outside the accessible reach range of people in wheelchairs;
- uninsulated pipes below sinks and lavatories;
- a lack of accessible parking spaces; and
- insufficient visual alarms and tactile signs for people with hearing and visual impairments.
The United States’ claims against the City of Los Angeles have not been resolved and are still pending in the litigation.
The agreement announced today partially resolves a lawsuit originally filed in United States District Court in Los Angeles by Mei Ling, a resident of Los Angeles resident who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group.
The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery. The False Claims Act permits the government to intervene in such lawsuit, as it has done in this case.
These matters were investigated and litigated by Assistant United States Attorneys Lisa A. Palombo and Ross M. Cuff of the Civil Division’s Civil Fraud Section and the Justice Department’s Civil Division Commercial Litigation Branch. HUD’s Office of Inspector General and Office of General Counsel also participated in the investigation.
The claims asserted against the City of Los Angeles and CRA/LA are allegations only; there has been no determination of liability. The case is captioned United States ex rel. Ling, et al. v. City of Los Angeles, et al., CV 11-974-PSG.
CRA/LA Agrees to Pay $3.1 Million to Resolve Alleged Misuse of Federal Funds for Inaccessible HousingRead the Press Release
CRA/LA agreed to pay $3.1 million to resolve allegations that its predecessor violated the False Claims Act by knowingly failing to comply with federal accessibility laws when it financed and assisted in the development of affordable housing in the City of Los Angeles supported by federal funds, the Department of Justice announced.
CRA/LA is the successor of the Community Redevelopment Agency of the City of Los Angeles, a local redevelopment agency that financed and assisted in the development of multifamily affordable housing using local tax monies and federal community development grants. In June 2011, the State of California dissolved all redevelopment agencies. CRA/LA is winding down the affairs of its predecessor.
“Today’s settlement demonstrates our continuing vigilance to ensure that developers receiving federal grant money for affordable housing satisfy their legal obligations to make such housing accessible to people with disabilities,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Grant recipients who knowingly discriminate against people with disabilities using taxpayer money will face serious consequences.”
“Despite millions of dollars of federal taxpayer money sent to Los Angeles to create affordable housing over many years, the CRA opted to lie about its failure to ensure that these projects were accessible to everyone,” said U.S. Attorney Nick Hanna for the Central District of California. “This settlement resolves only a small portion of this case, and we are prepared to litigate additional allegations that the City of Los Angeles covered up its failure to comply with federal laws enacted to protect the civil rights of all citizens.”
“The basic tenant of fair housing translates into the premise of equal access for all, this is to include those citizens that face physical and functional challenges,” said Inspector General Rae Oliver Davis of the U.S. Department of Housing and Urban Development. “This settlement reaffirms this office’s steadfast resolve to ensure those who receive federal housing funds abide by this fundamental principle.”
“This case demonstrates HUD’s commitment to holding recipients of federal funds accountable for their failure to comply with HUD’s accessibility requirements,” said General Counsel Paul Compton of the U.S. Department of Housing and Urban Development. “We will continue to collaborate with our partners at the Department of Justice to ensure that HUD participants provide accessible housing to individuals with disabilities.”
Recipients of federal housing development funds must comply with federal accessibility laws, including Section 504 of the Rehabilitation Act, the Americans with Disabilities Act, and the Fair Housing Act. These laws prohibit discrimination against people with disabilities in activities receiving federal financial assistance. For example, they require five percent of all units in certain federally-assisted multifamily housing be accessible for people with mobility impairments and an additional two percent be accessible for people with visual and auditory impairments. Recipients of federal funds must likewise implement accessible programs related to housing, including maintaining a publicly-available list of accessible units with a description of their accessibility features, adopting policies and procedures to ensure that people who need the accessibility features of particular units occupy them, and designating at least one individual to coordinate accessibility efforts.
The settlement resolves claims against CRA/LA in a lawsuit alleging that the CRA/LA’s predecessor, along with the City of Los Angeles, received money from the U.S. Department of Housing & Urban Development based on false claims they were complying with federal accessibility laws. As to the CRA/LA’s predecessor, the United States’ lawsuit alleged at least nine multifamily housing properties fell significantly short of federal accessibility laws since 2005. Examples of alleged defects included:
- slopes and ramps too steep for people in wheelchairs;
- tall thresholds restricting wheelchair access;
- kitchen cabinets, shelves, and surfaces outside the accessible reach range of people in wheelchairs;
- sinks, grab bars, and mailboxes mounted outside the accessible reach range of people in wheelchairs;
- uninsulated pipes below sinks and lavatories;
- a lack of accessible parking spaces; and
- insufficient visual alarms and tactile signs for people with hearing and visual impairments.
The United States’ claims against the City of Los Angeles have not been resolved and are still pending in the litigation.
The agreement announced today partially resolves a lawsuit filed in U.S. District Court in Los Angeles by Mei Ling, a Los Angeles resident who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group. The lawsuit was filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery. The False Claims Act permits the government to intervene in such a lawsuit, as it has done in this case.
These matters were investigated and litigated by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Central District of California. HUD’s Office of Inspector General and Office of General Counsel also participated in the investigation.
The claims asserted against the CRA/LA and the City of Los Angeles are allegations only; there has been no determination of liability. The case is captioned United States ex rel. Ling, et al. v. City of Los Angeles, et al., No. CV11-00974-PSG (C.D. Cal.).
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.
Returned Fugitive Sentenced to 2½ Years in Federal Prison for Role in Medicare Fraud Scheme Featuring Bogus Physical Therapy ClaimsRead the Press Release
SANTA ANA, California – A former chiropractor who was on a federal “Most Wanted” list of fugitives was sentenced today to 30 months in federal prison for his role in a $15 million Medicare fraud scheme in which claims were submitted for physical therapy services that either were not reimbursable or were not provided.
David Y. Kim, 57, who previously lived in the Arlington Heights district of Los Angeles, was sentenced by United States District Judge David O. Carter. Judge Carter also ordered Kim to pay $690,519 in restitution to Medicare.
Kim pleaded guilty in September 2019 to one count of health care fraud and one count of receiving illegal kickbacks in exchange for Medicare referrals. In 2015, after meeting with federal law enforcement agents for an interview, Kim fled the United States for South Korea. The U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) later included Kim on its public list of Most Wanted Fugitives.
In February 2019, Kim was found to be residing in Vietnam and he was apprehended in Ho Chi Minh City pursuant to an Interpol Red Notice. FBI agents then brought Kim back to the United States, where he has remained in federal custody.
According to his plea agreement, between March 2012 and January 2014, Kim owned and operated New Hope Clinic, a Koreatown-based sole proprietorship where he caused fraudulent claims to be submitted to Medicare for physical therapy services that were not provided to patients. Kim received approximately 55 percent of the illegal Medicare proceeds. During the course of the scheme, Medicare paid $690,519 on the fraudulent claims from Kim’s clinic. Kim personally received illegal proceeds totaling $379,785.
Co-defendants Joseff Sales, 42, of Buena Park, Danniel Goyena, 42, also of Buena Park, the owners and operators of several companies involved in the scheme, paid New Hope for Kim’s referral of Medicare beneficiaries to their business. Sales, Goyena and Marlon Songco, 43, of Sylmar, hired licensed physical therapists to occasionally supervise Kim’s unlicensed staff, who performed services that were not reimbursable under Medicare guidelines.
While at New Hope, Medicare beneficiaries often received only a massage and acupuncture – services that Kim knew that Medicare did not cover – from individuals not licensed to provide physical therapy. Kim and his co-conspirators then caused fraudulent claims for physical therapy to be submitted to Medicare.
Sales, Goyena and Songco each pleaded guilty to federal criminal charges in this matter and were given prison sentences. Sales and Goyena were held jointly liable for $7,896,007 in restitution.
This matter was investigated by the FBI and the U.S. Department of Health and Human Services Office of Inspector General.
This case was prosecuted by Assistant United States Attorney Alexander F. Porter of the Major Frauds Section and Ali Moghaddas of the General Crimes Section.
Four Indicted in Compound Cream Prescription Scam that Cost Government and Union Health Plans over $22 MillionRead the Press Release
LOS ANGELES – Federal authorities this morning arrested two defendants charged in a scheme that generated millions of dollars through an Orange County compound pharmacy that submitted fraudulent bills to the military’s TRICARE health plan and a labor union health plan for medically unnecessary compound cream prescriptions. Two other defendants named in a 48-count grand jury indictment are expected to surrender tomorrow.
The indictment – which contains charges of health care fraud, mail fraud, illegal kickbacks and money laundering – outlines a scheme in which the Orange County-based Professional Compounding Pharmacy (PCP), its team of marketers and a collusive physician made millions of dollars in illegal profits by fraudulently generating prescriptions for custom-made compound cream medications, some of which led to bills for as much as $15,000 per tube.
The scheme was fueled in part by the participation of two bogus “pain clinics” in Lawndale and National City, which recruited beneficiaries of TRICARE and the International Longshore and Warehouse Union’s (ILWU) Pacific Maritime Association Welfare Plan. The defendants allegedly paid beneficiaries $200 each to receive treatment by doctors who supposedly were conducting “pain studies” to evaluate the effectiveness of the compound pain creams.
PCP, which operated in La Habra and Brea, allegedly used a network of marketers and one principal doctor to locate beneficiaries of the TRICARE and ILWU plans. PCP and its marketers also enlisted the participation of other doctors and a nurse practitioner to write prescriptions for pain-relief creams, and PCP ultimately filled prescriptions – including myriad refills – that were not medically necessary.
The scheme’s participants allegedly provided the $200 payments to the “patients” for agreeing to show up at the clinics for the bogus pain studies. They also paid kickbacks to medical marketers and professionals in exchange for generating a large volume of compound prescriptions, the indictment alleges.
PCP paid marketers approximately 50 percent of the payments it received from TRICARE and ILWU Plan manager to provide the marketers with ongoing incentives to find doctors and patients willing to write or accept the medically unnecessary compound cream prescriptions, according to the indictment. Health care professionals engaged to work at these bogus “pain clinics” were encouraged to write prescriptions for medically unnecessary compounded creams to keep the revenue stream flowing to PCP and its marketers, the indictment alleges.
The four defendants named in the indictment are:
- James Nate Bell, 38, of Anaheim Hills, the owner of PCP and two medical marketing companies that were allegedly used to funnel kickbacks to PCP marketers;
- Regina Piehl, 66, of Pacific Palisades, who was affiliated with several companies that allegedly received and paid kickbacks to refer and obtain prescriptions for PCP;
- Dr. Michael Edwards, 52, of Huntington Beach, a physician who allegedly worked with Piehl to set up clinics to study the efficacy of compound creams, but which in reality served as prescriptions mills that generated millions of dollars in profits for PCP and its marketers; and
- Sara Samhat, 45, of Huntington Beach, who allegedly worked with Dr. Edwards to route prescriptions to PCP and other companies involved in the health care fraud scheme in exchange for receipt of kickbacks from the referral of the prescriptions.
Bell and Piehl were arrested this morning by federal agents and are expected to be arraigned on this indictment this afternoon in United States District Court, with Bell appearing in Santa Ana and Piehl appearing in Los Angeles. Edwards and Samhat are expected to surrender tomorrow morning at the federal courthouse in Santa Ana.
The indictment, which was returned by a federal grand jury in Santa Ana on January 29 and unsealed today, alleges that the scheme peaked in the first half 2015 and continued into 2016. The fraudulent billings to TRICARE, in particular, dropped significantly in the second half of 2015 when TRICARE, and then later the ILWU Plan, reduced reimbursement rates for compounded creams.
As result of the scheme, TRICARE sustained losses of approximately $19 million, and the ILWU Plan sustained additional losses of approximately $3 million.
In relation to this morning’s arrests, federal agents obtained warrants to seize a Cadillac Escalade and two of Bell’s brokerage accounts.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The ongoing investigation in this case is being conducted by the Department of Defense Office of Inspector General, the Defense Criminal Investigative Service, the FBI, IRS Criminal Investigation, the United States Department of Labor’s Office of Inspector General and the U.S. Department of Labor’s Employee Benefits Security Administration. The California Department of Insurance and the Office of Personnel Management’s Office of the Inspector General have provided substantial assistance.
This matter is being prosecuted by Assistant United States Attorney Paul G. Stern of the Environmental and Community Safety Crimes Section. Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section is also working on the case.
Acupuncturist Sentenced to 2½ Years in Federal Prison for Defrauding Amtrak’s Health Care Plan out of Millions of DollarsRead the Press Release
LOS ANGELES – A licensed acupuncturist was sentenced late this afternoon to 30 months in federal prison for fraudulently billing Amtrak’s health care plan for $7.1 million in acupuncture, massages and facials that either were medically unnecessary or were never provided.
Guiqiong Xiao Gudmundsen, 53, a.k.a. “Kimi” Gudmundsen, of Anaheim Hills, was sentenced by United States District Judge Dolly M. Gee. Judge Gee also ordered her to pay $2,683,903 in restitution to Amtrak.
In October 2019, Gudmundsen pleaded guilty to one count of health care fraud and one count of money laundering.
Gudmundsen owned Healthy Life Acupuncture Center, which operated in Riverside and Los Angeles. From January 2008 until December 2015, Gudmundsen recruited Amtrak employees to visit Healthy Life and then, among other things, billed the Amtrak health care plan for acupuncture, which she knew wasn’t being provided.
She billed the health plan for medically unnecessary services such as massages and facials, as well as for work-related injuries she knew the Amtrak plan did not cover. Gudmundsen also provided medical services to non-Amtrak health care plan participants and then billed the plan for it under the name of an actual Amtrak plan participant.
Gudmundsen regularly waived co-payments, co-insurance, and deductibles for Amtrak health care plan participants, something the plan did not permit. She double billed to other insurance plans, and she provided services to returning patients falsely billed as “new patients” in order to take advantage of higher reimbursement rates.
During the course of the scheme, Gudmundsen billed Amtrak’s health care plan in amounts comparable to large research hospitals and medical institutions that dwarfed other acupuncturists, court papers state. In 2013, Gudmundsen was ranked 32nd in the United States among health care providers for the amount billed to the Amtrak health care plan – above Johns Hopkins Hospital in Baltimore, which was ranked 39th, according to court documents.
Finally, she knowingly and routinely funneled her ill-gotten gains through bank accounts opened in the names of a shell company and her relatives.
Gudmundsen’s “entire business model was based on fraud, infiltrating all the services that she provided (and those she did not provide),” prosecutors wrote in their sentencing memorandum. “The Amtrak health care plan provides much-needed health care services to Amtrak union employees and their dependents. These types of fraud schemes increase the costs of such health insurance plans.”
This matter was investigated by Amtrak Office of Inspector General, IRS Criminal Investigation, and the U.S. Department of Labor’s Employee Benefits Security Administration.
This case was prosecuted by Assistant United States Attorneys Scott D. Dubois and Jenna G. Williams of the General Crimes Section.
Former Tax Lawyer Sentenced to Five Years in Federal Prison for Evading Back Taxes He Owed to Internal Revenue ServiceRead the Press Release
LOS ANGELES – A former tax and estate-planning lawyer who set up shell companies to evade the payment of more than $1.4 million he owed to the IRS was sentenced today to 60 months in federal prison.
James Roy McDaniel, 66, of Long Beach, was sentenced by United States District Judge S. James Otero, who also ordered McDaniel to pay $1.54 million in restitution.
In October 2019, McDaniel pleaded guilty to one count of tax evasion.
McDaniel was a licensed California lawyer from 1981 until he surrendered his law license in 2004, shortly before he pleaded guilty to one felony count of subscribing to a false income tax return. In 2005, McDaniel was sentenced to three years in federal prison for that crime. In that case, McDaniel’s failure to report income – $1.6 million embezzled from his law firm clients – resulted in a tax loss of $677,368 to the federal government. The IRS subsequently assessed McDaniel more than $1.4 million in taxes, interest and penalties for the tax years 1997 through 2001. The Los Angeles County District Attorney’s Office prosecuted McDaniel for grand theft in that matter and he was sentenced to two years in state prison.
Following his convictions in the previous cases, McDaniel willfully attempted to evade paying his debt to the IRS by creating two shell companies – Davis Bell Consulting LLC and James Roy Consulting LLC – where he directed payments for tax and estate planning consulting work he performed after he was released from prison. Between May 2008 and late 2018, McDaniel attempted to mislead federal tax authorities and conceal his income by directing other people to sign documents identifying themselves as the sole managing members of the shell companies. McDaniel directed them to open bank accounts where he deposited checks for his tax and estate planning work.
In his plea agreement, McDaniel admitted to owing a total of $1,584,126 in unpaid taxes for the years 2008 to 2017. He has been in federal custody since his arrest in December 2018.
“Despite his fortuitous second chance for a lucrative career, rather than properly report his income and pay taxes, defendant set up a complex web of limited liability corporations and straw bank accounts to conceal his connection to the tax consulting income,” prosecutors wrote in their sentencing memorandum. “As if defendant’s conduct was not bad enough, for years he used his unwitting girlfriend and young adult children as nominees.”
This case was investigated by IRS Criminal Investigation.
This matter was prosecuted by Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section.
Ex-Chairman of Christian Science Church in Los Angeles Pleads Guilty to Criminal Charges of Stealing $11 Million from ChurchRead the Press Release
LOS ANGELES – The former chairman of the board for the Fifth Church of Christ, Scientist, of Los Angeles pleaded guilty today to federal criminal charges that he stole more than $11 million in church money via bank accounts for phony companies and tried to cover his tracks by impersonating a real estate developer.
Charles Thomas Sebesta, 55, of Huntington Beach, pleaded guilty to one count of wire fraud affecting a financial institution and one count of bank fraud. He has been in federal custody since his arrest in August 2019.
According to his plea agreement and other court documents, Sebesta was hired in 2001 as the church’s facilities manager and joined the church in 2005, ultimately serving as its local chairman. In this capacity, he had control over the church’s financial assets and operations, including some of its bank accounts.
From at least August 2006 through December 2016, Sebesta caused the church to make checks and other payments to fictitious companies for which he had opened bank accounts that he controlled, as well as to bank accounts he held in his own name and in the names of his family members and a female companion. To further conceal these payments, Sebesta forged a church member’s signature on numerous checks drawn against the church’s bank accounts.
In the fall of 2008, Sebesta oversaw the sale of church property in Hollywood for approximately $12.8 million. He admitted that he siphoned a significant majority of the proceeds for his personal use, including purchasing a home with more than $2 million in cashier’s checks drawn from church bank accounts. The checks were falsely recorded in church records as “donations” and environmental remediation payments to a fictitious “Sky Blue Environmental” company.
In 2009 and 2010, Sebesta wired $1.86 million and $309,622 in church money to be credited to his own personal tax accounts in order to generate overpayment refunds to himself from the U.S. Treasury and the California Franchise Tax Board, respectively.
To conceal his crimes, Sebesta impersonated a real estate developer by creating an email account in the executive’s name. Posing as the developer, Sebesta sent emails to church members in which he fraudulently represented that the real estate developer was making donations to the church, including making rent payments for the church’s new location, and held Sebesta in high esteem.
Sebesta also admitted to defrauding another former employer – a private high school in Los Angeles County – out of $34,032.
He also embezzled $36,282, which had been donated to the church by the estate of a donor.
In total, Sebesta stole at least $11,438,213 of church assets, according to court documents.
United States District Judge Stephen V. Wilson has scheduled a May 18 sentencing hearing, at which time Sebesta will face a statutory maximum penalty of 60 years in federal prison.
The United States Secret Service investigated this matter.
This case is being prosecuted by Assistant United States Attorney Valerie L. Makarewicz of the Major Frauds Section.
Financial Advisor Sentenced to More Than 11 Years in Prison for Defrauding More Than a Dozen Clients in $8.1 Million Ponzi SchemeRead the Press Release
SANTA ANA, California – A former Ameriprise financial advisor who ran a Ponzi scheme that defrauded 20 of her clients – including some of her relatives – out of more than $8.1 million was sentenced today to 136 months in federal prison.
Li Lin Hsu, a.k.a. Yilin Hsu Lee, 42, of Diamond Bar, was sentenced by United States District Judge Andrew J. Guilford, who also ordered her to pay $5,274,277 in restitution to her victims. Hsu pleaded guilty in February 2019 to one count of wire fraud.
Between February 2014 and May 2018, Hsu lured in her victims with the promise that she would safely invest their money. She gained the trust of her victims – nearly all of whom are members of Southern California’s Chinese community – by speaking to them in their native language and telling them she was part of their community. Other victims included Hsu’s relatives.
In reality, Hsu failed to invest any of her victims’ money. Instead, she used their funds to buy homes in Diamond Bar and Irvine, a luxury Tesla automobile, a vacation at the Peninsula Hotel in Paris, and thousands of dollars’ worth of luxury goods at high-end stores such as Harry Winston, Chanel and Hermes. In the hallmark of a Ponzi scheme, Hsu also used money she stole from later investors to make lulling payments to early investors.
Hsu began her scheme while employed at Ameriprise Financial, Inc., as a financial advisor. Ameriprise fired her in 2015 after discovering her misconduct. In 2016, the Financial Industry Regulatory Authority (FINRA) barred Hsu from working in the investment business.
Shortly after Ameriprise terminated her, Hsu founded her own companies – American Capital Trading Group LLC and, in 2016, American Capital Republic, Inc. – where she sought out additional victim investors and swindled them.
Hsu told these new clients that their funds would be invested in low-risk municipal bonds. As with her Ameriprise accounts, Hsu failed to invest the funds as promised, but rather spent the funds on herself. She fabricated account statements that showed her victims’ funds were safely invested and lulled her victims into believing the account statements by making nominal “interest payments” that originated from the funds of other victims. She also lied to one of her victims when she said American Capital Trading Group – which she controlled – was an Ameriprise affiliate.
Through these two companies, Hsu caused losses of $8,191,554 to her victims.
In 2016, Hsu repeatedly lied under oath to the Securities and Exchange Commission, which had begun investigating her. After the FBI arrested Hsu in April 2018 and in violation of a court order, Hsu met with two of her victims and told them to lie to the FBI that her plan had always been to invest in the two properties she had purchased. She also induced them to give her an additional $450,000, which she then used to pay back another victim.
The FBI investigated this matter.
This case was prosecuted by Assistant United States Attorneys Poonam G. Kumar and Alexander C.K. Wyman of the Major Frauds Section, and Katharine Schonbachler and Victor A. Rodgers of the Asset Forfeiture Section.
Three Administrators of Philippine Church Arrested in Immigration Fraud Case Related to Workers Brought to U.S. to FundraiseRead the Press Release
LOS ANGELES – Federal authorities this morning arrested three top administrators of a Philippines-based church on federal charges of participating in an immigration fraud scheme that brought church members to the United States to work as fundraisers, and then arranged sham marriages and other illegal mechanisms to keep high-performing workers in the country.
A federal criminal complaint alleges that representatives of the church the Kingdom of Jesus Christ, The Name Above Every Name (KOJC) obtained visas for church members to enter the U.S. by claiming, for example, they would be performing at musical events. But, once the church members arrived in the United States, they were required to surrender their passports and work long hours as “FTWs” (full-time workers, who were also called “miracle workers”), who solicited donations for a church non-profit called the Children’s Joy Foundation USA (CJF). While the workers raised funds by telling donors their money would benefit impoverished children in the Philippines, the complaint alleges that most or all of the money raised was used to finance KOJC operations and the church leader’s lavish lifestyle.
The criminal complaint charges three defendants who are described as the main administrators of KOJC in the United States. They are:
- Guia Cabactulan, 59, the top KOJC official in the United States who maintained direct communication with KOJC leadership in the Philippines;
- Marissa Duenas, 41, who allegedly handled fraudulent immigration documents for KOJC workers and secured the passports immediately after workers entered the U.S.; and
- Amanda Estopare, 48, who allegedly handled the financial aspects of the KOJC enterprise, including enforcing fundraising quotas for KOJC workers.
Cabactulan and Duenas were arrested this morning at a KOJC compound in Van Nuys, where they lived. They are expected to make their initial court appearances this afternoon in United States District Court in Santa Ana. Estopare was arrested in Virginia.
In conjunction with this morning’s arrests, federal agents executed search warrants at the KOJC compound in Van Nuys, the CJF office in Glendale, and three other locations in the Los Angeles area. Searches were also conducted at two locations linked to KOJC in Hawaii, and agents fanned out across the United States to interview witnesses as part of a larger investigation into the organization.
The criminal complaint that led to this morning’s arrests charges the three defendants with conspiracy to commit immigration fraud. A 42-page affidavit in support of the complaint outlines a years-long scheme to bring FTWs to the United States under false pretenses and to make arrangements for productive fundraisers – known as “Assets” – to remain in the country by forcing them to marry other KOJC members who were U.S. citizens, or to obtain student visas and enroll FTWs in schools with lenient attendance policies. Over the past 20 years, according to immigration records summarized in the affidavit, there were 82 marriages involving KOJC administrators and FTWs.
The affidavit alleges that the immigration fraud scheme provided KOJC with workers to participate in widespread efforts to solicit donations with false claims that donors’ money would be used for the benefit of poor children in the Philippines. KOJC allegedly established daily cash solicitation quotas for FTWs, and if these quotas were not met, workers suffered abuse, according to victims who have fled KOJC and provided information to the FBI.
“[B]ank records show that KOJC accounts received approximately $20 million in cash deposits from 2014 through mid-2019,…[and] most of these funds appear to derive from street-level solicitation,” according to the affidavit, which notes that “little to no money solicited appears to benefit impoverished or in-need children.”
The affidavit summarizes the experiences of a series of victims who fled KOJC and provided information to the FBI over the past several years. Some of the victims described being sent across the U.S. to solicit donations, working long hours to reach their daily quotas, receiving little to no pay for their efforts, and participating in sending large sums of cash back to the Philippines on commercial and private flights.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The charge of conspiracy to commit immigration fraud carries a statutory maximum penalty of five years in federal prison.
The FBI has established a toll-free phone number for potential victims or anyone with information about KOJC activities to provide information. The information line is 1-800-CALL FBI (1-800-225-5324), and it will be staffed by English- and Tagalog-speaking personnel. Individuals may also contact the FBI through its website at https://www.fbi.gov/tips.
The ongoing investigation into KOJC is being led by the FBI, which is receiving substantial assistance from Homeland Security Investigations, U.S. Citizenship and Immigration Service’s Fraud Detection and National Security Unit, the U.S. Department of State’s Diplomatic Security Service, and IRS Criminal Investigation.
This matter is being prosecuted by Assistant United States Attorneys Daniel Ahn and Jake Nare of the Santa Ana Branch Office.
Indictment Charges Members of Inland Empire Drug Trafficking Ring with Transporting Kilograms of Cocaine by Mail and TrucksRead the Press Release
LOS ANGELES – Authorities this morning arrested 16 defendants linked to an Inland Empire-based drug trafficking ring that used the U.S. Postal Service and private vehicles to ship large quantities of cocaine and other narcotics to buyers across the country.
A 17-count indictment charges a total of 24 defendants with conspiracy to distribute controlled substances. The indictment also charges some of the defendants with distribution of controlled substances, possession with intent to distribute controlled substances, and being felons in possession of ammunition.
Over the course of the three-year investigation, authorities across the United States seized a total of approximately 77 kilograms of cocaine, nine kilograms of heroin, 150 pounds of methamphetamine, 989 fentanyl pills, 19 firearms, and $1,894,869 in suspected drug proceeds.
Thirteen of the defendants arrested today are expected to be arraigned this afternoon in United States District Court in downtown Los Angeles. An additional three defendants were arrested in Ohio and South Carolina.
Between October 2016 and May 2018, members of the conspiracy mailed large quantities of narcotics from post offices throughout Riverside and San Bernardino counties to recipients nationwide – including New York, Ohio, Michigan, and South Carolina – in exchange for large cash payments, often in excess of $100,000, according to the indictment.
The lead defendant in this case – Ricardo Alejandro Bazan, a.k.a. “Ricky,” “Chuco” and “Chu,” 41, of Riverside – allegedly directed the drug trafficking ring. The indictment alleges that illicit drug proceeds were sent back to California and were ultimately delivered to Bazan.
Co-defendants Doroteo Mendoza Torrez, a.k.a. “Guerro” and “Guerito,” 57, of Eastvale, and Edulfo Leyva Perez, a.k.a. “Gallo,” 54, of San Jacinto, allegedly arranged for narcotics to be shipped from Mexico and Colombia to Southern California.
Bazan then provided drugs to Noel Granados, a.k.a. “Big Show,” 40, of Moreno Valley, who arranged for the drugs to be shipped to co-conspirators in other states via U.S. mail and private trucks, according to the indictment. Granados allegedly handled the ring’s day-to-day operations, including the logistics of mailing drug parcels, sending drugs via trucks, and receiving drug proceeds sent back to California.
Estevan Ortiz, a.k.a. “Stevie” and “Wonder,” 39, of Hesperia, allegedly built hidden compartments in vehicles for the purpose of concealing narcotics and drug proceeds.
One defendant, Jonathan Darnell Carey, 41, of Dallas, Texas, mailed at least 36 kilograms (79.4 pounds) of cocaine from post offices in San Bernardino County to recipients in Ohio, Michigan, Tennessee, and New York, according to the indictment. Carey also allegedly received a USPS parcel containing between $125,000 and $200,000 in drug proceeds on December 30, 2016 in Victorville, and a second parcel containing approximately $185,185 in drug proceeds on April 4, 2017. In addition to the drug distribution conspiracy count, Carey faces five additional charges of distribution of cocaine.
Bazan also is charged with knowingly distributing to Carey and another co-conspirator approximately 15 kilograms (33.1 pounds) of cocaine on March 31, 2017 in Riverside County, and with arranging the delivery of approximately 19 kilograms (41.9 pounds) of cocaine to another co-defendant on April 7, 2018. The cocaine was to be mailed to other states, the indictment alleges.
If convicted of all counts, the defendants would face a statutory maximum sentence of life in federal prison and mandatory minimum sentences of at least 10 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This matter was investigated by the Los Angeles High Intensity Drug Trafficking Area (HIDTA) Group 50 and the United States Postal Inspection Service. HIDTA Group 50 is comprised of members from the Drug Enforcement Administration, IRS Criminal Investigation, CBP Air and Marine Operations, the Riverside Police Department, the Chino Police Department, the Ontario Police Department, the Riverside County Sheriff’s Department, and the San Bernardino County Sheriff’s Department. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force (OCDETF).
The case is being prosecuted by Assistant United States Attorney Victoria A. Degtyareva of the Cyber and Intellectual Property Crimes Section.
California’s Four U.S. Attorneys Agree It’s Time for a Permanent Ban on Fentanyl AnaloguesRead the Press Release
The following statement was issued by the four U.S. Attorneys who serve California: Nicola T. Hanna (Central District of California), David L. Anderson (Northern District of California), Robert S. Brewer (Southern District of California) and McGregor W. Scott (Eastern District of California)
In 2017, almost 50,000 Americans died from opioid overdoses. In California alone, there were 2,428 fatal opioid overdoses in 2018. And it’s getting worse. In San Francisco and Los Angeles counties, for instance, opioid fatalities have increased by 54% and 41%, respectively, since 2016. San Diego County and the Central Valley are also experiencing unprecedented levels of fatal opioid overdoses. This is a crisis, and illicitly produced fentanyl is largely responsible.
To fight this epidemic, law enforcement must have all the necessary tools at their disposal. One such tool is the Drug Enforcement Administration’s (DEA) 2018 order making all fentanyl-related drugs illegal in the United States. Unfortunately, that order was temporary and will expire in less than two weeks. The Senate recently passed bipartisan legislation approving a 15-month extension of the temporary order. While this is a step in the right direction, and the House should pass the Senate’s bill, a longer term solution is needed. We need a permanent ban on all fentanyl-like drugs.
Illicit fentanyl is manufactured in labs in China and Mexico and smuggled into the United States. It is 50 times more powerful than heroin and 100 times more powerful than morphine. So powerful, in fact, that only a couple milligrams – the size of a few grains of salt – can kill the average person.
Fentanyl, however, is unique. Because it is made in labs using chemicals, its structure is easily manipulated. And the drug cartels that manufacture and traffic this synthetic poison into our neighborhoods understand American laws and know how to exploit them. They know that by changing a single molecule in the chemical structure of fentanyl, they have essentially created a new drug. One that, unlike fentanyl, is not illegal in the United States. These drugs, known as “fentanyl analogues,” do as fentanyl does: create more addicts and kill more Americans. The analogues – which can be up to 100 times more potent than fentanyl and 10,000 times more potent than morphine – will become legal if Congress fails to act.
The DEA’s 2018 decision to temporarily schedule – that is, to make illegal – all fentanyl-related substances was a response to the extraordinary legal loophole exploited by drug traffickers. In April 2019, China also outlawed all fentanyl-related substances. This is extraordinary progress, with one caveat. Unlike China’s law, the United States’ has an expiration date.
On Feb. 6, 2020, the DEA’s temporary order expires, and all drugs seized by U.S. investigators over the past two years that have tested positive as fentanyl analogues will no longer be illegal. If Congress fails to pass the legislation it will have a dramatic impact not just on the prosecutors and law enforcement officers who spend their lives investigating and prosecuting drug dealers, but on communities already hard hit by the opioid epidemic, many of which are right here in California.
Despite the tireless efforts of law enforcement, California continues to be a main thoroughfare for fentanyl and fentanyl-like drugs arriving from China and Mexico. In 2019, federal law enforcement agents seized approximately three-quarters of a ton of fentanyl at the six ports of entry we share with Mexico and in all places in between. That’s 20 percent more than in 2018. And our federal resources are not infinite; we need all the help we can get. Passing this legislation would provide invaluable support to us as prosecutors and the entire law enforcement community as we continue to combat the opioid crisis in California and throughout America.
A number of organizations have voiced opposition to the proposed legislation, arguing that the bill does not “embrace public health approaches to the overdose crisis.” We agree that a comprehensive approach to the crisis is needed, and a permanent fentanyl analogue ban should be viewed as part of a holistic effort. But time is running out. There is no doubt that drug traffickers are eagerly awaiting the temporary order’s expiration to start flooding our communities with these dangerous drugs. The passage of this legislation is quite literally a matter of life and death.
There should be nothing partisan about declaring fentanyl analogues illegal. There is certainly nothing partisan about saving lives and bringing justice to those who profit from addiction and death. For the safety of our communities, we urge Congress to pass legislation making permanent the DEA’s temporary scheduling of all fentanyl-related drugs.
California's Four U.S. Attorneys Agree It’s Time for a Permanent Ban on Fentanyl AnaloguesRead the Press Release
The following statement was issued by the four U.S. Attorneys who serve California: David L. Anderson (Northern District of California), Robert S. Brewer (Southern District of California), Nicola T. Hanna (Central District of California), and McGregor W. Scott (Eastern District of California).
In 2017, almost 50,000 Americans died from opioid overdoses. In California alone, there were 2,428 fatal opioid overdoses in 2018. And it’s getting worse. In San Francisco and Los Angeles counties, for instance, opioid fatalities have increased by 54% and 41%, respectively, since 2016. San Diego County and the Central Valley are also experiencing unprecedented levels of fatal opioid overdoses. This is a crisis, and illicitly produced fentanyl is largely responsible.
To fight this epidemic, law enforcement must have all the necessary tools at their disposal. One such tool is the Drug Enforcement Administration’s (DEA) 2018 order making all fentanyl-related drugs illegal in the United States. Unfortunately, that order was temporary and will expire in less than two weeks. The Senate recently passed bipartisan legislation approving a 15-month extension of the temporary order. While this is a step in the right direction, and the House should pass the Senate’s bill, a longer term solution is needed. We need a permanent ban on all fentanyl-like drugs.
Illicit fentanyl is manufactured in labs in China and Mexico and smuggled into the United States. It is 50 times more powerful than heroin and 100 times more powerful than morphine. So powerful, in fact, that only a couple milligrams – the size of a few grains of salt – can kill the average person.
Fentanyl, however, is unique. Because it is made in labs using chemicals, its structure is easily manipulated. And the drug cartels that manufacture and traffic this synthetic poison into our neighborhoods understand American laws and know how to exploit them. They know that by changing a single molecule in the chemical structure of fentanyl, they have essentially created a new drug. One that, unlike fentanyl, is not illegal in the United States. These drugs, known as “fentanyl analogues,” do as fentanyl does: create more addicts and kill more Americans. The analogues – which can be up to 100 times more potent than fentanyl and 10,000 times more potent than morphine – will become legal if Congress fails to act.
The DEA’s 2018 decision to temporarily schedule – that is, to make illegal – all fentanyl-related substances was a response to the extraordinary legal loophole exploited by drug traffickers. In April 2019, China also outlawed all fentanyl-related substances. This is extraordinary progress, with one caveat. Unlike China’s law, the United States’ has an expiration date.
On Feb. 6, 2020, the DEA’s temporary order expires, and all drugs seized by U.S. investigators over the past two years that have tested positive as fentanyl analogues will no longer be illegal. If Congress fails to pass the legislation it will have a dramatic impact not just on the prosecutors and law enforcement officers who spend their lives investigating and prosecuting drug dealers, but on communities already hard hit by the opioid epidemic, many of which are right here in California.
Despite the tireless efforts of law enforcement, California continues to be a main thoroughfare for fentanyl and fentanyl-like drugs arriving from China and Mexico. In 2019, federal law enforcement agents seized approximately three-quarters of a ton of fentanyl at the six ports of entry we share with Mexico and in all places in between. That’s 20 percent more than in 2018. And our federal resources are not infinite; we need all the help we can get. Passing this legislation would provide invaluable support to us as prosecutors and the entire law enforcement community as we continue to combat the opioid crisis in California and throughout America.
A number of organizations have voiced opposition to the proposed legislation, arguing that the bill does not “embrace public health approaches to the overdose crisis.” We agree that a comprehensive approach to the crisis is needed, and a permanent fentanyl analogue ban should be viewed as part of a holistic effort. But time is running out. There is no doubt that drug traffickers are eagerly awaiting the temporary order’s expiration to start flooding our communities with these dangerous drugs. The passage of this legislation is quite literally a matter of life and death.
There should be nothing partisan about declaring fentanyl analogues illegal. There is certainly nothing partisan about saving lives and bringing justice to those who profit from addiction and death. For the safety of our communities, we urge Congress to pass legislation making permanent the DEA’s temporary scheduling of all fentanyl-related drugs.
California's Four U.S. Attorneys Agree It’s Time for a Permanent Ban on Fentanyl AnaloguesRead the Press Release
The following statement was issued by the four U.S. Attorneys who serve California: Nicola T. Hanna (Central District of California), David L. Anderson (Northern District of California), Robert S. Brewer (Southern District of California) and McGregor W. Scott (Eastern District of California)
In 2017, almost 50,000 Americans died from opioid overdoses. In California alone, there were 2,428 fatal opioid overdoses in 2018. And it’s getting worse. In San Francisco and Los Angeles counties, for instance, opioid fatalities have increased by 54% and 41%, respectively, since 2016. San Diego County and the Central Valley are also experiencing unprecedented levels of fatal opioid overdoses. This is a crisis, and illicitly produced fentanyl is largely responsible.
To fight this epidemic, law enforcement must have all the necessary tools at their disposal. One such tool is the Drug Enforcement Administration’s (DEA) 2018 order making all fentanyl-related drugs illegal in the United States. Unfortunately, that order was temporary and will expire in less than two weeks. The Senate recently passed bipartisan legislation approving a 15-month extension of the temporary order. While this is a step in the right direction, and the House should pass the Senate’s bill, a longer term solution is needed. We need a permanent ban on all fentanyl-like drugs.
Illicit fentanyl is manufactured in labs in China and Mexico and smuggled into the United States. It is 50 times more powerful than heroin and 100 times more powerful than morphine. So powerful, in fact, that only a couple milligrams – the size of a few grains of salt – can kill the average person.
Fentanyl, however, is unique. Because it is made in labs using chemicals, its structure is easily manipulated. And the drug cartels that manufacture and traffic this synthetic poison into our neighborhoods understand American laws and know how to exploit them. They know that by changing a single molecule in the chemical structure of fentanyl, they have essentially created a new drug. One that, unlike fentanyl, is not illegal in the United States. These drugs, known as “fentanyl analogues,” do as fentanyl does: create more addicts and kill more Americans. The analogues – which can be up to 100 times more potent than fentanyl and 10,000 times more potent than morphine – will become legal if Congress fails to act.
The DEA’s 2018 decision to temporarily schedule – that is, to make illegal – all fentanyl-related substances was a response to the extraordinary legal loophole exploited by drug traffickers. In April 2019, China also outlawed all fentanyl-related substances. This is extraordinary progress, with one caveat. Unlike China’s law, the United States’ has an expiration date.
On Feb. 6, 2020, the DEA’s temporary order expires, and all drugs seized by U.S. investigators over the past two years that have tested positive as fentanyl analogues will no longer be illegal. If Congress fails to pass the legislation it will have a dramatic impact not just on the prosecutors and law enforcement officers who spend their lives investigating and prosecuting drug dealers, but on communities already hard hit by the opioid epidemic, many of which are right here in California.
Despite the tireless efforts of law enforcement, California continues to be a main thoroughfare for fentanyl and fentanyl-like drugs arriving from China and Mexico. In 2019, federal law enforcement agents seized approximately three-quarters of a ton of fentanyl at the six ports of entry we share with Mexico and in all places in between. That’s 20 percent more than in 2018. And our federal resources are not infinite; we need all the help we can get. Passing this legislation would provide invaluable support to us as prosecutors and the entire law enforcement community as we continue to combat the opioid crisis in California and throughout America.
A number of organizations have voiced opposition to the proposed legislation, arguing that the bill does not “embrace public health approaches to the overdose crisis.” We agree that a comprehensive approach to the crisis is needed, and a permanent fentanyl analogue ban should be viewed as part of a holistic effort. But time is running out. There is no doubt that drug traffickers are eagerly awaiting the temporary order’s expiration to start flooding our communities with these dangerous drugs. The passage of this legislation is quite literally a matter of life and death.
There should be nothing partisan about declaring fentanyl analogues illegal. There is certainly nothing partisan about saving lives and bringing justice to those who profit from addiction and death. For the safety of our communities, we urge Congress to pass legislation making permanent the DEA’s temporary scheduling of all fentanyl-related drugs.