Central District of California
Press releases recorded for this federal judicial district.
Chinese National Pleads Guilty to Running ‘Birth Tourism’ Scheme that Helped Aliens Give Birth in U.S. to Secure Birthright CitizenshipRead the Press Release
SANTA ANA, California – A Chinese national pleaded guilty today to federal criminal charges for running an Orange County-based “birth tourism” business that catered to wealthy pregnant clients and Chinese government officials, charging them tens of thousands of dollars to help them give birth in the United States so their children would get U.S. citizenship.
Dongyuan Li (李冬媛), 41, of Irvine, pleaded guilty to one count of conspiracy to commit immigration fraud and one count of visa fraud. Li was one of 19 defendants named in a series of indictments unsealed earlier this year. She is the first of the charged operators of birth tourism businesses to plead guilty. The remaining defendants either are pending trial or are fugitives.
Li admitted in her plea agreement that, from 2013 until March 2015, she operated a birth tourism company in Irvine and in China called You Win USA Vacation Services Corp. You Win would assist pregnant foreign nationals – typically from China – to travel to and remain in the United States to give birth so their children would receive birthright U.S. citizenship, according to the plea agreement.
According to a January 2019 federal grand jury indictment against Li, You Win advertised that it had served more than 500 Chinese birth tourism customers seeking U.S. birthright citizenship for their children. The indictment details that Li used 20 apartments in Irvine, charged each customer between $40,000 and $80,000, and she received $3 million in international wire transfers from China in two years.
Some You Win customers coached by the company made false statements on their visa applications and to U.S. immigration officials, Li’s plea agreement states. Li also admitted that the customers were advised on how to pass the U.S. Consulate interview in China, including by falsely stating that they were going to stay in the United States for only two weeks, when in reality, they planned to stay for up to three months to give birth.
Li further admitted that her customers bypassed U.S. immigration controls by booking two flights – the first from China to Hawaii and the second from Hawaii to Los Angeles International Airport – because they thought it would be easier to clear U.S. Customs through Hawaii. Li’s customers also were coached how to trick U.S. Customs at ports of entry by concealing their pregnancies, according to the plea agreement.
In October 2013, Li made a $30,965 rent payment for Irvine apartments used in her birth tourism operation, and in November 2013, she made a $30,321 rent payment for those apartments, the plea agreement states.
As part of her plea agreement, Li agreed to forfeit more than $850,000, a Murrieta residence worth more than $500,000, as well as several Mercedes-Benz vehicles.
United States District Judge James V. Selna scheduled a December 16 sentencing hearing, at which time Li will face a statutory maximum sentence of 15 years in federal prison.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and IRS Criminal Investigation. The Irvine Police Department provided substantial assistance.
This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.
Ventura County Gang Member Linked to Mexican Mafia Convicted of Drug Trafficking Charges as Part of “SuperNova” TakedownRead the Press Release
LOS ANGELES – A high-ranking member of the Oxnard-based Surtown Chiques street gang who attempted to secure control of drug trafficking in Ventura County and who extorted “taxes” on behalf of the Mexican Mafia prison gang has been found guilty by a jury of federal narcotics charges.
Armando “Criminal” Molina, 36, of Ventura, was found guilty late Friday afternoon of one count of conspiracy to distribute methamphetamine and five counts of distribution of methamphetamine. Molina was arrested in 2013 as part of Operation “SuperNova,” a multi-agency task force investigation that targeted Mexican Mafia-affiliated street gangs in Ventura County.
According to evidence presented at a four-day trial, between October 2012 and March 2013, Molina and his co-conspirators sold 247 grams of pure methamphetamine to a confidential informant working for an FBI task force.
Molina was arrested in 2013 on a criminal complaint targeting “shotcallers” of Ventura County street gangs. The criminal complaint details a year-long undercover investigation and outlines a series of narcotics transactions that led to the seizure of more than two pounds of methamphetamine and quantities of heroin that were being sold on the streets of Ventura County.
The drugs were supplied by a drug trafficking organization controlled by Mexican Mafia member Martin Madrigal-Cazares. Local street gangs communicated with the head of the organization in Mexico, while controlling narcotics sales and collecting “taxes” on behalf of the Mexican Mafia in Ventura County, the complaint alleges.
United States District Judge John A. Kronstadt has scheduled a February 6 sentencing hearing, at which time Molina will face a statutory maximum sentence of life and a mandatory minimum sentence of 10 years in federal prison.
On the eve of Molina’s trial, his co-defendant, Frank “Villain” Ruiz, 37, of Ventura County, pleaded guilty to one count of conspiracy to distribute methamphetamine. Ruiz’s sentencing hearing is scheduled for December 12, at which time he will face a statutory maximum sentence of life in federal prison and a mandatory minimum sentence of 10 years in federal prison. In total, eight defendants have been convicted in connection with this phase of the operation.
The investigation was conducted jointly by the FBI, the Ventura Police Department and the Oxnard Police Department.
The Ventura County-Multi-Agency Gang Task Force is one of many FBI Safe Streets Task Forces throughout the United States, funded for the purpose of assisting local police in identifying and addressing violent crime in America.
This case is being prosecuted by Assistant United States Attorneys Agustin D. Orozco of the Public Corruption and Civil Rights Section and Alexander B. Schwab of the Major Frauds Section.
Ex-Credit Union Manager Sentenced to More Than 14 Years in Federal Prison for $40 Million Embezzlement that Made Institution InsolventRead the Press Release
LOS ANGELES – The former manager of CBS Employees Federal Credit Union was sentenced today to 169 months in federal prison for a two-decade-long embezzlement that caused the credit union a loss of $40 million – a scheme that ultimately led to the financial cooperative being forced into insolvency.
Edward Martin Rostohar, 62, of Studio City, was sentenced by United States District Judge Otis D. Wright II.
Rostohar pleaded guilty on May 20 to one count of bank fraud. He used his position as a manager at the credit union, a federally insured financial institution, to make online payments from the credit union to himself or by forging the signature of another credit union employee on checks made payable to himself.
Prior to his three decades of employment at the credit union, Rostohar was a trained accountant and an examiner at the National Credit Union Administration (NCUA), a federal agency that regulates credit unions. During his approximately 20 years of embezzling from CBS Employees FCU, he used his senior position at the institution to falsify its records to hide his fraud and make credit union appear to be profitable despite it suffering more than $40 million in losses as a direct result of his scheme.
The scheme was exposed in March when a credit union employee, after discovering a $35,000 check payable to Rostohar, conducted an audit and discovered approximately $3.8 million in checks made payable to Rostohar between January 2018 and March 2019. Rostohar told law enforcement he gambled away much of the money and spent the rest on traveling by private jet, buying expensive watches, and giving his wife a weekly allowance of $5,000. Rostohar also started a coffee business in Reno, Nevada in December 2018, and he wrote tens of thousands of dollars’ worth of checks to himself to cover the business’s costs as well as to pay a $5,000 monthly mortgage on a home in Reno he recently purchased.
“(Rostohar) has the moral culpability of someone who was willing to leave as many as 43 depositors with deep losses so that he could wear $100,000 watches, buy a new vehicle every couple years, and impress women less than half his age with trips on private jets to international vacation resorts, Tiffany jewelry, and gambling parties,” the government wrote in the prosecution’s sentencing memorandum.
Rostohar has agreed to forfeit his ill-gotten gains, including bank accounts in his name and the names of his shell companies, four automobiles, including a Porsche, a Tesla and a Lexus, homes in Studio City, Reno, and Mexico, luxury watches, and jewelry.
Rostohar’s long-running fraud resulted in the decision by the NCUA to liquidate the credit union and discontinue its operations after determining the Studio City-based CBS Employees was insolvent with no prospect of restoring viable operations on its own. In March, University Credit Union of Westwood assumed CBS Employees’ assets, loans, and all member shares. At the time of its liquidation and sale, CBS Employees served 2,798 members and had assets of $21,037,558, according to the credit union’s most recent Call Report.
Rostohar has been in federal custody since his arrest on March 13.
This case was investigated by the Federal Bureau of Investigation and the Los Angeles Police Department.
This matter is being prosecuted by Assistant United States Attorneys Andrew G. Brown of the Major Frauds Section and Victor A. Rodgers, deputy chief of the Asset Forfeiture Section.
North Hollywood Man to Plead Guilty to Charges that He Smuggled Greased-Up Kilograms of Cocaine to Australia in Household ProductsRead the Press Release
LOS ANGELES – A San Fernando Valley man has agreed to plead guilty to federal criminal charges that he conspired to smuggle approximately 40 kilograms of cocaine – concealed and suspended in grease – in household products and mailed it to Australia, then laundered up to $3.5 million of the illicit drug proceeds.
Vardges Markosyan, 47, of North Hollywood, whose aliases include “David Petrosov,” “Giani Oncho,” and “Laram Narman,” agreed to plead guilty to a two-count criminal information charging him with conspiracy to distribute cocaine and conspiracy to engage in money laundering.
Markosyan admitted in his plea agreement that, from December 2014 until October 2016, he was involved in a drug conspiracy that procured approximately 40 kilograms (88.2 pounds) of cocaine and shipped it to Australia. The cocaine would be suspended in grease and placed in empty household products such as log splitters, air compressors, tankless water heaters, lampstands, and air conditioners, according to the plea agreement.
The shipped packages were sent via commercial carrier to Australia, where they were distributed, court documents state. Markosyan admitted to conducting “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, Markosyan admitted that in March 2015, a co-conspirator sent 9.87 kilograms (21.76 pounds) of cocaine hidden in a log splitter to Australia, sent by FedEx. In advance of this package, Markosyan sent a “test run” for a similar log splitter that was sent to Australia, according to court documents.
Markosyan also admitted in his plea agreement that he conspired with his sister, Iren Markosyan, to launder the proceeds of drug trafficking, between May 2014 and January 2019. Markosyan admitted that he used his sister’s name – with her knowledge – to purchase properties in North Hollywood and Studio City. Markosyan and his sister obtained hard-money loans secured against these properties, and enjoyed and spent the net proceeds of these loans after transferring them to various accounts, according to court papers. In December 2018, Markosyan received $234,442 from the sale of the North Hollywood property.
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.
The charges to which Markosyan has agreed to plead guilty carry a statutory maximum sentence of life in federal prison. The charge of conspiracy to distribute cocaine carries a mandatory minimum sentence of 10 years in federal prison.
For her role in the scheme, Iren Markosyan pleaded guilty on May 13 to one felony count of conspiracy to launder monetary instruments. She has agreed to forfeit the Studio City property, to a judgment in the amount of $234,442, and her interest in the 1996 Carver 38 boat and a 2005 Caribe boat. She will face a statutory maximum sentence of 20 years in federal prison at her sentencing hearing.
This matter was investigated by the FBI, IRS-Criminal Investigations, the Glendale Police Department, and State of California Department of Health Care Services Investigations Branch, and is being conducted with the support of 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 Attorney Puneet V. Kakkar of the International Narcotics, Money Laundering, and Racketeering Section, and Assistant United States Attorney Katharine Schonbachler of the Asset Forfeiture Section.
Orange County Man Sentenced to 15 Years in Federal Prison for Participating in Dark-net Methamphetamine Distribution RingRead the Press Release
SANTA ANA, California – A Huntington Beach man was sentenced today to 180 months in federal prison for being part of a father-and-son crew that illegally distributed methamphetamine on one of the world’s largest dark-net marketplaces.
William Thomas Glarner III, 65, was sentenced by United States District Judge David O. Carter, who said that Glarner had “earned” his sentence and had “spent a lifetime” working his way to federal prison.
After a four-day trial, a federal jury in June found Glarner guilty of three methamphetamine distribution-related charges. Glarner was observed mailing packages of methamphetamine, including one to a dark-net customer, according to evidence presented at trial. A search warrant executed on March 14 on Glarner and his vehicle resulted in the seizure of more than 1.4 kilograms (3.1 pounds) of methamphetamine.
The term “dark-net” refers to computer networks that utilize some of the Internet, but provide greater anonymity, allowing vendors to sell goods and services – such as illegal drug sales – often in exchange for virtual currency.
Glarner was identified as part of an overall investigation into the dark-net activity of his son, William Thomas Glarner IV, a.k.a. “Billy,” 34, of Irvine, who pleaded guilty on June 17 to one felony count of possession with intent to distribute methamphetamine. The elder Glarner acted as a mailer of drugs for his son’s methamphetamine distribution operation.
Glarner IV admitted in his plea agreement that he used at least three monikers to obscure his true identity on the dark-net, including on the “Tor” dark-net browser, where he conducted more than 1,500 sales of controlled substances, including methamphetamine.
Glarner IV admitted he obtained drugs from various sources, and along with others, mailed drugs to dark-net customers nationwide by using such services as the United States Postal Service and commercial couriers. A search warrant executed at his residence and on his car on March 14 resulted in law enforcement officials recovering 2.5 kilograms (5.5 pounds) of methamphetamine, court papers state. Glarner IV admitted that some of this methamphetamine was packaged for purposes of distribution for orders placed on the dark-net.
Glarner IV is scheduled to be sentenced on November 4, at which time he will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life in prison.
This case was investigated by U.S. Customs and Immigration Enforcement’s Homeland Security Investigations and the United States Postal Inspection Service. The La Habra Police Department assisted with the investigation as did the Costa Mesa Police Department, the Brea Police Department, the Cypress Police Department, and the Cass County Drug Task Force of North Dakota. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force (OCDETF).
This matter is being prosecuted by Assistant United States Attorneys Puneet V. Kakkar and Kathy Yu of the International Narcotics, Money Laundering, and Racketeering Section.
O.C. Business Owner Faces Tax Evasion Charge Related to Nearly $30 Million Owed to IRS on Payroll Taxes Withheld from EmployeesRead the Press Release
SANTA ANA, California – An Orange County business owner is named in a federal grand jury indictment unsealed today that charges him with tax evasion for failing to pay to the Internal Revenue Service nearly $30 million in payroll taxes, penalties and interest related to money that had been withheld from the salaries of employees of his various temporary worker companies.
Luis E. Perez – who has maintained residences in Anaheim Hills, Yorba Linda and Dove Canyon – is charged with one felony count of tax evasion in an indictment returned by a grand jury on August 28.
Perez’s companies – which include Checkmates Staffing Inc.; Staffaide Inc.; BaronHR, LLC; and Fortress Holding Group, LLC – were required to withhold taxes from employee wages and to pay the withheld amounts to the IRS on a periodic basis. These withheld taxes, sometimes known as “trust fund taxes,” include income taxes and Federal Insurance Contributions Act (FICA) taxes that fund Social Security and Medicare.
The indictment alleges that for the tax years 2001, 2002, 2003, 2006, 2007, 2008 and 2010, Perez’s companies failed to pay the IRS the payroll taxes, including trust fund taxes that Perez’s companies withheld from employees’ paychecks. Beginning in June 2007, the IRS attempted to collect Perez’s outstanding tax liability, including penalties and interest. By February 2017, the outstanding balance had grown to $29,593,378, which included the unpaid taxes, interest and the “Trust Fund Recovery Penalty.”
The indictment alleges that Perez attempted to thwart the IRS’s collection efforts by purchasing luxury items – including numerous cars and a boat – and concealing his ownership by placing the titles of these items in the names of his businesses and other individuals. Those luxury items included a 2005 Ferrari 360 Spider F, a 2007 Rolls Royce Phantom, a Duffy D 22 Bay Island boat, a 2011 Mercedes-Benz SLS, a 2015 Mercedes-Benz G-Class, and a 2014 Lamborghini Aventador.
As part of his efforts to impede the IRS, Perez allegedly made false statements to IRS revenue officers during interviews and failed to include material information in documents submitted to the IRS. For example, Perez falsely claimed that he received a salary of only $1,000 per week from BaronHR and he did not receive any other funds from the company, according to the indictment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
Perez is expected to be arraigned on this indictment later this month.
If convicted, Perez would face a statutory maximum sentence of five years in federal prison.
This matter is being investigated by IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorney Brett A. Sagel of the Santa Ana Branch Office.
Manager of San Fernando Valley-Based Telephone Order Drug Delivery Service Sentenced to Nearly 20 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Sylmar man was sentenced today to 235 months in federal prison for managing “Manny’s Delivery Service,” a Van Nuys-based drug-distribution ring that used a fleet of cars and a staff of drivers to make rapid deliveries – primarily of heroin – to its customers who phoned in orders for narcotics.
Sigifredo Gurrola Barrientos, 42, was sentenced by United States District Judge Percy Anderson, who said Barrientos was “willing to profit off the misery and at the expense of communities that have to live with the consequences of drug trafficking. Distribution of this poison…carries a very steep price.”
Barrientos pleaded guilty in April 2018 to one felony count of conspiracy to distribute controlled substances. He was the lead defendant in a federal grand jury indictment charging him and 13 other people in with various narcotics distribution-related offenses stemming from the delivery operation.
Between 2013 and December 2017, Barrientos was the manager and overseer of Manny’s Delivery Service. In that role, Barrientos obtained wholesale quantities of heroin and cocaine; managed employees; kept drug sale ledgers; arranged for the storage and transportation of heroin, cocaine and drug proceeds; and obtained, maintained and outfitted a fleet of drug delivery vehicles. The ring also sold larger quantities to street-level heroin dealers as part of its sophisticated, high-volume narcotics business. Delivery vehicles had hidden compartments to conceal drugs and the movement of bulk cash collected from narcotics transactions.
Members of the drug ring obtained pound quantities of heroin and moved hundreds of thousands of dollars in cash, according to wiretapped conversations. Bulk narcotics were stored in a “stash house,” and smaller quantities of drugs were packaged and dispatched to customers from a facility maintained by the ring in Van Nuys. The outfit frequently supplied drugs to customers who were directed to meet delivery drivers at locations across the San Fernando Valley.
For example, in November 2014, Barrientos coordinated the distribution of nearly one pound of heroin to a Manny’s customer, but law enforcement subsequently seized it.
When law enforcement broke up the Manny’s ring in December 2017, the outfit possessed at a Van Nuys stash house approximately 11.5 pounds of heroin and 1.1 pounds of cocaine meant for distribution. Barrientos and a co-defendant also possessed $434,327 in Manny’s drug proceeds at the stash house.
Barrientos has been in custody since his arrest in this case in December 2017. He is the last of the 14 defendants charged in the indictment to be sentenced. Other defendants in this case received sentences of up to 97 months in federal prison.
Three drug dealers associated with this conspiracy were charged in separate indictments with distribution or possession with intent to distribute heroin. All three of those defendants have pleaded guilty and been sentenced to prison terms of up to 63 months.
The investigation into Manny’s Delivery Service was conducted by the Drug Enforcement Administration and the Ventura County Narcotics Task Force. The Los Angeles Police Department and the Glendale Police Department provided substantial assistance during the investigation, which was part of the Justice Department's Organized Crime Drug Enforcement Task Force (OCDETF).
This case was prosecuted by Assistant United States Attorneys A. Carley Palmer and Christopher C. Kendall of the International Narcotics, Money Laundering, and Racketeering Section.
Los Angeles County Man Pleads Guilty to Federal Charge of Attempting to Obtain the Biological Toxin Ricin for Unlawful PurposesRead the Press Release
LOS ANGELES – A La Crescenta man pleaded guilty today to attempting to obtain ricin from an online source, admitting that he intended to acquire the biological agent for use as a weapon.
Steve S. Kim, 41, pleaded guilty before United States District Judge Terry J. Hatter to one count of violating a criminal statute called prohibition with respect to biological weapons.
Over a two-month period late last year, Kim attempted to obtain ricin from what he thought was an online seller of ricin, but in fact was an undercover FBI operative. During negotiations with the FBI operative, Kim stated that the ricin was intended for an individual who weighed 110 pounds, according to the plea agreement. Kim subsequently agreed to pay 320 Euros (approximately $350) in bitcoin for the ricin. The FBI concealed a substance purporting to be ricin inside another product, and the package was delivered on November 29, 2018 to Kim’s work address in Los Angeles. That evening, Kim took the parcel home, accessed the fake ricin, and was immediately placed under arrest.
“Ricin is an incredibly dangerous biological toxin – just a few tiny grains can kill a human,” said United States Attorney Nick Hanna. “Because it can be used as a weapon of mass destruction and there is no antidote for ricin poisoning, any attempt to acquire this deadly chemical agent is an extremely serious matter that will prompt a vigorous response.”
“The idea of intentionally using a biological agent to do harm shocks the conscience,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case demonstrates the FBI’s commitment to holding accountable actors who use or attempt to use weapons of mass destruction to carry out acts of terrorism or violence. This case also sends the message that the primary objective of the Joint Terrorism Task Force is to prevent an act before innocent people become victims.”
In his plea agreement, Kim admitted that he did not intend to use the ricin for a prophylactic, protective, bona fide research, or other peaceful purpose as required by law.
Judge Hatter is scheduled to sentence Kim on November 18.
As a result of today’s guilty plea, Kim will face a maximum statutory sentence of life in federal prison. However, in the plea agreement, the government agreed that it will recommend a sentence of no more than 87 months in prison. The actual sentence imposed in this case will be determined by Judge Hatter.
This matter was investigated by the FBI, which received assistance from the United States Postal Service.
The prosecution is being handled by Assistant United States Attorney Reema M. El-Amamy, with assistance from the Department of Justice’s Counterterrorism Section.
Former Burbank Elementary School Teacher Pleads Guilty to Producing Child Pornography Depicting His Former StudentRead the Press Release
LOS ANGELES – A former elementary school teacher pleaded guilty today to federal criminal charges for sexually exploiting his 15-year-old former student by producing pornographic images of her.
Sean David Sigler, 55, of Burbank, pleaded guilty to two felony counts of production of child pornography. Sigler, whom a federal grand jury indicted in May 2018, previously taught fifth-grade students at Bret Harte Elementary School in Burbank and at Gardner Street Elementary School in Hollywood.
According to a criminal complaint filed in this case, Sigler became involved in the victim’s personal life after the child left Sigler’s classroom. He then used his position as former teacher, mentor, and father figure to gain the trust of the victim and her parent. Sigler then exploited that trust to gain sexual access to the minor victim. Over the course of 15 months, Sigler regularly transported the victim to his home, where he gave her alcohol and pills and then photographed and filmed his sexual activity with her. Sigler began having sex with the minor victim when she was just 15 years old.
Sigler admitted in his plea agreement that he created multiple sexually explicit videos of the victim, and that he also took sexually explicit photographs of her, beginning when she was 15 years old. Some of child pornography Sigler created included images and videos involving sadomasochistic conduct. Sigler also created child pornography by modifying a pornographic image of the minor victim’s body and digitally superimposing the face of a different underage former student. Sigler’s digital devices contained numerous images and videos of his sexual acts with the victim, as well as more than 5,000 images of child pornography depicting unknown pre-pubescent minors, according to court documents.
As part of his plea agreement, Sigler agreed to forfeit $271,506 in cash seized by the government, which constitutes the proceeds from the sale of the home where Sigler produced child pornography.
United States District Judge John A. Kronstadt has scheduled a December 5 sentencing hearing, at which time Sigler will face a statutory maximum sentence of 60 years in federal prison. Each count of production of child pornography also carries a mandatory minimum sentence of 15 years in federal prison.
This matter was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Burbank Police Department.
The case is being prosecuted by Assistant United States Attorneys Damaris Diaz of the Violent and Organized Crime Section and Devon Myers of the Cyber and Intellectual Property Crimes Section.
This case is part of Project Safe Childhood, which is a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse. Launched by the Justice Department in 2006 and led by the U.S. Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.
Federal Grand Jury Indictments Allege Drug Trafficking Ring that Smuggled Hundreds of Pounds of Cocaine, Ecstasy, Other NarcoticsRead the Press Release
LOS ANGELES – Thirteen people were arrested today on two federal grand jury indictments alleging a conspiracy to export hundreds of pounds of narcotics, including cocaine, heroin and methamphetamine, from Mexico through Southern California and into Canada.
Three defendants were arrested in the Los Angeles area, while the others were arrested in the Seattle and Vancouver, Canada areas. Three additional defendants are currently in state custody and will be transferred over to federal custody at a later date.
The indictments unsealed today charge a total of 30 defendants with a series of narcotics-related offenses, including conspiracies to distribute, import, and export controlled substances. The indictments further allege that the organization imported MDMA, or ecstasy, from Canada to Southern California in exchange for other drugs.
According to the indictments and other court documents, the defendants, one of whom was arrested on August 24 and remains in federal custody, were members of related international drug trafficking organizations that worked together to traffic bulk quantities of cocaine, methamphetamine and heroin from Mexico to Canada through Southern California, including at locations in Costa Mesa, Compton, Ventura, and Redlands.
The drugs would be exchanged for either cash or bulk quantities of ecstasy, the indictments allege. Some of the defendants allegedly also conspired to transport narcotics to Australia from Southern California. The drug trafficking organizations included members of Canadian, Mexican, Serbian, Chinese, and Sudanese organized crime groups, according to court documents.
The defendants allegedly used modified cellular devices with military-grade end-to-end encryption to communicate with each other regarding their drug trafficking business, including the transportation of narcotics between the United States and Canada. These devices are manufactured primarily by Canadian companies that remove most functionality from the phones, leaving only an encrypted email system, court papers state.
In total, law enforcement seized approximately 428.5 kilograms (944.7 pounds) of cocaine, nine kilograms (19.8 pounds) of heroin, 46.6 kilograms (102.7 pounds) of methamphetamine, and 46.12 kilograms (106.1 pounds) of MDMA. Law enforcement also seized approximately $811,000 in Canadian currency.
Those defendants arrested today in the U.S. will appear this afternoon in United States District Court, including in downtown Los Angeles.
If convicted of all charges, the defendants would face a statutory maximum sentence of life in federal prison and a mandatory minimum sentence of 10 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This matter was investigated by the Federal Bureau of Investigation, the Royal Canadian Mounted Police, the Los Angeles Police Department, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. Critical support was provided by the Toronto Police Service, the Sudbury Police Service, the Hamilton Police Service, Peel Regional Police, the Hawthorne Police Department, the Baldwin Park Police Department, the West Covina Police Department, the Fontana Police Department, the California Highway Patrol, the U.S. Drug Enforcement Administration, the Department of Justice Canada, and the Criminal Division’s Office of International Affairs. This investigation is part of the Justice Department's Organized Crime Drug Enforcement Task Force (OCDETF).
This case is being prosecuted by Assistant United States Attorney Victoria A. Degtyareva of the International Narcotics, Money Laundering, and Racketeering Section.
Indictment 1 Indictment 2Accountant Who Cheated Her Friends and Clients via a $27.5 Million Ponzi Scheme Sentenced to More than 8 Years in Federal PrisonRead the Press Release
LOS ANGELES – A retired certified public accountant has been sentenced to 97 months in federal prison for running a $27.5 million Ponzi scheme that for roughly two decades defrauded her friends and her accounting firm’s clients.
Carol Ann Pedersen, 66, of Long Beach, was sentenced late Wednesday afternoon by United States District Judge Dolly M. Gee, who cited the “grave economic and psychological toll” of Pedersen’s "insidious Ponzi scheme" as she “preyed on some of her closest friends.” Pedersen pleaded guilty in March to one felony count of wire fraud. Judge Gee also ordered her to pay approximately $27.5 million in restitution.
Between 1996 and September 2017, Pedersen, who only was licensed to be a CPA, served as her victims’ unlicensed investment advisor. Through her firm, Carol A. Pedersen, C.P.A., she solicited her accounting clients’ investments through two types of investment opportunities that she offered: “Time Deposit” and “Client Pool.” Pedersen told her victims that Time Deposit would invest in low-risk securities providing a fixed return on their money after a period of time while Client Pool would invest their money in the stock market through an investment pool Pedersen had established with other investors’ funds.
In reality, Pedersen’s fraud was nothing more than a Ponzi scheme. She solicited investors and promised to invest their money in the stock market, but never did. Instead, she deposited the funds into her personal accounts, and then spent the money to fund her own personal expenses, including the payment of her credit card bills, the establishment of trust accounts for her family, and the purchase of real estate. She also used her victims’ money to fulfill distribution requests by her other victims – which she falsely represented were returns on their investments.
For example, on July 30, 2015, Pedersen wired $3 million from a purported “Client Pool” account to a personal account that she controlled.
In 2017, after receiving distribution requests that she could not honor with the funds she had available, Pedersen’s scheme collapsed. She retired shortly thereafter.
Pedersen’s victims, at least 56 people, invested more than $40 million into these accounts during the scheme and their total loss was at least $27,547,839.
This matter was investigated by the Federal Bureau of Investigation and the Los Angeles County Sheriff’s Department.
In March, the Securities and Exchange Commission filed a civil complaint against Pedersen in connection with the fraudulent scheme. Pedersen has admitted liability in that case.
This case was prosecuted by Assistant United States Attorneys Alexander C.K. Wyman and Julian L. André of the Major Frauds Section.
Hollywood Hills Man Arrested on Federal Charges of Selling Fentanyl-Laced Pills to Rapper Mac Miller Two Days before His Overdose DeathRead the Press Release
COMPLAINTLOS ANGELES – A Hollywood Hills resident was arrested this morning on federal charges alleging that he sold counterfeit pharmaceutical narcotics containing fentanyl to Mac Miller two days before the hip-hop artist died of a drug overdose.
Cameron James Pettit, 28, was arrested this morning by special agents with the Drug Enforcement Administration and officers with the Los Angeles Police Department. Pettit is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles.
Pettit was arrested pursuant to a criminal complaint filed last Friday that charges him with one count of distribution of a controlled substance.
According to the affidavit in support of the criminal complaint, Pettit and others distributed narcotics to 26-year-old Malcolm James McCormick – who recorded and performed under the name Mac Miller – approximately two days before McCormick suffered a fatal drug overdose in Studio City on September 7, 2018. The Los Angeles County Medical Examiner-Coroner later determined that McCormick died of mixed drug toxicity involving fentanyl, cocaine and alcohol.
According to communications detailed in the affidavit, late on the night of September 4, Pettit agreed to supply McCormick with 30 milligram oxycodone pills, as well as cocaine and the sedative Xanax. But, instead of providing McCormick with genuine oxycodone when he made the delivery during the early morning hours of September 5, Pettit allegedly sold McCormick counterfeit oxycodone pills that contained fentanyl – a powerful synthetic opioid that is 50 times more potent than heroin.
Two days after Pettit allegedly supplied McCormick with the fentanyl-laced pills, McCormick died in his Studio City home. The affidavit states that that hours after news outlets reported McCormick’s death, Pettit sent a message to a friend saying, “Most likely I will die in jail.”
Investigators believe that McCormick died after snorting the counterfeit oxycodone pills containing fentanyl and that those pills had been provided by Pettit, according to the affidavit. While another individual allegedly supplied McCormick with other drugs prior to his death, according to the affidavit those narcotics drugs did not contain fentanyl.
“Fentanyl disguised as a genuine pharmaceutical is a killer – which is being proven every day in America,” said United States Attorney Nick Hanna. “Drugs laced with cheap and potent fentanyl are increasingly common, and we owe it to the victims and their families to aggressively target the drug dealers that cause these overdose deaths.”
“While the death of any victim of the opioid epidemic is tragic, today’s arrest is another success for the DEA’s HIDTA Fusion Task Force,” said DEA Los Angeles Deputy Special Agent in Charge Daniel C. Comeaux. “Let our message be clear, if you peddle illegal drugs and kill someone, the DEA will be the voice of the victim. We will not rest until you face the justice system.”
If convicted of the drug trafficking charge alleged in the complaint, Pettit would face a statutory maximum sentence of 20 years in federal prison.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The ongoing investigation in this matter is being conducted by the High Intensity Drug Trafficking Area’s (HIDTA) Opioid Response Team, which operates under the direction of the DEA. The Los Angeles Police Department provided substantial assistance in this matter.
This case is being prosecuted by Assistant United States Attorney Matthew J. Jacobs of the General Crimes Section.
Riverside County Tax Preparer Pleads Guilty to Charges of Cheating IRS Out of $2.1 Million through Filing of Hundreds of Bogus ReturnsRead the Press Release
LOS ANGELES – An Inland Empire income tax return preparer pleaded guilty today to federal criminal charges for defrauding the Internal Revenue Service out of more than $2.1 million by submitting false tax returns on his clients’ behalf, including obtaining child tax credits for childless clients.
Dennis L. Reed II, 31, of Hemet, pleaded guilty to two counts of aiding and assisting in the preparation of false income tax returns. United States District Judge Otis D. Wright II scheduled a December 2 sentencing hearing, at which time Reed will face a statutory maximum sentence of six years in federal prison.
Reed admitted in his plea agreement that, from 2014 through 2019, he prepared hundreds of federal and state income tax returns containing false claims designed to generate or increase fraudulent tax refunds. The fraudulent tax returns falsely claimed, for example, that the taxpayers had dependents, operated a sole proprietorship, or were entitled to receive credits for certain educational expenses.
For example, Reed admitted he prepared at least 384 returns that falsely stated that the client had earned income from Schedule C sole proprietorships, which are tax forms used by the self-employed to report business profits or losses. In reality, Reed knew his clients did not work at all during the year, had not earned income, and were not required to file an income tax return, the plea agreement states. On at least 79 tax returns, Reed admitted he created phantom business income or losses and claimed false dependents on clients’ tax returns in order to generate tax refunds to which the clients weren’t entitled. On at least 114 tax returns, Reed falsely claimed that the clients had educational expenses that resulted in refunds to which they weren’t entitled.
Though Reed prepared federal income tax returns for clients, he did not sign their returns to identify himself to the IRS as the returns’ preparer, but rather stated on the tax returns that they were “self-prepared,” the plea agreement states. Reed admitted that he charged clients between $350 and $1,350 to prepare and file income tax returns.
The false tax returns Reed prepared resulted in a loss of $2,158,337 to the IRS, according to the plea agreement.
This matter was investigated by IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorney Valerie L. Makarewicz of the Major Frauds Section.
Santa Fe Springs ‘Shotcaller’ and Mexican Mafia Member Convicted of Racketeering, Narcotics Offenses, and 2016 Murder of Rival GangsterRead the Press Release
LOS ANGELES – A Mexican Mafia member and “shotcaller” of the Santa Fe Springs- and Whittier-based Canta Ranas street gang has been found guilty by a federal jury of multiple crimes resulting from his control of a wide-ranging racketeering criminal enterprise, including the murder of a rival Mexican Mafia member at a San Gabriel Valley restaurant.
Jose Loza, 40, the lead defendant in a 2016 federal grand jury indictment charging 51 Canta Ranas members and associates, was convicted Thursday afternoon of 12 felonies. Canta Ranas is a multi-generational criminal enterprise engaged in murder, attempted murder, assault, extortion, money laundering, and drug distribution.
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.
United States District Judge Virginia A. Phillips has scheduled a December 16 sentencing hearing, at which time Loza will face a mandatory sentence of life in federal prison stemming from his conviction for the murder alone.
According to the evidence presented at Loza’s month-long trial, 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, according to trial evidence.
In addition to implementing Gavaldon’s orders, Loza murdered Dominic Gonzales, 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, Gonzales was shot six times, including to the head and chest, his bodyguard was severely wounded, and an innocent restaurant patron was wounded, receiving six gunshots to the abdomen, back, buttocks, and legs.
In what’s believed to be a first-time occurrence, Loza as well as other Mexican Mafia members and high-level associates of the prison gang, including a death row inmate from San Quentin, took the unusual step of testifying about the gang’s existence, activities, and power both inside and outside prison systems.
Prosecutors have secured more than 40 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 51 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.
Loza’s accomplice in the 2016 murder, Leonardo Antolin, 25, of Whittier, pleaded guilty to five felonies in this case and has agreed to a prison sentence of 33 years to 40 years in federal prison. His sentencing hearing is scheduled for September 23.
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 matter is being prosecuted by Assistant United States Attorney Carol Alexis Chen, Chief of the International Narcotics, Money Laundering, and Racketeering Section, and Assistant United States Attorneys Victoria A. Degtyareva and Kathy Yu, also of the International Narcotics, Money Laundering, and Racketeering Section.
L.A. County Man Arrested on Federal Complaint Charging Him with Transporting Teenager Across State Lines to Engage in ProstitutionRead the Press Release
SANTA ANA, California – A Los Angeles County man has been arrested on a federal criminal complaint charging him with transporting a teenage girl in interstate commerce so she could work as a prostitute in Southern California, Nevada and Arizona.
Christian Alexander Augustus, 23, a.k.a. “Sir Ceeco,” was arrested in Stockton on Tuesday. He made his initial appearance in United States District Court in Sacramento on August 28, and was ordered detained pending trial. He remains in federal custody in Sacramento and will be transferred to this district at a later date to face the charges against him.
According to an affidavit filed Monday with the criminal complaint in this case, the victim was a 16-year-old runaway from Orange County who met Augustus in Los Angeles in December 2018 and he had been her trafficker until she fled from him in July 2019. Prior to the victim fleeing, Augustus allegedly took her to Los Angeles, Santa Ana, Las Vegas and Phoenix, where she worked for him as a prostitute and would give him all the money she made. Augustus forced the victim to work on the streets and advertised her services on the internet, the affidavit states
The victim said Augustus would beat her for not bringing him enough money and later for attempting to flee, according to the affidavit. The victim said when she tried to flee Augustus in Phoenix on July 1, he beat her so severely that she suffered two black eyes, a bruised rib, and swelling to face, the affidavit states. The victim fled Augustus on July 8 and said he later contacted her and threatened to kill her and her family, according to the affidavit.
If convicted of the charge, Augustus would face a statutory maximum sentence of life in federal prison and a mandatory minimum sentence of 10 years in federal prison.
A complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This matter was investigated by the Orange County Human Trafficking Task Force (OCHTTF), which is comprised of local law enforcement agencies, including U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the U.S. Attorney’s Office for the Central District of California. The Stockton Police Department and the Stockton HSI office provided substantial assistance to this case via their arrest of Augustus on Monday.
This case is being prosecuted by Assistant United States Attorney Jake D. Nare of the Santa Ana Branch Office.
The Orange County Human Trafficking Task Force core mission is to use a victim-centered and trauma-informed approach toward the goal of combating human trafficking in Orange County, making the recovery of juvenile victims its top priority.
Paralegal Arrested on Federal Grand Jury Indictment Alleging She Defrauded Clients of Immigration Law FirmsRead the Press Release
LOS ANGELES – A local paralegal was arrested today on a seven-count federal grand jury indictment charging her with defrauding clients of various immigration law firms by depositing payments for legal services and filing fees into her personal bank account, thus depriving clients of the legal services for which they had paid.
Tanya Garcia, 40, of Whittier, was arrested at her residence this morning. She has been charged with six counts of wire fraud and one count of aggravated identity theft. Garcia is scheduled to be arraigned on the charges this afternoon in United States District Court in Los Angeles.
According to the indictment, Garcia worked as a paralegal at various immigration law firms in Los Angeles and Riverside counties. The law firms assisted clients with matters such as obtaining asylum, relief from deportation, U.S. residence and citizenship, and work permits. From at least October 2014 until October 2018, Garcia collected payments from clients and represented the payments would be used for immigration-related legal services and filing fees. Garcia allegedly instructed the clients to leave the “pay to” line on money orders and checks blank.
Garcia then wrote her own name in the “pay to” line on the money orders and checks, and on multiple occasions, she crossed out “U.S. Department of Homeland Security” from the “pay to” line of money orders and wrote in her own name, the indictment alleges. Garcia allegedly deposited the payments into her personal bank accounts and used the money on personal expenses including her mortgage, credit card bills, and clothes.
When the immigration law firms’ clients realized they were not receiving any legal services after paying Garcia, she refused to permit the clients to speak to a licensed lawyer, according to the indictment. Garcia allegedly defrauded the immigration law firms and their clients out of approximately $181,344.
If convicted of all charges, Garcia would face a statutory maximum sentence of 122 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 United States Secret Service, the Inglewood Police Department, and the United States Postal Inspection Service.
This case is being prosecuted by Assistant United States Attorney Roger A. Hsieh of the Major Frauds Section and Brian R. Faerstein of the General Crimes Section.
O.C. Physician Assistant Arrested on Federal Charges Alleging He Wrote Opioid Prescriptions to Drug Dealers without Medical NeedRead the Press Release
SANTA ANA, California – A physician assistant who practiced at a Fountain Valley clinic was arrested today on an 11-count federal grand jury indictment charging him with conspiring to issue prescriptions for the highly addictive opioid painkiller oxycodone, without a medical purpose, to drug dealers in exchange for cash, knowing the drugs would be sold on the street.
Raif Wadie Iskander, 53, of Ladera Ranch, was arrested at his residence this morning. He is scheduled to make his initial court appearance this afternoon and he also will be arraigned on the charges in United States District Court in Santa Ana.
According to the indictment, from October 2018 until April 2019, Iskander wrote prescriptions for “patients” he had never met or examined, including an undercover law enforcement officer. Iskander allegedly provided to drug brokers multiple paper prescriptions that he had signed, but with the patient names left blank, to be filled in by the drug brokers later.
In exchange for cash, Iskander wrote fraudulent oxycodone prescriptions to co-defendants Johnny Gilbert Alvarez, 39, a.k.a. “M.J.,” of Santa Ana, and Adam Anton Roggero, 36, of Costa Mesa, who sold the prescribed drugs on the street as well as to an undercover officer, the indictment alleges.
All three defendants have been charged with one count of conspiracy. Iskander also has been charged with two counts of intentionally distributing oxycodone without a medical purpose. In addition to the conspiracy charge, Alvarez faces felony counts of illegally distributing methamphetamine, fentanyl, and oxycodone. Roggero also has been charged with two felony drug distribution counts.
If convicted of all charges, Iskander would face a statutory maximum sentence of 60 years in federal prison. Alvarez would face a statutory maximum sentence of life in prison and a mandatory minimum sentence of 10 years’ imprisonment. Roggero would face a statutory maximum sentence of 60 years in 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 Drug Enforcement Administration, the Costa Mesa Police Department, and the California Department of Health Care Services.
This case is being prosecuted by Assistant United States Attorney Rosalind Wang of the Santa Ana Branch Office.
FBI Arrests Manhattan Beach Man Facing Federal Charges Related to Movie Investment Scam that Cost Victims $14 MillionRead the Press Release
LOS ANGELES – A Manhattan Beach man surrendered this morning to face federal charges that allege he collected $14 million from investors who were falsely told their money would be used to produce a feature film that Netflix would distribute and would involve several notable Hollywood figures.
Adam Joiner, 41, is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles. A criminal complaint filed August 13 and unsealed this morning charges Joiner with wire fraud, money laundering and aggravated identity theft.
According to the affidavit in support of the complaint, Joiner used fake documents and forged signatures to raise millions of dollars from foreign investment firms based in South Korea and China for a project he said would be called “Legends,” which is described in court papers as “an anachronistic mash-up of legendary and historical figures from nineteenth century America, such as Davy Crockett, Calamity Jane, Paul Bunyan, and John Henry.”
Joiner, who operated a company called Dark Planet Pictures, LLC, allegedly defrauded Korea Investment Global Contents Fund, a South Korean investment fund whose assets are managed by Korean Investment Partners Co., Ltd. (KIP). The complaint also accuses Joiner of defrauding a Chinese investment firm called Star Century Pictures Co., Ltd. and a related company called PGA Yungpark Capital Ltd.
The scheme allegedly began in late 2015 when Joiner met a director of KIP and provided him a script for “Legends,” which Joiner said had been written by his brother. As KIP considered making an investment in the film, Joiner falsely told company representatives that Netflix had agreed to distribute the picture, a claim Joiner supported with a bogus distribution agreement that appeared to be signed by a Netflix executive, according to the complaint. After Joiner provided a copy of the purported distribution agreement, KIP agreed to invest $8 million in the project and, in April 2016, transferred the first half of the investment to Dark Planet Pictures.
During the investigation, FBI agents spoke to the Netflix executive who appeared to have signed the distribution agreement. That executive told the FBI that he had never heard of Joiner, his company or the “Legends” project, nor did he sign the purported distribution agreement, according to the affidavit.
Soon after KIP sent the $4 million to Dark Planet Pictures, Joiner entered into an agreement with the Chinese investors that was supported by the same bogus Netflix distribution agreement, according to the complaint affidavit. As a result of this fraudulent misrepresentation, Yungpark wired $6 million to Dark Planet Pictures in June 2016.
After receiving the initial $10 million from the victim investors, Joiner provided them with updates claiming that well known Hollywood figures – such as producer Don Murphy – had agreed to work on the project, the affidavit states. While Murphy was retained to produce the film and secure a distribution agreement, no distributor was identified, no talent was secured, and no director committed to the film, the complaint alleges. Murphy terminated his arrangement with Joiner in mid-2017.
In late 2016, Joiner allegedly told his investors that he had terminated the distribution agreement with Netflix and had secured a new agreement with Amblin Partners – all of which was bogus, according to executives at both companies. However, the new distribution agreement prompted the South Korean investors to complete their investment by wiring another $4 million to Dark Planet Pictures in early 2017, the complaint alleges.
Following this final wire transfer, Joiner provided a series of excuses to his investors as to why the project was not moving forward, according to the affidavit. He also allegedly provided a forged bank statement to the South Korean investors to prove that he could repay their investment. The FBI reviewed Dark Planet Pictures bank records and determined that more than $5 million of the investors’ money was used to purchase Joiner’s Manhattan Beach residence and another $4.3 million was transferred to a bank account that may be linked to another film in development linked to Joiner.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The charge of wire fraud carries a statutory maximum sentence of 20 years in federal and the money laundering offense could lead to a sentence of up to 10 years. The aggravated identity theft charge carries a mandatory two-year prison term.
This matter is being investigated by the FBI.
This case is being prosecuted by Assistant United States Attorney Alexander B. Schwab of the Major Frauds Section.
Orange County Man Sentenced to 17½ Years in Federal Prison for Selling Counterfeit Opioid Pills Laced with FentanylRead the Press Release
SANTA ANA, California – A Santa Ana man who admitted his role in a scheme that used fentanyl and other synthetic opioids to manufacture and sell counterfeit pharmaceutical pills designed to look like brand-name oxycodone pills was sentenced this morning to 210 months in federal prison.
Wyatt Pasek, 22, who lived in the penthouse of a luxury high-rise in Santa Ana until his arrest last year, was sentenced by United States District Judge James V. Selna.
Pasek – who used in the moniker “oxygod” when soliciting customers in online marketplaces, and posted images and videos of himself to social media platforms under the moniker Yung10x – pleaded guilty last November to participating in a narcotics-trafficking conspiracy, being a convicted felon in possession of a firearm, and money laundering.
Pasek “caused highly toxic drugs to be mixed into counterfeit pharmaceuticals at a clandestine laboratory in a highly populated residential and commercial area, the Newport Beach Peninsula, and sold the drugs in massive quantities for approximately one year,” prosecutors wrote in a sentencing memorandum filed with the court.
According to court documents, Pasek and two co-defendants obtained fentanyl and a similar drug called cyclopropyl fentanyl through internet from Chinese suppliers, used a pill press to make counterfeit pills, and distributed the narcotics through the mails, often arranging sales through a dark-net marketplace. Pasek also sold the counterfeit pills in hand-to-hand transactions.
The other two defendants in this case – Duc Cao, 22, of Orange, and Isaiah Suarez, 23, of Newport Beach – also pleaded guilty and were sentenced earlier this year by Judge Selna to 87 months and 37 months in federal prison, respectively.
“The defendants in this case played a direct role in fueling this nation’s opioid crisis,” said United States Attorney Nick Hanna. “The use of powerful drugs such as fentanyl in counterfeit pills intentionally made to look like less-lethal opioids demonstrates a complete disrespect for human life.”
When the three defendants were arrested in April 2018, authorities seized a pill press lab in Suarez’s apartment, along with bags that contained nearly 100,000 counterfeit oxycodone pills, hundreds of bogus Xanax pills, nearly six kilograms of fentanyl and fentanyl analogues, and bundles of cash.
During a six-month investigation led by the Drug Enforcement Administration, Internal Revenue Service – Criminal Investigation, and the Costa Mesa Police Department, authorities recovered blue pills stamped “A 215” that resemble 30 mg. oxycodone pills. In the weeks leading up the arrests in this case, investigators intercepted 20 packages that were being sent to Pasek’s customers.
“Had federal agents not intercepted these packages, they would have resulted in substantial counterfeit opioids containing fentanyl and fentanyl analogues to be distributed to New York, California, Massachusetts, Illinois, Texas, Florida, Nevada, Georgia, Utah, Virginia, Tennessee, North Carolina, Colorado, Alabama, and Nebraska,” according to the sentencing memo.
Pasek, who has three prior drug-related convictions, apologized during today’s hearing. “I know I have affected countless [people],” he said. “I can’t even imagine how much damage I have done.”
As part of his plea agreement, Pasek agreed to forfeit to the government a number of items seized in relation to his arrest in April 2018: more than $21,000 in cash; jewelry, including a Silver Royal Offshore watch with diamonds, and a gold and diamond Bitcoin necklace; two gold bars seized from his mother’s residence; and thousands of dollars in cryptocurrency/Bitcoin he possessed in his Blockchain wallet.
This matter was investigated by the Drug Enforcement Administration, IRS Criminal Investigation, the Costa Mesa Police Department, the United States Postal Inspection Service, the Food and Drug Administration – Office of Criminal Investigations, the United States Marshals Service, and the Federal Bureau of Investigation.
This case was prosecuted by Assistant United States Attorney Brett A. Sagel of the Santa Ana Branch Office.
Ex-Chairman for Christian Science Church in Los Angeles Arrested on Indictment Alleging $11.5 Million Bank and Wire FraudRead the Press Release
LOS ANGELES – The former chairman of the board for the Fifth Church of Christ, Scientist, of Los Angeles was arrested today on a federal grand jury indictment charging him with fraud for stealing more than $11 million in church money and using it to purchase a home, a membership at Disneyland’s exclusive dining club, and other personal expenses.
Charles Thomas Sebesta, 54, of Huntington Beach, is expected to make his initial court appearance this afternoon in United States District Court in Los Angeles. Sebesta has been charged with six counts of wire fraud, five counts of bank fraud and two counts of aggravated identity theft.
According to the indictment unsealed today, Sebesta was hired in 2001 as the church’s facilities manager and ultimately joined the church in 2005 and served as its local chairman. In this capacity, he had control over the church’s financial assets and operations, including at least five of its bank accounts, the indictment states.
From at least August 2006 through December 2016, Sebesta allegedly caused the church to make checks and other payments to fictitious companies for which he had opened bank accounts, as well as to accounts in his own name and in the names of his family members. To further conceal these payments, Sebesta allegedly 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, and he siphoned a significant majority of the proceeds for his personal use, including purchasing a home with $2,019,000 in cashier’s checks drawn from church bank accounts, the indictment alleges. Sebesta falsely recorded his thefts in church records as “donations,” as well as environmental remediation and other payments to fictitious companies which Sebesta named so that they appeared legitimate, the indictment states.
In June 2010, Sebesta allegedly used stolen church funds to purchase a membership at Club 33, Disneyland’s exclusive dining club, where he hosted high-profile entertainment companies, including professional sports teams, and their employees.
In 2009 and 2010, Sebesta allegedly wired $1.86 million and $309,622 in church money toward 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.
Among other concealments and deceptions, the indictment also alleges that Sebesta deceived fellow church members and others by creating fictitious email accounts, including in the name of a prominent real estate executive, whom Sebesta impersonated to further his scheme.
In total, Sebesta stole at least $11,438,213 of church assets and also stole $34,032 from a private high school that also employed him, according to the indictment.
If convicted of all charges, Sebesta would face a statutory maximum sentence of more than 250 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 United States Secret Service.
This case is being prosecuted by Assistant United States Attorney Adam P. Schleifer of the Major Frauds Section.
Westwood Man Agrees to Plead Guilty to Federal Narcotics, Money Laundering Charges for Running Unlicensed Bitcoin Exchange and ATMRead the Press Release
LOS ANGELES – A Westwood man has agreed to plead guilty to federal criminal charges for owning and operating an unlicensed money transmitting business where he exchanged up to $25 million in cash and virtual currency for individuals, including Darknet drug dealers and other criminals, some of whom used his Bitcoin ATM kiosk.
Kunal Kalra, 25 – who was also known as “Kumar,” “shecklemayne” and “coinman” – was charged today in a four-count criminal information filed in United States District Court and is expected to make his initial court appearance next month. Pursuant to a plea agreement also filed today, Kalra agreed to plead guilty to four felonies: distribution of methamphetamine, operating an unlicensed money transmitting business, laundering of monetary instruments, and failure to maintain an effective anti-money laundering program.
This is believed to be the first federal criminal case charging an unlicensed money remitting business that used a Bitcoin kiosk.
According to the court documents, from May 2015 through October 2017, Kalra knowingly operated a virtual currency exchange business where he exchanged U.S. dollars for Bitcoin and vice versa. Kalra charged commissions for exchanging dollars for Bitcoin, and he only dealt with high-volume customers willing to exchange at least $5,000 per transaction. Kalra admitted in his plea agreement that he exchanged Bitcoin for cash from criminals, including those who received Bitcoin from selling narcotics on the Darknet.
Kalra established bank accounts in the names of others, including fake businesses, which allowed him, for a time, to conceal his illicit business activities, court papers state. Kalra also admitted to operating a kiosk – essentially an ATM – where his customers could exchange Bitcoin for cash and vice versa. Kalra profited from every transaction conducted on the ATM. Customers who sought to do an exchange using this ATM were not required to provide their identities and Kalra did not install a camera or implement any features requiring customers to identify themselves, the plea agreement states.
Kalra also admitted that in 2017 he exchanged approximately $400,000 in cash for Bitcoin for an undercover agent who contacted him online and later met him in person on multiple occasions at a coffee shop in Los Angeles. The undercover agent told Kalra that his virtual currency were proceeds of drug trafficking, and Kalra continued with various transactions, according to the plea agreement.
In June 2017, Kalra sold nearly two pounds of methamphetamine to an undercover law enforcement official in exchange for $6,000. Kalra and the undercover agent later met at a coffee shop in Signal Hill to exchange $50,000 in Bitcoin for cash, which the undercover agent represented to Kalra was the proceeds of the sales of the methamphetamine that Kalra had sold to the agent, the plea agreement states.
Law enforcement seized nearly $889,000 in cash from Kalra’s bank accounts and vehicle, as well as approximately 54.3 Bitcoin and other cryptocurrencies.
The maximum possible sentence Kalra could receive for these charges is life in federal prison.
Kalra also faces federal criminal charges in San Antonio, Texas, that were filed earlier this month. That case alleges Kalra conspired to commit money laundering for a drug trafficking network that sold fraudulent prescription tablets, including some laced with methamphetamine and fentanyl. In the plea agreement filed today, Kalra agreed to plead guilty to those charges in Los Angeles federal court.
This matter was investigated by the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Postal Inspection Service, IRS Criminal Investigation, and the Los Angeles Police Department. The Federal Bureau of Investigation assisted with the investigation.
This case is being prosecuted by Assistant United States Attorney Puneet V. Kakkar of the International Narcotics, Money Laundering, and Racketeering Section.
Massive International Fraud and Money Laundering Conspiracy Detailed in Federal Grand Jury Indictment that Charges 80 DefendantsRead the Press Release
IndictmentLOS ANGELES – A 252-count federal grand jury indictment unsealed today charges 80 defendants, most of whom are Nigerian nationals, with participating in a massive conspiracy to steal millions of dollars through a variety of fraud schemes and launder the funds through a Los Angeles-based money laundering network.
The indictment was unsealed after law enforcement authorities this morning arrested 14 defendants across the United States, with 11 of those arrests taking place in the Los Angeles region. Two defendants were already in federal custody on other charges, and one was arrested earlier this week. The remaining defendants are believed to be abroad, with most them located in Nigeria.
The indictment alleges that the 80 defendants and others used various online fraud schemes – including business email compromise (BEC) frauds, romance scams, and schemes targeting the elderly – to defraud victims out of millions of dollars. According to a criminal complaint also unsealed today, co-conspirators based in Nigeria, the United States and other countries contacted the lead defendants in the indictment – Valentine Iro, 31, of Carson, and Chukwudi Christogunus Igbokwe, 38, of Gardena, both Nigerian citizens – for bank and money-service accounts that could receive funds fraudulently obtained from victims. Once members of the conspiracy convinced victims to send money under false pretenses, Iro and Igbokwe coordinated the receipt of funds and oversaw an extensive money-laundering network, according to the 145-page indictment.
The indictment and criminal complaint allege that Iro and Igbokwe, who were among those arrested this morning, were involved in schemes resulting in the fraudulent transfer of at least $6 million in fraudulently-obtained funds – and the overall conspiracy was responsible for the attempted theft of at least an additional $40 million.
The fraudsters targeted victims in the United States and across the globe, including individuals, small and large businesses, and law firms. Some of the victims of the conspiracy lost hundreds of thousands of dollars to fraud schemes, and many were elderly.
“This case is part of our ongoing efforts to protect Americans from fraudulent online schemes and to bring to justice those who prey upon American citizens and businesses,” said United States Attorney Nick Hanna. “Today, we have taken a major step to disrupt criminal networks that use BEC schemes, romance scams and other frauds to fleece victims. This indictment sends a message that we will identify perpetrators – no matter where they reside – and we will cut off the flow of ill-gotten gains.”
“Today’s announcement highlights the extensive efforts that organized criminal groups will engage in to perpetrate BEC schemes that target American citizens and their hard-earned assets,” said Assistant Director in Charge Paul Delacourt of the FBI’s Los Angeles Field Office. “Billions of dollars are lost annually, and we urge citizens to be aware of these sophisticated financial schemes to protect themselves or their businesses from becoming unsuspecting victims. The FBI is committed to working with our partner agencies worldwide to continue to identify these cyber criminals and to dismantle their networks.”
Iro and Igbokwe essentially were brokers of fraudulent bank accounts. According to the indictment, Iro and Igbokwe collected bank accounts, fielded requests for bank account information, provided that information to co-conspirators around the world, and laundered the money obtained from victims – all of this in exchange for a cut of the money stolen from victims of the various fraud schemes.
If a bank account with a specific business name was required to trick a business-victim into making a payment, Iro and Igbokwe often coordinated with “money mules” to open accounts that could receive funds obtained, according to court documents. In addition to making the fake business name mirror the name of a legitimate company, members of the conspiracy routinely filed fictitious business name statements with the Los Angeles County Registrar/Recorder’s Office that were presented to banks when the fraudulent accounts were opened.
Once a victim deposited funds into a bank account or a money services account, Iro and Igbokwe allegedly coordinated with others to further launder the funds. Members of the conspiracy sometimes wired funds to other bank accounts under their control; in other cases, they simply withdrew funds as cash or negotiable instruments such as cashier’s checks.
When stolen funds were withdrawn as cash, the defendants frequently used illicit money exchangers to move funds overseas, generally avoiding transferring the funds directly through banking institutions, the indictment alleges. To do this, Iro and Igbokwe coordinated the transfer of a victim’s funds from a fraudulent bank account they controlled to U.S. bank accounts belonging to illicit money exchangers. Those money exchangers, in turn, used a Nigerian banking application to transfer other funds in naira (₦), the currency of Nigeria, from Nigerian bank accounts they controlled to the Nigerian bank accounts specified by Iro and Igbokwe. This method was used to transfer millions of dollars to Nigerian co-conspirators without directly transferring funds overseas. The indictment alleges that Jerry Ikogho, 50, of Carson (who was taken into custody on Sunday), and Adegoke Moses Ogungbe, 34, of Fontana, were among those who served as illicit money exchangers for the conspiracy.
Each of the 80 defendants named in the indictment is charged with conspiracy to commit fraud, conspiracy to launder money, and aggravated identity theft. A number of the defendants also face substantive fraud and money laundering charges.
Additionally, Iro, Igbokwe, Ikogho, Ogungbe and three other defendants –Izuchukwu Kingsley Umejesi, 30, of Los Angeles, Tityaye Marina Mansbangura, 33, of Palmdale, and Obi Madekwe, 31, of Nigeria – are charged with operating illegal money transmitting businesses. Ogungbe and Mansbangura were also among those arrested this morning, and Umejesi is a fugitive currently being sought by authorities.
Iro, Igbokwe and Chuks Eroha, 39, face additional charges for attempting to destroy their phones when the FBI executed a search warrant in July 2017. Iro also is charged with lying to the FBI in an interview conducted during the search. The complaint alleges that, when the FBI arrived to conduct the court-authorized search at Iro’s apartment in Carson, Iro broke his phone in half, while Igbokwe and Eroha threw phones from a bedroom window of the apartment. While Iro claimed he previously had broken the phone during an argument with his wife, the complaint details how the FBI was able to determine that the phone was operational until seconds after the FBI knocked on Iro’s apartment door to execute the search warrant. Eroha is believed to have fled to Nigeria shortly after the FBI executed the warrant.
The charges contained in the criminal complaint and indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty in court.
This investigation is being led by the Federal Bureau of Investigation.
The Los Angeles County District Attorney’s Office, the Los Angeles County Sheriff’s Department, and the U.S. Department of State’s Diplomatic Security Service (DSS) provided substantial assistance during the investigation.
Several agencies provided support during today’s takedown or during the investigation, including the United States Postal Inspection Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, U.S. Citizenship and Immigration Services, U.S. Customs and Border Protection, the Ventura County District Attorney’s Office and the California Franchise Tax Board.
Many of the FBI’s Legal Attachés provided assistance throughout this investigation, as did the Criminal Division’s Office of International Affairs, and foreign authorities around the world. In particular, the FBI and U.S. Attorney’s Office thank the National Crime Agency in the United Kingdom and the Public Prosecutor’s Office of Osnabrück, Germany for their contributions.
This case is being prosecuted by Assistant United States Attorneys Anil J. Antony and Joseph B. Woodring of the Cyber and Intellectual Property Crimes Section.
The FBI in 2017 issued a report on the rise of BEC schemes, and published a recap of 2018’s Operation WireWire, which was an international effort to disrupt international BEC scams. An FBI public service announcement that warns of the dangers of BEC schemes encourages businesses to “trust but verify.”
Two Los Angeles Pharmacy Owners Found Guilty in Multimillion-Dollar Health Care Fraud and Money Laundering SchemeRead the Press Release
A federal jury found two Los Angeles pharmacy owners guilty yesterday for their participation in a $35 million health care fraud and money laundering scheme to bill Medicare for medications that were never provided and to launder the proceeds of the fraud.
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 Kurt Mueller of the California Department of Justice made the announcement.
After an 11-day trial, Aleksandr Suris, 51, and Maxim Sverdlov, 44, both of Sherman Oaks, California, were found guilty of one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering. Suris was also found guilty of one additional count of conspiracy to commit health care fraud and six additional counts of health care fraud. Both defendants were found not guilty of three counts of healthcare fraud. Sentencing has been scheduled for Nov. 18, 2019, before U.S. District Court Judge S. James Otero of the Central District of California, who presided over the trial.
According to the evidence presented at trial, from 2012 to 2015, Suris and Sverdlov fraudulently billed Medicare and CIGNA for prescription medications that were not actually dispensed to beneficiaries by the pharmacy they owned, Royal Care Pharmacy (Royal Care). In order to hide the fraud, Suris and Sverdlov obtained fake invoices from a co-conspirator to make it appear as if Royal Care had purchased the medicines it had billed Medicare for when it had not. The evidence further established that Suris and Sverdlov also used these fake invoices to launder the proceeds of the fraud through the co-conspirator.
This case was investigated by the HHS-OIG, 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. Assistant Chief Daniel J. Griffin and Trial Attorney Robyn N. Pullio of the Fraud Section are prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 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.
Canadian National Who Ran ‘Grandparent Scam’ that Swindled U.S. Senior Citizens Sentenced to More Than 4 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Canadian telemarketer has been sentenced to 51 months in federal prison for conning American senior citizens out of their money by impersonating their grandchildren over the telephone and asking for financial help to get their purportedly distressed relatives out of trouble in a foreign country.
Kelen Magael Buchan, 27, of Westphal, Nova Scotia, was sentenced on Tuesday by United States District Judge Cormac J. Carney, who noted Buchan’s lead role in the scheme and said he may not have seen a fraud case “so cruel and heartless” in design. In addition to the prison term, Judge Carney ordered Buchan to pay $519,400 in restitution to more than 80 victims.
Buchan pleaded guilty on May 21 to one felony count of wire fraud. Buchan – who has been in federal custody, along with three co-defendants, since they were extradited from Canada in January – admitted in his plea agreement that he and his co-conspirators contacted their elderly U.S. victims by telephone. Buchan and his co-conspirators fraudulently induced their victims to send them money by pretending to be the victim’s grandchild or some other relative who was in distress in a foreign nation, such as Canada, Mexico, Bolivia, or the Dominican Republic.
For example, Buchan, while pretending to be the victim’s grandchild, would say that he had been involved in a car crash and needed money to cover purported automobile accident expenses. On other occasions, Buchan, once again pretending to be the victim’s grandchild, said that he had been arrested and needed his grandparents’ money to be released on bail. Other times, Buchan lied to his victims by telling them that he was a lawyer in contact with their grandchild or other relative. He then would direct the victims 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, Buchan 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, Buchan 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.
Buchan admitted in his plea agreement that in February 2012 that one of the scheme’s targeted victims was a Camarillo resident.
One of the scheme’s other victims was an 86-year-old man who wired $4,300 at the urgings of an imposter posing as the man’s grandson who claimed to have been involved in an accident in Bolivia, according to court documents. Law enforcement later found the victim’s contact information in Buchan’s residence and the transaction information was recovered from a phone seized from Buchan’s bedroom, court papers state.
A federal grand jury charged Buchan and four Canadian nationals from the Montreal area in July 2013 in a 25-count indictment alleging wire fraud. Agiyl Kamaldin, 32, pleaded guilty on May 23 to one count of wire fraud and is scheduled to be sentenced by Judge Carney on September 9. He faces up to 20 years in federal prison.
Co-defendants Clifford Kirstein, 29, and Mark El Bernachawy, 33, are scheduled to go to trial in this matter on December 3.
Peter Iacino, 29, also was charged in the indictment and is a fugitive believed to be in Canada.
This matter was investigated by the Federal Bureau of Investigation, the United States Secret Service, and the Royal Canadian Mounted Police. 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.
Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. In addition to a nationwide elder fraud sweep earlier this year, the Department has conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.
The U.S. Attorney’s Office for the Central District of California is one of six federal prosecutorial 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.
Man Taken into Custody after Being Charged with Illegally Exporting Prohibited Manufacturing Equipment to IranRead the Press Release
LOS ANGELES – Federal authorities have arrested a resident of Iran who is charged in a scheme to ship prohibited items from the United States to Iran, in violation of the International Emergency Economic Powers Act (IEEPA) and U.S. sanctions imposed on the nation.
Mehdi Hashemi, who sometimes used the name “Eddie Hashemi,” 46, a dual citizen of the United States and Iran who previously resided in Los Angeles, is charged in a 21-count indictment that was unsealed Monday afternoon.
Hashemi allegedly participated in a conspiracy to illegally export to Iran computer numerical control (CNC) machines, which are used to process raw materials, such as metals, to precise standards. The CNC machines at issue in this case are export-controlled for nuclear non-proliferation and anti-terrorism reasons.
After being taken into custody on Sunday after arriving at Los Angeles International Airport on a flight from Turkey, Hashemi was arraigned on the indictment late Monday afternoon. He entered not guilty pleas, was ordered held without bond, and a trial date was scheduled for October 15.
The indictment outlines a scheme in which Hashemi purchased CNC machines and related equipment from suppliers in the United States and Canada, made arrangements to ship the machines to the United Arab Emirates under false and forged invoices and packing lists, and then arranged to forward the machines from the UAE to Iran. Hashemi purchased the machines on behalf of a Tehran-based company identified in the indictment as “Company A,” an outfit that claimed to manufacture textiles, medical and automotive components, and spare parts.
The indictment outlines illegal shipments of CNC machines and related equipment to the UAE and alleges that Hashemi knew and intended for them to be forwarded to Iran. The indictment also alleges that Hashemi attempted to export CNC machines on several occasions, including two attempts through the Port of Long Beach.
Hashemi also is charged with making false statements to federal authorities in 2018 when he lied about his activities, his knowledge of federal export laws and his intention to send the CNC machines to Iran.
The indictment charges Hashemi with conspiring to violate IEEPA, violating IEEPA, smuggling, money laundering, unlawful export information activities, and making false statements.
A second defendant charged in the indictment – Feroz Khan, of the United Arab Emirates, who allegedly helped to ship CNC machines from the UAE to Iran – is a fugitive.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If he were to be convicted of the 21 charges in the indictment, Hashemi would face a statutory maximum penalty of 320 years in federal prison.
The case is being investigated by the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, which has received significant assistance from U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and U.S. Customs and Border Protection.
This case is being prosecuted by Assistant United States Attorney George E. Pence IV of the Terrorism and Export Crimes Section.
Arms Trafficker Convicted in Anti-Aircraft Missiles Scheme and of Other Arms Offenses Sentenced to 30 Years in Federal PrisonRead the Press Release
LOS ANGELES – A black-market arms dealer with a long history of brokering machine guns, rocket-propelled grenades and anti-tank armaments – and who was found guilty last year in a scheme to sell and use surface-to-air missiles – has been sentenced to 30 years in federal prison.
Rami Najm Asad-Ghanem, 53, who was commonly known as Rami Ghanem, a naturalized United States citizen who was living in Egypt at the time of the offenses, was sentenced Monday by United States District Judge S. James Otero.
During Monday’s sentencing hearing, Judge Otero said, “The breadth, scope and gravity [of Ghanem’s offenses] is really breathtaking and, in many ways, frightening.”
Following a nine-day trial last November, a federal jury found Ghanem guilty of conspiring to use and to transfer missile systems designed to destroy aircraft. The day before his trial started, Ghanem pleaded guilty to six other federal crimes stemming from his arms-trafficking activities, including the unlicensed export of weapons and ammunition, smuggling, money laundering, and unlicensed arms brokering.
The evidence presented at last year’s trial showed that Ghanem conspired to transfer a wide array of surface-to-air missile systems to customers around the world, including clients in Libya, the United Arab Emirates, Iraq, and the leadership of Hezbollah, a designated foreign terrorist organization. During the trial, prosecutors showed that he conspired to use Russian-made Igla and Strela surface-to-air missile systems by brokering the services of mercenary missile operators to a militant faction in Libya in 2015. Among other actions, Ghanem negotiated the salaries and terms of service of the mercenary missile operators, coordinated their payment, facilitated their travel to Libya, confirmed their arrival and performance of duties, and offered them a $50,000 bonus if they were successful in their mission of shooting down airplanes flown by the internationally recognized government of Libya. In addition to numerous documents that demonstrated Ghanem’s role in the conspiracy, the jury viewed videos of sworn deposition testimony of two missile operators and Ghanem’s fellow arms broker who assisted in procuring their services for this transaction.
“This defendant brokered a wide array of military-grade weapons, which endangered civilians around the world and put at risk America’s national security interests, including members of our armed services,” said United States Attorney Nick Hanna. “Mr. Ghanem was literally a merchant of death who was ready, willing and able to sell weapons, including surface-to-air missiles, to any paying customer, with zero concern for the death and destruction these weapons might cause. As a result of his conduct, the sentence imposed in this case is appropriate and richly deserved.”
“This lengthy sentence is well deserved and, unfortunately, demonstrates the sheer breadth of criminal activity engaged in by those who oppose us,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “Counter-proliferation investigations are the highest priority for HSI – and we remain steadfastly committed to working with our domestic and international law enforcement partners to pursue transnational criminal networks intent on committing acts of terrorism against the United States.”
HSI’s Los Angeles Counter-Proliferation Investigations Center began the investigation into Ghanem in mid-2014, when a Los Angeles-based company alerted HSI that it had been solicited to provide military equipment to Ghanem. During an undercover operation, an HSI agent developed a relationship with Ghanem, who was seeking to procure a number of armaments – including sniper rifles and night-vision optics. During discussions with the undercover agent, Ghanem affirmed that the transactions were being conducted “illegally” and had to be “under the table.” During subsequent meetings with the undercover operative in Greece, Ghanem expressed an interest in purchasing helicopters and fighter jets on behalf of Iranian clients, and Ghanem said he had relationships with Hezbollah in Iraq.
Over the course of several months in 2015, Ghanem discussed his interest in purchasing numerous weapons, and in August 2015 placed an order for $220,000 worth of sniper rifles, pistols, silencers, laser sights, ammunition, night-vision googles and other items that were to be shipped to Libya. After making two down payments, Ghanem was arrested on December 8, 2015, in Athens. He was extradited to the United States in April 2016 to face prosecution in this case and has remained in custody without bond since the time of his arrest.
After his arrest, authorities seized numerous digital devices that Ghanem had in his possession. Searches of those devices revealed evidence of other large-scale arms brokering activities, including millions of rounds of ammunition, anti-tank missiles, and the scheme to transfer and use anti-aircraft missiles.
In documents filed in relation to the sentencing hearing, prosecutors offered evidence of a contract documenting Ghanem’s agreement to sell $250 million worth of weapons and ammunition to a militant faction in Libya; a contract between Ghanem and the Egyptian Ministry of Defense dealing with hundreds of rocket-propelled grenade launchers; attempts to buy and sell combat jets and helicopter gunships; and his apparent role in the trafficking of counterfeit currency, looted antiquities and black-market diamonds.
“Protecting America’s warfighters and preserving our national security interests by ensuring that Department of Defense assets and technologies do not end up in the hands of those that seek to do harm to our country or our foreign allies is a critical component of the Defense Criminal Investigative Service's mission,” said Bryan D. Denny, the Special Agent in Charge of the DCIS Western Field Office. “Ghanem’s sentencing reflects the seriousness of the crimes he committed against the United States, and serves as a cautionary tale to others considering or engaging in similar illegal activities. Without question, the exceptional collaboration between the U.S. Attorney's Office, Homeland Security Investigations, the Office of Export Enforcement, and DCIS led to Ghanem’s successful prosecution and sentencing, despite the inherent complexities in detecting, investigating, and prosecuting illegal international arms-trafficking matters.”
“This sentence is the result of outstanding collaborative investigative work by the Office of Export Enforcement and its law enforcement partners to combat the illegal shipment of sophisticated technology. We will continue to aggressively pursue violators wherever they may be,” said Richard Weir, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Los Angeles Field Office.
The investigation in this case was led by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, which received substantial assistance from the Department of Defense’s Criminal Investigative Service; the Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and the Hellenic National Police; the Hellenic Financial and Economic Crimes Unit; and U.S. Customs and Border Protection. The Justice Department’s Office of International Affairs of the Department’s Criminal Division provided significant support in the investigation and securing the defendant’s extradition from Greece.
This case was prosecuted by Assistant United States Attorneys Melissa J. Mills and George E. Pence IV of the Terrorism and Export Crimes Section in the United States Attorney’s Office, and by Trial Attorney Christian E. Ford of the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.
Arms Trafficker Convicted in Anti-Aircraft Missiles Scheme and Other Arms Offenses Sentenced to 30 Years in Federal PrisonRead the Press Release
A black-market arms dealer with a long history of brokering machine guns, rocket-propelled grenades and anti-tank armaments – and who was found guilty last year in a scheme to sell and use surface-to-air missiles – was sentenced yesterday to 30 years in federal prison.
Rami Najm Asad-Ghanem, 53, who was commonly known as Rami Ghanem, a naturalized United States citizen who was living in Egypt at the time of the offenses, was sentenced by U.S. District Judge S. James Otero.
During this morning’s sentencing hearing, Judge Otero said, “The breadth, scope and gravity [of Ghanem’s offenses] is really breathtaking and, in many ways, frightening.”
Following a nine-day trial last November, a federal jury found Ghanem guilty of conspiring to use and to transfer missile systems designed to destroy aircraft. The day before his trial started, Ghanem pleaded guilty to six other federal crimes stemming from his arms-trafficking activities, including the unlicensed export of weapons and ammunition, smuggling, money laundering, and unlicensed arms brokering.
The evidence presented at last year’s trial showed that Ghanem conspired to transfer a wide array of surface-to-air missile systems to customers around the world, including clients in Libya, the United Arab Emirates, Iraq, and the leadership of Hezbollah, a designated foreign terrorist organization. During the trial, prosecutors showed that he conspired to use Russian-made Igla and Strela surface-to-air missile systems by brokering the services of mercenary missile operators to a militant faction in Libya in 2015. Among other actions, Ghanem negotiated the salaries and terms of service of the mercenary missile operators, coordinated their payment, facilitated their travel to Libya, confirmed their arrival and performance of duties, and offered them a $50,000 bonus if they were successful in their mission of shooting down airplanes flown by the internationally recognized government of Libya. In addition to numerous documents that demonstrated Ghanem’s role in the conspiracy, the jury viewed videos of sworn deposition testimony of two missile operators and Ghanem’s fellow arms broker who assisted in procuring their services for this transaction.
“This defendant brokered a wide array of military-grade weapons, which endangered civilians around the world and put at risk America’s national security interests, including members of our armed services,” said U.S. Attorney Nick Hanna for the Central District of California. “Mr. Ghanem was literally a merchant of death who was ready, willing and able to sell weapons, including surface-to-air missiles, to any paying customer, with zero concern for the death and destruction these weapons might cause. As a result of his conduct, the sentence imposed in this case is appropriate and richly deserved.”
“Yesterday’s sentencing is well deserved and, unfortunately, demonstrates the shear breadth of criminal activity engaged in by those who oppose us,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “Counter-proliferation investigations are the highest priority for HSI – and we remain steadfastly committed to working with our domestic and international law enforcement partners to pursue transnational criminal networks intent on committing acts of terrorism against the United States.”
“Protecting America’s warfighters and preserving our national security interests by ensuring that Department of Defense assets and technologies do not end up in the hands of those that seek to do harm to our country or our foreign allies is a critical component of the Defense Criminal Investigative Service's mission,” said Bryan D. Denny, the Special Agent in Charge of the DCIS Western Field Office. “Ghanem’s sentencing reflects the seriousness of the crimes he committed against the United States, and serves as a cautionary tale to others considering or engaging in similar illegal activities. Without question, the exceptional collaboration between the U.S. Attorney's Office, Homeland Security Investigations, the Office of Export Enforcement, and DCIS led to Ghanem’s successful prosecution and sentencing, despite the inherent complexities in detecting, investigating, and prosecuting illegal international arms-trafficking matters.”
“Yesterday’s sentence is the result of outstanding collaborative investigative work by the Office of Export Enforcement and its law enforcement partners to combat the illegal shipment of sophisticated technology. We will continue to aggressively pursue violators wherever they may be,” said Richard Weir, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Los Angeles Field Office.
HSI’s Los Angeles Counter-Proliferation Investigations Center began the investigation into Ghanem in mid-2014, when a Los Angeles-based company alerted HSI that it had been solicited to provide military equipment to Ghanem. During an undercover operation, an HSI agent developed a relationship with Ghanem, who was seeking to procure a number of armaments – including sniper rifles and night-vision optics. During discussions with the undercover agent, Ghanem affirmed that the transactions were being conducted “illegally” and had to be “under the table.” During subsequent meetings with the undercover operative in Athens, Ghanem expressed an interest in purchasing helicopters and fighter jets on behalf of Iranian clients, and Ghanem said he had relationships with Hezbollah in Iraq.
Over the course of several months in 2015, Ghanem discussed his interest in purchasing numerous weapons, and in August 2015 placed an order for $220,000 worth of sniper rifles, pistols, silencers, laser sights, ammunition, night-vision googles and other items that were to be shipped to Libya. After making two down payments, Ghanem was arrested on Dec. 8, 2015, in Athens. He was extradited to the United States in April 2016 to face prosecution in this case and has remained in custody without bond since the time of his arrest.
After his arrest, authorities seized numerous digital devices that Ghanem had in his possession. Searches of those devices revealed evidence of other large-scale arms brokering activities, including millions of rounds of ammunition, anti-tank missiles, and the scheme to transfer and use anti-aircraft missiles.
In documents filed in relation to today’s sentencing, prosecutors offered evidence of a contract documenting Ghanem’s agreement to sell $250 million worth of weapons and ammunition to a militant faction in Libya; a contract between Ghanem and the Egyptian Ministry of Defendant dealing with hundreds of rocket-propelled grenade launchers; attempts to buy and sell combat jets and helicopter gunships; and his apparent role in the trafficking of counterfeit currency, looted antiquities and black-market diamonds.
The investigation in this case was led by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, which received substantial assistance from the Department of Defense’s Criminal Investigative Service; the Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and the Hellenic National Police; the Hellenic Financial and Economic Crimes Unit; and U.S. Customs and Border Protection.
This case was prosecuted by Trial Attorney Christian E. Ford of the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division and Assistant U.S. Attorneys Melissa Mills and George E. Pence IV of the Terrorism and Export Crimes Section in the U.S. Attorney’s Office. The Justice Department’s Office of International Affairs of the Department’s Criminal Division provided significant support in the investigation and securing the defendant’s extradition from Greece.
South L.A. Man Pleads Guilty to Federal Robbery Charge in Scheme that Stole Nearly $240,000 from United States Postal Service TrucksRead the Press Release
LOS ANGELES – A South Los Angeles man pleaded guilty today to a federal criminal charge and admitted to participating in two armed robberies of United States Postal Service trucks carrying tens of thousands of dollars in cash.
Myron Crosby, 28, of Athens, pleaded guilty to one felony count of robbery of United States property. United States District Judge S. James Otero has scheduled a November 25 sentencing hearing.
Crosby admitted in his plea agreement that, on February 1, 2018, he and his co-conspirators organized the armed robbery of a Postal Service truck departing the Wagner Post Office located in Los Angeles, near the city boundary with Inglewood. During the robbery, in which Crosby acted as a lookout, a white minivan blocked the USPS truck just outside the Wagner Post Office, the robber threatened the truck driver at gunpoint, and the robber stole $37,658 in cash.
On March 1, 2018, Crosby conspired to rob the Dockweiler Post Office in South Los Angeles, he admitted in his plea agreement. On the day of the robbery, Crosby rented a Mercedes-Benz SUV and used that vehicle to box in the USPS truck as it exited the southbound 110 Freeway at Slauson Avenue. At that time, another co-conspirator exited another vehicle, brandished a gun to control the USPS driver, and stole $72,563 in cash, the plea agreement states. Crosby admitted that he and his co-conspirators robbed the USPS of $110,221.
At the time of his sentencing hearing, Crosby will face a statutory maximum sentence of 25 years in federal prison.
On July 31, Crosby’s half-brother and co-defendant, William Crosby IV, 32, of Inglewood, pleaded guilty to two felonies: robbery of United States property and using a firearm in furtherance of a violent crime.
William Crosby is a former USPS supervisor who previously worked at both the Wagner and Dockweiler post offices and who knew when the USPS transported cash generated from the sale of money orders and USPS merchandise – information that is not known to all Postal Service employees, according to a July 2018 grand jury indictment charging the two men.
William Crosby admitted in his plea agreement that between August 2017 and March 2018, while a USPS employee, he conspired with others, including Myron Crosby, to plan a theft and two robberies of USPS trucks carrying cash. The burglary and armed robberies caused cash losses of $238,457, William Crosby admitted.
William Crosby’s sentencing hearing is scheduled for October 28, at which time he will face a statutory maximum sentence of life imprisonment.
The probe into Myron and William Crosby was conducted by the United States Postal Inspection Service and the United States Secret Service. The investigation remains ongoing with respect to additional co-conspirators and additional robberies.
The case is being prosecuted by Assistant United States Attorneys Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section, and Jeffrey M. Chemerinsky of the Violent and Organized Crime Section.
Nigerian Man Sentenced to Prison for Role in $8.3 Million Medicare Fraud Scheme and Related Money LaunderingRead the Press Release
A Nigerian man was sentenced to 46 months in prison today for his role in a durable medical equipment (DME) scheme in which more than $8 million was fraudulently billed to Medicare for DME that was not medically necessary.
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 B. DeFrancesca of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Regional Office, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division and Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation (IRS-CI) Los Angeles Field Office made the announcement.
Ayodeji Temitayo Fatunmbi, 47, of Nigeria, was sentenced to 46 months in prison by U.S. District Judge Christina A. Snyder of the Central District of California, who also ordered Fatunmbi to pay $1,076,893.15 in restitution. Fatunmbi pleaded guilty on May 8, 2019 to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.
Fatunmbi was charged along with Olufunke Ibiyemi Fadojutimi, 47, of Carson, California, and Maritza Elizabeth Velasquez, 44, of Las Vegas, Nevada.
As part of his guilty plea, Fatunmbi admitted that he and others paid cash kickbacks to patient recruiters and physicians for fraudulent prescriptions for DME such as power wheelchairs, which the Medicare beneficiaries did not have a legitimate medical need. Fatunmbi and co-conspirators caused Lutemi Medical Supply (Lutemi), a DME supply company that he co-ran, to submit approximately $8.3 million in claims to Medicare, which resulted in the company being paid over $3.5 million. Fatunmbi further admitted that he was responsible for $2,090,434 in false and fraudulent claims for medically unnecessary DME and that as a result of his conduct, Medicare paid Lutemi a total of $1,076,893. In furtherance of this scheme, Fatunmbi and a co-conspirator wrote checks from Lutemi’s bank account to Lutemi employees and others, and Fatunmbi instructed that those monies be returned to him to pay the illegal cash kickbacks to the patient recruiters and doctors, he admitted. Fatummbi admittedly directed others at Lutemi to engage in these tranactions to conceal the nature and source of the proceeds of the health care fraud conspiracy.
Velasquez pleaded guilty on July 24, 2013, to one count of conspiracy to commit health care fraud, and was sentenced to 15 months in prison and restitution in the amount of $3,411,428. Fadojutimi was found guilty after a jury trial on July 31, 2014, of one count of conspiracy to commit health care fraud, seven counts of health care fraud and one count of money laundering, and was sentenced to four years in prison and restitution in the amount of $4,372,466.
This case was investigated by the HHS-OIG, the FBI and IRS-CI. Trial Attorneys Claire Yan, Emily Z. Culbertson and Justin P. Givens of the Criminal Division’s Fraud Section are prosecuting the case. The Asset Forfeiture Section of the U.S. Attorney’s Office for the Central District of California is handling the asset forfeiture aspects of the case.
The Fraud Section leads the Medicare Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Man Sentenced to More than 8 Years in Prison for Illegally Importing, Selling Male Sexual Enhancement Pills Branded as ‘Herbal’ MedicineRead the Press Release
LOS ANGELES – A Walnut man was sentenced today to 100 months in federal prison for illegally importing from China and selling $11 million worth of pharmaceutical-grade erectile dysfunction drugs that were falsely marketed as herbal remedies for men, some of whom suffered permanent injuries after consuming them.
John Seil Lee, 41, was sentenced by United States District Judge Percy Anderson, who ordered him remanded into federal custody. Judge Anderson – who also ordered Lee to pay more than $552,000 in restitution to his victims, including men who were injured by Lee’s misbranded pills – remarked in court on Lee’s “callousness” and how Lee’s “scheme has literally ruined lives.”
“It’s obvious to me,” Judge Anderson said, “that this defendant has little or no respect for the law or the harm he caused numerous victims.”
On February 27, Lee pleaded guilty to three felony counts of conspiracy, importing contraband into the United States, and filing a false tax return.
Lee’s companies – KHK International Trade Enterprise, Inc., and SHH World Trading Enterprises, Inc. – each were sentenced today to five years’ probation. KHK was fined $100,000 and SHH was ordered to pay its victims $115,484 in restitution. Lee’s companies each pleaded guilty in February to two felony counts of introducing misbranded drugs into interstate commerce.
From 2011 through early 2017, Lee illegally imported shipments of powder Tadalafil – a prescription drug used to treat erectile dysfunction and sold under the brand name Cialis – from suppliers in China. Lee then manufactured the powder Tadalafil into at least 5.5 million pills that he sold to distributors across the United States. In order to boost sales, Lee made the pills with up to 14 times the level of Tadalafil contained in Cialis.
Lee sold at least $11 million worth of pills across the United States – under names such as “X Again,” “X Monster” and “Royal Master” – with labels that did not disclose the presence of Tadalafil and falsely stated that no prescription was necessary, according to court documents. Lee also continued selling the pills despite FDA announcements that the pills were tainted because they contained undeclared Tadalafil. In order to evade federal regulators, Lee relabeled the tainted pills in response to FDA announcements about their safety, the information states. For example, in August 2016, after the FDA announced that SHH’s “One More Knight” pills contained undisclosed Tadalafil, Lee rebranded the same pills as “Own the Knight” and continued selling them.
After Lee closed SHH following the execution of federal search warrants in February 2017, he helped his friend Jin Su Park set up RNG Global Management and Trading Group to operate as a copycat business, according to Park’s plea agreement and statements made in court today. Park took 14,000 of Lee’s pills, rebranded them as “EEZZY UP PLATINUM,” and sold them to Lee’s former distributors across the country. EEZZY UP’s packaging also failed to disclose that the pills contained Tadalafil.
The FDA’s approval of Cialis is limited to the use under the supervision of a licensed professional. Due to toxicity and other potentially harmful effects – including life-threatening drops in blood pressure, loss of vision, loss of hearing and prolonged, painful erections that can result in permanent injury – drugs similar to Cialis are not safe for use except under the supervision of a medical practitioner.
In addition to the convictions of Lee, KHK, and SHH, federal prosecutors have obtained 13 guilty pleas from individuals and companies who conspired with Lee to distribute his misbranded erectile dysfunction drugs. These defendants are scheduled to be sentenced by Judge Anderson over the next several months.
The investigation into these cases was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Food and Drug Administration’s Office of Criminal Investigations and IRS Criminal Investigation.
The cases are being prosecuted by Assistant United States Attorney Matthew W. O’Brien of the Environmental and Community Safety Crimes Section.
Hidden active pharmaceutical ingredients have been identified in products promoted not only for sexual enhancement, but also for bodybuilding, pain relief and weight loss. The FDA has issued hundreds of public warnings and recall announcements related to these types of fraudulent products. The FDA’s Tainted Products database can help consumers identify some of these potentially harmful products. Even if a product is not included in the list, consumers should be cautious about using certain products, especially those promoted for sexual enhancement, weight loss, bodybuilding and pain relief.
Seven People Face Federal Charges in Connection with Armed Robbery Spree that Targeted Pharmacies Across Southern CaliforniaRead the Press Release
LOS ANGELES – A federal grand jury today returned an eight-count superseding indictment that charges a Lynwood man with being the organizer and leader of a crew that committed at least 15 armed robberies of independent and “mom-and-pop” pharmacies across Southern California. The robbers allegedly stole a variety of prescription medications – in particular, oxycodone – with the intent of selling the stolen drugs on the black market.
The suspected organizer and leader, Tyrome Lewis, 24, a.k.a. “Boobie,” was charged with one count of conspiracy to interfere with commerce by robbery, one count of conspiracy to distribute oxycodone, two counts of interference with commerce by robbery, two counts of possession with intent to distribute oxycodone, and two counts of knowingly using and brandishing a firearm during a crime of violence. Lewis, who was previously arrested and charged in a criminal complaint, is being held without bond. His arraignment is scheduled for August 22.
The superseding indictment filed today adds Lewis to a case in which another man – Darrell Mitchell, 29, of Long Beach – was previously charged. Darrell Mitchell, who is a fugitive, also faces conspiracy, narcotics and firearms offenses.
The initial indictment charged two additional co-conspirators, Terrell Mitchell, 31, (Darrell Mitchell’s brother) and Deandre Bonney, 29, both from Compton. Terrell Mitchell and Bonney have signed plea agreements in which they admitted their involvement in a December 2018 robbery of a Glendale pharmacy. Terrell Mitchel and Bonney are not named in the superseding indictment, and they are expected to enter guilty pleas in September.
Over an 18-month period that ended just a few weeks ago, Lewis allegedly led an armed crew that robbed pharmacies in Bellflower, Cerritos, South Los Angeles, Westminster, Pico Rivera, Fullerton, Hawthorne, Huntington Park, Anaheim, Glendale, Riverside, Paramount, and Claremont. Lewis allegedly picked out the robbery locations and provided details to the crew’s participants as to how the robberies should be conducted, including what medications to target. Lewis also traveled to the robbery locations in advance to scout the targeted stores and later oversaw the robberies as they were committed, the indictment alleges.
Each of the robberies shared a common modus operandi, including targeting smaller pharmacies, placing the stolen prescription drugs into the pharmacy’s trash bags or trash cans, using a black semi-automatic handgun to threaten and intimidate store employees, forcing employees to open the medication vault, and taking the store employees’ cell phones to prevent them from immediately calling police, according to court documents.
In addition to the Southern California robberies, the indictment alleges that Lewis was involved in a burglary of a Walgreens pharmacy in Anthony, Texas in January 2018.
If convicted of all charges, Lewis and Mitchell each would face a statutory maximum sentence of life in federal prison.
Three additional co-conspirators have been charged in a separate indictment. Aaron Ganner, 27, Karon Lofton, 28, and Devon Jackson, 30, all from Compton, were indicted for their role in a June 12 robbery of a pharmacy in Torrance. Ganner, Lofton and Jackson were arraigned Thursday in United States District Court, where they were ordered held without bond and a trial was scheduled for October 8.
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 Federal Bureau of Investigation and the Los Angeles County Sheriff’s Department, with assistance from the Torrance Police Department.
This case is being prosecuted by Assistant United States Attorneys Jeffrey M. Chemerinsky and Joseph D. Axelrad of the Violent and Organized Crimes Section.
Inland Empire Man Arrested on Federal Indictment for Allegedly Engaging in Sextortion with Victims He Messaged on FacebookRead the Press Release
LOS ANGELES – A San Bernardino County man was arrested today on a federal grand jury indictment alleging he blackmailed young women on Facebook by threatening to publish nude photographs and videos unless they complied with his demands of sending him additional sexually explicit images.
Jorge Esteban Sanchez Ramos, 23 – who used a series of online aliases, including “Nathan Ramirez,” “Juan Romero” and “George Sanchez” – was arrested without incident this morning at his Ontario residence by special agents with the Federal Bureau of Investigation.
Sanchez was charged with four felony counts of stalking in an indictment returned by a federal grand jury on May 24. Sanchez is scheduled to be arraigned on the indictment this afternoon in United States District Court in Los Angeles.
According to the indictment, Sanchez’s conduct between April 2016 and May 2018 typically involved him using multiple aliases and Facebook accounts in order to contact his victims. Sanchez allegedly sent his victims – the indictment specifically alleges four women ranging in age between 18 and 24 – a series of messages complimenting the women and requesting that the women send him nude photographs or nude videos of themselves. After the victims sent Sanchez nude photographs or videos, Sanchez – using a different screen name – sent menacing messages that threatened to post their nude images to social media unless they sent him additional sexually explicit images, the indictment alleges.
For example, in April 2016, Sanchez sent one 18-year-old woman a request to send nude images, and then sent her a series of messages from different Facebook accounts. On April 20, 2016, according to the indictment, Sanchez sent the victim a Facebook message that included a full-frontal nude image she had sent and a message stating, “Yes do it or I’ll post these nude [photos] some guy sent me how do you think I found you.” Sanchez allegedly sent the victim follow-up Facebook messages in which he instructed her how to film a sexually explicit video of herself, and he also demanded a nude video of herself that day. In between his demands for more sexually explicit images of the victim, Sanchez wrote, “Unblock me or I’ll ruin you” and “I know where you live,” the indictment states.
In April 2016, Sanchez, using aliases, contacted another 18-year-old woman via Facebook and offered to pay her $600 in exchange for a nude image of herself, the indictment states. Sanchez allegedly sent the victim threatening Facebook messages where he demanded sexually explicit videos of the victim and threatened to post sexually explicit videos of the victim to her classmates and her parents.
In May 2018, Sanchez allegedly sent the same victim a Facebook message containing a topless photograph of herself and then sent her messages, which stated, “Just reply…or i swear i will always be here” and “Good luck facing everyone after this. xD” Sanchez then posted a comment on Facebook offering to show third parties nude photos of the victim, the indictment alleges.
If convicted of the four counts in the indictment, Sanchez 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.
This matter was investigated by the Federal Bureau of Investigation and the Pomona Police Department.
This case is being prosecuted by Assistant United States Attorney Aron Ketchel of the Public Corruption and Civil Rights Section.
High Desert Pharmacist Sentenced to over 5 Years in Federal Prison for Illegally Distributing Prescription Opioids and Money LaunderingRead the Press Release
LOS ANGELES – A High Desert pharmacist who illegally distributed oxycodone by filling hundreds of counterfeit prescriptions was ordered today to serve 63 months in federal prison.
Pauline Tilton, 50, of Hesperia, a licensed pharmacist and the owner of Oasis Pharmacy in Victorville, was sentenced by United States District Judge Otis D. Wright II.
Tilton pleaded guilty on April 29 to one count of distribution of oxycodone and one count of money laundering related to more than a quarter millions dollars of revenue she received from the illegal sales.
Tilton filled at least 345 fraudulent prescriptions for oxycodone during a one-year period that ended in July 2017. The prescriptions were written under the name and DEA registration number of a retired doctor. When she pleaded guilty, Tilton admitted knowing the prescriptions were fraudulent, outside the usual scope of professional practice, and without a legitimate medical purpose.
As a result of the 345 prescriptions, Tilton and Oasis Pharmacy illegally diverted approximately 62,100 tablets of oxycodone to the black market. Many of the fraudulent oxycodone prescriptions also included prescriptions for alprazolam and promethazine with codeine. Those three drugs – oxycodone, alprazolam, and promethazine with codeine – comprise the “Holy Trinity,” a frequently abused and life-threatening cocktail of controlled substances.
“Tilton admitted that she abused a position of public trust and special skill in committing these offenses, as she used her position of as a pharmacist-in-charge to falsify and fill fraudulent prescriptions for oxycodone and other, potentially lethal controlled narcotics, which she sold to drug dealers,” prosecutors wrote in documents filed with the court.
In return for filling the fake prescriptions, Tilton and Oasis Pharmacy received hundreds of thousands of dollars in cash payments. Between January 2016 and June 2017, Tilton deposited $268,621 of illicit cash proceeds from her illegal drug distribution into three banks accounts over which Tilton held sole signature authority.
“Tilton, using defendant Oasis, profited handsomely for her criminal activity, which included injecting thousands of opioids and other lethal prescription drugs into a community that, like much of the country, is ravaged by the Opioid Crisis,” according to court documents.
As he imposed the prison term – and ordered Tilton to pay a $30,000 fine – Judge Wright said the defendant demonstrated a “callous disregard for her own customers’ health.”
When Tilton pleaded guilty, Oasis Pharmacy also pleaded guilty to the same drug distribution and money laundering offenses. Judge Wright today placed Oasis Pharmacy on probation for one year.
This case was the first to be charged as the result of an ongoing investigation into corrupt pharmacies dubbed “Operation Faux Pharmacy.”
This case is being investigated by the Drug Enforcement Administration; the U.S. Department of Health and Human Services, Office of Inspector General; IRS Criminal Investigation; and the California Board of Pharmacy.
This matter is being prosecuted by Assistant United States Attorney Chelsea Norell of the International Narcotics, Money Laundering, & Racketeering Section.
Conman Who Posed as Beverage Entrepreneur Sentenced to more than 7 Years in Federal Prison for Running $7.5 Million Ponzi SchemeRead the Press Release
LOS ANGELES – A Canadian national was sentenced today to 87 months in federal prison for running a $7.5 million Ponzi scheme in which he defrauded investors by posing as a successful beverage entrepreneur with close ties to well-known business executives and professional sports stars, including NBA star Stephen Curry.
Khemraj Dave Hardat, 50, a former resident of the Ritz-Carlton Residences at L.A. Live in downtown Los Angeles who has been in federal custody since his arrest last November, was sentenced by United States District Judge Dale S. Fischer, who said Hardat was “not a misguided businessman; he was a very skillful fraudster.”
Hardat was sentenced after pleading guilty on April 22 to five counts of wire fraud. When he pleaded guilty, Hardat admitted that, from August 2014 through November 2018, he raised money from investors by falsely holding himself out as a successful investor and businessman in the performance beverage and water-bottling industries. Hardat duped his investors by falsely representing that he had a doctorate and that he maintained relationships with established business figures such as computer entrepreneur Michael Dell and the chief executive officer of PepsiCo.
Hardat falsely claimed that professional basketball star Stephen Curry would be endorsing one of his company’s products, and that PepsiCo and Dr. Pepper Snapple Group, Inc. owed him more than $100 million as the result of purported business deals he had consummated with them.
Hardat supported his bogus claims of financial success by showing victims doctored digital images of bank account statements showing inflated balances. One fraudulent image emailed to a victim showed a balance of nearly $500 million in one bank account, while another phony image showed a bank account balance of nearly $170 million.
In reality, Hardat used investor funds to pay off his personal debts, purchase luxury cars worth more than $100,000 each, pay rent at the Ritz-Carlton Residences, pay tuition to exclusive private schools, and purchase luxury boxes and tickets for sporting and entertainment events. Hardat also admitted that, in the style of a Ponzi scheme, he made payments to prior victim-investors out of subsequent victim-investors’ money. During the course of the scheme, Hardat took in approximately $7.5 million from investors, who suffered losses of more than $6.4 million.
“Fleeing the fallout and escaping the consequences of frauds he perpetrated in Canada, defendant immigrated to the United States, where he overstayed his visa and reconstituted his lucrative, luxurious life of financial crime,” prosecutors wrote in a sentencing memorandum. “[Hardat] befriended neighbors, fellow parents at his children’s school, and entrepreneurial would-be co-venturers, whose trust, loyalty, and hopes he carefully nurtured, only to betray them at the earliest opportunity.”
This matter was investigated by the Federal Bureau of Investigation.
This case was prosecuted by Assistant United States Attorney Adam P. Schleifer of the Major Frauds Section.
Former Doctor Pleads Guilty to Federal Criminal Charges for Illegally Selling Painkillers for Cash at His High Desert Medical ClinicRead the Press Release
LOS ANGELES – An ex-physician pleaded guilty today to federal criminal charges for illegally prescribing and distributing the semi-synthetic opioid painkiller oxycodone to undercover operatives who visited his Victorville medical office.
Wendell Mark Street, 67, of Las Vegas, pleaded guilty to two felony counts of illegally prescribing oxycodone to patients without a legitimate medical purpose. United States District Judge George H. Wu has scheduled a December 9 sentencing hearing, at which time Street will face a statutory maximum sentence of 40 years in federal prison.
Street admitted in court today that, while he was a licensed anesthesiologist, on August 1, 2013, he sold two prescriptions for $300 each to a confidential informant and an undercover investigator with the California Medical Board. He further admitted that he wrote the prescriptions without a legitimate medical purpose and intentionally acted outside the usual course of professional practice, including by failing to conduct a physical examination, establish diagnostic testing, provide a treatment plan, and create documentation to establish a medication indication for the prescriptions.
The investigation showed that Street prescribed 7,769 prescriptions for narcotics, including 437,000 doses of oxycodone, from November 2012 to November 2013.
Street was charged in a 10-count indictment returned by a federal grand jury in February 2018. During the investigation into Street, investigators executed a search warrant at his Victorville office in 2014. Street surrendered his California medical license in 2016.
This matter was investigated by the Drug Enforcement Administration – Riverside District Office Diversion Group.
This case is being prosecuted by Assistant United States Attorneys Bryant Y. Yang of the International Narcotics, Money Laundering, and Racketeering Section and Jason C. Pang of the General Crimes Section.
Ex-Wells Fargo Manager Pleads Guilty to Bank Fraud for Role in Scheme that Laundered $14 Million in Tax Fraud ProceedsRead the Press Release
SANTA ANA, California – A former bank branch manager at Wells Fargo pleaded guilty today to one felony count of bank fraud for using his position to help launder proceeds of a tax fraud and identity theft scheme that used false identities and bogus Republic of Armenia passports to fraudulently obtain $14 million in tax refunds from the Internal Revenue Service.
Hakop Zakaryan, 34, of Glendale, entered a guilty plea this afternoon before United States District Judge Andrew J. Guilford, who scheduled a November 18 sentencing hearing, at which time Zakaryan will face a statutory maximum sentence of 30 years in federal prison.
Zakaryan admitted in his plea agreement that he used his position as bank manager in Glendale to “unfreeze” bank accounts that Wells Fargo had frozen because of suspected fraud. To do so, Zakaryan called the bank’s loss prevention department and provided false information to unfreeze the bank accounts, even though he knew that the schemers were using fraudulent identities, according to the plea agreement. Zakaryan admitted that he assisted the schemers because they paid him thousands of dollars in cash.
For example, in July 2014, Zakaryan called the bank’s loss prevention department and provided false information to unfreeze the bank account, which helped the schemers to withdraw $29,453 in cash from that account. Zakaryan admitted that he unfroze the account in exchange for approximately $3,000 in cash from the schemers.
The underlying Stolen Identity Refund Fraud (SIRF) scheme involved schemers who used false identities and fake Republic of Armenia passports to open hundreds of bank accounts that were used to launder funds fraudulently received from the IRS. A total of 18 defendants, including Zakaryan and Glendale lawyer Arthur S. Charchian, have been charged in that scheme, which involved approximately 7,000 fraudulent tax returns that cumulatively sought about $38 million in refunds. The IRS issued about $14 million in refunds. The fraudulent tax returns were filed and the bank accounts were opened with personal identifying information that had been stolen from thousands of victims.
The federal investigation into the SIRF scheme has resulted in 12 convictions, and the seizure of four residential properties and more than $700,000 from bank accounts. Last month, a civil forfeiture action was commenced against another property worth approximately $1.5 million. One defendant has been extradited from Colombia, four defendants remain fugitives from justice, and two defendants are scheduled to go to trial later this year.
The case against Zakaryan and the defendants in the SIRF scheme is being investigated by IRS Criminal Investigation, the Federal Bureau of Investigation, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office. The civil forfeiture action is being pursued by Assistant United States Attorney Brent A. Whittlesey of the Asset Forfeiture Section.
Former Santa Ana Police Officer Criminally Charged with Using Unreasonable Force, Filing False Reports in Connection with BeatingRead the Press Release
SANTA ANA, California – A retired Santa Ana Police officer was charged today by a federal grand jury that accused him of violating the civil rights of a man by using unreasonable force during an arrest and then lying about the incident in official reports.
Brian Patric Booker, 50, of Chino Hills, was named in an indictment that charges him with one felony count of deprivation of rights under color of law and two felony counts of falsification of records. He will be arraigned on the indictment on August 12 in United States District Court in Santa Ana.
According to the indictment, on June 19, 2014, Booker used unreasonable force in connection with the arrest of the victim. The victim was not resisting arrest.
Following the incident, Booker allegedly caused false police reports to be filed. Booker falsely claimed that the victim reached toward Booker and grabbed Booker by his right leg, the indictment alleges. Booker also falsely stated that he delivered three or four punches to the back of the victim’s head because he believed the victim was about to tackle him and possibly have access to Booker’s firearm, according to the indictment. Booker allegedly knew these statements were false when the reports were filed.
Booker retired from the Santa Ana Police Department last year after approximately 19 years of service.
If convicted of all counts, Booker would face a statutory maximum sentence of 60 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 in court.
This matter was investigated by the Federal Bureau of Investigation. The Santa Ana Police Department cooperated fully with the FBI’s investigation.
This case is being prosecuted by Assistant United States Attorneys Jennifer L. Waier and Robert J. Keenan of the Santa Ana Branch Office.
Former Postal Service Employee Pleads Guilty to Robbery, Firearms Charges in Scheme that Stole Nearly $240,000 from USPS TrucksRead the Press Release
LOS ANGELES – A former United States Postal Service employee pleaded guilty today to federal criminal charges for participating in one burglary and two armed robberies of USPS trucks carrying cash – incidents that caused nearly a quarter million dollars in losses.
William Crosby IV, 32, of Inglewood, pleaded guilty to two felonies: robbery of United States property and using a firearm in furtherance of a violent crime. United States District Judge S. James Otero scheduled an October 28 sentencing hearing, at which time Crosby will face a statutory maximum sentence of life in federal prison along with a mandatory consecutive sentence of seven years’ imprisonment.
Crosby admitted in his plea agreement that between August 2017 and March 2018, while a USPS employee, he conspired with others to plan a theft and two robberies of USPS trucks carrying cash. The burglary and armed robberies caused cash losses of $238,457, Crosby admitted in his plea agreement.
As a former supervisor, Crosby knew when the USPS transported cash generated from the sale of money orders and USPS merchandise – information that is not known to all Postal Service employees, according to a federal grand jury indictment.
On August 1, 2017, Crosby signaled to his co-conspirators that a Postal Service truck carrying a large amount of cash was on the loading dock at the Dockweiler Post Office in South Los Angeles. A co-conspirator wearing a Postal Service shirt walked onto the loading dock and stole a container inside the truck that contained $128,236 in cash.
On February 1, 2018, Crosby, then assigned to the Wagner Post Office in Los Angeles near the city boundary with Inglewood, provided information to co-conspirators that a USPS truck carrying cash was leaving the facility. During the robbery, in which Crosby acted as a lookout, a minivan blocked the USPS truck just outside the Wagner Post Office, the robber threatened the truck driver at gunpoint, and the robber stole $37,658 in cash.
On March 1, 2018, Crosby took sick leave without pay from his job at the Wagner Post Office. On that date, however, he again conspired to rob a post office, this time the Dockweiler Post Office, where he previously worked. Less than one hour before the robbery, Crosby parked at a grocery store parking lot across the street from the Dockweiler Post Office in a spot where he could see the post office’s loading dock area.
After the USPS truck left the facility, Crosby, along with his co-conspirators, followed the truck, according to the plea agreement. A co-conspirator rented a Mercedes-Benz SUV and used that vehicle to box in the USPS truck as it exited the southbound 110 Freeway at Slauson Avenue. At that time, another co-conspirator exited another vehicle, brandished a gun to control the USPS driver, and stole $72,563 in cash, the plea agreement states.
Crosby’s co-defendant, his half-brother Myron Crosby, 28, of Inglewood, is scheduled to go to trial in this case on September 3.
This matter was investigated by the United States Postal Inspection Service and the United States Secret Service.
The case is being prosecuted by Assistant United States Attorneys Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section, and Jeffrey M. Chemerinsky of the Violent and Organized Crime Section.
Federal Indictment Alleges Scheme to Avoid Payment of $1.8 Billion in Anti-Dumping Duties on Chinese Aluminum Imported as ‘Pallets’Read the Press Release
LOS ANGELES – A federal grand jury indictment unsealed late Tuesday alleges a complex financial fraud scheme in which a Chinese company exported to the United States huge amounts of aluminum – disguised as “pallets” to avoid customs duties of up to 400 percent – and “sold” the purported pallets to related entities to fraudulently inflate the company’s revenues and deceive investors around the world.
The 53-page indictment alleges that China Zhongwang Holdings Limited, Asia’s largest aluminum extrusion company; Zhongtian Liu, the company’s former president and chairman; and several individual and corporate co-defendants lied to U.S. Customs and Border Protection to avoid paying the United States $1.8 billion in anti-dumping and countervailing duties (AD/CVD) that were imposed in 2011 on certain types of extruded aluminum imported into the United States from China.
The aluminum sold to United States-based companies controlled by Liu were simply aluminum extrusions that were spot-welded together to make them appear to be functional pallets, which would be finished goods not subject to the duties, according to the indictment. In reality, there were no customers for the 2.2 million pallets imported by the Liu-controlled companies between 2011 and 2014, and no pallets were ever sold.
The aluminum was imported through the Ports of Los Angeles and Long Beach and then stockpiled at four large warehouses in Southern California, all of which were purchased at Liu’s direction.
Liu and his co-defendants orchestrated the bogus sales of aluminum to Liu-controlled companies in Southern California to falsely inflate the value of China Zhongwang, according to the indictment. Liu is a major shareholder of China Zhongwang, which has been listed on the Stock Exchange of Hong Kong since a 2009 initial public offering that raised $1.26 billion.
After the AD/CVD duties were put in place in 2011, the company’s annual reports created a false narrative that there was a robust demand for the aluminum pallets in the United States, according to the indictment. The defendants allegedly inflated China Zhongwang’s sales volume and its volume of exports to the United States by engaging in transactions with entities controlled by Liu, and then falsely claimed in China Zhongwang’s annual reports that the aluminum was being sold to independent third parties, when it was actually being stockpiled by Liu-controlled entities in Southern California. Because there was no such demand for the pallets, the indictment alleges that “defendants Liu and China Zhongwang would direct that aluminum melting facilities be built and acquired to be used to reconfigure the aluminum imported as pallets into a form with commercial value.”
The indictment also alleges a massive money laundering scheme that was used by the defendants to funnel hundreds of millions of dollars through shell companies to the U.S.-based aluminum companies controlled by Liu. The funds were then transferred to China Zhongwang and the other shell companies as payments for the aluminum.
“This indictment outlines the unscrupulous and anti-competitive practices of a corrupt businessman who defrauded the United States out of $1.8 billion in tariffs due on Chinese imports,” said United States Attorney Nick Hanna. “Moreover, the bogus sales of hundreds of millions of dollars of aluminum artificially inflated the value of a publicly traded company, putting at risk investors around the world. The rampant criminality described in this case also posed a threat to American industry, livelihoods and investments.”
“The charges filed against these defendants are extremely serious,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “Organized assistance and subsidies by foreign nations such as China have a detrimental effect on U.S. production and employment. Of greater concern, our national security is jeopardized when domestic industry loses its ability to develop and supply products for U.S. defense and critical infrastructure applications, forcing us to become dependent on unreliable imports from other countries. HSI will continue to work closely with our law enforcement partners in the U.S. and overseas to aggressively target threats to our national interest.”
The defendants named in the 24-count indictment returned under seal on May 7 are:
- Zhongtian Liu, 55, a billionaire Chinese citizen, who for a time maintained a residence in Tustin, and who is the former president and former chairman of the board of China Zhongwang;
- China Zhongwang Holdings Limited, the publicly traded aluminum company based in Liaoyang City that was the largest aluminum extrusion manufacturer in Asia and the second-largest in the world;
- Zhaohua Chen, 60, a Chinese national and close friend of Liu, who allegedly was a key player in the scheme;
- Xiang Chun Shao, also known as Johnson Shao, 58, most recently of Irvine, who managed a collection of Southern California businesses that pretended to be independent third parties importing the Chinese aluminum;
- the Ontario-based Perfectus Aluminum Inc., which was controlled by Liu and managed by Shao;
- Perfectus Aluminum Acquisitions, LLC, a subsidiary of Perfectus Aluminum formed in late 2014 to take over a string of companies that had received aluminum pallets shipped to the U.S. after the duties were imposed on Chinese aluminum in 2011; and
- four LLCs controlled by Liu that were established to purchase warehouses in Riverside, Ontario, Irvine and Fontana where the aluminum pallets were stockpiled.
At this time, none of the individual defendants named in the indictment – Liu, Chen or Shao – are believed to be in the United States.
In a separate case filed late Tuesday, an associate of Liu, Po-Chi Eric Shen, 41, of Los Angeles, was charged with failing to report to the Internal Revenue Service more than $9 million in taxable income he received in 2015. Shen has agreed to plead guilty and cooperate with the government’s ongoing investigation in this matter.
“Tariffs are a tax on imports. Importers are expected to check the tariffs and other taxes and duties due on the goods they bring in, calculate what they owe, and pay it,” stated IRS Criminal Investigation Special Agent in Charge Ryan L. Korner. “Today’s announcement reinforces our commitment to every American taxpayer to identify and prosecute those who evade taxes, including by devising illegal schemes to dodge tariffs and create an unfair trade advantage for profit.”
In September 2017, the United States Attorney’s Office filed civil forfeiture actions against the four Southern California warehouses used by Perfectus to store the pallets. In February 2018, the government filed a fifth civil forfeiture complaint against “approximately 279,808 Aluminum Structures in the Shape of Pallets,” about half of which were seized in early 2017 at the Ports of Los Angeles and Long Beach, and the other half were seized from three other warehouses Perfectus was using to store the pallets. Those civil asset forfeiture cases have been stayed pending the completion of the criminal prosecution, in which the government is seeking the criminal forfeiture of the warehouses and seized aluminum.
The indictment announced today charges all of the defendants with conspiracy, nine counts of wire fraud and seven counts of passing false and fraudulent papers through a customhouse. All of the defendants, except the warehouse entities, also face seven counts of international promotional money laundering. If they were to be convicted, the individual defendants would face a statutory maximum penalty of five years in federal prison for the conspiracy charge and up to 20 years for each of the remaining 23 counts. If the companies were to be convicted, they would face substantial monetary penalties.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
This matter is being investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and IRS Criminal Investigation.
The criminal cases are being prosecuted by Assistant United States Attorneys Eddie A. Jauregui, Poonam G. Kumar and Julian L. André of the Major Frauds Section. The asset forfeiture cases are being handled by Assistant United States Attorney Steven R. Welk, Chief of the Asset Forfeiture Section.
IndictmentTrucking School Owner and President Pleads Guilty in $4.2 Million Fraud for Collecting Tuition for Veterans Who Didn’t Attend ClassesRead the Press Release
LOS ANGELES – The owner and president of a San Fernando Valley trucking school pleaded guilty today to federal criminal charges for bilking the United States Department of Veterans Affairs out of more than $4 million in tuition and other payments after falsely certifying that veterans had attended classes that they never took.
Emmit Marshall, 52, of Woodland Hills, pleaded guilty to five felony counts of wire fraud. United States District Judge Stephen V. Wilson scheduled a November 18 sentencing hearing, where Marshall will face a statutory maximum sentence of 100 years in federal prison.
Marshall, the owner and president of Chatsworth-based Alliance School of Trucking (AST), admitted in his plea agreement that, from July 2011 until April 2015, he and co-defendant Robert Waggoner, 56, of Canyon Country, who was a director at AST, schemed to defraud the VA. Marshall and Waggoner recruited eligible veterans to take trucking classes paid under the Post-9/11 GI Bill. AST was certified to offer classes under the Post-9/11 GI Bill that included a 160-hour Tractor Trailer & Safety class and a 600-hour Select Driver Development Program.
Pursuant to the Post-9/11 GI Bill, the VA paid tuition and fees directly to the school at which the veteran was enrolled. The VA also paid a housing allowance to the veteran enrolled full-time in an approved program, and, in some cases, the VA paid a books and supplies benefit directly to the veteran. Marshall admitted that Waggoner and another individual recruited eligible veterans to enroll at AST by telling the veterans they could collect housing and other fees from the VA without attending the programs. Knowing that the vast majority of veterans enrolling at AST did not intend to attend any portion of those programs, Marshall and Waggoner created and submitted fraudulent enrollment certifications, according to Marshall’s plea agreement. They also created student files that contained bogus documents.
When they became aware of the investigation into their conduct, Marshall, Waggoner and others at AST removed fraudulent documents from student files, and Marshall later ordered that these files be destroyed, the plea agreement states.
From the end of 2011 through April 2015, as a result of the fraudulent scheme, the VA paid AST approximately $2.3 million in tuition and fee payments for veterans who purportedly attended approved programs at AST, according to the plea agreement. During that same period, the VA also paid approximately $1.9 million in education benefits directly to veterans who purportedly attended approved programs at AST, the plea agreement states. Investigators are continuing to finalize the exact loss figure, but the total loss to the VA is estimated to be approximately $4.2 million
Waggoner is scheduled to go to trial in this case on February 25, 2020.
This matter was investigated by the U.S. Department of Veterans Affairs’ Office of Inspector General, the U.S. Department of Justice Office of the Inspector General, and the Federal Bureau of Investigation.
This case is being prosecuted by Assistant United States Attorney Kimberly D. Jaimez of the Major Frauds Section.
Texas Man Convicted of Multiple Federal Criminal Charges for Orchestrating Phishing Attack on Los Angeles County Superior CourtRead the Press Release
LOS ANGELES – A suburban Houston resident has been found guilty by a jury of 27 federal criminal charges for hacking into the Los Angeles Superior Court computer system and then using it to send approximately 2 million malicious phishing emails.
Oriyomi Sadiq Aloba, 33, of Katy, Texas, was found guilty late Thursday afternoon after a three-day trial. The jury found Aloba guilty of one count of conspiracy to commit wire fraud, 15 counts of wire fraud, one count of attempted wire fraud, one count of unauthorized impairment of a protected computer, five counts of unauthorized access to a protected computer to obtain information, and four counts of aggravated identity theft. Aloba was taken into federal custody immediately after the verdict was read.
According to the evidence presented at trial, in July 2017, Aloba and his co-conspirators targeted the Los Angeles Superior Court for a phishing attack. During the attack, one court employee’s email account was compromised and sent an email – without her authorization – to co-workers purporting to be from the file hosting service Dropbox. In fact, it was a phishing email that contained a link to a phishing website that asked for the users’ Superior Court email addresses and passwords, court papers state. Thousands of court employees received the Dropbox email and hundreds disclosed their email credentials to the attacker. Multiple court employees’ emails then were used by the attacker to send out millions of phishing emails.
These additional phishing emails purported to be communications from American Express, Wells Fargo, and other companies, and led victims to a webpage that asked for their banking login credentials, personal identifying information, and credit card information. The link for the fake American Express website used source code that designated Aloba’s email account as the delivery address for the information that the victims input into the website, according to court documents.
Investigators executed a search warrant at Aloba’s residence in Texas, which revealed a thumb drive in a toilet, a damaged iPhone in a bathroom sink, and – in the closet of a spare bedroom – a laptop computer with a smashed screen that was smeared with fresh blood. Nearby, agents found a broken mug, which apparently was used to smash the laptop computer. At the time of his arrest, Aloba had blood on his hands and agents saw him picking something out of his hands.
During the search, agents retrieved from the thumb drive and bloody laptop dozens of phishing kits, which is software designed to facilitate a phishing attack, including the American Express phishing kit used in the court attack.
As a result of the phishing attack, the court suffered monetary losses, including more than $45,000 in employee time paid to respond to the attack that would have otherwise been spent on ordinary work activities. Additionally, there were more than $15,000 in combined actual and intended losses to credit card victims, according to court documents.
United States District Judge R. Gary Klausner has scheduled a sentencing hearing for October 21, where Aloba will face a statutory maximum sentence of more than 350 years in federal prison.
Aloba was initially charged by the Los Angeles County District Attorney, but the matter was referred to the United States Attorney’s Office for federal prosecution.
A co-defendant, Robert Charles Nicholson, 28, of Brooklyn, New York, pleaded guilty last month to one count of conspiracy to commit wire fraud. His sentencing hearing is scheduled for September 30. Aloba’s other three co-defendants remain at large outside the United States.
This matter was investigated by the Federal Bureau of Investigation and the Los Angeles County District Attorney’s Office.
This case is being prosecuted by Assistant United States Attorneys Robyn K. Bacon and Ryan White of the Cyber and Intellectual Property Crimes Section.
Sherman Oaks Man Arrested on Federal Narcotics Charge Alleging He Sold Fentanyl that Caused Two Overdose DeathsRead the Press Release
LOS ANGELES – A Sherman Oaks man has been arrested on federal narcotics trafficking charges related to the deaths of two people who suffered fentanyl overdoses at the same Woodland Hills residence.
Trent Michael Tomasovich, 28, was arrested on Tuesday by the Los Angeles Police Department. He is now in federal custody.
An indictment naming Tomasovich was unsealed this afternoon when he was arraigned in United States District Court. The indictment charges Tomasovich with one felony count of distribution of fentanyl resulting in death. Tomasovich pleaded not guilty to the charge and his trial will be scheduled for a later date.
According to the indictment and a search warrant that was also unsealed this afternoon, Tomasovich sold fentanyl to a 24-year-old woman who took the drug at a Woodland Hills apartment and died during the early morning hours of July 14, 2018. The victim was visiting a friend, who found the woman unresponsive and then summoned paramedics.
Several hours later, the boyfriend of the woman who lived in the Woodland Hills apartment found the narcotics that the deceased woman had purchased, court documents state. Ignoring his girlfriend’s request to dispose of the drugs, the 38-year-old man consumed the fentanyl and suffered a fatal overdose.
“The two overdose deaths alleged in this case are a stark reminder that the explosion of fentanyl trafficking is causing death and misery across the nation,” said United States Attorney Nick Hanna. “People who deal in fentanyl should be on notice that federal authorities are aggressively investigating deaths linked to illegal opioids, and we can seek stiff federal mandatory minimum prison sentences for dealers who sell narcotics that cause fatal overdoses.”
“The HIDTA Fusion Task Force will continue to aggressively target those who prey upon our community and dump lethal drugs onto our streets,” said DEA Deputy Special Agent in Charge Daniel C. Comeaux. “The men and women of the DEA, as well as our federal, state and local counterparts, take seriously our commitment to stand up for victims of the opioid epidemic who can no longer speak for themselves.”
“The DEA will continue to aggressively target those who utilize online marketplaces to peddle fentanyl and other synthetic opioids. The outstanding relationships we maintain with other federal, state, local, and county law enforcement agencies make investigations such as this one possible,” said Acting Special Agent in Charge William D. Bodner of the DEA’s Los Angeles Field Division.
According to the affidavit in support of the search warrant that was unsealed today, “Tomasovich has a long history of being investigated by law enforcement for narcotics trafficking.” In 2017, Tomasovich was identified on wiretapped phone calls as being a customer of a heroin delivery service that was the subject of a federal grand jury indictment, but he was not charged in that case. In early 2018, after he offered heroin for sale on Craigslist, Tomasovich sold heroin during an undercover operation conducted by the Glendale Police Department, which led to him being convicted of drug trafficking offenses in Los Angeles County Superior Court.
The narcotics-trafficking charge in the indictment carries a mandatory minimum sentence of 20 years in federal prison and a potential sentence of life without parole.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The investigation into Tomasovich is being conducted by the HIDTA Fusion Task Force, which is part of the High Intensity Drug Trafficking Area (HIDTA) task force and operates under the direction of the Drug Enforcement Administration. The Los Angeles Police Department (Van Nuys Homicide), the Glendale Police Department and the Ventura County Sheriff’s Office provided substantial assistance in this matter.
This case is being prosecuted by Assistant United States Attorneys A. Carley Palmer of the International Narcotics, Money Laundering and Racketeering Section and Benjamin R. Barron, chief of the Santa Ana Branch Office.
Convicted Leader of Billion-Dollar Health Care Scam to Plead Guilty to Violating Court Forfeiture Order by Illegally Selling His Luxury CarsRead the Press Release
SANTA ANA, California – The imprisoned former owner of Pacific Hospital in Long Beach has agreed to plead guilty to federal criminal charges for illegally selling his luxury cars and keeping the proceeds for himself, disobeying a court order that he forfeit the money because of a previous conviction for orchestrating a nearly $1 billion health care fraud scheme.
Michael D. Drobot, 74, formerly of Corona del Mar but who is now imprisoned at Taft Correctional Institution in Kern County, has been charged in a three-count criminal information with wire fraud, engaging in monetary transactions in property derived from unlawful activity, and criminal contempt of court.
Drobot is scheduled to be arraigned on the information in the coming weeks in United States District Court in Santa Ana. He faces a statutory maximum sentence of 50 years in federal prison.
Drobot pleaded guilty in 2014 to charges of conspiracy and paying illegal kickbacks, admitting that he orchestrated a wide-ranging fraudulent kickback scheme where paid more than $50 million in bribes to doctors to steer hundreds of millions of dollars in spinal surgeries to his hospital. Drobot ultimately profited millions of dollars from the scheme.
According to his plea agreement filed on Tuesday, in January 2018, Drobot was sentenced to five years in federal prison and was ordered by the court to forfeit $10 million to the United States government and to partially satisfy the forfeiture by selling his 1965 Aston Martin, 1958 Porsche, and 1971 Mercedes-Benz automobiles. Drobot was ordered to perform this obligation by July 5, 2018.
Instead, from June 22, 2018 until September 14, 2018, Drobot intentionally violated the court’s forfeiture order in an effort to keep his criminal proceeds, the plea agreement states.
For example, on June 22, 2018, Drobot conveyed an interest in the Aston Martin car to a classic car auction company in exchange for a $1 million advance on the proceeds of the car’s sale, according to the plea agreement. Drobot admitted that he caused the auction company to wire $1 million to Drobot’s bank account. Drobot also admitted he used that money for personal expenses and not to satisfy the court’s forfeiture order. Drobot further admitted to laundering the money via transfers to third parties.
After Drobot violated the court’s forfeiture order, the government moved successfully in February 2019 to satisfy the outstanding money judgment by forfeiting Drobot’s interest in his Newport Beach residence and Perris, California business property.
As part of the underlying health care fraud scheme for which he was imprisoned, Drobot paid bribes to California State Senator Ronald Calderon in exchange for Calderon performing official acts to keep the spinal pass-through law on the books. Calderon served a 3½-year sentence in federal prison after admitting that he took bribes from Drobot and undercover FBI agents.
Prosecutors have charged 17 individuals and obtained 10 convictions as part of Operation Spinal Cap, which targets a long-running health care fraud scheme that generated nearly $1 billion in fraudulent claims to federal government, California state, and private insurers. Drobot spearheaded the scheme.
This case was investigated by the Federal Bureau of Investigation, IRS-Criminal Investigation, the California Department of Insurance, and the United States Postal Service, Office of the Inspector General.
This matter is being prosecuted by Assistant United States Attorneys Joseph T. McNally of the Violent and Organized Crime Section, Scott D. Tenley of the Santa Ana Branch Office, Ashwin Janakiram of the Major Frauds Section, and Jonathan S. Galatzan of the Asset Forfeiture Section.
Moreno Valley Man Who Led Crew that Robbed at Least 15 AutoZone Stores Pleads Guilty to Federal Conspiracy, Firearms ChargesRead the Press Release
RIVERSIDE, California – A Moreno Valley man pleaded guilty today to federal criminal charges for leading a crew that committed at least 15 armed robberies of AutoZone stores in the Inland Empire, making off with a total of more than $11,000 in cash.
Daeon Raishawn Cox, 21, pleaded guilty to one count of conspiracy to interfere with commerce by robbery, and one count of brandishing a firearm in furtherance of a crime of violence. United States District Judge Jesus G. Bernal has scheduled an October 7 sentencing hearing, where Cox, who remains in federal custody, will face a statutory maximum sentence of 27 years and a mandatory minimum of seven years in federal prison.
Cox admitted in his plea agreement that from September 5, 2018 until December 13, 2018, he and his co-conspirators robbed AutoZone stores at gunpoint. On December 5, 2018, Cox robbed an AutoZone store in Redlands hours after his co-conspirator scouted the store and looked for the location of its money safe, according to court documents.
Later that same day, the same co-conspirator dropped off Cox, who was armed with an AR-style assault rifle, at the AutoZone store in Redlands, the plea agreement states. Once inside the store and while the co-conspirator waited outside as the getaway driver, Cox pointed the rifle at the AutoZone employees and forced one of them to give him approximately $1,500 belonging to the store, the plea agreement states.
One of Cox’s co-defendants, Dashon Raymond White, 25, pleaded guilty on July 1 to conspiracy to one count of interfere with commerce by robbery and one count of brandishing a firearm in furtherance of a crime of violence. White faces a statutory maximum sentence of 27 years in federal prison at his September 23 sentencing hearing.
Cox, White and co-defendant Jada Shardae Allen, 19, were caught after an attempted robbery by Cox and White at an AutoZone on December 12, 2018 was interrupted by Fontana police, who had been conducting surveillance at an AutoZone store in that city, according to an affidavit filed with a criminal complaint in the case. The suspects led police on a high-speed freeway chase that ended when they crashed and tried to run away. All three suspects were eventually apprehended by officers.
Allen’s trial in this matter is scheduled for October 8.
This case was investigated by the Federal Bureau of Investigation, the Fontana Police Department, the San Bernardino County Sheriff’s Department, the Riverside Police Department, the Hemet Police Department, the Redlands Police Department, the Moreno Valley Police Department, the Riverside County District Attorney’s Office and the San Bernardino County District Attorney’s Office.
This case is being prosecuted by Assistant United States Attorney Jerry C. Yang of the Riverside Branch Office.
Former Customs and Border Protection Officer Pleads Guilty to Federal Charges for Running Illegal Firearms Business, Tax EvasionRead the Press Release
LOS ANGELES – A former U.S. Customs and Border Protection watch commander at the Long Beach Seaport pleaded guilty today to federal criminal charges for running an illegal gun-selling business, unlawfully possessing more than 40 machine guns and other prohibited firearms, failing to disclose his foreign financial interests and contacts in China in order to obtain a secret-level security clearance, and cheating on his federal income taxes.
Wei Xu, 56, of Santa Fe Springs, pleaded guilty to four felonies: unlawfully engaging in the business of dealing in firearms, unlawfully possessing unregistered firearms, making materially false statements to a federal agency, and tax evasion.
United States District Judge R. Gary Klausner has scheduled a January 14, 2020 sentencing hearing, where Xu will face a statutory maximum sentence of 25 years in federal prison. Xu has been in federal custody since his arrest on February 5.
Xu admitted in his plea agreement and in open court today, that he sold at least 99 firearms without the required federal license between the late 1990s and his arrest. To increase the profit margin of his unlawful firearms selling business, Xu exploited his status as a law enforcement officer to purchase and then transfer “off-roster” handguns that cannot be sold to the general public by a federal firearms license (FFL) dealer, according to the plea agreement.
Xu also sold or transferred firearms within days or weeks from the date he purchased them and operated several accounts on Internet marketplaces to advertise his firearm business, according to court documents.
According to plea documents and Xu’s admissions in court today, in July and August 2018, Xu sold four firearms to an undercover agent posing as a buyer, and Xu unlawfully sold three of the firearms out of the trunk of his car. The firearms included an “off-roster” pistol, high-capacity magazines, and a short-barreled rifle, the plea agreement states.
A search of Xu’s residence on February 5 recovered more than 250 firearms, including 41 fully-automatic firearms or machineguns and two additional short-barreled rifles – all of which never were registered with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) as required by federal law.
Xu also admitted that he made materially false statements on three questionnaires submitted to the Office of Personnel Management (OPM) to obtain a secret-level security clearance. OPM is a federal agency that oversees applications for security clearances for federal government employees.
Specifically, Xu maintained foreign financial interests and had nearly weekly contacts with his business associates in China as part of his employment as an accounts manager for a China-based auto parts import company. Xu collected a commission for his work and remitted the profit to his China-based business partners. But on his security clearance questionnaires in 2003, 2011 and 2015, Xu falsely denied maintaining close and continuing contacts with foreign nationals, denied having a foreign financial interest, and denied having a business venture with a foreign national.
Finally, Xu admitted in his plea agreement that he willfully evaded the payment federal income tax from 2005 to 2017 by setting up Trans Pacific Group, Inc. Xu used this Florida-incorporated sham company as a means to claim fictional ordinary business losses to offset his ordinary income and fraudulently evade tax due to the Internal Revenue Service.
“Mr. Xu’s public life as a federal officer masked his private greed and disrespect for the law, which he demonstrated through illegal weapons sales, tax evasion, and lying about contacts with foreign nationals,” said United States Attorney Nick Hanna. “Public officials promise to act with integrity when they take an oath of office, and we will zealously prosecute those who mock the laws they have sworn to uphold.”
“ATF Los Angeles Field Division regularly works with our federal, state and local law enforcement partners to protect the public from violent criminals and firearms traffickers,” said the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge of Los Angeles Field Division Carlos A. Canino. “We are proud to have assisted in bringing this case to a positive conclusion.”
“Mr. Xu's plea to a variety of offenses including trafficking in illegal firearms, tax fraud and lying to his government employer about Chinese contacts in order to maintain a security clearance, is a necessary step in holding him accountable for years of criminal activity,” said Paul Delacourt, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “Our communities and our nation are more secure now that Mr. Xu has been stripped of his access to guns and confidential information.”
“As admitted in court today, Xu made many bad decisions during his employment as a sworn law enforcement officer with the United States Customs and Border Protection – least of all was his ongoing decision to evade the payment of taxes due to the IRS for a period of over 10 years through the use of a sham corporation,” stated Special Agent in Charge Ryan L. Korner with IRS Criminal Investigation. “IRS Criminal Investigation is proud to partner with the FBI and ATF in this thorough investigation and hopes the message is clear--operating outside the law and failing to pay taxes has severe consequences.”
This matter is being investigated by the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; and IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorneys Annamartine Salick of the Terrorism and Export Crimes Section, Valerie L. Makarewicz of the Major Frauds Section, and Brent A. Whittlesey of the Asset Forfeiture Section.
ITT Cannon to Pay $11 Million to Settle False Claims Allegations for Untested Electrical ConnectorsRead the Press Release
ITT Cannon has agreed to pay the United States $11 million to settle False Claims Act allegations that it supplied electrical connectors to the military that had not been properly tested, the Justice Department announced today. ITT sold the untested connectors both directly to the Government and through distributors and other government contractors which incorporated them into technology and equipment sold to the Government.
“Failure to comply with testing requirements undermines the integrity of essential government equipment and technology, and thereby reduces its durability and reliability,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “This settlement demonstrates that we will hold contractors accountable when they fail to deliver what they were paid to deliver.”
“Defense contractors agree to follow strict manufacturing and testing protocols to ensure that our government receives only the best equipment,” said Nicola T. Hanna, U.S. Attorney for the Central District of California. “This multimillion dollar settlement is designed to ensure that ITT does not engage in this type of misconduct in the future, and this case should serve as a warning to any government contractor who is not completely upfront about its testing results.”
The settlement resolves allegations that from September 2008 to March 21, 2017, ITT did not conduct the required periodic testing on six models of electrical connectors. In December 2010, the Government learned that ITT had not done this testing and ITT promised the Government that it would conduct remedial testing and report the result to the Government. Shortly thereafter, in February 2011, ITT experienced several failures in its remedial testing. ITT did not immediately disclose these failures but represented to the Government that it was merely behind in the remedial testing.
In March 2017, the Defense Logistics Agency (DLA) issued an order stopping the shipment of the six connectors. In June 2017, ITT issued six Government Industry Data Exchange Program notices (GIDEP) disclosing to industry its failure to conduct required testing, its test failures, and changes in the processes, materials, construction, sourcing and design of the connectors. DLA then removed the six ITT connectors from the Qualified Products List (QPL). The QPL lists products that have met the qualification requirements set forth in the applicable Military Specifications (Mil Specs), which are uniform engineering and technical requirements for certain products used by the Department of Defense. DLA’s removal of ITT from the QPL precluded ITT from selling parts to the military covered by the Mil Specs. Recently, ITT has requalified one of the connectors for sale to the Government.
The settlement resolves allegations filed in a lawsuit by Ralph Tatgenhorst, the former regional quality manager at ITT’s Santa Ana facility, in federal court in Los Angeles, California, under the whistleblower (or “qui tam”) provisions of the False Claims Act. These provisions permit private individuals to sue on behalf of the Government for false claims and to share in any recovery. Mr. Tatgenhorst will receive $2,090,000 as his share of the settlement amount.
The settlement with ITT was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch; the United States Attorney’s Office for the Central District of California; the Defense Logistics Agency; the Defense Criminal Investigative Service; the Naval Criminal Investigative Service; the National Reconnaissance Office; the Office of the Inspector General for the National Aeronautics and Space Administration; the Air Force Office of Special Investigations; the Defense Contracts Audit Agency; and the United States Coast Guard Office of Inspector General. The claims resolved by the civil settlement are allegations only and there has been no determination of liability.
The lawsuit is captioned U.S. ex rel. Tatgenhorst v. ITT Corporation, PEI/Genesis, Inc., No. 14-7424 JAK (C.D.Cal.).
ITT Cannon to Pay $11 Million to Settle False Claims Act Allegations that It Sold Untested Electrical Connectors to the MilitaryRead the Press Release
LOS ANGELES – ITT Cannon has agreed to pay the United States $11 million to settle False Claims Act allegations that it supplied electrical connectors to the military that had not been properly tested, the Justice Department announced today. ITT sold the untested connectors both directly to the Government and through distributors and other government contractors which incorporated them into technology and equipment sold to the Government.
“Defense contractors agree to follow strict manufacturing and testing protocols to ensure that our government receives only the best equipment,” said Nick Hanna, U.S. Attorney for the Central District of California. “This multimillion dollar settlement is designed to ensure that ITT does not engage in this type of misconduct in the future, and this case should serve as a warning to any government contractor who is not completely upfront about its testing results.”
“Failure to comply with testing requirements undermines the integrity of essential government equipment and technology, and thereby reduces its durability and reliability,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “This settlement demonstrates that we will hold contractors accountable when they fail to deliver what they were paid to deliver.”
The settlement resolves allegations that from September 2008 to March 21, 2017, ITT did not conduct the required periodic testing on six models of electrical connectors. In December 2010, the Government learned that ITT had not done this testing and ITT promised the Government that it would conduct remedial testing and report the result to the Government. Shortly thereafter, in February 2011, ITT experienced several failures in its remedial testing. ITT did not immediately disclose these failures but represented to the Government that it was merely behind in the remedial testing.
In March 2017, the Defense Logistics Agency (DLA) issued an order stopping the shipment of the six connectors. In June 2017, ITT issued six Government Industry Data Exchange Program notices (GIDEP) disclosing to industry its failure to conduct required testing, its test failures, and changes in the processes, materials, construction, sourcing and design of the connectors. DLA then removed the six ITT connectors from the Qualified Products List (QPL). The QPL lists products that have met the qualification requirements set forth in the applicable Military Specifications (Mil Specs), which are uniform engineering and technical requirements for certain products used by the Department of Defense. DLA’s removal of ITT from the QPL precluded ITT from selling parts to the military covered by the Mil Specs. Recently, ITT has requalified one of the connectors for sale to the Government.
The settlement resolves allegations filed in a lawsuit by Ralph Tatgenhorst, the former regional quality manager at ITT’s Santa Ana facility, in federal court in Los Angeles, California, under the whistleblower (or “qui tam”) provisions of the False Claims Act. These provisions permit private individuals to sue on behalf of the Government for false claims and to share in any recovery. Mr. Tatgenhorst will receive $2,090,000 as his share of the settlement amount.
The settlement with ITT was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch; the United States Attorney’s Office for the Central District of California; the Defense Logistics Agency; the Defense Criminal Investigative Service; the Naval Criminal Investigative Service; the National Reconnaissance Office; the Office of the Inspector General for the National Aeronautics and Space Administration; the Air Force Office of Special Investigations; the Defense Contracts Audit Agency; and the United States Coast Guard Office of Inspector General. The claims resolved by the civil settlement are allegations only and there has been no determination of liability.
This matter was litigated by Assistant United States Attorney Kent A. Kawakami of the Civil Division’s Civil Fraud Section and Department of Justice Senior Trial Counsel Alicia Bentley.
The lawsuit is captioned U.S. ex rel. Tatgenhorst v. ITT Corporation, PEI/Genesis, Inc., No. 14-7424 JAK (C.D.Cal.).
22 Los Angeles-Based Members of MS-13 Transnational Gang Named in Federal Racketeering Case that Alleges String of Grisly MurdersRead the Press Release
LOS ANGELES – An investigation by federal and local authorities has resulted in a federal racketeering case that charges 22 people linked to the MS-13 transnational gang, most of whom allegedly participated in a series of murders, including several slayings in which victims were hacked to death with machetes in the Angeles National Forest.
A 12-count indictment unsealed Monday afternoon alleges that members and associates of the gang murdered seven people over the last two years. The indictment charges gang leaders who allegedly authorized and coordinated the murders. Also charged are gang members who allegedly murdered and attempted to murder rival gang members, those who were perceived to be cooperating with law enforcement, and, in one instance, a homeless man who was temporarily living in a park controlled by the gang.
The indictment focuses on a particularly violent subset of the gang known as the Fulton clique, which operates in the San Fernando Valley and has recently seen an influx of young immigrants from Central America. Under the influence of these young gangsters, younger associates who wanted to become members of MS-13 were “required to kill an MS-13 rival or someone perceived to be adverse to MS-13 to be initiated into MS-13,” according to the indictment.
In one murder detailed in the indictment, several MS-13 members allegedly targeted a rival gang member who was believed to have defaced MS-13 graffiti. On March 6, 2017, according to the indictment, the rival gang member was abducted, choked, and driven to a remote location in the Angeles National Forest, where six people attacked him with a machete. The victim was dismembered, and his body parts were thrown into a canyon after one of the defendants allegedly cut the heart out of the victim’s body.
The federal RICO case – which was unsealed Monday during arraignments for three defendants who were taken into custody over the past several days in the Los Angeles area – is the product of an investigation by the Los Angeles Metropolitan Task Force on Violent Gangs, which is made up of special agents with the Federal Bureau of Investigation, officers with the Los Angeles Police Department, and deputies with the Los Angeles County Sheriff’s Department. A fourth defendant was arrested over the weekend in Oklahoma.
Over the past year, the other 18 defendants named in the indictment were taken into custody, some on state charges and some on federal charges previously filed. The superseding indictment announced today, which was returned by a federal grand jury on July 9, adds 15 defendants to an indictment filed in March.
“We have now taken off the streets nearly two dozen people associated with the most violent arm of MS-13 in Los Angeles, where the gang is believed to have killed 24 people over the past two years,” said United States Attorney Nick Hanna. “This investigation has been an unqualified success. The collaborative law enforcement effort solved several murder cases and dealt a severe blow to members of the gang who engaged in acts of brutality not seen in the region for over 20 years. The prosecution of these defendants would not have been possible without the backing of local law enforcement, including District Attorney Jackie Lacey, who has supported our efforts every step of the way and has dedicated substantial resources to ensure that all of these defendants get the justice they deserve.”
“Taking violent offenders off the street should send a message to MS-13 members and their associates that medieval-style violence and senseless murder will not be tolerated in Los Angeles,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Working with our local partners, we expect to impact MS-13’s influence in gang-occupied communities.”
“The greatest tragedy in these cases is that these young victims likely left their homelands hopeful that in the United States they would find safety and prosperity,” Los Angeles County District Attorney Jackie Lacey said. “Instead, these victims had the misfortune of crossing paths with violent gang members who preyed on the vulnerabilities of their immigrant experience. My office will vigorously prosecute these defendants and continue to work with other agencies to enhance public safety in the communities where MS-13 and other brutal gangs operate.”
“Today’s charges are the product of diligent work and a steadfast resolve that we will not let violent criminals continue to victimize our residents,” said Los Angeles Police Chief Michel Moore. “It can only be accomplished through the shared vision of our state, local, and federal law enforcement partners.”
“The Los Angeles County Sheriff’s Department is always willing to work with our local, state and federal law enforcement counterparts to ensure public safety,” said Sheriff Alex Villanueva.
The 78-page indictment charges all but one of the 22 defendants with conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act. The RICO charge alleges nearly 200 “overt acts,” beginning with the transportation of $1.22 million in narcotics proceeds that were seized in Nebraska in 2010. As part of the RICO conspiracy, members of the gang allegedly committed murders in 2014 and 2015, the second of which is part of a previous racketeering case against the leadership of MS-13 in Los Angeles.
The majority of the conduct outlined in the indictment – including seven murders – started in 2017 and continued into this year. While the indictment focuses on murders committed to increase the gang’s membership, expand the gang’s power and intimidate outsiders, the RICO charge also alleges drug-trafficking activities, including the sale of narcotics to the Fulton clique in Maryland.
In addition to the conspiracy charge, the indictment contains four counts of first-degree murder related to machete, knife and baseball bat killings in the Angeles National Forest, which is within the special maritime and territorial jurisdiction of the United States. Those four murders – along with a fifth that occurred in the Malibu hills and a sixth in that was committed in the Fulton clique’s stronghold of Whitsett Fields Park in North Hollywood – are also charged as violent crimes committed in aid of racketeering (VICAR), and those six counts allege that the victims were killed “for the purpose of gaining entry to and maintaining and increasing position in MS-13 Los Angeles.”
The indictment also contains allegations that the six VICAR murders were committed “in an especially heinous, cruel, or depraved manner in that [they] involved torture or serious physical abuse to the victim.” The 16 defendants charged in relation to those six murders are eligible for the federal death penalty, although the government has not indicated whether it will seek such a sentence for any of the defendants if they are convicted.
In addition to the RICO case announced today, there are two under-seal cases pending against juvenile defendants in United States District Court.
In 2017, as the result of another investigation by the Los Angeles Metropolitan Task Force on Violent Gangs, a federal grand jury issued a RICO indictment that targeted MS-13’s leadership across the Los Angeles region. That indictment, which alleged three murders attributed to the Fulton clique, charged 34 defendants, 14 of whom have pleaded guilty. Nineteen of the defendants are currently scheduled for trial on September 24. One defendant in that case – Sergio Alexander Galindo, also known as “Killer” – remains a fugitive.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The federal RICO case is being prosecuted by Assistant United States Attorney Joanna Curtis of the Violent and Organized Crime Section and Deputy District Attorneys Eric W. Siddall and Carmelia Mejia, Los Angeles County Deputy District Attorneys who have been designated as Special Assistant United States Attorneys.
IndictmentFormer Cheerleading Coach Who Committed Sexual Assault on a Cruise Ship Sentenced to 6½ Years in Federal PrisonRead the Press Release
LOS ANGELES – A former cheerleading coach was sentenced today to 78 months in federal prison for sexually assaulting an intoxicated woman on a cruise ship bound from Long Beach to Ensenada, Mexico during the summer of 2015.
Anthony Paul De La Torriente, 30, of Simi Valley, was sentenced today by United States District Judge Dale S. Fischer, who also ordered him to register as a sex offender for the rest of his life. In imposing sentence, Judge Fischer said, “I hope that the fact that a jury of (the victim’s) peers believed her provides some comfort. I believe her too.”
On February 13, a federal jury found De La Torriente guilty of one count of sexual abuse and one count of abusive sexual contact. In reaching the verdict, the jury found that De La Torriente knew the victim was physically unable to decline participation or she had communicated unwillingness to engage in the sexual act.
According to the evidence presented at trial, De La Torriente volunteered to stay alone in the victim’s cabin with the victim, whose severe intoxication from a daytime excursion in Ensenada had worried their colleagues. Once alone with the victim, while the colleagues were away getting food on the cruise ship, De La Torriente sexually assaulted her. When their colleagues returned, they found the victim’s cabin door had been double-locked from the inside. When De La Torriente eventually unlocked the door and allowed their colleagues inside, the victim identified De La Torriente as her attacker.
The victim reported the assault to the cruise ship’s medical and security staff. Swabs taken from the victim’s body matched De La Torriente’s DNA, while swabs taken from inside and outside of his underwear matched the victim’s DNA.
This matter was investigated by the Federal Bureau of Investigation.
This case was prosecuted by Assistant United States Attorneys Cassie D. Palmer of the Public Corruption and Civil Rights Section and Jeffrey M. Chemerinsky of the Violent and Organized Crime Section.
Ex-U.S. Navy Contract Official Sentenced to More than 5 Years in Prison for Bribery Scheme Where He Netted $1.2 Million in KickbacksRead the Press Release
LOS ANGELES – A former civilian employee of the United States Navy who was a senior procurement official for Naval Base Ventura County and who received $1.2 million in illegal kickbacks was sentenced today to 70 months in federal prison.
Fernando Barroso Sr., 69, of Oxnard, was sentenced by United States District Judge John F. Walter. In March, Barroso pleaded guilty to one count of conspiracy and one count of subscribing to a false federal income tax return. Barroso admitted in his plea agreement that he defrauded the United States, submitted false claims for payment and accepted bribes.
Barroso worked for 22 years as the master scheduler for the Public Works Department at the Naval Base, which included three facilities – Point Mugu, Port Hueneme and San Nicolas Island. In this role, Barroso was an “approving official” responsible for approving material purchases, service contracts, vendors and payments to vendors.
Barroso conspired with Theodore Bauer, a Ventura County businessman who operated three entities that received contracts from the Navy. Barroso and Bauer entered into an arrangement in 2008 where Barroso issued and approved work orders and purchase orders for Bauer’s companies. Bauer submitted false invoices on behalf of his companies, and Barroso approved invoices and payments to Bauer’s companies – even though work was not being performed. In return, Bauer gave Barroso 50 percent of all proceeds generated by the scheme.
Prior to September 13, 2011, Bauer paid Barroso in cash – a figure that exceeded $375,000. Beginning on September 14, 2011, when Barroso created F. Barroso & Sons, Bauer paid the kickbacks by issuing checks payable to Barroso’s corporation. In December 2013, Barroso purchased a majority stake in a maintenance company, and Bauer paid kickbacks in the form of checks to that company as well. The total amount of kickbacks paid by Bauer to Barroso in the form of checks was $846,100.
Barroso admitted in his plea agreement that he violated government procurement regulations and violated conflict of interest laws by approving contract payments to the maintenance company he controlled. Barroso further admitted that some of the invoices issued by the maintenance company were simply fraudulent.
Barroso also admitted that he failed to report $95,200 of kickbacks on his 2011 tax return, and that he claimed $331,225 of fictitious deductions on his 2012 tax returns. These violations caused a tax loss to the government of $105,039. Judge Walter ordered Barroso to pay $1,077,718 in restitution to the U.S. Navy and Internal Revenue Service.
Bauer pleaded guilty in November 2018 to conspiracy to commit bribery and is scheduled to be sentenced by Judge Walter on July 22.
This matter was investigated by IRS Criminal Investigation, the Defense Criminal Investigative Service, and the Naval Criminal Investigative Service.
The cases against Barroso and Bauer are being prosecuted by Assistant United States Attorney Daniel J. O’Brien of the Public Corruption and Civil Rights Section.