Central District of California
Press releases recorded for this federal judicial district.
Federal Grand Jury Charges San Fernando Valley Man with Planning Long Beach Terror Attack in Plot to Cause Mass CasualtiesRead the Press Release
A federal grand jury has indicted a San Fernando Valley man for his role in planning to bomb a rally in Long Beach last month for the purpose of causing mass casualties. Assistant Attorney General for National Security John C. Demers and U.S. Attorney Nicola T. Hanna for the Central District of California made the announcement.
Mark Steven Domingo, 26, of Reseda, California, a former U.S. Army infantryman who was deployed to Afghanistan, was previously arrested on a criminal complaint in this case. The indictment returned today formally charges him with providing material support to terrorists and attempted use of a weapon of mass destruction. If convicted, he would face a statutory maximum sentence of life in federal prison.
Domingo, who has been in federal custody since his arrest last month, is scheduled to be arraigned on the indictment on May 31 in United States District Court.
According to the affidavit filed with the criminal complaint, Domingo, in online posts and in conversations with an FBI source, expressed support for violent jihad, a desire to seek retribution for attacks against Muslims, and a willingness to become a martyr. After considering various attacks – including targeting Jewish people, churches, and police officers – Domingo decided to bomb a rally scheduled to take place in Long Beach last month. As part of the plot, Domingo asked a confederate – who actually was working with the FBI as part of the investigation – to find a bomb-maker. Domingo then purchased and provided to the confederate and the bomb-maker, who was actually an undercover officer, several hundred nails to be used as shrapnel for the bombs.
Leading up to the planned attack, Domingo called for another event similar to the October 2017 mass shooting in Las Vegas to give Americans “a taste of the terror they gladly spread all over the world,” the complaint states. Following an attack on Muslims in New Zealand on March 15, Domingo wrote in an online post, “there must be retribution,” according to the complaint.
On April 26, Domingo received what he thought was a live bomb, but in fact was an inert explosive device that was delivered by the undercover law enforcement officer. According to the criminal complaint, after receiving the bomb, Domingo drove his confederate and the undercover officer to Long Beach to scout the location Domingo planned to attack. While there, Domingo discussed finding the most crowded areas in order to kill the most people. Domingo was arrested shortly after returning from scouting the intended attack location.
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 is the product of an investigation by the FBI’s Joint Terrorism Task Force. JTTF members who participated in the investigation include the FBI, the Los Angeles Police Department, the Naval Criminal Investigative Service, the Los Angeles County Sheriff's Department, and the Long Beach Police Department.
This case is being prosecuted by Assistant United States Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section at the United States Attorney’s Office for the Central District of California and Trial Attorney Ranganath Manthripragada of the Counterterrorism Section at the Department of Justice’s National Security Division.
Four People Linked to Santa Fe Springs Street Gang Sentenced to Lengthy Prison Terms for Racketeering and Drug OffensesRead the Press Release
LOS ANGELES – Four members of the violent, Mexican Mafia-affiliated Canta Ranas street gang have received lengthy prison sentences for violating multiple federal laws, including participating in racketeering, drug trafficking, and money laundering conspiracies.
Three defendants linked to Canta Ranas, a gang that operates primarily in Santa Fe Springs and Whittier, were sentenced on Monday by United States District Judge R. Gary Klausner. In two separate jury trials last year, they were convicted of conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act, and other crimes.
The defendants sentenced on Monday were:
- Donald Goulet, a.k.a. “Wacky,” 32, sentenced to 20 years in federal prison. Goulet was a foot soldier involved in drug trafficking, collecting extortionate “taxes,” and committing violent crimes on behalf of Canta Ranas such as a home invasion robbery, during which Goulet and a co-conspirator tied up victims with duct tape at gun point while they ransacked the victims’ home. Goulet was convicted of RICO conspiracy, conspiracy to distribute methamphetamine, and conspiracy to commit money laundering.
- Emanuel Higuera, a.k.a. “Blanco,” 34, sentenced to 17 years in federal prison for drug trafficking on behalf of Canta Ranas, and who was found guilty of RICO conspiracy, conspiracy to distribute methamphetamine, and possession with intent to distribute methamphetamine.
- Monica Rodriguez, a.k.a. “Smiley,” 41, a “secretary” for Mexican Mafia member David Gavaldon, who is currently serving a life sentence in state prison for a murder conviction. Rodriguez, who was sentenced to 14 years in federal prison for her crimes, visited Gavaldon at Pelican Bay State Prison to order the death of another member of the organization. Rodriguez also drove her son to a gang meeting for the purpose of him receiving a disciplinary beating from other Canta Ranas gang members, according to evidence presented at trial. Rodriguez was convicted of RICO conspiracy, conspiracy to distribute methamphetamine, and conspiracy to commit money laundering.
Earlier this month, another defendant, Enrique Holguin, a.k.a. “Boxer,” 56, was sentenced to 14 years in federal prison for RICO conspiracy and for committing a violent act in aid of racketeering (VICAR) for his role in the attempted assault of a fellow inmate at the Metropolitan Detention Center in downtown Los Angeles because the intended target was perceived to be an informant for law enforcement authorities.
These convictions and sentencings arose from a 2016 federal grand jury indictment charging 51 defendants that was the result of Operation “Frog Legs.” Prosecutors have secured more than 20 convictions so far in this matter.
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.
The trial prosecutors for these matters were Assistant United States Attorneys Carol Alexis Chen, Victoria A. Degtyareva, Kathy Yu, and Chelsea Norell, who are all members of the International Narcotics, Money Laundering, and Racketeering Section.
Man Who Stole Critically Endangered Ring-Tailed Lemur from Santa Ana Zoo Agrees to Plead Guilty to Federal Criminal ChargeRead the Press Release
SANTA ANA, California – A man who broke into the Santa Ana Zoo after hours and stole North America’s oldest-living ring-tailed lemur in captivity to keep the endangered animal as a pet has agreed to plead guilty to a federal criminal charge.
Aquinas Kasbar, 19, of Newport Beach, has agreed to plead guilty to one misdemeanor count of unlawfully taking an endangered species. The charge carries a statutory maximum penalty of one year in federal prison and a $100,000 fine. Kasbar’s initial court appearance has been scheduled for May 28 in United States District Court in Santa Ana.
According to his plea agreement filed today, on July 27, 2018, Kasbar broke into the Santa Ana Zoo after it had closed for the day. While in the zoo, Kasbar used bolt cutters to cut a hole in the zoo’s enclosures for lemurs and capuchin monkeys, which enabled several of the animals to escape, though they were later recovered, according to court documents.
Kasbar admitted in his plea agreement to stealing Isaac, a 32-year-old, ring-tailed lemur (lemur catta), and North America’s oldest ring-tailed lemur in captivity. (The life span of a lemur typically is 20 to 25 years.) The ring-tailed lemur is on a list of the 25 most endangered primates, and ring-tailed lemurs are endangered, in part, because of the illegal pet trade, according to the plea agreement.
After stealing Isaac, Kasbar placed the animal in a plastic drawer that lacked ventilation holes, court papers state. The next day, Kasbar abandoned Isaac in front of a Newport Beach hotel, leaving him in the same plastic drawer with two notes placed on it, which read, “Lemur (with tracker)” and “This belongs to the Santa Ana Zoo it was taken last night please bring it to police,” the plea agreement states. Kasbar’s actions resulted in a loss to the Santa Ana Zoo of approximately $8,486, court papers state.
This case is being investigated by the Federal Bureau of Investigation, the United States Fish and Wildlife Service, the Newport Beach Police Department, and the Santa Ana Police Department.
This matter is being prosecuted by Assistant United States Attorneys Daniel H. Ahn of the Santa Ana Branch Office and Erik M. Silber of the Environmental and Community Safety Crimes Section.
Ex-Mirae Bank Executive Sentenced to More than 5 Years in Prison for Loan Fraud that Caused Large Losses to the BankRead the Press Release
LOS ANGELES – The former chief marketing officer at the now-defunct Mirae Bank was sentenced today to 70 months in federal prison for his role in a scheme that caused the Koreatown-based lender to issue more than $15 million in fraudulent loans, and ultimately caused the bank to suffer severe losses.
Ataollah Aminpour, 60, of Beverly Hills, was sentenced today by United States District Judge Dale S. Fischer, who also ordered Aminpour to pay $7,519,084 in restitution. Judge Fischer then remanded Aminpour, who had been on bond, into federal custody to begin serving his sentence immediately.
Aminpour, who is also known as John and Johnny Aminpour, pleaded guilty in December 2017 to one felony count of making a false statement to a financial institution.
According to court documents, Aminpour held himself out as a successful businessman who could help people obtain financing for gas station and car wash businesses with little or no down payment. In some instances, Aminpour would identify a business for the borrower to purchase, and would negotiate the sales price. On the commercial loan applications that Aminpour would submit to the bank on behalf of the borrower, however, Aminpour would overstate the actual purchase price of the business, thereby causing the bank to issue inflated loan amounts that were not fully secured.
From 2005 to 2007, Aminpour, along with other participants, submitted fraudulent commercial loan applications to Mirae Bank, a federally insured financial institution. In his role as a senior bank executive, Aminpour submitted and knowingly caused others to submit false information not only about the true purchase price of the business but also about the assets of the borrowers and the finances of the businesses being purchased. Aminpour also allowed borrowers to circumvent the bank’s down payment requirements by arranging for money to be transferred into escrow accounts so it would falsely appear to Mirae Bank that the borrowers were making large down payments. As a result, borrowers were able to acquire businesses with little to no money down, with Aminpour earning commissions as a result and, in some instances, with Aminpour misappropriating the excess loan proceeds for himself.
For example, Aminpour made false statements to Mirae Bank in an application for a $4.2 million loan in connection with the purchase a car wash in Maywood. When he pleaded guilty, Aminpour admitted that, on the application, he falsely stated that the purchase price of the car wash was $6.65 million when the real purchase price was $3.25 million.
In his plea agreement, Aminpour further admitted that his scheme involved false statements in six loan applications submitted between November 2005 and February 2007 for loans totaling $16.7 million, and that losses on those loans exceeded $7.5 million.
In addition to the loans charged as part of the fraud in this case, Aminpour referred approximately $150 million in loans to Mirae Bank, and the losses on those loans played a significant role in the bank’s collapse in 2009, according to court documents.
After the bank’s failure, the FDIC took over Mirae Bank as its receiver. FDIC and Wilshire Bank, which acquired Mirae Bank’s assets from FDIC, together suffered more than $33 million in losses on the Aminpour-referred loans. Wilshire Bank was subsequently acquired by, and now does business as, Bank of Hope.
The case was investigated by the Federal Deposit Insurance Corporation’s Office of Inspector General, the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Federal Housing Finance Agency’s Office of Inspector General.
This matter is being prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.
Ex-Credit Union Manager Pleads Guilty to Bank Fraud in $40 Million Embezzlement that Rendered Institution InsolventRead the Press Release
LOS ANGELES – The former manager of CBS Employees Federal Credit Union pleaded guilty today to one felony count of bank fraud for embezzling $40 million from his employer over the course of 20 years – spending the money on gambling; homes in California, Nevada and Mexico; and travel by private jet – in a scheme that ultimately led to the credit union becoming insolvent.
Edward Martin Rostohar, 62, of Studio City, entered his plea before United States District Judge Otis D. Wright II, who scheduled a sentencing hearing for September 16, where Rostohar will face a statutory maximum sentence of 30 years in federal prison.
According to his plea agreement, Rostohar 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 plea agreement states.
Rostohar sometimes disguised his unauthorized payments, and hid the proceeds of the fraud, by directing the stolen funds to shell companies he controlled, court papers state. Rostohar also admitted to submitting credit union checks to make personal credit card payments.
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 $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, according to an affidavit filed with a criminal complaint in the case. 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, according to court documents.
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, expensive watches, and Tiffany 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 Brown of the Major Frauds Section and Victor Rodgers, deputy chief of the Asset Forfeiture Section.
Charter School Founder and CEO Sentenced to 2½ Years in Federal Prison for Misappropriating $3.2 Million in Public Education FundsRead the Press Release
LOS ANGELES – The founder and ex-chief executive officer of Celerity Educational Group, a Koreatown-based non-profit owner and operator of charter schools, was sentenced today to 30 months in federal prison for conspiring to misappropriate approximately $3.2 million in public education funds allocated to some of her company’s schools.
Vielka Maritza McFarlane, 56, of Sylmar, was sentenced by United States District Judge R. Gary Klausner, who told her, “If you want to help your students, you can teach them that if they make mistakes, they have to pay the price and be responsible for their own actions.”
McFarlane, who pleaded guilty on January 8 to one count of conspiracy to misappropriate and embezzle public funds, founded Celerity Educational Group in 2004 and served as its CEO until April 2015. Between April 2012 and April 2017, McFarlane also was CEO of Celerity Global Development, a non-profit California corporation, which provided various management services to the Celerity charter schools in exchange for a percentage of the schools’ revenues.
From July 2009 to April 2017, McFarlane and her co-conspirators caused the Celerity charter schools and Celerity Educational Group to falsely certify to federal, state and local authorities that they were complying with all rules and regulations governing the use of public funds that they received. McFarlane used public funds – money that should have been spent on educational purposes at Celerity charter schools in Los Angeles, Compton and Pasadena – for a variety of personal expenses and improper expenditures.
Those expenses included unauthorized first-class airfare and foreign travel, luxury items purchased from shops in Beverly Hills and Tokyo, expensive meals at high-end restaurants, airfare and lodging for herself, her family members, and others in January 2013 to attend President Barack Obama’s second inauguration, and customized recreational bicycles for the use of McFarlane and her spouse.
“Every dollar defendant spent on herself and her family members, whether it was for alcoholic drinks at expensive restaurants or checked bags for her trip to Washington, D.C., for a presidential inauguration, was a dollar less for the underserved yet deserving children of the Celerity Charter Schools and an insult to the hardworking individuals of Los Angeles who pay their taxes to help fund these needed schools,” prosecutors wrote in the government’s sentencing papers.
From late 2012 to June 2014, McFarlane also conspired to use approximately $3 million in public funds – a substantial portion of which came from the United States Department of Education – awarded to Celerity’s charter schools in Los Angeles to purchase and renovate an office building in Columbus, Ohio, where she oversaw the founding of a separate charter school.
McFarlane also used public funds awarded to the Celerity charters schools in 2013 to pay $157,957 for the security deposit, monthly rent and renovations at a soundstage and recording studio in Canoga Park, which was rarely used by the Celerity charter schools. McFarlane pursued a proposal to allow a digital-production company to use the studio space in exchange for 200,000 shares in the digital-production company, which would have been issued to a separate for-profit media-production business called The Muse Collective.
She admitted in her plea agreement that the payments for her personal use, the Ohio property purchase, and the Canoga Village studio were improper; she lacked authorization to make those payments and expenditures; and the payments violated rules, regulations and laws governing the use of public funds that the Celerity charter schools received.
Grace Canada, another Celerity executive, has pleaded not guilty to a 23-count federal grand injury indictment alleging conspiracy and wire fraud, among other offenses. She is scheduled to go to trial on November 12.
In June 2017, the U.S. Attorney’s Office entered into a Non-Prosecution Agreement with Celerity Educational Group, now known as ISANA Academies, in which ISANA recognized and acknowledged the misconduct committed by McFarlane, agreed to cooperate fully with the government’s investigation, and agreed to implement certain reforms designed to ensure that similar conduct does not occur again.
By entering into the Non-Prosecution Agreement, the U.S. Attorney’s Office recognized that ISANA is responsible for educating thousands of students from underserved neighborhoods throughout Los Angeles County, and has demonstrated a strong commitment to its students and their academic achievement. The reforms now implemented by ISANA should allow it to continue serving its students and communities. The United States Attorney’s Office recognizes the cooperation of ISANA and its board of directors throughout its ongoing investigation.
This case was investigated by the United States Department of Education, Office of Inspector General; the Federal Bureau of Investigation, the United States Postal Inspection Service; IRS Criminal Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and the United States Secret Service. The Los Angeles Unified School District’s Office of Inspector General was also part of the investigative team and has played an instrumental role in the ongoing investigation.
This case is being prosecuted by Assistant United States Attorneys Julian L. André and Valerie L. Makarewicz of the Major Frauds Section.
Semiconductor Engineer Arrested on Charges that He Netted Large Profits in Illegal Insider Trades of His Employer’s StockRead the Press Release
SANTA ANA, California – A former engineer at Skyworks Solutions, Inc. surrendered to law enforcement today on a federal criminal complaint alleging he obtained his employer’s non-public financial results without authorization and then illegally used the confidential information to purchase large amounts of Skyworks securities prior to the information being made public.
Yuh-Yue Chen, 52, of Taiwan, formerly of Irvine, has been charged with one felony count of insider trading. Chen is scheduled to make his initial court appearance this afternoon in United States District Court in Santa Ana.
According to an affidavit filed with the criminal complaint, Chen worked as an electrical principal engineer from 2003 until his termination in September 2014 at Skyworks, a publicly traded, Woburn, Massachusetts-based semiconductor company with a branch office and design center in Irvine. As a Skyworks employee, Chen received regular warnings from the company against engaging in insider trading, and as an engineer he was barred from having access to the company’s non-public earnings reports before they were publicly released.
On July 14, 2014, Chen ignored these warnings and gained unauthorized access to the Skyworks finance area on four occasions, according to the affidavit. On July 15, using non-public Skyworks financial information, Chen allegedly purchased 1,300 Skyworks $48 call options – which gives a securities buyer the right to buy certain stock within a specified time frame – at an average price of $1.90. On July 17, Skyworks, which closed at a price of $46.34 per share, released its quarterly earnings report after markets closed. On July 18, Skyworks shares opened at $50.11 per share – a per-share gain of $3.77 – in response to the earnings announcement. On the same day, Chen sold his Skyworks calls for an average price of $3.36, resulting in profits of approximately $484,645, the affidavit states.
Shortly after 9 p.m. on September 15, 2014, two Skyworks employees – in the parking lot outside the company’s Irvine office – caught Chen rifling through documents in the restricted accounting and finance office, the complaint alleges. When one of the employees entered the building and asked Chen to stop, Chen allegedly ran out of the office through a side door and escaped, running through nearby bushes. Chen did not return to Skyworks after this encounter, the affidavit states.
Five days later, Chen flew from Los Angeles International Airport to Taipei, Taiwan without informing anyone at Skyworks, court documents state. Chen was fired on September 30, 2014 for his actions 15 days earlier and after Skyworks had conducted an investigation where Chen was deemed to have been evasive. When Chen returned his work laptop computer by mail to Skyworks, the computer did not have any files or documents on it, the affidavit states.
Law enforcement interviewed Chen at LAX on March 29, 2019, where he confessed to committing insider trading, the complaint states.
If convicted, Chen faces a statutory maximum sentence of 20 years in federal prison.
Chen also faces civil charges in a lawsuit filed last month by the Securities and Exchange Commission that alleges insider trading.
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 Federal Bureau of Investigation.
The case is being prosecuted by Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office.
O.C. Man Who Committed 23 Armed Robberies of Gasoline Stations and Convenience Stores Sentenced to over 8 Years in Federal PrisonRead the Press Release
SANTA ANA, California – A Buena Park man was sentenced today to 100 months in federal prison for committing a series of armed robberies of gasoline stations and convenience stores in Los Angeles and Orange counties where he used a replica firearm to threaten and intimidate store clerks.
Gerardo Sotelo, 28, was sentenced by United States District Judge Josephine L. Staton, who also ordered him to pay $625 in restitution. Sotelo pleaded guilty in February 2019 to four counts of interference with commerce by robbery, and one count of attempted interference with commerce by robbery.
Sotelo’s conviction and sentence arose out of a series of robberies dating back to 2016 that targeted Shell and Chevron gas stations and 7-Eleven convenience stores. During the spree, Sotelo robbed businesses in Brea, Pico Rivera, Norwalk, La Habra, Artesia, Cerritos, Whittier, Cypress, Fullerton, and Fountain Valley.
Sotelo usually wore a hooded sweatshirt, zipped or cinched up to hide his neck during the robberies. He would select an item from the convenience store before approaching the counter, demanding money from the clerk, and brandishing what appeared to be a real semi-automatic pistol at the gas station clerk. Sotelo typically stole between $150 and $250 per robbery, and sometimes he returned to a store he previously robbed weeks before in order to rob it again.
On May 1, 2018, Sotelo was arrested moments after he robbed a Chevron gasoline station convenience store in Artesia, which he previously had robbed on April 18, 2018. Law enforcement found Sotelo in possession of the replica firearm used during the robberies and the $151 he had stolen from the Chevron gas station moments before. When authorities interviewed the clerk who was robbed at gunpoint, the victim said he recognized Sotelo as having robbed him previously at gunpoint on April 18, according to an affidavit filed with a criminal complaint against Sotelo.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Brea Police Department, with substantial assistance from the Fullerton Police Department.
This case was prosecuted by Assistant United States Attorney Scott D. Tenley of the Santa Ana Branch Office.
Federal Grand Jury Charges International Drug Smuggling Ring that Trafficked Kilograms of Cocaine, Heroin and MethamphetamineRead the Press Release
RIVERSIDE, California – A federal grand jury has charged 11 defendants on federal narcotics and money laundering charges stemming from a wiretap investigation into a drug trafficking ring that smuggled more than 107.8 kilograms (237.7 pounds) of cocaine, heroin, and methamphetamine from Mexico into the United States and Canada.
A federal indictment unsealed Thursday charged 11 defendants with conspiracy to distribute controlled substances, possession with intent to distribute controlled substances, and conspiracy to launder monetary instruments. This case is part of a larger wiretap investigation that altogether has resulted in federal indictments charging a total of 18 defendants.
According to the latest indictment, from May 2014 until October 2014, defendant Alvaro Maclovio Morales-Felix, a.k.a. “Pancho Panthera,” 42, of Mexico, arranged for kilogram quantities of narcotics from Mexico into the United States. Co-defendant Clovis Etzel Bravo-Silva, a.k.a. “Gordo,” “El Chavo de los 8s,” 37, of Nicaragua, then would coordinate the shipment and distribution of the narcotics via couriers from the United States into Canada. In one incident in October 2014, the defendants allegedly smuggled 24 kilograms of cocaine and heroin, stuffed in a spare tire, from Wilmington, California to Seattle and ultimately into Canada. In total, law enforcement seized 22.35 kilograms of heroin, 47.9 kilograms of cocaine, and 37.5 kilograms of methamphetamine.
The indictment also alleges that Bravo-Silva and Morales-Felix used co-defendant Manuel Enrique Valdes-Prado, 42, of Mexico, who owned an event ticket reselling business, to launder proceeds from the narcotics distribution, bring the proceeds from Canada into the United States, and then send them out to Morales-Felix in Mexico. For example, on May 21, 2014, Valdes-Prado allegedly deposited $110,691 in Canadian dollars ($97,352 in U.S. dollars) – the proceeds of the narcotics sales – into a bank account in Seattle. He then withdrew $19,000 in cash from the account from a bank branch in Chula Vista, California, then wired $55,601 to a bank account in Mexico, the indictment alleges.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case was investigated by the Drug Enforcement Administration, the Internal Revenue Service, Criminal Investigation, the Los Angeles County Sheriff’s Department, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and the Royal Canadian Mounted Police.
This matter is being prosecuted by Assistant United States Attorneys Tritia Yuen and Jerry C. Yang of the Riverside Branch Office.
Three New Federal Cases Allege Illegal Distribution of Male Sexual Enhancement Pills Falsely Branded as ‘Herbal’ MedicineRead the Press Release
LOS ANGELES – Three companies and five executives have agreed to plead guilty to federal criminal charges alleging that they purchased and resold millions of dollars’ worth of pharmaceutical-grade erectile dysfunction pills that were falsely labeled as male herbal remedies.
The anticipated guilty pleas are in relation to three cases filed today in United States District Court against distributors of the misbranded drugs.
In one of the new cases, Ronald Daniel Scott, a.k.a., “Danny Scott,” 49, of Stevenson Ranch, agreed to plead guilty to a misdemeanor charge of introducing misbranded drugs into interstate commerce. Scott is the chief executive officer of Premiere Sales Group, Inc., a Santa Clarita-based company that also agreed to plead guilty to the same charge. Scott admitted in a plea agreement filed today that, from 2013 until early 2017, he purchased at least 1.7 million male sexual enhancement pills for $3.8 million from John Seil Lee, 40, of Walnut, the manufacturer of the pills who pleaded guilty in February to a series of felony offenses related to his illegal business.
Two other federal cases filed today charged the following six defendants with misdemeanor charges of conspiring with Lee to distribute his misbranded erectile enhancement drugs:
- Contenda Health LLC, a Southern Pines, North Carolina-based company;
- Chase Evan Cranford, 36, of Raleigh, North Carolina, the owner of Contenda Health LLC;
- Randall Cranford, 65, of Pinehurst, North Carolina, who is Chase Cranford’s father and who assisted him at Contenda Health;
- Eldorado Trading Company II, Inc., a distributor of adult toys and other sexual products, based in Broomfield, Colorado;
- Jon Vogt, 58, of Erie, Colorado, the director of purchasing for Eldorado Trading; and
- Dennis Jones, 65, of Thornton, Colorado, the senior buyer at Eldorado Trading.
According to court documents, Lee smuggled powder Tadalafil – the prescription drug used to treat erectile dysfunction and sold under the brand name Cialis – from China. Lee then manufactured the powder Tadalafil into 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.
In their plea agreements, Contenda Health and the Cranfords admitted to purchasing more than 1.4 million misbranded pills from Lee for approximately $2.1 million, which they resold to retail locations across the United States.
Eldorado Trading, Jones, and Vogt admitted in their plea agreements to buying hundreds of thousands of misbranded pills from Lee, which Eldorado Trading resold for a profit of at least $215,000.
Once they enter their guilty pleas, the five businessmen charged today each will face a statutory maximum sentence of one year in federal prison. The three corporate entities will face up to five years of probation, as well as monetary sanctions of up to $200,000 in fines or twice the gross gain resulting from the criminal offenses.
The arraignments in these cases have been scheduled for June 24 for the defendants in the Eldorado Trading case, June 27 for the defendants in the Premiere Sales case, and July 15 for the defendants in the Contenda Health case.
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.
The investigation into these cases was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Food and Drug Administration’s Office of Criminal Investigations.
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.
O.C. Man Pleads Guilty to Running Down Federal Officer with His CarRead the Press Release
SANTA ANA, California – An Aliso Viejo man pleaded guilty this morning to federal charges stemming from a vehicular assault that severely injured an employee of U.S. Customs and Border Protection at the federal building in Laguna Niguel.
Geoffrey Donald Rickner, 48, pleaded guilty to one count of assault on a federal employee by use of a dangerous and deadly weapon and inflicting bodily injury, a felony offense that carries a statutory maximum sentence of 20 years in federal prison.
Rickner admitted driving his Mercedes-Benz sedan into CBP Security Specialist Jose Gutierrez on March 3, 2016 at the Chet Holifield Federal Building, which is commonly known as the Ziggurat Building. Mr. Gutierrez, who was in a well-marked crosswalk and wearing his federal employee identification card, suffered permanent and life-threatening injuries – including head trauma, broken ribs, internal bleeding and badly damaged legs – that put him in the hospital for nearly three weeks and continue to cause him pain and physical impairment.
When Rickner struck Mr. Gutierrez, the vehicle was travelling at such a high rate of speed that it continued traveling into the Ziggurat, going through a metal garage door, and stopping only when it struck a concrete wall inside the building.
Rickner had been behaving suspiciously in the hours leading up to the assault on Mr. Gutierrez, prompting building security personnel at one point to detain him, during which he made comments about owing money to the Internal Revenue Service, according to documents previously filed in this case.
Rickner pleaded guilty before U.S. District Judge James V. Selna, who scheduled a sentencing hearing on October 7.
The investigation in this case is being conducted by the FBI and the U.S. Treasury Inspector General for Tax Administration.
This matter is being prosecuted by Assistant United States Attorney Robert J. Keenan of the Santa Ana Branch Office.
San Fernando Valley Con Man Pleads Guilty in Multi-Million Dollar Real Estate Fraud Scheme that Targeted Vulnerable HomeownersRead the Press Release
LOS ANGELES – A career con man pleaded guilty today in a federal fraud case stemming from a real estate scam that targeted distressed homeowners, many of whom were elderly individuals who were scammed out of their homes, losing significant equity in the properties accumulated over the course of their lifetimes and sometimes over the course of generations of home ownership.
Michael “Mickey” Henschel, 70, of Van Nuys, pleaded guilty to mail fraud in relation to the scheme that generated more than $17 million in profits and caused homeowners to suffer approximately $10 million in losses when they lost title to their homes and when they were defrauded into giving Henschel and his co-conspirators money as part of the scam. Henschel’s fraudulent conduct also caused losses to mortgage lenders and purchasers of foreclosed properties.
With another defendant pleading guilty today, a total of seven conspirators linked to Henschel’s Van Nuys-based businesses have now pleaded guilty in the scheme that used fraudulent deeds to steal properties from homeowners, and also charged homeowners illegal fees to delay foreclosure and eviction actions.
According to court documents, Henschel – who used various aliases, including “Frank Winston,” “Steve Lopez” and “Ron Berman” – and his co-conspirators tricked distressed homeowners into signing fraudulent deeds on their properties with false promises that the deeds would help homeowners protect their properties from creditors. The fraudulent deeds allowed Henschel and the others to fraudulently file documents on the titles to the targeted homeowners’ properties. For example, they filed fraudulent grant deeds that purported to convey an interest in the properties to entities that Henschel controlled. They also filed fraudulent trust deeds based on fictional loans supposedly guaranteed by the targeted homeowners and fraudulent liens that recorded an interest in the properties based on fictional debts.
Henschel and his co-conspirators benefited from the fraudulent filings in a variety of ways, including through outright theft of the properties, mortgages that co-conspirators obtained on the properties, and rental payments that they obtained from tenants living in the properties. The schemers also made money by demanding payments from the targeted homeowners to clear up the title, and from fraudulent state court civil actions that Henschel and his co-conspirators used to leverage settlement payments.
Four other defendants who worked for Henschel’s various companies recently pleaded guilty to conspiracy to commit mail fraud and bankruptcy fraud. They are:
• Camerino “Mino” Islas, 42, of North Hollywood;
• Claudia “Jessica” Islas, 43, of Reseda;
• Juan Carlos Velasquez, 44, of Sylmar; and
• Eugene “Gene” Fulmer, 84, of Encino, who pleaded guilty today.
Two other individuals – Shara Surabi, 35, of Burbank, and Lidia Alvarez, 55, of Bell Gardens – pleaded guilty in late 2017 to federal charges related to this scheme.
The real estate fraud scheme had two parts – one involving property theft and litigation extortion, and the other involving illegal foreclosure and eviction delay.
In relation to the first aspect of the scheme, Henschel and his co-conspirators identified distressed homeowners who were in default on mortgages or were experiencing financial troubles, even though some had large amounts of equity in their properties. These homeowners were falsely told that Henschel was a sophisticated real estate investor and attorney who would purchase their properties on fair market terms, or he could help protect the homes from creditors. Henschel and the others promised distressed homeowners that they could refinance mortgages or restructure real estate holdings to insulate the properties from creditors, and that Henschel and other co-conspirators could manage the properties on an ongoing basis.
Henschel and the others convinced homeowners to sign fraudulent documents that were recorded on the titles to their homes. In some cases, these fraudulent filings were used to steal properties outright. In other cases, the conspirators exploited the fraudulent filings by initiating foreclosure proceedings and demanding money from homeowners before the properties could be sold. Henschel and his co-conspirators also leveraged the high cost of bringing and defending civil actions to extort settlement payments from homeowners, relying on the fact that it would often be less expensive for homeowners to pay money than to fight them in court.
In the foreclosure rescue part of the scheme, Henschel and his co-conspirators used fraudulent filings to charge homeowners fees to delay foreclosure and eviction actions. Henschel and the others had homeowners sign fraudulent deeds that transferred interests to debtors in bankruptcy cases – but the bankruptcies were fraudulent and used solely as part of the fraudulent scheme, not as part of any genuine effort to restructure or eliminate debts. Many of the fraudulent bankruptcies were filed in the names of fictional people and entities, and some involved stolen identities. Henschel and his co-conspirators sent fake deeds and fraudulent bankruptcy petitions to trustees to stop foreclosure sales, and they delayed evictions in a similar way, mainly by sending bogus documents to various county sheriff’s offices.
As a result of his guilty plea today, Henschel is facing a statutory maximum sentence of 20 years in federal prison. The other six defendants each face up to five years’ imprisonment. Henschel is scheduled to be sentenced by United States District Judge Virginia A. Phillips on August 12, and the four other conspirators who recently pleaded guilty are scheduled to be sentenced on August 26. Surabi and Alvarez are expected to be sentenced later this year.
As part of his plea agreement, Henschel agreed to forfeit money and property that represent proceeds of the fraudulent scheme, including more than $100,000 in cash seized from a bank account and various residential properties in the San Fernando Valley, Glendale and Pasadena.
The case against Henschel and the others are the result of an investigation by the Federal Bureau of Investigation, and the Federal Housing Finance Agency - Office of Inspector General. The United States Trustee’s Office for the Central District of California initially referred the matter for investigation and has provided substantial assistance. Also providing assistance during the investigation were the Alameda County District Attorney’s Office, the Los Angeles County Recorder’s Office, the Alameda County Recorder’s Office, and the San Diego County Recorder’s Office.
This case is being prosecuted by Assistant United States Attorneys Kerry L. Quinn and Eddie A. Jauregui of the Major Frauds Section. The forfeiture part of the case is being handled by Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section.
IRS Official Arrested on Federal Bribery Charge for Allegedly Taking $5,000 in Cash to Reduce a Taxpayer’s Debt to the Tax AgencyRead the Press Release
SANTA ANA, California – An Internal Revenue Service official was arrested this morning for allegedly soliciting and accepting a $5,000 bribe to reduce the tax liability of a taxpayer who was under audit.
Felecia Edna Taylor, 50, a resident of the Florence neighborhood in South Los Angeles, was arrested at the IRS office in Long Beach after being named in a one-count criminal complaint that charges her with solicitation and receipt of a bribe by a public official.
Taylor is making her initial court appearance this afternoon in United States District Court in Santa Ana.
According to an affidavit in support of the criminal complaint, Taylor, who has been employed at the IRS since 1990, works as a tax compliance officer in Long Beach, where she plans and conducts examinations of individual and business taxpayers. On May 1, a taxpayer contacted law enforcement, and stated that, at a meeting two days earlier, Taylor was “inviting a bribe” in exchange for lowering the amount owed to the IRS to $10,000, according to court documents. The taxpayer was supposed to pay the bribe to Taylor on May 7 at her Long Beach office, court papers state.
The taxpayer met with law enforcement on Tuesday, was equipped with recording devices, and was given $5,000 in cash to give to Taylor, the affidavit states. According to a recording of that meeting, Taylor provided adjusted tax records to show a reduction of the taxpayer’s liability to $10,616 as agreed and, in response, the taxpayer handed Taylor an envelope containing $5,000 in cash. Taylor allegedly took the envelope in one hand, mouthed the word, “Five?” and placed five fingers in the air to non-verbally confirm the amount of cash the taxpayer had just given her. When the taxpayer replied, “Yes, what we agreed on, yep it’s all there,” Taylor placed the envelope on her desk and stated, “We are all done,” the affidavit states.
If convicted of the bribery charge, Taylor would face a statutory maximum penalty of 15 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 U.S. Treasury Inspector General for Tax Administration.
This case is being prosecuted by Assistant United States Attorney Jennifer Waier of the Santa Ana Branch Office.
Pueblo Bishop Bloods Gang Member Convicted at Retrial in RICO Case for Ambush Murder of Man in Front of His 2-Year-Old SonRead the Press Release
LOS ANGELES – A member of the Pueblo Bishop Bloods street gang has been found guilty by a jury for the second time of racketeering offenses that included the slaying of a man in front of the victim’s 2-year-old son.
Rondale Young, a.k.a. “Pueblo Grump,” 36, of South Los Angeles, was found guilty on Tuesday after a two-week trial. United States District Judge S. James Otero has scheduled an October 7 sentencing hearing, at which time Young is expected to receive a sentence of life in federal prison.
The federal jury convicted Young of conspiring to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) in relation to the August 2, 2009 murder of Francisco Cornelio, a 23-year-old man with no gang affiliation who was shot to death at point-blank range while vacuuming his car and in front of his young son. The jury also found Young guilty of conspiracy to commit a violent crime in aid of racketeering (VICAR); VICAR murder; and possessing, using and discharging a firearm resulting in death in relation to a crime of violence.
According to the evidence presented at trial, on the day of Mr. Cornelio’s murder, Young, accompanied by other armed gang members, drove his car into rival gang territory, seeking retaliation for a fatal drive-by shooting of a Pueblo Bishop gang member. Mr. Cornelio was targeted simply because he was of Hispanic descent and was in rival gang territory. Local authorities originally charged Young in 2009 with killing Mr. Cornelio, but he was acquitted by a state jury.
An August 2010 indictment charged Young and 44 other members and associates of the gang with being members of a criminal enterprise that engaged in drug dealing, firearms trafficking, murder, witness intimidation and armed robbery as part of the gang’s efforts to control and terrorize the Pueblo Del Rio Housing Projects in South Los Angeles.
In 2013, Young was convicted of racketeering charges in connection to the indictment and Mr. Cornelio’s murder and was sentenced to life in federal prison. That conviction was vacated in 2017 by the U.S. Court of Appeals for the Ninth Circuit, which cited evidentiary errors during the first trial. The case was sent back to the district court for a retrial. Young has been in federal custody since the 2010 indictment.
With Young’s conviction, all 45 defendants charged in this matter have been convicted of federal RICO and related charges, and have been held responsible for multiple murders.
This matter was investigated by the Federal Bureau of Investigation; the Los Angeles Police Department; the United States Department of Housing and Urban Development, Office of Inspector General; the California Department of Corrections and Rehabilitation; and the Los Angeles County District Attorney’s Office.
This case is being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section; Assistant United States Attorney Frances S. Lewis of the Public Corruption and Civil Rights Section; and Assistant United States Attorney Julia S. Choe of the Cyber and Intellectual Property Crimes Section.
Nigerian Man Pleads Guilty to Role in $8.3 Million Medicare Fraud Scheme and Related Money LaunderingRead the Press Release
A Nigerian man pleaded guilty today for his role in a durable medical equipment (DME) scheme that fraudulently billed more than $8 million dollars 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 Christian J. Schrank of the U.S. Department of Health and Human Services Office of the Inspector General’s (HHS-OIG) Los Angeles Region, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division and Acting Special Agent in Charge Ryan L. Korner of the IRS Criminal Investigations (IRS-CI) Los Angeles Field Office made the announcement.
Ayodeji Temitayo Fatunmbi, 47, pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering before U.S. District Judge Christina A. Snyder of the Central District of California. Fatunmbi was extradited from Nigeria to the Central District of California in October of 2018 on charges contained in a May 2013 indictment. Sentencing has been scheduled for Aug. 19, 2019 before Judge Snyder.
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 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. As part of his plea agreement, Fatunmbi agreed to pay restitution to Medicare in the amount of $1,076,893.
Fatunmbi was charged along with Olufunke Ibiyemi Fadojutimi, 47, of Carson, California, and Maritza Elizabeth Velasquez, 44, of Las Vegas, Nevada. 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 sentenced to four years in prison and restitution in the amount of $4,372,466. In her sentencing, Fadojutimi was held responsible for the full amount of over $8 million in intended losses caused by the fraud at Lutemi.
This case was investigated by the the FBI, the IRS and the Los Angeles Region of HHS-OIG. Trial Attorneys Claire Yan, Emily Culbertson and Justin Givens of the Criminal Division’s 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, now operating in nine cities across the country, has charged nearly 2,300 defendants who have collectively billed the Medicare program for more than $7 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.
Inglewood-based Tax Preparer Indicted in $5 Million Tax Fraud CaseRead the Press Release
LOS ANGELES – A tax preparer and former California Franchise Tax Board employee was arrested today on a 26-count federal grand jury indictment alleging he schemed to defraud the Internal Revenue Service by declaring fictitious withholdings used to fraudulently claim tax refunds of more than $5 million.
Cubby Wayne Williams, 63, of Alhambra, was arraigned this afternoon in United States District Court on 22 counts of assisting in the preparation of false tax returns for his clients and four counts of subscribing to false tax returns for himself. United States District Judge Percy Anderson has scheduled a May 13 trial-setting hearing for Williams, who is free on $20,000 bond.
According to the indictment, Williams owns and operates Williams Financial Network, an Inglewood-based tax services company. Prior to forming this company, Williams worked from 1985 to 1996 as a compliance representative in the California Franchise Tax Board’s collection division.
Williams allegedly filed tax returns claiming that his clients had accrued Original Issue Discount (OID) interest income. OID is a form of interest that accrues over the life of a bond or other debt instrument, but is not payable as it accrues. Financial institutions use IRS Forms 1099-OID to report this accrued, but unpaid, income, and any tax withholdings on it.
Williams filed approximately 514 tax returns for clients for tax years 2010 through 2016, fraudulently claiming OID withholdings and seeking approximately $5.49 million in bogus tax refunds, according to prosecutors, who also stated that the IRS paid out approximately $3 million on these fraudulent claims. The clients have not been charged in the alleged scheme.
Williams admitted creating the Forms 1099-OID he gave to IRS auditors, who questioned the withholdings he claimed on the tax returns he prepared for his clients and himself, prosecutors said in court today.
If convicted of all counts, Williams would face a statutory maximum sentence of 78 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 case is being investigated by IRS Criminal Investigation.
This matter is being prosecuted by Assistant United States Attorney Ranee Katzenstein of the Major Frauds Section.
Inland Empire Man Pleads Guilty to TARP Homeowner Relief FraudRead the Press Release
RIVERSIDE, California – A Corona man has become the first individual to plead guilty to federal charges for fraudulently obtaining tens of thousands of dollars in mortgage assistance benefits under the portion of the Troubled Asset Relief Program (TARP) intended for homeowners hardest hit by the 2007-09 economic downturn.
Eliseo Delgado Jr., 40, entered a guilty plea on Monday to one felony count of making a false or fraudulent claim against the United States. Delgado made the first known guilty plea by an individual to fraud charges regarding TARP’s mortgage assistance program. United States District Judge Jesus G. Bernal has scheduled an October 28 sentencing hearing, where Delgado faces a statutory maximum sentence of five years in federal prison.
According to court documents, in November 2014, Delgado knowingly submitted a false application for homeowner relief benefits under the Unemployment Mortgage Assistance Program (UMA). UMA was a federally funded program under TARP that was administered in California by the California Housing Finance Authority’s Mortgage Assistance Corporation under the name “Keep Your Home California.” The program was designed to help homeowners by providing temporary mortgage assistance to eligible low-to moderate-income homeowners who became unemployed. Congress passed TARP to stabilize the nation’s financial system during the financial crisis of 2008. In 2010, using TARP money, Congress established the Hardest Hit Fund (HHF), to provide targeted aid to families in states hit hard by the economic and housing market downturn.
Delgado’s November 2014 application for homeowner relief benefits fraudulently stated that Delgado’s income had been reduced because of unemployment. In a “hardship letter” in support of his application for UMA benefits, Delgado wrote, “I have lost my job…I fell behind on my mortgage payments in 01/01/2014, earlier this year due to lack of income.” In fact, from 2009 to 2016, Delgado was self-employed at various businesses he had founded, and at no point was he unemployed. In total, Delgado fraudulently received $52,373 in UMA benefits from January 2015 until June 2016 – 18 months, the maximum length of time permissible under the program, according to court documents.
This case was investigated by the Office of the Special Inspector General for the Troubled Asset Relief Program.
This matter is being prosecuted by Assistant United States Attorney Benjamin Weir of the Riverside Branch Office.
Company Controller Pleads Guilty to Fraud Charges for Failing to Report $2.8 Million He Embezzled from EmployerRead the Press Release
LOS ANGELES – A controller for a commercial printing company has pleaded guilty to tax and mail fraud charges for embezzling $2.8 million from his employer and failing to report the stolen funds as income to the Internal Revenue Service.
Sean Edin Talaee, 62, of Glendale, pleaded guilty on Monday to one count of mail fraud and one count of subscribing to a false income tax return. United States District Judge Otis D. Wright II has scheduled an August 19 sentencing hearing, where Talaee will face a statutory maximum sentence of 23 years in federal prison.
According to his plea agreement, between October 2015 and June 2018, Talaee worked as the controller overseeing the accounting and tax payments of Printograph, Inc., a Burbank-based commercial printing company that does business as GotPrint.com. During this time period, Printograph made a series of periodic estimated tax payments, which were based on the company’s expected gross income, deductions, and credits for each year. To enable these estimated tax payments, Talaee brought company checks to Printograph’s president and sole owner – who had signing authority for the company’s bank account – for her signature prior to their submission to the IRS.
On at least eight separate occasions, Talaee obtained company checks from Printograph’s president but instead inserted his own taxpayer information when filling out the IRS voucher forms that accompanied the estimated tax payments. By using his own information – and not the company’s – Talaee was able to claim the estimated tax payments for himself and caused the IRS to credit the payments to his own personal account, thereby embezzling the funds from Printograph and effectively laundering the embezzled proceeds through the IRS.
During the course of the scheme, Talaee embezzled $2.8 million from his employer and falsely claimed estimated tax payments in that amount for the years 2015, 2016, and 2017, according to court documents. These estimated tax payments allowed Talaee to receive a total of $2,778,994 in fraudulent tax refunds for these years, court papers state. Talaee failed to report the embezzled money as income for these tax years, causing a total tax loss of $740,085.
This case was investigated by IRS Criminal Investigation and the Federal Bureau of Investigation.
This matter is being prosecuted by Assistant United States Attorney Alexander Wyman of the Major Frauds Section.
San Fernando Valley Man Convicted in Scheme that Used Stolen Identities to Obtain over $3 Million in Loans, Cars and CashRead the Press Release
LOS ANGELES – A jury has convicted a Northridge man of 51 counts of fraud, money laundering, identity theft and other federal offenses in relation to a scheme that generated at least $3 million.
Turhan Lemont Armstrong, 49, was found guilty Friday afternoon at the conclusion of a two-week trial. Armstrong was convicted of all 51 counts in a grand jury indictment, which included charges of conspiracy to commit financial institution fraud, financial institution fraud, making false statements to financial institutions, conspiracy to commit money laundering, money laundering, conspiracy to commit access device (credit card) fraud, access device fraud, interstate transportation of stolen vehicles, and aggravated identity theft.
The evidence presented at trial showed that Armstrong used stolen identities and Social Security numbers to obtain credit cards, open bank accounts, set up shell companies, apply for loans, and purchase homes and cars. Armstrong and his co-defendants – two of whom previously pleaded guilty – favored using the social security numbers of children, who would be less likely to monitor their credit.
In addition to using fraudulently obtained credit cards to purchase goods, members of the scheme were able to use point-of-sale terminals maintained by “collusive merchants,” which allowed them to make what were essentially cash withdrawals.
Armstrong and his co-conspirators also used the fraudulent information to apply for loans from financial institutions across the country. In some instances, Armstrong obtained loans for cars that had already been exported out of the United States.
During the trial, the jury heard evidence that Armstrong did not report any income to the Internal Revenue Service for the years 2009 through 2017 – yet he maintained residences in Georgia, Florida and the Sherwood Forest neighborhood of Northridge. When authorities went to Armstrong’s apartment in Atlanta in late 2017 to arrest him pursuant to the indictment, he evaded law enforcement, only to be arrested three days later leaving his house in Fort Lauderdale. Investigators executed search warrants at all three of Armstrong’s homes, as well as two storage units in the Los Angeles area, where they discovered false identity documents, hundreds of credit cards in various names, and lists of social security numbers belonging to other people.
Armstrong is scheduled to be sentenced by United States District Judge R. Gary Klausner on August 5. As a result of the guilty verdicts, Armstrong faces a statutory maximum sentence of over 1,000 years in federal prison.
The investigation of Armstrong was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. Substantial assistance was provided by the Social Security Administration’s Office of Inspector General, the Miami-Dade Police Department, and the North Miami Beach Police Department.
The matter is being prosecuted by Assistant United States Attorneys Alexander B. Schwab of the Major Frauds Section and Allison L. Westfahl Kong of the General Crimes Section.
Three Germans Who Allegedly Operated Dark Web Marketplace with over 1 Million Users Face U.S. Narcotics and Money Laundering ChargesRead the Press Release
Following a nearly two-year international investigation involving U.S. law enforcement and authorities in Germany and the Netherlands, federal prosecutors have charged three German nationals with being the administrators of Wall Street Market (WSM), which was one of the world’s largest dark web marketplaces that allowed vendors to sell a wide variety of contraband, including an array of illegal narcotics, counterfeit goods and malicious computer hacking software.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna for the Central District of California, U.S. Attorney McGregor W. Scott for the Eastern District of California, Assistant Director in Charge Paul Delacourt of the FBI’s Los Angeles Field Office, Special Agent in Charge Chris Nielsen of the U.S. Drug Enforcement Administration (DEA) San Francisco Division, Chief Don Fort of IRS Criminal Investigation, Inspector in Charge Michael Ray of the U.S. Postal Inspection Service and Acting Executive Associate Director Alysa D. Erichs of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) made the announcement.
A criminal complaint filed Wednesday in U.S. District Court in Los Angeles alleges that the three defendants, who currently are in custody in Germany, were the administrators of WSM, a sophisticated online marketplace available in six languages that allowed approximately 5,400 vendors to sell illegal goods to about 1.15 million customers around the world. Like other dark web marketplaces previously shut down by authorities – Silk Road and AlphaBay, for example – WSM functioned like a conventional e-commerce website, but it was a hidden service located beyond the reach of traditional internet browsers on the Tor network, a service designed to conceal user identities.
For nearly three years, WSM allegedly was operated on the dark web by the three men who now face charges in both the United States and Germany. An “exit scam” was allegedly conducted last month when the WSM administrators took all of the virtual currency held in marketplace escrow and user accounts – believed by investigators to be approximately $11 million – and then diverted the money to their own accounts. Exit scams are common among large darknet marketplaces, which typically hold money in escrow while a vendor delivers illicit goods.
The three defendants charged in the United States were arrested in Germany on April 23 and 24. They are:
- A 23-year-old resident of Kleve, Germany;
- A 31-year-old resident of Wurzburg, Germany; and
- A 29-year-old resident of Stuttgart, Germany.
These defendants also face charges in Germany. See: https://www.europol.europa.eu/newsroom/news/double-blow-to-dark-web-marketplaces and https://twitter.com/bka.
A fourth defendant linked to Wall Street Market was charged yesterday in a criminal complaint filed in U.S. District Court in Sacramento, California. Marcos Paulo De Oliveira-Annibale, 29, of Sao Paulo, Brazil, also faces federal drug distribution and money laundering charges for allegedly acting as a moderator who, among other things, mediated disputes between vendors and their customers. Annibale, who used the online monikers “MED3LIN,” also acted as a public relations representative for WSM by, among others things, promoting WSM on websites such as Reddit, according to the complaint. The case naming Annibale was unsealed today when Brazilian authorities executed a search warrant at his residence.
“Just as international law-enforcement partners began dismantling Wall Street Market and taking action against its members, as alleged in the complaint, the site’s administrators decided to steal their customers’ money via an exit scam,” said Assistant Attorney General Brian Benczkowski. “This operation sends a crystal-clear message: dark markets offer no safe haven. The arrest and prosecution of the criminals who allegedly ran this darknet marketplace is a great example of our partnership with law enforcement authorities in Europe, with the support of Europol, and demonstrates what we can do when we stand together.”
“We continue to keep pace with sophisticated actors on the dark web by increasing our technical abilities and working even more closely with our international law enforcement partners,” said U.S. Attorney Nick Hanna. “While they lurk in the deepest corners of the internet, this case shows that we can hunt down these criminals wherever they hide.”
“We are on the hunt for even the tiniest of breadcrumbs to identify criminals on the dark web,” said U.S. Attorney McGregor W. Scott. “The prosecution of these defendants shows that even the smallest mistake will allow us to figure out a cybercriminal’s true identity. As with defendant Marcos Annibale, forum posts and pictures of him online from years ago allowed us to connect the dots between him and his online persona ‘Med3l1n.’ No matter where they live, we will investigate and prosecute criminals who create, maintain, and promote dark web marketplaces to sell illegal drugs and other contraband.”
The affidavit in support of the criminal complaint filed in Los Angeles outlines how the defendants operated a sophisticated online marketplace that offered encrypted communications between buyers and sellers, as well as an online forum to discuss vendors and the quality of their wares. The affidavit also describes an international investigation that was able to identify the three administrators of WSM, show how they previously operated another German-based darknet marketplace that shut down in 2016, and link them to computer servers in Germany and the Netherlands that were used to operate WSM and process virtual currency transactions.
The three defendants allegedly created WSM, maintained the website, and operated the marketplace to ensure that buyers could access vendor pages and that financial transactions were properly processed. The investigation outlined in the complaint affidavit linked the three defendants to WSM in a number of ways, including their access to the WSM computer infrastructure. One defendant, for example, used virtual private networks to access WSM computers, but when a VPN connection would fail, his IP was revealed and authorities were able to identify his specific location.
The three defendants charged in the Central District of California were arrested in Germany after the WSM administrators conducted an exit scam in the wake of WSM recently becoming regarded as the world’s pre-eminent dark web marketplace and gaining a significant influx of new vendors and users, according to the affidavit. On April 16, vendors realized they could not collect the virtual funds that had been placed in escrow by their customers, which prompted German authorities to execute a series of arrest and search warrants.
The complaint affidavit identifies several cases that have been filed in the United States against WSM vendors. One darknet vendor who advertised on WSM is currently serving a 12-year federal prison sentence after being convicted in the Western District of Wisconsin for distributing a fentanyl analogue resulting in the overdose death of a Florida resident who ordered a nasal spray laced with the powerful opioid from the vendor.
Two of the “top vendors” on WSM – identified by the online monikers Platinum45 and Ladyskywalker – were based in the Los Angeles area and were major drug distributors. One vender, “Ladyskywalker,” operated on several darknet marketplaces, where the individual advertised and sold opioids such as fentanyl, oxycodone and hydrocodone.
The second top vendor – who used the moniker “Platinum45” and operated on at least two darknet marketplaces, including WSM – advertised and sold drugs such as methamphetamine, Adderall and oxycodone to customers in the United States and around the world, including in Germany and Australia. “Platinum45” also manufactured Adderall tablets and advertised the sale of up to 1 kilogram quantities of methamphetamine on WSM.
“Investigators from many countries overcame the national, legal and diplomatic challenges to hold accountable sophisticated actors who operated one of the largest known encrypted marketplaces in the shadowy environment of the Darknet,” said Assistant Director Paul Delacourt of the FBI’s Los Angeles Field Office. “This case is an example of successful global collaboration among law enforcement entities who share the many challenges of prosecuting transnational criminal activity conducted by individuals who operate anonymously across borders.”
“The dark web marketplace, Wall Street Market, was one of the largest operating hosts for vendors peddling illegal wares,” said DEA San Francisco Special Agent in Charge Chris Nielsen. “Law enforcement is always adapting to changes in technology and this case sends a clear message to those breaking the law and attempting to hide behind the illusion of anonymity – we will identify and find you. The success of this case is due to the excellent cooperation between law enforcement agencies from around the globe who delivered another blow to criminal networks operating in the underground cyberspace.”
“Anyone who thinks the dark web is a safe place to conduct illegal commerce should know they are not anonymous,” said Inspector in Charge Michael Ray. “They will be found and they will be brought to justice. The Postal Inspection Service has a highly trained, skilled and committed cyber unit that works tirelessly with other law enforcement agencies to disrupt marketplaces and stop vendors from using the U.S. mail to ship illegal goods and dangerous drugs.”
“Taking down this site is a huge win for past and future victims of crimes perpetrated due to the proliferation of illegal products and services being sold,” said Chief Don Fort of IRS Criminal Investigation. “We are committed to using our unique financial investigative abilities to tackle these kinds of threats head on to protect citizens, to promote cyber security and to inform the global community.”
“HSI and our partners are at the forefront of combating narcotics trafficking, financial crimes and illicit activities purveyed by online black markets,” said HSI Acting Executive Associate Director Alysa D. Erichs. “While criminal operators may continue to grow the reach of their businesses through these dark web marketplaces, ultimately they do not escape the reach of law enforcement. We continue to investigate, disrupt, and dismantle hidden illegal networks that pose a threat in cyberspace.”
The charges against the three WSM administrators were announced today in conjunction with authorities in Germany and the Netherlands.
The U.S. case is the result of an investigation by the FBI, the DEA, the U.S. Postal Inspection Service, IRS Criminal Investigation, and HSI, and was supported and coordinated by the Department of Justice’s multi-agency Special Operations Division (SOD). The case in the United States is being prosecuted by Assistant U.S. Attorneys Ryan White and Puneet Kakkar of the Central District of California, Assistant U.S. Attorney Grant Rabenn of the Eastern District of California, Justice Department Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section, and Justice Department Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section.
The Department thanks its law enforcement colleagues at the German Federal Criminal Police (the Bundeskriminalamt), the German Public Prosecutor’s Office in Frankfurt, the Dutch National Police (Politie), the Netherlands National Prosecutor’s Office, Federal Police of Brazil (Policia Federal), Europol and Eurojust. Significant assistance was provided by the Criminal Division’s Office of International Affairs and Organized Crime and Drug Enforcement Task Force Program.
3 Germans Who Allegedly Operated Dark Web Marketplace with over 1 Million Users Face U.S. Narcotics and Money Laundering ChargesRead the Press Release
LOS ANGELES – Following a nearly two-year international investigation involving U.S. law enforcement and authorities in Germany and the Netherlands, federal prosecutors have charged three German nationals with being the administrators of Wall Street Market (WSM), which was one of the world’s largest dark web marketplaces that allowed vendors to sell a wide variety of contraband, including an array of illegal narcotics, counterfeit goods and malicious computer hacking software.
A criminal complaint filed Wednesday in United States District Court in Los Angeles alleges that the three defendants, who currently are in custody in Germany, were the administrators of WSM, a sophisticated online marketplace available in six languages that allowed approximately 5,400 vendors to sell illegal goods to about 1.15 million customers around the world. Like other dark web marketplaces previously shut down by authorities – Silk Road and AlphaBay, for example – WSM functioned like a conventional e-commerce website, but it was a hidden service located beyond the reach of traditional internet browsers, accessible only through the use of networks designed to conceal user identities, such as the Tor network.
For nearly three years, WSM allegedly was operated on the dark web by the three men who now face charges in both the United States and Germany. An “exit scam” was allegedly conducted last month when the WSM administrators took all of the virtual currency held in marketplace escrow and user accounts – believed by investigators to be approximately $11 million – and then diverted the money to their own accounts. Exit scams are common among large dark-net marketplaces, which typically hold money in escrow while a vendor delivers illicit goods.
The three defendants charged in the United States were arrested in Germany on April 23 and 24. They are a 23-year-old resident of Kleve, Germany; a 31-year-old resident of Wurzburg, Germany; and a 29-year-old resident of Stuttgart, Germany. The complaint charges the men with two felony counts – conspiracy to launder monetary instruments, and distribution and conspiracy to distribute controlled substances. These three defendants also face charges in Germany.
A fourth defendant linked to Wall Street Market was charged yesterday in a criminal complaint filed in United States District Court in Sacramento, California. Marcos Paulo De Oliveira-Annibale, 29, of Sao Paulo, Brazil, also faces federal drug distribution and money laundering charges for allegedly acting as a moderator on WSM, who, among other things, mediated disputes between vendors and their customers. Annibale, who used the online monikers “MED3LIN,” also acted as a public relations representative for WSM by, among others things, promoting WSM on websites such as Reddit, according to the complaint. The case naming Annibale was unsealed today when Brazilian authorities executed a search warrant at his residence.
The two cases filed in the United States are the result of an investigation by the Federal Bureau of Investigation, the Drug Enforcement Administration, the U.S. Postal Inspection Service, IRS Criminal Investigation, and U.S. Immigration and Customs’ Enforcement’s Homeland Security Investigations (HSI).
“We continue to keep pace with sophisticated actors on the dark web by increasing our technical abilities and working even more closely with our international law enforcement partners,” said United States Attorney Nick Hanna. “While they lurk in the deepest corners of the internet, this case shows that we can hunt down these criminals wherever they hide.”
“We are on the hunt for even the tiniest of breadcrumbs to identify criminals on the dark web,” said United States Attorney McGregor W. Scott for the Eastern District of California. “The prosecution of these defendants shows that even the smallest mistake will allow us to figure out a cybercriminal’s true identity. As with defendant Marcos Annibale, forum posts and pictures of him online from years ago allowed us to connect the dots between him and his online persona ‘Med3l1n.’ No matter where they live, we will investigate and prosecute criminals who create, maintain, and promote dark web marketplaces to sell illegal drugs and other contraband.”
“Just as international law-enforcement partners began dismantling Wall Street Market and taking action against its members, as alleged in the complaint, the site’s administrators decided to steal their customers’ money via an exit scam,” said Assistant Attorney General Brian Benczkowski. “This operation sends a crystal-clear message: dark markets offer no safe haven. The arrest and prosecution of the criminals who allegedly ran this dark-net marketplace is a great example of our partnership with law enforcement authorities in Europe, with the support of Europol, and demonstrates what we can do when we stand together.”
“Investigators from many countries overcame the national, legal and diplomatic challenges to hold accountable sophisticated actors who operated one of the largest known encrypted marketplaces in the shadowy environment of the Dark-net,” said Assistant Director Paul Delacourt of the FBI’s Los Angeles Field Office. “This case is an example of successful global collaboration among law enforcement entities who share the many challenges of prosecuting transnational criminal activity conducted by individuals who operate anonymously across borders.”
The affidavit in support of the criminal complaint filed in Los Angeles outlines how the defendants operated a sophisticated online marketplace that offered encrypted communications between buyers and sellers, as well as an online forum to discuss vendors and the quality of their wares. The affidavit also describes an international investigation that was able to identify the three administrators of WSM, show how they previously operated another German-based dark-net marketplace that shut down in 2016, and link them to computer servers in Germany and the Netherlands that were used to operate WSM and process virtual currency transactions.
The three defendants allegedly created WSM, maintained the website, and operated the marketplace to ensure that buyers could access vendor pages and that financial transactions were properly processed. The investigation outlined in the complaint affidavit linked the three defendants to WSM in a number of ways, including their access to the WSM computer infrastructure. One defendant, for example, used virtual private networks to access WSM computers, but when a VPN connection would fail, his IP was revealed and authorities were able to identify his specific location.
The three defendants charged in Los Angeles were arrested in Germany after the WSM administrators conducted an exit scam in the wake of WSM recently becoming regarded as the world’s pre-eminent dark web marketplace and gaining a significant influx of new vendors and users, according to the affidavit. On April 16, vendors realized they could not collect the virtual funds that had been placed in escrow by their customers, which prompted German authorities to execute a series of arrest and search warrants.
The complaint affidavit identifies several cases that have been filed in the United States against WSM vendors. One dark-net vendor who advertised on WSM is currently serving a 12-year federal prison sentence after being convicted in the Western District of Wisconsin for distributing a fentanyl analogue resulting in the overdose death of a Florida resident who ordered a nasal spray laced with the powerful opioid from the vendor.
Two of the “top vendors” on WSM – identified by the online monikers Platinum45 and Ladyskywalker – were based in the Los Angeles area and were major drug distributors. One vender, “Ladyskywalker,” operated on several dark-net marketplaces, where the individual advertised and sold opioids such as fentanyl, oxycodone and hydrocodone. The second top vendor – who used the moniker “Platinum45” and operated on at least two dark-net marketplaces, including WSM – advertised and sold drugs such as methamphetamine, Adderall and oxycodone to customers in the United States and around the world, including in Germany and Australia. “Platinum45” also manufactured Adderall tablets and advertised the sale of up to 1 kilogram quantities of methamphetamine on WSM.
“The dark web marketplace, Wall Street Market, was one of the largest operating hosts for vendors peddling illegal wares,” said DEA San Francisco Special Agent in Charge Chris Nielsen. “Law enforcement is always adapting to changes in technology and this case sends a clear message to those breaking the law and attempting to hide behind the illusion of anonymity – we will identify and find you. The success of this case is due to the excellent cooperation between law enforcement agencies from around the globe who delivered another blow to criminal networks operating in the underground cyberspace.”
“Anyone who thinks the dark web is a safe place to conduct illegal commerce should know they are not anonymous,” said Inspector in Charge Michael Ray of the Postal Inspection Service. “They will be found and they will be brought to justice. The Postal Inspection Service has a highly trained, skilled and committed cyber unit that works tirelessly with other law enforcement agencies to disrupt marketplaces and stop vendors from using the U.S. mail to ship illegal goods and dangerous drugs.”
“Taking down this site is a huge win for past and future victims of crimes perpetrated due to the proliferation of illegal products and services being sold,” said Chief Don Fort of IRS Criminal Investigation. “We are committed to using our unique financial investigative abilities to tackle these kinds of threats head on to protect citizens, to promote cyber security and to inform the global community.”
“HSI and our partners are at the forefront of combating narcotics trafficking, financial crimes and illicit activities purveyed by online black markets,” said HSI Acting Executive Associate Director Alysa D. Erichs. “While criminal operators may continue to grow the reach of their businesses through these dark web marketplaces, ultimately they do not escape the reach of law enforcement. We continue to investigate, disrupt, and dismantle hidden illegal networks that pose a threat in cyberspace.”
A complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The charges against the three WSM administrators were announced today in conjunction with authorities in Germany and the Netherlands.
The case in the United States is being prosecuted by Assistant U.S. Attorneys Ryan White and Puneet Kakkar of the Central District of California, Assistant U.S. Attorney Grant Rabenn of the Eastern District of California, Justice Department Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section, and Justice Department Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section.
The U.S. investigation was conducted with support and coordination provided by the Department of Justice’s multi-agency Special Operations Division.
The Justice Department thanks its law enforcement colleagues at the German Federal Criminal Police (the Bundeskriminalamt), the German Public Prosecutor’s Office in Frankfurt, the Dutch National Police (Politie), the Netherlands National Prosecutor’s Office, Federal Police of Brazil (Policia Federal), Europol and Eurojust. Significant assistance was provided by the Office of International Affairs at the Justice Department and the Organized Crime and Drug Enforcement Task Force program.
High Desert Pharmacist Pleads Guilty to Illegal Distribution of Prescription Opioids and Laundering the Proceeds of the Illicit SalesRead the Press Release
LOS ANGELES – A High Desert pharmacist has pleaded guilty to a federal charge of illegally distributing the opioid oxycodone, admitting that she filled hundreds of counterfeit prescriptions.
Pauline Tilton, 49, of Hesperia, a licensed pharmacist and the owner of Oasis Pharmacy in Victorville, pleaded guilty Monday to one count of distribution of oxycodone and one count of money laundering related to more than a quarter millions dollars of revenue generated by the illegal sales.
In conjunction with Tilton’s guilty pleas, Oasis Pharmacy also pleaded guilty Monday to the same two felony offenses.
According to court documents, over the course of just one year that ended in July 2017, Tilton filled at least 345 fraudulent prescriptions for oxycodone. The prescriptions were written under the name and DEA registration number of a retired doctor. 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. 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.
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 and Oasis Pharmacy pleaded guilty before United States District Judge Otis D. Wright II, who scheduled sentencing hearings on August 12 for both defendants.
When she is sentenced, Tilton will face a statutory maximum penalty of 30 years in federal prison. Oasis Pharmacy could be ordered a fine of up to $1.25 million.
This case was the first to be charged as the result of an 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.
San Fernando Valley Man Arrested in Terror Plot to Detonate Explosive Device Designed to Kill InnocentsRead the Press Release
LOS ANGELES – A San Fernando Valley man was arrested Friday night after he received what he thought was a live bomb, but in fact was an inert explosive device that was delivered by an undercover law enforcement officer as part of an investigation by the FBI’s Joint Terrorism Task Force.
Mark Steven Domingo, 26, of Reseda, a former U.S. Army infantryman with combat experience in Afghanistan, faces federal charges in a terrorist plot in which he planned to detonate an improvised explosive device (IED) for the purpose of causing mass casualties.
In a criminal complaint filed Saturday by federal prosecutors and unsealed earlier today, Domingo was charged with providing and attempting to provide material support to terrorists. Domingo, who has been in federal custody since his arrest, is expected to make his initial appearance this afternoon in United States District Court.
According to a 30-page affidavit in support of the complaint, since early March, Domingo “planned and took steps to manufacture and use a weapon of mass destruction in order to commit mass murder.”
“This investigation successfully disrupted a very real threat posed by a trained combat soldier who repeatedly stated he wanted to cause the maximum number of casualties,” said United States Attorney Nick Hanna. “Protecting Americans from terror attacks is the number one priority of the Justice Department, and anyone who plots to use a weapon of mass destruction will be held to account.”
“I’m extremely glad to be announcing that we interdicted a potential terrorist attack, rather than outlining the FBI’s response to yet another tragedy,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “At no time was the public in danger and there is currently no known threat to public safety. I’m very proud of the agents and officers assigned to the Joint Terrorism Task Force who diligently marshaled the resources of our law enforcement partners in a short period of time and in doing so, ensured the safety of Southern California residents.”
“I can tell you, unequivocally, that this partnership, coupled with our ability to be nimble, ultimately resulted in dozens of innocent lives being saved in Southern California,” said Los Angeles Police Chief Michel R. Moore.
In online posts and in conversations with an FBI source, Domingo expressed support for violent jihad, a desire to seek retribution for attacks against Muslims, and a willingness to become a martyr, according to the affidavit. After considering various attacks – including targeting Jews, churches, and police officers – Domingo decided to detonate an IED at a rally scheduled to take place in Long Beach this past weekend. As part of the plot, Domingo asked his confederate – who actually was cooperating with the FBI as part of the investigation – to find a bomb-maker, and Domingo last week purchased several hundred nails to be used as shrapnel inside the IED.
“Domingo said he specifically bought three-inch nails because they would be long enough to penetrate the human body and puncture internal organs,” the affidavit states.
After Domingo provided the nails to the undercover operative for use in the construction of the bomb, Domingo sent a message on Thursday indicating that the operation was to proceed, according to the affidavit. On Friday evening, the undercover operative delivered multiple inert devices, which Domingo believed were weapons of mass destruction. After inspecting the devices and travelling to a park in Long Beach to surveil the location of the planned attack, Domingo was taken into custody.
According to the criminal complaint, Domingo posted an online video professing his Muslim faith on March 2, and the next day made another posting in which he said “America needs another vegas event” (referring to the October 2017 mass shooting in Las Vegas, Nevada) that would give “them a taste of the terror they gladly spread all over the world.” Following an attack on a mosque in New Zealand on March 13, Domingo posted, “there mustbe retribution.”
In response to the postings, an FBI “confidential human source” (CHS) began an online conversation that resulted in a series of in-person meetings with Domingo. During the first meeting, on March 18, “Domingo discussed with the CHS different targets for an attack, including Jews, police officers, churches, and a military facility,” according to the affidavit.
During subsequent meetings outlined in the affidavit, Domingo continued to express his desire to commit a terrorist act, at points contemplating a drive-by shooting with a modified AK-47-style rifle he owned, and at other points considering the use of an IED. During an April 3 meeting, Domingo allegedly expressed support for ISIS and said “if ISIS ‘came here,’ he would swear allegiance to ISIS,” according to the complaint.
The plan to target the rally came into shape during an April 19 meeting, when Domingo arrived to a meeting with the CHS armed with an AK-47-style rifle “to show you that I’m serious,” according to the complaint. During that meeting, Domingo referenced the Boston Marathon bombing and asked the CHS to find a person to construct an IED that he said could cause 50 casualties.
During several of the meetings, Domingo urged the CHS to maintain secrecy, stating what they were discussing were “federal charges” and “We broke federal law,” according to the complaint.
“Domingo, a former U.S. Army Infantryman, wanted to use improvised explosive devices against innocent civilians and he selected components that would make the bombs even more deadly to the victims he targeted,” said Assistant Attorney General for National Security John C. Demers. “His arrest today mitigates the threat he posed to others in the Los Angeles community. I want to thank the agents, analysts, and prosecutors who are responsible for this investigation and arrest.”
“The individual charged in this case wanted to carry out a mass casualty attack with explosive devices, and he moved very quickly from talking about violence to mobilizing to commit such an attack,” said Assistant Director Michael McGarrity of the FBI’s Counterterrorism Section. “This case should remind the public of the need to be vigilant and notify law enforcement if you see suspicious behavior.”
“We strongly value the interagency cooperation and information sharing that occurs on a daily basis regarding potential threats to our region,” stated Long Beach Police Chief Robert Luna. “I want to thank all of our partner agencies for their dedicated efforts on this extensive investigation and for ensuring that the City of Long Beach was not impacted by a significant act of senseless violence."
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of the charge of providing and attempting to provide material support to terrorists, Domingo would face a statutory maximum sentence of 15 years in federal prison.
This matter is being investigated by the FBI’s Joint Terrorism Task Force, which includes special agents with the FBI and officers with the Los Angeles Police Department. JTTF members who participated in the investigation include the Naval Criminal Investigative Service, the Los Angeles County Sheriff's Department and the Long Beach Police Department.
This case is being prosecuted by Assistant United States Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section.
California Man Arrested in Terror Plot to Detonate Explosive Device Designed to Kill InnocentsRead the Press Release
Mark Steven Domingo, 26, of Reseda, California, was arrested Friday night after he received what he thought was a live bomb, but in fact was an inert explosive device that was delivered by an undercover law enforcement officer as part of an investigation by the FBI’s Joint Terrorism Task Force.
Domingo, a former U.S. Army infantryman with combat experience in Afghanistan, faces federal charges in a terrorist plot in which he planned to detonate an improvised explosive device (IED) for the purpose of causing mass casualties.
Assistant Attorney General for National Security John C. Demers, U.S. Attorney Nick Hanna for the Central District of California and Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Field Office made the announcement.
“Domingo, a former U.S. Army Infantryman, wanted to use improvised explosive devices against innocent civilians and he selected components that would make the bombs even more deadly to the victims he targeted,” said Assistant Attorney General Demers. “His arrest today mitigates the threat he posed to others in the Los Angeles community. I want to thank the agents, analysts, and prosecutors who are responsible for this investigation and arrest.”
“This investigation successfully disrupted a very real threat posed by a trained combat soldier who repeatedly stated he wanted to cause the maximum number of casualties,” said U.S. Attorney Hanna. “Protecting Americans from terror attacks is the number one priority of the Justice Department, and anyone who plots to use a weapon of mass destruction will be held to account.”
“The individual charged in this case wanted to carry out a mass casualty attack with explosive devices, and he moved very quickly from talking about violence to mobilizing to commit such an attack,” said Assistant Director Michael McGarrity of the FBI’s Counterterrorism Division. “This case should remind the public of the need to be vigilant and notify law enforcement if you see suspicious behavior.”
“I’m extremely glad to be announcing that we interdicted a potential terrorist attack, rather than outlining the FBI’s response to yet another tragedy,” said Assistant Director Delacourt of the FBI’s Los Angeles Field Office. “At no time was the public in danger and there is currently no known threat to public safety. I’m very proud of the agents and officers assigned to the Joint Terrorism Task Force who diligently marshaled the resources of our law enforcement partners in a short period of time and in doing so, ensured the safety of Southern California residents.”
“I can tell you, unequivocally, that this partnership, coupled with our ability to be nimble, ultimately resulted in dozens of innocent lives being saved in Southern California,” said Los Angeles Police Chief Michel R. Moore.
In a criminal complaint filed by federal prosecutors on April 27, 2019, and unsealed earlier today, Domingo was charged with providing and attempting to provide material support to terrorists. Domingo, who has been in federal custody since his arrest, is expected to make his initial appearance this afternoon in United States District Court.
According to a 30-page affidavit in support of the complaint, since early March, Domingo “planned and took steps to manufacture and use a weapon of mass destruction in order to commit mass murder.”
In online posts and in conversations with an FBI source, Domingo expressed support for violent jihad, a desire to seek retribution for attacks against Muslims, and a willingness to become a martyr, according to the affidavit. After considering various attacks – including targeting Jews, churches, and police officers – Domingo decided to detonate an IED at a rally scheduled to take place in Long Beach this past weekend. As part of the plot, Domingo asked his confederate – who actually was cooperating with the FBI as part of the investigation – to find a bomb-maker, and Domingo last week purchased several hundred nails to be used as shrapnel inside the IED.
“Domingo said he specifically bought three-inch nails because they would be long enough to penetrate the human body and puncture internal organs,” the affidavit states.
After Domingo provided the nails to the undercover operative for use in the construction of the bomb, Domingo sent a message on Thursday indicating that the operation was to proceed, according to the affidavit. On Friday evening, the undercover operative delivered multiple inert devices, which Domingo believed were weapons of mass destruction. After inspecting the devices and travelling to a park in Long Beach to surveil the location of the planned attack, Domingo was taken into custody.
According to the criminal complaint, Domingo posted an online video professing his Muslim faith on March 2, and the next day made another posting in which he said “America needs another vegas event” (referring to the October 2017 mass shooting in Las Vegas, Nevada) that would give “them a taste of the terror they gladly spread all over the world.” Following an attack on a mosque in New Zealand on March 13, Domingo posted, “there mustbe retribution.”
In response to the postings, an FBI “confidential human source” (CHS) began an online conversation that resulted in a series of in-person meetings with Domingo. During the first meeting, on March 18, “Domingo discussed with the CHS different targets for an attack, including Jews, police officers, churches, and a military facility,” according to the affidavit.
During subsequent meetings outlined in the affidavit, Domingo continued to express his desire to commit a terrorist act, at points contemplating a drive-by shooting with a modified AK-47-style rifle he owned, and at other points considering the use of an IED. During an April 3 meeting, Domingo allegedly expressed support for ISIS and said “if ISIS ‘came here,’ he would swear allegiance to ISIS,” according to the complaint.
The plan to target the rally came into shape during an April 19 meeting, when Domingo arrived to a meeting with the CHS armed with an AK-47-style rifle “to show you that I’m serious,” according to the complaint. During that meeting, Domingo referenced the Boston Marathon bombing and asked the CHS to find a person to construct an IED that he said could cause 50 casualties.
During several of the meetings, Domingo urged the CHS to maintain secrecy, stating what they were discussing were “federal charges” and “We broke federal law,” according to the complaint.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of the charge of providing and attempting to provide material support to terrorists, Domingo would face a statutory maximum sentence of 15 years in federal prison.
This matter is being investigated by the FBI’s Joint Terrorism Task Force, which includes special agents with the FBI and officers with the Los Angeles Police Department. JTTF members who participated in the investigation include the Naval Criminal Investigative Service, the Los Angeles County Sheriff's Department and the Long Beach Police Department.
This case is being prosecuted by Assistant United States Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section.
Jordanian National Who Hid Terrorism Conviction from Immigration Officials Sentenced to Prison and Is Stripped of U.S. CitizenshipRead the Press Release
LOS ANGELES – A Jordanian national who was sentenced to prison in Israel after admitting he acted at the direction of a terrorist organization to detonate a roadside bomb in an attempt to blow up a civilian bus in Israel was ordered today to serve a nine-month prison sentence for lying to immigration authorities to obtain U.S. citizenship and, as a result of his conviction, will be deported to Jordan.
Vallmoe Shqaire, 51, of Downey, an admitted member of the Palestinian Liberation Organization, pleaded guilty on January 14 to unlawfully procuring U.S. citizenship. As a consequence of his conviction, Shqaire was denaturalized, and he agreed to be removed to Jordan upon the completion of his prison sentence.
Shqaire was convicted in Israel of numerous violent felonies, including charges related to his role in the failed plot to bomb an Israeli bus and for assaulting persons suspected of cooperating with the Israeli authorities,
When he pleaded guilty earlier this year, Shqaire admitted that he lied to U.S. Citizenship and Immigration Services (USCIS) in order to become a citizen. On his citizenship application and during the interview, Shqaire falsely denied under oath that he had never been arrested, convicted or sentenced for any crime, and that he was never a member of any organization or association. Certified Israeli court records show that Shqaire was, in fact, arrested on two occasions in the late 1980s and early 1990s; was convicted of multiple, violent felonies; and served a prison sentence in Israel.
“By repeatedly lying to USCIS Officers, defendant sought to conceal his extensive and violent criminal history in Israel and attacked the immigration safeguards that are in place to protect persons like the defendant from entering our country,” prosecutors wrote in a sentencing memo that noted Shqaire’s criminal conduct continued after he fraudulently obtained U.S. citizenship. After being granted citizenship, Shqaire was prosecuted in a credit card fraud scheme that led to a state prison sentence, and he made additional false statements to law enforcement officers in an attempt to minimize his significant criminal history.
Shqaire was sentenced today by United States District Judge John F. Walter, who issued the order that Shqaire be removed to Jordan once he completes his prison sentence.
The case against Shqaire was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
This matter was prosecuted by Assistant United States Attorneys Annamartine Salick of the Terrorism and Export Crimes Section and Robyn K. Bacon of the Cyber and Intellectual Property Crimes Section.
High Desert Resident Who Claimed to be a Licensed CPA Convicted in Tax Scheme that Collected over $1 Million in Fraudulent RefundsRead the Press Release
LOS ANGELES – A San Bernardino County tax preparer was found guilty late Thursday of filing false and fraudulent tax returns with the Internal Revenue Service as part of a scheme that illegally generated more than $1 million in refunds.
Scott Douglas Cutting Sr., 69, of Apple Valley, was found guilty by a federal jury at the conclusion of a three-day trial. Following about two hours of deliberations, the jury convicted Cutting of six felony counts of aiding and assisting in the preparation of false and fraudulent tax returns.
Cutting, who portrayed himself as a CPA despite his license expiring in 1989, prepared and filed tax returns and then had the refunds directly deposited into his own bank accounts. The evidence presented at trial showed that Cutting kept hundreds or thousands of dollars from each fraudulent tax return he filed, often giving clients nothing or only a small portion of the refund.
Cutting filed on behalf of low- or no-income individuals income tax returns that falsely claimed income or credits to fraudulently create a tax refund. Cutting electronically filed the returns, but he did not identify himself as the preparer of the tax returns. Cutting often filed tax returns for people when he had no authority to do so, using their names and Social Security numbers, as well as the names and Social Security numbers of their dependents, without their permission.
The investigation in this case revealed that, from 2008 to 2012, Cutting prepared and filed approximately 314 false or fraudulent tax returns, and the IRS issued approximately $1.09 million in refunds.
In addition the six guilty verdicts returned on Thursday, the jury acquitted Cutting of one count.
Cutting is scheduled to be sentenced by United States District Judge George H. Wu on June 27. As a result of the guilty verdicts, Cutting faces a statutory maximum sentence of 18 years in federal prison.
The investigation of Cutting was conducted by IRS Criminal Investigation.
The matter is being prosecuted by Assistant United States Attorneys Veronica M.A. Alegría and Bryant Y. Yang of the International Narcotics, Money Laundering, and Racketeering Section.
Federal Grand Jury Indicts Alleged Robbery Crew in Well-Planned Jewelry Heists that Netted $1 Million in Stolen GoodsRead the Press Release
LOS ANGELES – A federal grand jury today indicted five members of a robbery crew who allegedly committed sophisticated heists by following wholesale jewelers and bank customers – sometimes for days – and then robbing them, netting the thieves more than $1 million worth of jewelry and tens of thousands of dollars in cash over the past 18 months.
The five defendants, who all are in federal custody after being arrested earlier this month, each are charged with participating in a conspiracy to interfere with commerce by robbery. They are:
- Federico Santiago Quiroz Lucca, 51, of Los Angeles, the alleged ringleader of the scheme;
- Roberto Melendez Falcon, 51, of Los Angeles;
- Roberto Alonso Castellanos, 48, of Pomona;
- Jose Oscar Cupitre Nuñez, 47, of Australia; and
- Jose Manuel Lopez Molina, 45, of Colombia.
Lucca and Nuñez are also charged in a second count with interference with commerce by robbery.
According to an affidavit previously filed in this case, from October 2017 until April 2019, the defendants surveilled and conspired to rob a series of jewelry salespeople and bank customers in the Los Angeles metropolitan area, the San Francisco Bay Area and Denver. Lucca allegedly led and organized the crew’s activities, enlisting help from several Colombian nationals who traveled to Los Angeles to participate in the conspiracy and robberies.
The various heists described in court documents followed a similar pattern: a member of the crew known as a “scout” identified a victim who was likely to be carrying jewelry or cash. The victims typically were jewelers conducting business at jewelry stores or malls in Orange County, the Jewelry District in downtown Los Angeles, or at various trade shows, the affidavit states. The “scout” followed the victim, who often was carrying large amounts of jewelry or cash, and would wait for an opportunity when the scout and co-conspirators could rob the jeweler.
The co-conspirators followed victims to locations such as gas stations and hotels, where the defendants allegedly used a ruse, such as puncturing a car tire, and then posed as a Good Samaritan, or simply used force, to rob the victims.
For example, on February 8, 2018, Lucca allegedly spent four hours following a traveling jewelry salesman making rounds on behalf of his employer to jewelry stores in Orange County. As the victim returned to his car after stopping in Cypress, he was violently pushed from behind, falling into his car door, and his bag containing approximately $400,000 in jewelry was stolen, court papers state.
In a January 2019 incident, a couple who operated a jewelry business in Connecticut was participating in a jewelry show at the Los Angeles Convention Center, when a man wearing a yellow and orange safety vest asked to help them pack up their belongings. According to an affidavit filed in this case, the man in the safety vest ended up pushing their large cart with all their belongings – including a bag containing approximately $400,000 in jewelry – and the bag was later discovered to be missing. Evidence subsequently developed by investigators determined that the robbery crew had tracked the victims for days.
Earlier this month, Lucca, Nuñez, and Molina were arrested in Northern California after they allegedly surveilled various locations, including jewelry stores, a residence, and the Santa Clara Convention Center, where a jewelry show was scheduled to occur, according to court documents.
Castellanos was arrested in Las Vegas, Nevada on April 12, and Falcon was arrested on April 13 in Los Angeles.
All five defendants are scheduled to be arraigned in United States District Court in Los Angeles on May 3.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted in this case, defendants Lucca and Nuñez would face a statutory maximum sentence of 40 years in federal prison, and the other defendants would face statutory maximum sentences of 20 years in prison.
This matter is being investigated by the Federal Bureau of Investigation, which is receiving substantial assistance from the Los Angeles Police Department.
This case is being prosecuted by Assistant United States Attorneys Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section and Joshua O. Mausner of the Violent and Organized Crime Section.
Federal Indictments Target San Bernardino Street Gang’s Drug Trafficking Activities, Including Smuggling Drugs into County JailRead the Press Release
RIVERSIDE, California – More than 250 law enforcement personnel this morning arrested 24 members and associates of the Westside Verdugo street gang in San Bernardino who are charged in eight federal indictments, one of which alleges they deliberately got themselves arrested in order to smuggle narcotics and syringes hidden in their body cavities into San Bernardino County jails.
The defendants arrested this morning are among 35 charged in the indictments unsealed today. A total of 10 defendants are already in state custody and are expected to be brought to federal court in the near future.
Three of the indictments returned by a federal grand jury earlier this month name Carlos Antonio Aznaran, 24, of Rialto, as the central figure in separate narcotics-trafficking conspiracies. One of the indictments details how the gang distributed methamphetamine, heroin and marijuana inside San Bernardino County’s jail system from at least July 2017 until April 2019. Another indictment alleges that members and associates of Westside Verdugo – including Aznaran and his wife, Elisa Montes, 28, of Palm Desert – conspired to distribute methamphetamine within the City of San Bernardino. The third narcotics indictment charges Aznaran and others with conspiring to distribute heroin in San Bernardino County, as well as possessing firearms and ammunition in furtherance of their drug crimes. The remaining five indictments charge individual Westside Verdugo gang members or associates with being felons in possession of firearms and ammunition.
One of the indictments alleges that on July 2, 2017, Aznaran and other defendants planned for another gang member – Trevor Harris, a.k.a. “Eminem,” and “Vice,” 28, of San Bernardino – to get himself arrested purposely so he could smuggle narcotics to jailed co-conspirators. One week later, Harris was arrested for tampering with a vehicle and was taken to the Central Detention Center in San Bernardino. A search by law enforcement personnel, who had been monitoring telephone calls at the jail, recovered from Harris’s anal cavity approximately 43.33 grams of methamphetamine, approximately 49.7 grams of heroin, five syringes, and 20 packets of the opioid Suboxone, the indictment states. The narcotics allegedly were separated into multiple packets with monikers written on them to indicate who would receive the drugs.
On September 24, 2017, Ernest Madrid, 48, of San Bernardino, told another person that he was “trying to get busted right now” so he could smuggle narcotics into a custody facility, according to the indictment. Later that day, Madrid was arrested for a probation violation and was taken to the Central Detention Center, where approximately 78.2 grams of methamphetamine, approximately 12.12 grams of heroin, and five syringes – all concealed in his anal cavity – were seized. Authorities also found two telephone numbers, allegedly used by Aznaran, written in marker on Madrid’s legs.
“For more than 50 years, this gang has been responsible for spreading drugs and violence in this community, but today we have taken a major step to combat the group’s influence on the city of San Bernardino,” said United States Attorney Nick Hanna. “While this is not the first time federal authorities have joined with our local counterparts to fight this criminal gang, today’s arrests signal that we will continue to pursue street gangs until families in every Southern California neighborhood can lead safe and peaceful lives.”
“Collaboration with law enforcement at all levels of government is crucial in our continuing efforts to stem the tide of criminal activity by street gangs,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The arrests announced today are the latest example of that partnership and of our commitment to targeting the most violent of these gangs, such as the Westside Verdugo, whose members traffic in drugs and intimidate through violence.”
“Today, our department assigned four tactical teams to apprehend the suspects involved in this case. This is a significant step in interrupting this criminal enterprise so that they can be prosecuted by the U.S. Attorney,” said Undersheriff Shannon Dicus of the San Bernardino County Sheriff’s Department. “On behalf of Sheriff John McMahon, we would like to thank all of our agency partners, especially the men and women who worked on this investigation for their commitment to protecting all of us.”
“This gang is and has been responsible for many crimes on our streets,” said San Bernardino Acting Police Chief Eric McBride. “We appreciate the work and collaborative effort done by our partnering agencies. This investigation has made strides in making our community a safer place.”
In addition to allegations of distribution of methamphetamine, one of the indictments also claims that two of the gang’s associates were found in possession of personal identifying information of dozens of unsuspecting victims, whose identities the defendants used to commit fraud.
In the third conspiracy case, the documents allege that law enforcement not only seized heroin, but also substances containing fentanyl, as well as loaded firearms stored with the narcotics.
The charge of conspiracy to distribute controlled substances carries 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 investigation was led by the Federal Bureau of Investigation, the San Bernardino County Sheriff’s Department, and the San Bernardino Police Department.
The Fontana Police Department; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Drug Enforcement Administration; IRS Criminal Investigation; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and the San Bernardino County Probation and Parole Departments provided substantial assistance.
This matter is being prosecuted by Assistant United States Attorneys Justin R. Rhoades and Scott M. Lara of the Violent and Organized Crime Section.
L.A. County Public Official and Contractor Who Paid Him Bribes Agree to Plead Guilty to Federal Bribery and Tax ChargesRead the Press Release
LOS ANGELES – A public official in Los Angeles County’s Internal Services Department and the electrical contractor from whom he accepted nearly $300,000 in bribes have both agreed to plead guilty to bribery and tax charges.
In a plea agreement filed this morning, the county official – Mohammad R. Tirmazi, 50, of Alta Loma – agreed to plead guilty to accepting bribes and subscribing to a false 2016 tax return in which he failed to report $192,800 in income, including approximately $137,400 in bribe payments.
In a second plea agreement filed this morning, the contractor – Enrique Contreras, 38, of Palmdale – agreed to plead guilty to paying bribes and subscribing to a false 2015 tax return in which he failed to report $281,422 in income.
According to court documents, from 2014 to 2016, Tirmazi accepted a total of nearly $300,000 in bribe payments from Contreras, the owner of a low voltage electrical wiring company, Tel-Pro Voice & Data, Inc., that performed work for the County. In exchange for the bribes, Tirmazi approved change orders requested by Contreras for, among other things, work that did not occur and materials that were not used on County projects.
Tirmazi also admits in his plea agreement that he did not report, or force Contreras to correct, violations of the County’s Building and Safety Code or the National Electrical Code that Tirmazi uncovered during inspections of Tel-Pro’s work. Some of those violations related to asbestos removal and Tel-Pro’s failure to properly install cables. In his plea agreement, Tirmazi admits that he generally considered Tel-Pro’s work to be “shoddy,” but he overlooked its poor work because of the bribes he received from Contreras.
“Corrupt public officials and powerful people who pay bribes pose a threat to our institutions and, as we see in this case, also can threaten public safety,” said United States Attorney Nick Hanna. “Bringing these criminals to justice will help restore trust in our civic institutions.”
“Public officials who accept bribes abdicate their responsibilities at the expense of the public they’re paid to serve,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI is committed to investigating unscrupulous individuals whose criminal behavior erodes trust in our municipal departments.”
Tirmazi formed a company called TEQ Solutions, LLC as a way to conceal bribe payments from Contreras, court filings state. Contreras, who bribed Tirmazi with cash and gifts, also paid Tirmazi with checks made payable to TEQ Solutions that were disguised to look like payment for legitimate services rendered. Because TEQ Solutions did no work for Contreras or Tel-Pro, the checks were nothing more than bribes.
Tirmazi’s plea agreement further states that, to hide his ownership of TEQ Solutions, Tirmazi used a third party to file the business paperwork and open a bank account. To lower TEQ Solutions’ taxable income, and thus keep more of the bribe money he received, Tirmazi issued sham IRS Form 1099s to make it appear as though other individuals had received income from TEQ Solutions for work legitimately performed.
In his plea agreement, Tirmazi admits that he failed to report on his tax returns for years 2014 to 2016 a total of $355,107 of income he received from bribe payments and a side business selling IT equipment.
Contreras, in his plea agreement, admits that he failed to report a total of $636,454 of income he received from 2013 to 2017 as a result of his improper deduction of bribe payments and other personal expenses.
“Investigating contractor fraud schemes is like peeling back the layers of a rotten onion: Each new layer reveals another public official and/or contractor who is profiting from these illicit schemes,” said Acting Special Agent in Charge Ryan L. Korner for IRS Criminal Investigation in Los Angeles. “We must stop this corrupt conduct, which leads to the unfair awarding of lucrative contracts and a clear violation of the federal tax laws.”
As part of their plea agreements, both Tirmazi and Contreras have agreed to cooperate with an ongoing federal investigation.
In his plea agreement, Contreras admits to bribing two County officials—Tirmazi and Thomas J. Shepos, 69, of Palmdale, a public official formerly employed by the County in the Real Estate Division. Shepos pleaded guilty in November 2018 to accepting bribes and is scheduled to be sentenced by United States District Judge R. Gary Klausner on November 18, 2019.
From approximately 2013 to 2016, Contreras made cash payments to Shepos, totaling approximately $200,000 to $300,000, in exchange for Shepos providing non-public County information to Contreras and helping Contreras secure County contracts.
As part of his plea agreement, Shepos also agreed to cooperate with the ongoing federal investigation.
One of the individuals from whom Shepos admitting receiving bribes was real estate developer Arman Gabaee, 58, of Beverly Hills. Gabaee was arrested and subsequently indicted on federal bribery charges last year. His trial is currently scheduled for September 10 before United States District Judge George H. Wu.
Tirmazi and Contreras will be summonsed to appear for arraignments in United States District Court in the coming weeks.
Once they enter their respective guilty pleas, each man will face a statutory maximum sentence of 13 years in federal prison.
The cases against Tirmazi and Contreras are part of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS Criminal Investigation.
This matter is being prosecuted by Assistant United States Attorneys Ruth C. Pinkel and Lindsey Greer Dotson of the Public Corruption and Civil Rights Section.
Inland Empire Man Sentenced to More than 6 Years in Federal Prison for Stealing Disaster Relief Funds Intended for Hurricane VictimsRead the Press Release
LOS ANGELES – A San Bernardino County man has been sentenced to 79 months in federal prison for conspiring to defraud the government out of more than $1.3 million in benefits, including Federal Emergency Management Agency (FEMA) disaster relief funds intended for victims of Hurricanes Harvey and Irma in 2017.
Ikponmwosa Eugene Idemudia, 40, of Rancho Cucamonga, was sentenced at a Monday hearing by United States District Judge Percy Anderson, who also ordered him to pay $1,328,982 in restitution. Idemudia pleaded guilty in October 2018 to one felony count of conspiracy to commit wire fraud.
Court documents state that from 2016 until May 2018, Idemudia conspired with others to use stolen identities to apply for fraudulent government benefits, including FEMA disaster assistance funds, Social Security Administration benefits, federal tax refunds, federal unemployment benefits, and Health and Human Services benefits. The FEMA disaster relief money was stolen through the conspiracy occurred in relation to Hurricane Harvey and Hurricane Irma, which were presidentially declared major disasters. Once the funds were illicitly obtained, Idemudia and his co-conspirators transferred the benefits to prepaid debit cards, including Green Dot cards that had been registered under false names. Idemudia and his co-conspirators then converted the debit cards to cash.
When law enforcement executed a search warrant at Idemudia’s residence in May 2018, agents found $256,904 in cash and more than $130,000 on prepaid debit cards. A preliminary forensic review of Idemudia’s cell phones showed that he exchanged more than 100 images of prepaid debit cards or gift cards with co-conspirators and the prepaid card numbers were registered with the stolen identities from various victims throughout the United States.
This case was investigated by the United States Department of Homeland Security Office of Inspector General, the United States Postal Inspection Service, Social Security Administration Office of Inspector General, U.S. Secret Service, and Small Business Administration Office of Inspector General
This matter is being prosecuted by Assistant United States Attorney Andrew Brown of the Major Frauds Section.
Eagle Rock Man Arrested on Indictment Alleging Investment Scam that Claimed Precious Metals Could Be Extracted from ‘Ancient Slag’Read the Press Release
LOS ANGELES – An Eagle Rock resident was arrested this morning on federal fraud and money laundering charges stemming from a scheme that sold “ancient slag,” a mining waste byproduct that supposedly contained precious metals.
Michael Godfree, 77, is scheduled to be arraigned on a seven-count indictment this afternoon in United States District Court.
According to the indictment that was returned by a federal grand jury on April 19 and unsealed today, Godfree was co-founder of The Minerals Acquisition Company (TMAC), a Pasadena-based outfit that offered to sell slag to victims who were told the company possessed “proof of concept” of a method to extract precious metals from this slag, which was generated from copper mining. TMAC sold ton-quantities of the slag with promises of refining the material and recovering precious metals. TMAC provided victims with supposedly attorney-certified “Certificates of Title” that purported to transfer ownership of the slag to victims.
Godfree’s scheme was nothing more than a series of lies, according to the indictment, which alleges that Godfree and TMAC did not actually own the vast majority of the slag they sold, there was not a commercially viable process for extracting precious metals from the slag, and the business operation had not been endorsed by an attorney.
TMAC was dissolved in 2015, but its operations were largely taken over by Precious Metals of North America, Inc., another of Godfree’s companies.
As a result of the fraudulent conduct, prosecutors believe that Godfree generated at least $7 million in sales from more than 100 victims.
Rather than using the victims’ money for the purchase of slag and to develop an extraction process, prosecutors said Godfree and his co-schemers used victims’ money to pay for, among other things, sales commissions and Godfree’s personal expenses, which included the purchase of luxury items.
The indictment charges Godfree with five counts of mail fraud, one count of money laundering and one count of aggravated identity theft for misusing the name of an attorney.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If he were to be convicted of the seven counts in the indictment, Godfree would face a statutory maximum sentence of 112 years in federal prison.
This case is being investigated by the Federal Bureau of Investigation, West Covina Resident Agency.
This matter is being prosecuted by Assistant United States Attorney Joseph D. Axelrad of the Violent and Organized Crime Section and Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.
Conman Who Pretended to Be Beverage Entrepreneur Pleads Guilty to Federal Fraud Charges Stemming from $5 Million Ponzi SchemeRead the Press Release
LOS ANGELES – A Canadian national pleaded guilty today to five wire fraud charges for defrauding investors in a $5 million Ponzi scheme in which he pretended to be a successful beverage entrepreneur with close ties to well-known business executives and NBA stars such as Stephen Curry and Shaquille O’Neal.
Khemraj Dave Hardat, 50, a former resident of the Ritz-Carlton Residences at L.A. Live in downtown Los Angeles, entered his plea before United States District Judge Dale S. Fischer, who scheduled an August 12 sentencing hearing. As a result of today’s guilty pleas, Hardat faces a statutory maximum sentence of 100 years in prison.
In a plea agreement filed in United States District Court, Hardat admitted that, from August 2014 through November 2018, he falsely held 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 advanced educational degrees – including a Ph.D. – and that he maintained relationships with established business figures such as computer entrepreneur Michael Dell and the chief executive officer of PepsiCo.
Hardat also falsely represented that Basketball Hall of Famer Shaquille O’Neal was one of his business partners, and that professional basketball star Stephen Curry would be endorsing one of his company’s products, according to court documents. Furthermore, Hardat falsely claimed that PepsiCo and Dr. Pepper Snapple Group, Inc. owed him more than $100 million as the result of purported business deals he consummated with them, the plea agreement states.
Hardat supported his bogus claims of financial success by showing victims doctored digital images of bank account statements showing balances inflated far beyond any amount Hardat actually had at these financial institutions. One doctored image emailed to a victim purportedly showed a balance of nearly $500 million in one bank account, while another phony image purported to show a bank account balance of nearly $170 million, court papers state.
In reality, Hardat never intended to use his investors’ proceeds for the business purposes that he represented, the plea agreement states. Instead he used the 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 for exclusive private schools for his children, and purchase luxury boxes and tickets for sporting and entertainment events, according to the plea agreement. 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 more than $5 million from investors, who have suffered losses of more than $4 million.
This matter was investigated by the Federal Bureau of Investigation.
This case is being prosecuted by Assistant United States Attorney Adam P. Schleifer of the Major Frauds Section.
United States Returns $9.8 Million Recovered from e-Bullion Illegal Money-Transmitting Business to VictimsRead the Press Release
LOS ANGELES – The United States has returned approximately $9.8 million to more than 1,000 victims who made investments or who had deposited money in e-Bullion.com, a website that operated for years as an illegal money transmitting business.
The funds – the final civil proceeds recovered in the case – were disbursed Wednesday pursuant to a civil forfeiture judgment in the amount of $9,805,621.65 from gold and silver stored at a mint in Perth, Australia. The funds had been stored in the Perth mint by e-Bullion operator James Fayed, formerly of Camarillo, and his companies Goldfinger Coin and Bullion (GCB) and Goldfinger Bullion Reserve Corp.
Fayed is now on California’s death row in relation to a separate investigation and conviction in state court for contracting with hitmen who murdered his wife in 2008.
This week’s disbursement in the e-Bullion civil forfeiture cases follows previous disbursements of $1.8 million in civilly forfeited funds to more than 300 victims in December 2014, and approximately $11.7 million disbursed to more than 1,000 victims in November 2015.
e-Bullion purported to provide opportunities to invest in precious metals. Through the website, individuals opened accounts with real money, which they used to purchase virtual “e-currency” purportedly backed by precious metal reserves maintained by Fayed’s companies in the United States and Australia. In practice, e-Bullion allowed individuals engaging in fraud to obtain money from victims and move the money around the world while remaining virtually anonymous and avoiding many global banking reporting requirements.
The United States obtained information from e-Bullion’s and GCB’s encrypted computer servers that Fayed stored in California and Switzerland, and that information was used to identify e-Bullion accountholders and the value of their individual accounts. The Department of Justice, through claims administrator Analytics Consulting, LLC, distributed the recovered funds to the innocent accountholders through a process known as “remission,” which allows the government to use forfeited monies to compensate domestic and international victims of crime.
Assistant United States Attorney Katharine Schonbachler of the Asset Forfeiture Section is handling this matter.
Federal Law Enforcement Official Sentenced to More than 12 Years in Prison for Large-Scale Interstate Narcotics Trafficking OperationRead the Press Release
LOS ANGELES – A 25-year veteran officer of U.S. Customs and Border Protection (CBP) who worked at Los Angeles International Airport was sentenced today to 151 months in federal prison for helping to move hundreds of kilograms of cocaine, heroin and marijuana from Southern California to Chicago as part of a narcotics distribution ring.
Manuel Porras Salas, 52, of Fontana, who is on indefinite suspension from the agency, was sentenced today by United States District Judge Cormac J. Carney, who said Salas “let his agency down and let his country down.”
Sayda Powery Orellana, 50, also of Fontana, who was Salas’ wife during the time of the narcotics trafficking conspiracy, also was sentenced to 151 months in federal prison for her role in the drug distribution ring.
After a five-day trial in December, a federal jury found Salas and Orellana guilty of one count of conspiracy to distribute controlled substances, one count of conspiracy to commit money laundering, and one count of making false statements to law enforcement. The jury also found Orellana guilty of four additional money laundering counts.
According to the evidence presented at trial, Salas, who previously worked as a CBP officer at John Wayne and Ontario International airports, and Orellana obtained kilogram quantities of narcotics and provided them to a commercial truck driver who delivered the narcotics from California to Illinois. The defendants also laundered the hundreds of thousands of dollars they received in compensation by using bank accounts in the names of Orellana and others.
“This federal law enforcement officer and his then-wife were involved in the distribution of narcotics worth millions of dollars,” said United States Attorney Nick Hanna. “They participated in a sophisticated trafficking operation that sent many pounds of dangerous and addictive drugs to the Midwest. While the narcotics distribution was not directly related to Officer Salas’ position with the government, we cannot tolerate any law enforcement official playing a role in illegal activity that threatens the well-being of American citizens.”
“U.S. Customs and Border Protection stresses honor and integrity in every aspect of our mission, and the overwhelming majority of CBP employees perform their duties with honor and distinction every day to keep our country safe,” said Denise R. Mar, Special Agent in Charge of CBP’s Office of Professional Responsibility in Los Angeles. “Today’s lengthy sentence will serve notice to all government employees that integrity and public trust in our agency will be held to the highest standard. We will continue our efforts with our law enforcement partners to investigate CBP employees involved in criminal activity.”
“Today’s sentence reflects DEA’s commitment to not only destroying drug trafficking organizations, but also to rooting out police corruption,” said David J. Downing, Special Agent in Charge of the Drug Enforcement Administration, Los Angeles Field Office. “This sentence is indicative of the hard work by our federal law enforcement partners, as well as our financial investigations group’s dedicated agents.”
“As today’s sentence reflects, this case involves serious criminal conduct – the distribution of millions of dollars of narcotics and the deposit of hundreds of thousands of dollars in cash to accounts associated with Salas and Orellana,” said Ryan L. Korner, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office. “Mr. Salas violated the trust placed in him by the U.S. Customs and Border Protection and the people of this country, for his own and his former wife’s personal financial gain.”
The conspiracy began to unravel on March 11, 2012, when a commercial truck driver was stopped in Gallup, New Mexico with approximately 260 kilograms of narcotics – including heroin, cocaine, and marijuana – that was valued at approximately $1.5 million. The commercial truck driver told law enforcement that he had worked with Salas and Orellana transporting narcotics to Chicago on multiple occasions, and that he would receive the drug sales proceeds and deposit them into various bank accounts at Salas and Orellana’s direction. The driver later pleaded guilty to possession with intent to distribute controlled substances. The driver’s telephone, telephone records, and banking records tied Salas to the narcotics distribution activities and money laundering. Salas and Orellana lied to law enforcement that they didn’t know the commercial truck driver and that the money deposited into Orellana’s bank account was intended for someone else.
This matter was investigated by U.S. Customs and Border Protection’s Office of Professional Responsibility, the Drug Enforcement Administration and IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorneys Joseph T. McNally of the Violent and Organized Crime Section and Aron Ketchel of the Public Corruption and Civil Rights Section.
O.C. Man Arrested on Federal Charges Stemming from $72 Million Scheme to Smuggle Counterfeit Cell Phone Parts from ChinaRead the Press Release
SANTA ANA, California – A Laguna Hills man has been arrested on federal charges alleging he oversaw a scheme that smuggled counterfeit Apple and Samsung cell phone components from China that were sold in the United States, generating tens of millions of dollars in revenue.
Chan Hung Le, 44, was arrested Tuesday afternoon pursuant to a criminal complaint that charges him with conspiracy to defraud the United States, conspiracy to traffic in counterfeit goods, conspiracy to illegally import merchandise, conspiracy to commit mail fraud and wire fraud, and aggravated identity theft. Le is expected to make his initial court appearance this afternoon in United States District Court in Santa Ana.
According to the affidavit in support of the complaint, Le and his wife own EZ Elektronix, a company now based in Irvine that imported counterfeit electronics products – screens and other cell phone parts – from China into the United States. Starting in June 2010, Le and several co-conspirators, including his relatives and employees, smuggled counterfeit goods and employed various tactics to avoid scrutiny from authorities in the United States, Hong Kong and China, the affidavit states.
The complaint alleges that Le attempted to conceal the scheme by using multiple business names and addresses, as well as “virtual offices” and post office boxes, in at least three U.S. states. Once the counterfeit products arrived, Le and his co-conspirators allegedly distributed the parts to the public through various online stores that falsely claimed the parts were genuine.
In October 2011 and February 2012, law enforcement executed search warrants at EZ Elektronix’s office and seized approximately 7,200 counterfeit iPhone parts and 11,700 other counterfeit cell phone parts that had a retail value of more than $1.7 million, the affidavit states. In response to the search warrants, Le allegedly changed his importation practices by having the counterfeit goods sent to mail drops he set up in Texas and Oklahoma under the names of two fictitious companies and one of his employees. After the bogus parts were sent to the mail drops, they were shipped to Southern California under a new business name, “Pac-Depot Inc.,” while legitimate merchandise was shipped directly to EZ Elektronix, the affidavit states. Using these methods, Le ensured that the shipments containing counterfeit goods would be inspected at a different port of entry in the United States and would not be associated with him or his company, court papers state.
In 2016, one of Le’s suppliers, Hongwei “Nick” Du, pleaded guilty in United States District Court in San Diego to conspiring to traffic in counterfeit goods and related money laundering charges. In his plea agreement, Du admitted to selling Le at least $18,744,354 worth of cellular telephone and electronic components for resale from China into the United States and that about half of the goods was counterfeit merchandise bearing the trademarks of Apple, Samsung, Nokia and other companies.
Between January 2012 and December 2018, EZ Elektronix paid more than $72 million to three companies who conspired with Le to traffic counterfeit goods from Hong Kong and China into the United States, according to the affidavit.
A search conducted Tuesday afternoon in conjunction with Le’s arrest led to the discovery of many cell phone components that appeared to be counterfeit.
A complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of all charges, Le faces a statutory maximum sentence of 45 years in federal prison on the conspiracy charges, plus a mandatory two-year consecutive sentence for the aggravated identity theft charge.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, U.S. Customs and Border Protection, and the Westminster Police Department.
This matter is being prosecuted by Assistant United States Attorney Cameron Schroeder of the Cyber and Intellectual Property Crimes Section.
Two Brothers Plead Guilty in Conspiracy to Distribute Opioids Through Sham Medical Clinics and Corrupt DoctorsRead the Press Release
LOS ANGELES – Two San Fernando Valley brothers have pleaded guilty to federal criminal charges, admitting that they conspired to distribute powerful narcotics such as hydrocodone and oxycodone via sham medical clinics that hired corrupt doctors who wrote fraudulent prescriptions to black market customers.
Minas Matosyan, a.k.a. “Maserati Mike,” 38, of Encino, and Hayk Matosyan, 32, of Granada Hills, each pleaded guilty on Monday to one count of conspiracy to distribute a controlled substance. United States District Judge Philip S. Gutierrez has scheduled a July 15 sentencing hearing for the brothers, each of whom faces a statutory maximum sentence of 20 years in federal prison.
The Matosyan brothers were arrested in August 2017 pursuant to a grand jury indictment that charged 12 defendants in a scheme to divert at least 2 million prescription pills for sale on the black market. A September 10 trial date has been scheduled for most of the remaining defendants.
According to his plea agreement, Minas Matosyan admitted to controlling the sham clinics and hiring corrupt doctors who allowed their names to be used on fraudulent prescriptions in exchange for kickbacks. Minas Matosyan also admitted to stealing the identities of other doctors and then issuing prescriptions in those doctors’ names, either by personally acquiring prescription pads in the doctors’ names or by arranging for other co-conspirators to do so. The elder Matosyan also admitted to staffing receptionists at the clinics who would falsely verify the phony prescriptions when pharmacists called to verify them. Minas Matosyan sold narcotic prescriptions to black market customers – either directly or through couriers – and also sold bulk quantities of hydrocodone and oxycodone he had acquired from phony prescriptions filled at pharmacies by other customers.
In May 2016, Minas Matosyan spoke with a doctor and offered him a “very lucrative position” where the doctor would “sit home making $20,000 a month doing nothing,” according to the plea agreement. After the doctor declined the offer, Matosyan stole the doctor’s identity, sending a co-conspirator a text message containing the doctor’s full name, medical license number and national provider identifier number that the co-conspirator used to order prescription pads in the doctor’s name. Over the next two months, Matosyan and his co-conspirators sold fraudulent prescriptions purportedly issued by the victim doctor for at least 9,450 pills of oxycodone and 990 pills of hydrocodone, the plea agreement states.
Hayk Matosyan admitted in his plea agreement that he aided the conspiracy by serving as a courier of oxycodone or related proceeds from the sale of oxycodone.
The investigation in this case is being conducted by the Drug Enforcement Administration; Internal Revenue Service Criminal Investigation; the U.S. Department of Health and Human Services - Office of Inspector General; the Ventura County Sheriff’s Office, Pharmaceutical Crimes Unit; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
The primary investigative agencies received substantial assistance from the Los Angeles County Sheriff’s Department, the Los Angeles Police Department, the California Department of Justice, and the Orange Police Department.
This matter is being prosecuted by Assistant United States Attorney Benjamin Barron of the Organized Crime Drug Enforcement Task Force.
Corona Lawyer Admits Illegal Possession of Unregistered WeaponsRead the Press Release
LOS ANGELES – A California attorney and ex-Rialto police officer pleaded guilty today to one felony count of illegally possessing multiple unregistered weapons, including a short-barreled rifle, two silencers, and a hand grenade.
Sergio Lopez de Tirado, 43, of Corona, pleaded guilty to possession of an unregistered firearm and destructive device.
United States District Judge Fernando M. Olguin scheduled a September 26 sentencing hearing, where Lopez de Tirado will face a statutory maximum sentence of 10 years in federal prison. Lopez de Tirado is currently in custody without bond.
According to court documents, law enforcement found Lopez de Tirado asleep and apparently intoxicated in the passenger’s seat of a pickup truck that was parked with its doors wide open and blocking a driveway in Norco. During their search of the truck on December 21, 2018, authorities found a short-barreled 9-millimeter rifle, two silencers, and a hand grenade in a holster under his arm. Other items, such as high-capacity magazines, ammunition, and brass knuckles, were also found in the truck.
According to court documents, the firearms in the vehicle – including the short-barreled rifle and an AR-type rifle with a silencer – were loaded when recovered by authorities.
Lopez de Tirado admitted in his plea agreement that he had not registered the rifle, the silencers or the hand grenade with the National Firearms Registration and Transfer Record.
This case was investigated by the FBI’s Inland Empire Joint Terrorism Task Force, and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Substantial assistance was provided by the Riverside County Sheriff’s Department, the Rialto Police Department, the Corona Police Department, and the California Highway Patrol.
This case is being prosecuted by Assistant United States Attorney Reema M. El-Amamy of the Terrorism and Export Crimes Section.
Attorney Michael Avenatti Named in Federal Grand Jury Indictment that Accuses Him of Stealing Millions of Dollars from ClientsRead the Press Release
LOS ANGELES – A federal grand jury indictment filed late Wednesday charges high-profile attorney Michael Avenatti with a host of fraud and tax offenses that allege, among other things, that he stole millions of dollars from clients and millions of dollars of employment taxes that his coffee company should have paid to the Internal Revenue Service.
The 36-count indictment, which was returned by a grand jury in Santa Ana, outlines four areas of criminal conduct, all of which relate to the misappropriation and/or the illegal concealment of funds.
Avenatti, 48, who resides in Century City, was arrested in this case on March 25 pursuant to a criminal complaint that alleged the theft of money from one client and the use of bogus tax returns to obtain a series of loans. The indictment, which is now the operative charging document, alleges this conduct, but also significantly broadens the scope of the case.
The criminal charges in the indictment address four areas of wrongdoing: the embezzlement of millions of dollars that should have been paid to clients, the failure to file income tax returns and failure to pay the IRS millions of dollars in taxes, the submission of fraudulent loan applications that included tax returns never filed with the IRS, and the concealment of assets from the Bankruptcy Court.
“These four areas of criminal conduct alleged in the indictment are all linked to one another because money generated from one set of crimes appears in other sets – typically in the form of payments to lull victims and to prevent Mr. Avenatti’s financial house of cards from collapsing,” said United States Attorney Nick Hanna.
“The financial investigation conducted by the IRS details a man who allegedly failed to meet his obligations to the government, stole from his clients, and used his ill-gotten gains to support his racing team, the ownership of Tully’s coffee shops, and a private jet,” said Acting Special Agent in Charge Ryan L. Korner with IRS Criminal Investigation in Los Angeles. “Individuals who intentionally thwart the IRS and fail to meet their tax obligations will be caught and they will be held accountable”
The Wire Fraud Charges
Avenatti faces 10 counts of wire fraud related to more than $12 million he received on behalf of clients as a result of settlements in lawsuits and other negotiations. While he was entitled to attorney’s fees for work done on behalf of clients, the indictment alleges that Avenatti stole millions of dollars from clients he represented in four matters.
In each of the four cases of embezzlement alleged in the indictment, Avenatti received money on behalf of clients into client trust accounts, misappropriated the money, and lied to the clients about receiving the money or, in one case, claimed that the money had already been sent to the client.
- In the case of a victim called Client 1 in the indictment, Avenatti represented the man in a lawsuit against the County of Los Angeles that alleged, among other things, Client 1 became a paraplegic as a result of the county violating his constitutional rights. The county paid a $4 million settlement in January 2015, but within months Avenatti had drained the entire settlement payment from his law firms’ trust account and used portions of the settlement to finance his coffee business or pay personal expenses. Avenatti concealed the receipt of the settlement from Client 1 and instead gave him periodic “advances” of no more than $1,900 and paid the rent for his assisted living facility, according to the indictment.
- Client 2 obtained a $3 million settlement in a matter, which included a payment of $2.75 million in early 2017. The indictment alleges that Avenatti took the bulk of this money – $2.5 million – and used it to purchase his portion of a jet, while falsely telling Client 2 that the settlement called for monthly payments over eight years. Avenatti made 11 monthly payments, making them appear to come from the individual who paid the settlement, but then Avenatti allegedly stopped paying Client 2.
- Client 3 is the client-victim discussed in the criminal complaint who was to receive a $1.9 million settlement in an intellectual property dispute. Avenatti allegedly embezzled the first installment of $1.6 million in January 2018, in part by providing Client 3 with a bogus settlement agreement indicating that the payment was going to be made two months later. The indictment alleges that Avenatti used the money to pay expenses at his coffee business and to pay his own legal expenses.
- Clients 4 and 5 divested shares in a company after Avenatti negotiated a “Common Stock Repurchase Agreement” for the sale of nearly $27.5 million worth of shares and then another sale of approximately $8.15 million worth of shares. When the first payment was made, Avenatti took his fees for the overall $35 million sale and sent the balance to Client 4. But when the second stock sale was finalized and the company sent nearly $8.15 million, Avenatti kept $4 million for himself and used this money to pay some of his law firm’s bankruptcy creditors, including the IRS; to provide funding for his various businesses; and to make lulling payments to Client 1 and Client 2. When Client 4 and Client 5 demanded their money, Avenatti falsely told them that the purloined $4 million already had been wired to them and provided them with a wire transfer confirmation document which actually documented the transfer of an earlier $4 million payment.
The Tax Fraud Charges
The indictment charges Avenatti with a total of 19 tax-related offenses. The indictment alleges that Avenatti has failed to file personal income tax returns since 2010, and that he failed to file various tax returns for his two law firms in which he held a controlling interest.
Some of the tax charges relate to Avenatti’s ownership of Global Baristas US LLC (GBUS), which operated Tully’s Coffee. Starting in late 2015 and continuing into 2017, GBUS failed to file employment tax returns and failed to pay approximately $3.2 million in federal payroll taxes, according to the indictment, which notes that this figure includes at least $2.3 million in “trust fund taxes” that GBUS had withheld from its employees’ paychecks. In 2016, the IRS initiated a collection action against GBUS, and, in June 2017, the IRS filed a federal tax lien against GBUS as part of its attempts to collect nearly $5 million in unpaid federal payroll taxes and penalties.
Further, Avenatti allegedly attempted to obstruct the IRS’s efforts to collect the taxes. The indictment alleges that he lied to an IRS revenue officer, opened a new bank account to receive funds related to credit card transactions at Tully’s coffee shops, and directed Tully’s employees to deposit cash receipts into a bank account belonging to a car racing outfit that Avenatti also owned. Some of the money that should have been used to pay GBUS’ tax debt was transferred to bank accounts associated with Avenatti’s law firms, and some of that money was used to make lulling payments to Clients 1 and 2.
The Bank Fraud Charges
Avenatti faces two counts of bank fraud stemming from an alleged scheme in which he submitted bogus financial information to obtain three loans totaling $4.1 million from The People’s Bank, a federally insured financial institution in Mississippi. As previously alleged in the criminal complaint, Avenatti submitted personal tax returns that had never been filed with the IRS, but the indictment further alleges that he submitted documents to the bank that overstated the resources of the Eagan Avenatti law firm. For example, the indictment accuses Avenatti of submitting a balance sheet for the law firm stating that the law firm, on March 10, 2014, had $508,200 in its operating account, when in fact the account held slightly more than $43,000. Avenatti also allegedly submitted to the bank a partnership tax return for Eagan Avenatti for 2012 that was different from the return actually submitted to the IRS in that the return provided to the bank reported close to $8 million in additional business income.
The Bankruptcy Fraud Charges
Avenatti faces four bankruptcy fraud charges for allegedly making false statements in relation to a bankruptcy case involving Eagan Avenatti. As the managing partner of the firm, Avenatti agreed in the bankruptcy proceeding to abide by certain guidelines and requirements, including filing monthly operating reports that detailed all of the firm’s financial information. Three of the bankruptcy fraud charges allege that Avenatti submitted, under penalty of perjury, monthly operating reports that failed to report all of the firm’s accounts receivable. Additionally, Avenatti is charged with falsely testifying under oath during a June 2017 bankruptcy hearing by denying the firm had received any fees related to a lawsuit when Eagan Avenatti had actually received more than $1.3 million, which included attorney’s fees in relation to that case.
The indictment specifically charges Avenatti with 10 counts of wire fraud related to the theft of money that should have been paid to clients, eight counts of willful failure to collect and pay over taxes withheld from GBUS employee, one count of endeavoring to obstruct the administration of the Internal Revenue Code, four misdemeanor counts of willful failure to file his personal tax returns for the years 2014 through 2017, three misdemeanor counts of willful failure to file Eagan Avenatti’s tax returns for the years 2015 through 2017, three misdemeanor counts of willful failure to file tax returns for Avenatti & Associates for the years 2015 through 2017, two counts of bank fraud related to the loans received from The People’s Bank, one count of aggravated identity theft for misusing the name of a tax preparer in relation to the bank fraud scheme, three counts of making false declarations in relation to a bankruptcy, and one count of giving false testimony under oath in Bankruptcy Court.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If he were to be convicted of the charges alleged in the indictment, Avenatti would face a statutory maximum sentence of 333 years in federal prison, plus an additional two-year mandatory consecutive sentence for the aggravated identity theft charge.
Avenatti, who is free on a $300,000 bond, is scheduled to be arraigned on the indictment on April 29 in United States District Court in Santa Ana.
The ongoing investigation into Avenatti is being conducted by IRS Criminal Investigation, which has received assistance from the Newport Beach Police Department and the Orange County District Attorney’s Office.
This case is being prosecuted by Assistant United States Attorneys Julian L. André of the Major Frauds Section and Brett A. Sagel of the Santa Ana Branch Office.
In a related action on Wednesday, federal authorities seized the Honda jet that was purchased, in part, with money Avenatti allegedly stole from Client 2. That portion of the case is being handled by Assistant United States Attorney Steven R. Welk, Chief of the Asset Forfeiture Section.
Avenatti IndictmentOrange County Woman Sentenced to 4½ Years in Federal Prison for Unemployment Insurance FraudRead the Press Release
LOS ANGELES – A woman was sentenced today to 54 months in federal prison for defrauding the state’s unemployment insurance program out of more than one-half million dollars by using stolen identities to submit dozens of bogus claims for “employees” who supposedly worked at sham companies.
Rolanda Ashley, 49, of Anaheim, was sentenced by United States District Judge John A. Kronstadt, who also ordered her to pay $547,904 in restitution to her victims. Ashley pleaded guilty in October 2018 to one felony count of mail fraud.
According to her plea agreement, from October 2010 to November 2013, Ashley participated in a scheme to defraud the Employment Development Department (EDD), the state agency that administers the federal unemployment insurance program in California.
As part of the scheme, Ashley and a co-conspirator registered fictitious companies with EDD, submitted false wage information for individuals who purportedly worked for these sham companies, and then she fraudulently applied for and obtained unemployment insurance benefits in these individuals’ names. At least 10 victims had their Social Security numbers and dates of birth used without their permission to further the scheme. When registering the business addresses of fake companies with EDD, Ashley listed addresses that she controlled or to which she had access. As a result of Ashley’s fraudulent submissions, EDD directed a bank to mail debit cards to addresses that she listed for the fake claimants.
In total, Ashley submitted approximately 40 fraudulent claims seeking more than $550,000 in unemployment insurance benefits.
This case was investigated by the United States Department of Labor - Office of Inspector General, and the California Employment Development Department.
This matter is being prosecuted by Assistant United States Attorneys Kerry L. Quinn and Poonam G. Kumar of the Major Frauds Section.
Final Gang Defendant in Federal Hate Crimes Indictment Pleads Guilty in Firebombing of African-American ResidencesRead the Press Release
LOS ANGELES – The lead defendant in a federal hate crimes indictment has pleaded guilty to five charges and admitted he organized a group of street gang members who firebombed African-American residences inside the Ramona Gardens Housing Development in Boyle Heights “in order to force the African-American victims to move from the [development].”
Carlos Hernandez, also known as “Rider,” 34, pleaded guilty Monday to five felonies that carry a mandatory minimum sentence of 15 years in federal prison.
On the night of May 11, 2014, which was Mother’s Day, eight members of the Big Hazard street gang – including Hernandez, who was orchestrating the group’s activities – agreed to firebomb several apartments in Ramona Gardens because the residents were African Americans and living in the housing complex. In his plea agreement, Hernandez admitted that he organized the participants, gave each specific roles in the attacks and provided them with items to be used, including masks to conceal their identity and a hammer to break windows.
Once the gang members located their pre-selected targets, they smashed the windows of four apartments to allow for cleaner entry of the firebombs to maximize damage and threw lit Molotov cocktails into the residences, according to court documents. Three of the four targeted apartments were occupied by African-American families, including women and children, who were sleeping at the time of the unprovoked attack.
“Hernandez told the other codefendants who were present that the African-American victims were being targeted for firebombing because of their race,” according to his plea agreement, in which Hernandez admitted that he “and the codefendants knew that throwing firebombs into occupied residences after midnight created a substantial likelihood of causing serious bodily injury” to the African-American families.
“This defendant oversaw a scheme designed to send African-American residents a potentially deadly message – you are not welcome here,” said United States Attorney Nick Hanna. “As this successful prosecution clearly demonstrates, we simply will not tolerate acts of violence and hate calculated to deprive people of their civil rights.”
“The defendant and his fellow gang members targeted and attacked families sleeping in their homes because of their race,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Justice Department will continue to investigate and prosecute these violent acts of hate.”
“Many resources were devoted to the investigation of this hate crime which inexplicably targeted residents based on the color of their skin, including vulnerable children,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Any crime that violates an individual’s civil rights will not be tolerated and will be vigorously investigated by the FBI and our partners.”
Hernandez pleaded guilty to conspiracy to violate civil rights, violent crime in aid of racketeering, using fire and carrying explosives to commit another federal felony, using and possessing a firearm in a crime of violence, and violating the Fair Housing Act.
United States District Judge Christina A. Snyder is scheduled to sentence Hernandez on October 7, at which time he will face a statutory maximum penalty of life in prison.
Previously in this case, seven other defendants who were charged in 2016 pleaded guilty to federal hate crime and related offenses. All of those defendants also admitted that they participated in the firebombings because of the victims’ race and color and with the intent to force the victims to move away from the federally funded housing complex. Those seven defendants are scheduled to be sentenced later this year.
The investigation into the firebombing was conducted by agents and detectives with the Federal Bureau of Investigation; the Los Angeles Police Department; the Los Angeles Fire Department; and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
This case is being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section; Justice Department Trial Attorney Julia Gegenheimer of the Civil Rights Division’s Criminal Section; and Assistant United States Attorney MiRi Song of the General Crimes Section.
Final Defendant in East L.A. Street Gang Pleads Guilty to Federal Charges Stemming from Firebombing of African-American ResidencesRead the Press Release
The lead defendant in a federal hate crimes indictment pleaded guilty yesterday to five charges and admitted he organized a group of street gang members who firebombed African-American residences inside the Ramona Gardens Housing Development “in order to force the African-American victims to move from the [development].”
Carlos Hernandez, also known as “Rider,” 34, pleaded guilty yesterday to five felonies that carry a mandatory minimum sentence of 15 years in federal prison.
“The defendant and his fellow gang members targeted and attacked families sleeping in their homes because of their race,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Justice Department will continue to investigate and prosecute these violent acts of hate.”
“This defendant oversaw a scheme designed to send African-American residents a potentially deadly message – you are not welcome here,” said United States Attorney Nick Hanna. “As this successful prosecution clearly demonstrates, we simply will not tolerate acts of violence and hate calculated to deprive people of their civil rights.”
“Many resources were devoted to the investigation of this hate crime which inexplicably targeted residents based on the color of their skin, including vulnerable children,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Any crime that violates an individual’s civil rights will not be tolerated and will be vigorously investigated by the FBI and our partners.”
On the night of Mother’s Day, May 11, 2014, eight members of the Big Hazard street gang – including Hernandez, who was orchestrating the group’s activities – agreed to firebomb several apartments in Ramona Gardens because the residents were African Americans and living in the housing complex. In his plea agreement, Hernandez admitted that he organized the participants, gave each specific roles in the attacks and provided them with items to be used, including masks to conceal their identity and a hammer to break windows.
Once the gang members located their pre-selected targets, they smashed the windows of four apartments to allow for cleaner entry of the firebombs to maximize damage and threw lit Molotov cocktails into the residences, according to court documents. Three of the four targeted apartments were occupied by African-American families, including women and children, who were sleeping at the time of the unprovoked attack.
“Hernandez told the other codefendants who were present that the African-American victims were being targeted for firebombing because of their race,” according to his plea agreement, in which Hernandez admitted that he “and the codefendants knew that throwing firebombs into occupied residences after midnight created a substantial likelihood of causing serious bodily injury” to the African-American families.
Hernandez pleaded guilty to conspiracy to violate civil rights, violent crime in aid of racketeering, using fire and carrying explosives to commit another federal felony, using and possessing a firearm in a crime of violence, and violating the Fair Housing Act.
United States District Judge Christina A. Snyder is scheduled to sentence Hernandez on Oct. 7 where he will face a statutory maximum penalty of life in prison.
Previously in this case, the other seven defendants who were charged in 2016 pleaded guilty to federal hate crime and related offenses. All of those defendants also admitted that they participated in the firebombings because of the victims’ race and color and with the intent to force the victims to move away from the federally funded housing complex in the Boyle Heights section of Los Angeles. Those seven defendants are scheduled to be sentenced later this year.
The investigation into the firebombing was conducted by agents and detectives with the Federal Bureau of Investigation; the Los Angeles Police Department; the Los Angeles Fire Department; and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
This case is being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section; Justice Department Trial Attorney Julia Gegenheimer of the Civil Rights Division’s Criminal Section; and Assistant United States Attorney MiRi Song of the General Crimes Section.
For more information about DOJ’s work to combat and prevent hate crimes, visit www.justice.gov/hatecrimes: a one-stop portal with links to DOJ hate crimes resources for law enforcement, media, researchers, victims, advocacy groups, and other organizations and individuals.
Unlicensed Lawyer Found Guilty of Federal Fraud and Tax Offenses for Bilking ‘Clients’ and Claiming Illegal Tax RefundsRead the Press Release
LOS ANGELES – A Pasadena man who falsely claimed to be a licensed attorney was remanded into custody this afternoon after a federal jury found him guilty of fraud charges related to his representation of “clients” in federal and state courts.
Kenneth Paul Ferreyro, 37, who resided in Glendale during most of the criminal conduct, was also convicted of tax offenses for seeking well over $100,000 in refunds on federal tax returns that falsely claimed substantial payroll taxes had been withheld and remitted to the Internal Revenue Service.
Following a four-day trial in United States District Court, the jury deliberated for about two hours before convicting Ferreyro of four counts of wire fraud and four counts of making false claims on his tax returns.
The evidence presented at trial showed that, from at least 2010 to 2017, Ferreyro told people, most of whom were affiliated with his father’s church, that he could represent them in United States Bankruptcy Court and other courts and that he could perform work related to real estate refinancing and tax liens. While Ferreyro did graduate from a law school, he never received a license to practice law.
In relation to several victims, Ferreyro prepared and/or filed bankruptcy petitions in Los Angeles, Sacramento and Phoenix. In relation to petitions filed in the Central District of California, Ferreyro concealed his participation by claiming that the victims were filing on their own behalf.
Ferreyro also “represented” a person in a child support dispute in a state court in Idaho, and he charged another person $5,000 based on false claims he could remove federal tax liens so the victim could refinance a residence.
Ferreyro, who at times described himself as a “tax attorney,” also defrauded the government by making false claims on tax returns he filed for the years 2013 through 2016. Ferreyro submitted tax returns to the IRS which falsely stated that he and his wife had already paid substantial amounts of payroll taxes and he fraudulently sought refunds totaling $126,826, some of which was paid by the IRS.
Ferreyro is scheduled to be sentenced by United States District Judge John F. Walter on June 24. As a result of today’s guilty verdicts, Ferreyro faces a statutory maximum sentence of 100 years in federal prison.
The investigation of Ferreyro was conducted by IRS Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service. The United States Trustee Program offices in Los Angeles, Sacramento and Phoenix provided substantial assistance.
The matter is being prosecuted by Assistant United States Attorneys Monica E. Tait and Ashwin Janakiram of the Major Frauds Section.
Three L.A. Residents Charged in Darknet Drug Ring that Allegedly Shipped Methamphetamine to Buyers Around the WorldRead the Press Release
LOS ANGELES – Three people accused of being part of an international drug trafficking ring are in custody on federal charges alleging they used the Darknet to obtain drugs and offer narcotics for sale, and then shipped pound quantities of methamphetamine to buyers in the Philippines, New Zealand, Poland and other foreign destinations.
An eight-count indictment returned on March 22 by a federal grand jury charges the three defendants with conspiracy to distribute methamphetamine and substantive drug trafficking offenses. The defendants are:
- Michael Alan Goldberg, 34, of Panorama City, who allegedly directed the conspiracy, even after being taken into federal custody in June 2018;
- Donnica Rabulan, 31, of Panorama City; who is Goldberg’s wife, and
- James Caleb Kueker, 41, of the Hollywood Hills.
Rabulan, who in addition to the conspiracy charge faces four counts of distributing methamphetamine, was arraigned Monday afternoon in United States District Court. Kueker, who also is charged with one count of possession with the intent to distribute ketamine, as well as with one count of possession of a firearm in furtherance of a drug trafficking crime, was also arraigned on Monday. Rabulan and Kueker each entered not guilty pleas and were ordered to stand trial on June 4.
Goldberg, who also faces one count of intentionally distributing methamphetamine, is scheduled to be arraigned on April 8.
The eight-count indictment followed a criminal complaint filed on March 1 that outlined how the three defendants used the Darknet to purchase narcotics with cryptocurrency such as Bitcoin, and then made 59 shipments of methamphetamine and other illegal drugs to international buyers. During the course of the alleged conspiracy, Goldberg was arrested on an unrelated fraud case and was sentenced to 42 months in federal prison on that matter.
In May 2018, one shipping company security manager in Van Nuys contacted federal law enforcement about seven parcels destined for the Philippines that were suspected of containing controlled substances, according to the affidavit in support of the complaint. The seven packages cumulatively contained nearly 21 kilograms of methamphetamine, and had contact information with telephone numbers linked to Goldberg, the affidavit states.
The indictment alleges that Rabulan shipped methamphetamine to international buyers, while Kueker collected tens of thousands of dollars in illicit proceeds from the sales on Goldberg’s behalf.
Search warrants executed on March 11 led to the discovery of suspected drug labs at Kueker’s homes in the Hollywood Hills and Valley Village, as well as a loaded AK-47-style rifle in the bedroom of Kueker’s Hollywood Hills residence, court papers state. Federal agents also recovered more than $150,000 in suspected drug proceeds in a safe deposit box registered to Kueker, according to court documents. Three residents of the house were arrested and were charged in separate indictments alleging possession with intent to distribute a controlled substance.
If convicted on all counts, each defendant faces a statutory maximum sentence of life in federal prison. The conspiracy count carries a mandatory minimum sentence of 10 years in prison. The count alleging firearm possession in furtherance of a drug trafficking crime carries a five-year mandatory minimum prison sentence.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This matter is being investigated by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Secret Service, the U.S. Postal Inspection Service, and U.S. Customs and Border Protection.
This case is being prosecuted by Assistant United States Attorneys Roger Hsieh and Ian Yanniello of the General Crimes Section and Special Assistant United States Attorney Ryan Waters of the Asset Forfeiture Section.
Tax Lawyer for Ex-NFL Player Gets 3 Years in Prison for Obstructing IRS and Filing False Documents without Player’s KnowledgeRead the Press Release
LOS ANGELES – A tax lawyer who represented retired professional football player Antrel Rolle was sentenced to 36 months in federal prison today for fraudulently obtaining tax refunds for Rolle, stealing the refunds and then covering up his scheme by filing false documents with the Internal Revenue Service.
Hiram M. Martin, 71, of Fair Oaks, California, pleaded guilty on January 7 to one felony count of attempting to obstruct or impede the administration of internal revenue laws. The three-year prison sentence handed down by United States District Judge Otis D. Wright II is the maximum amount of prison time possible under the law for the offense. Judge Wright also ordered Martin to pay $1,223,480 in restitution.
Martin admitted in his plea agreement that he submitted false tax returns for Rolle, who hired Martin when he was a 23-year-old rookie in the National Football League. The tax returns claimed millions of dollars in bogus charitable donations and business expenses, and Martin never informed Rolle about the phony deductions. The IRS issued tax refunds of $322,008 for the 2005 tax year and $901,472 for the 2006 year as a result of Martin’s deductions. Martin directed the IRS to deposit the refunds into Martin’s bank account or to mail the refunds to his mailing address. Martin then used the fraudulently obtained money for his own personal benefit, including an investment account under his control.
When the IRS began auditing Rolle’s tax returns for these years, Martin in August 2009 faxed two letters to the IRS that attempted to support the fraudulent donations. Martin then – without Rolle’s authorization – filed petitions in Tax Court challenging the IRS after it rejected the deductions. Martin has admitted that he forged Rolle’s signature on the Tax Court petitions. In May 2011, Martin – without Rolle’s knowledge or authorization – agreed to a judgment that imposed a tax liability of nearly $2 million on Rolle. Martin also admitted that he provided Rolle with a fabricated set of tax returns for 2005 and 2006 that did not claim any refunds – refunds that Martin never submitted to the IRS.
Martin also took steps to prevent the IRS from directly contacting Rolle by providing the IRS with his own personal and business addresses and claiming they were Rolle’s addresses. When a news article detailing Rolle’s tax liabilities were published in January 2010, Martin attempted to prevent Rolle from contacting the IRS by telling him that the article was not true.
This matter was investigated by IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorneys Alexander Wyman and Ranee Katzenstein of the Major Frauds Section.
Two Corporate Executives Indicted in First-Ever Criminal Prosecution for Failure to Report under Consumer Product Safety ActRead the Press Release
LOS ANGELES – A federal grand jury returned an indictment yesterday against two corporate executives for their roles in a scheme involving defective and dangerous consumer products, the Department of Justice announced.
Simon Chu, 63, of Chino Hills, California, and Charley Loh, 60, of Arcadia, California, were charged with a multiple-object conspiracy to commit wire fraud, to fail to furnish information under the Consumer Product Safety Act (CPSA), and to defraud the U.S. Consumer Product Safety Commission (CPSC). In addition to the conspiracy charge, the indictment also charges both defendants with one count of wire fraud and one count of failure to furnish information under the CPSA.
According to the indictment, Simon Chu was part owner and chief administrative officer of two corporations in City of Industry, California, that imported, distributed, and sold to retailers for consumer purchase dehumidifiers that were made in China. The indictment further states that Loh was part owner and chief executive officer of the same two corporations.
The Consumer Product Safety Act requires manufacturers, importers, and distributors of consumer products to report “immediately” to the CPSC information that reasonably supports the conclusion that a product contains a defect that could create a substantial product hazard or creates an unreasonable risk of serious injury or death. This duty also applies to the individual directors, officers, and agents of those companies. The indictment alleges that as early as September 2012, Chu, Loh, and their companies received multiple reports that their Chinese dehumidifiers were defective, dangerous, and could catch fire. They also allegedly knew that they were required to report this product safety information to the CPSC immediately. Despite their knowledge of consumer complaints of dehumidifier fires and test results showing problems with the dehumidifiers, the indictment alleges that Chu and Loh failed to disclose their dehumidifiers’ defects and hazards for at least six months while they continued to sell their products to retailers for resale to consumers.
“The importation, distribution, and sale of defective consumer products have real-world consequences, including serious injury or death,” said Nicola T. Hanna, U.S. Attorney for the Central District of California. “This indictment sends a clear message: If you plan to profit from selling defective products, you should also plan to face justice.”
“When corporate executives delay reporting defective consumer products to the CPSC, it puts consumers at needless risk for injury or even death,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “This prosecution reflects the Department of Justice’s commitment to enforcing product safety laws that protect consumers from product hazards. We will seek to hold accountable corporate executives who value profits over the safety of consumers by failing to immediately report their dangerous products.”
The indictment further alleges that as part of their scheme, Chu and Loh deliberately withheld information about the defective and dangerous Chinese dehumidifiers from the retail companies that bought the dehumidifiers; the insurance companies that paid for damage caused by the fires resulting from the dehumidifiers; and the CPSC. Loh and Chu allegedly continued to sell the Chinese dehumidifiers to retailers with false certifications that the products met safety standards; caused a company employee to solicit materials that would falsely portray to an insurance company that the dehumidifiers were safe and not defective; and sent an untimely report to the CPSC that falsely stated that the dehumidifiers were not defective or hazardous.
“Inferior goods represent a serious threat to the integrity of the consumer product supply chain that the public needs to rely on with confidence,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “Dangerous products like these pose a serious threat to consumers who mistakenly assume the products are safe and reliable. HSI will continue to work with our law enforcement partners to aggressively target and investigate those who would do harm to the public safety of our citizens.”
According to the indictment, Chu, Loh, and their companies continued to sell the defective and dangerous dehumidifiers through April 2013, and sought to avoid, reduce, and delay the costs of recalling the products. If convicted, Loh and Chu face a term of up to five years in prison for each of the conspiracy and the failure to furnish information counts. They both face up to 20 years’ imprisonment for the wire fraud charge. If convicted, the defendants are also subject to forfeiture and a fine of $250,000 or twice the gross gain or loss for each count.
In September 2013, the CPSC announced a recall of 2.2 million dehumidifiers, including Chinese dehumidifiers allegedly sold by Loh’s and Chu’s companies between September 2012 and April 2013.
An indictment merely alleges that crimes have been committed, and each defendant is presumed innocent until proven guilty beyond a reasonable doubt.
This case is being prosecuted by Senior Litigation Counsel Allan Gordus and Trial Attorney Natalie Sanders of the U.S. Department of Justice’s Consumer Protection Branch and Assistant United States Attorneys Joseph Johns and Dennis Mitchell of the Central District of California, with the assistance of Patricia Vieira of the CPSC Office of General Counsel. The case was investigated by U.S. Homeland Security Investigations in the Department of Homeland Security.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca.
Two Corporate Executives Indicted in First-Ever Criminal Prosecution for Failure to Report Under Consumer Product Safety ActRead the Press Release
A federal grand jury returned an indictment yesterday against two corporate executives for their roles in a scheme involving defective and dangerous consumer products, the Department of Justice announced.
Simon Chu, 63, of Chino Hills, California, and Charley Loh, 60, of Arcadia, California, were charged with a multiple-object conspiracy to commit wire fraud, to fail to furnish information under the Consumer Product Safety Act (CPSA), and to defraud the U.S. Consumer Product Safety Commission (CPSC). In addition to the conspiracy charge, the indictment also charges both defendants with one count of wire fraud and one count of failure to furnish information under the CPSA.
According to the indictment, Simon Chu was part owner and chief administrative officer of two corporations in City of Industry, California, that imported, distributed, and sold to retailers for consumer purchase dehumidifiers that were made in China. The indictment further states that Loh was part owner and chief executive officer of the same two corporations.
The Consumer Product Safety Act requires manufacturers, importers, and distributors of consumer products to report “immediately” to the CPSC information that reasonably supports the conclusion that a product contains a defect that could create a substantial product hazard or creates an unreasonable risk of serious injury or death. This duty also applies to the individual directors, officers, and agents of those companies. The indictment alleges that as early as September 2012, Chu, Loh, and their companies received multiple reports that their Chinese dehumidifiers were defective, dangerous, and could catch fire. They also allegedly knew that they were required to report this product safety information to the CPSC immediately. Despite their knowledge of consumer complaints of dehumidifier fires and test results showing problems with the dehumidifiers, the indictment alleges that Chu and Loh failed to disclose their dehumidifiers’ defects and hazards for at least six months while they continued to sell their products to retailers for resale to consumers.
“When corporate executives delay reporting defective consumer products to the CPSC, it puts consumers at needless risk for injury or even death,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “This prosecution reflects the Department of Justice’s commitment to enforcing product safety laws that protect consumers from product hazards. We will seek to hold accountable corporate executives who value profits over the safety of consumers by failing to immediately report their dangerous products.”
“The importation, distribution, and sale of defective consumer products have real-world consequences, including serious injury or death,” said Nicola T. Hanna, U.S. Attorney for the Central District of California. “This indictment sends a clear message: If you plan to profit from selling defective products, you should also plan to face justice.”
The indictment further alleges that as part of their scheme, Chu and Loh deliberately withheld information about the defective and dangerous Chinese dehumidifiers from the retail companies that bought the dehumidifiers; the insurance companies that paid for damage caused by the fires resulting from the dehumidifiers; and the CPSC. Loh and Chu allegedly continued to sell the Chinese dehumidifiers to retailers with false certifications that the products met safety standards; caused a company employee to solicit materials that would falsely portray to an insurance company that the dehumidifiers were safe and not defective; and sent an untimely report to the CPSC that falsely stated that the dehumidifiers were not defective or hazardous.
“Inferior goods represent a serious threat to the integrity of the consumer product supply chain that the public needs to rely on with confidence,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “Dangerous products like these pose a serious threat to consumers who mistakenly assume the products are safe and reliable. HSI will continue to work with our law enforcement partners to aggressively target and investigate those who would do harm to the public safety of our citizens.”
This case is being prosecuted by Senior Litigation Counsel Allan Gordus and Trial Attorney Natalie Sanders of the U.S. Department of Justice’s Consumer Protection Branch and Assistant United States Attorneys Joseph Johns and Dennis Mitchell of the Central District of California, with the assistance of Patricia Vieira of the CPSC Office of General Counsel. The case was investigated by U.S. Homeland Security Investigations in the Department of Homeland Security.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca.
Credit Union Manager Who Allegedly Embezzled $40 Million from His Employer Faces Bank Fraud, Identity Theft ChargesRead the Press Release
LOS ANGELES – A long-time manager at CBS Employees Federal Credit Union is in federal custody on a criminal complaint alleging he embezzled $40 million from his employer over two decades and spent the money on gambling, expensive cars and watches, and travel by private jet.
Edward Martin Rostohar, 62, of Studio City, has been charged with two felony counts: bank fraud and aggravated identity theft. He was arrested on March 12 and has been ordered detained as both a flight risk and an economic danger to the community. Rostohar’s arraignment is scheduled for April 18.
The charges against Rostohar were made in conjunction with today’s announcement by the National Credit Union Administration (NCUA), a federal agency that regulates credit unions, that it has liquidated CBS Employees Federal Credit Union and discontinued its operations after determining CBS Employees was insolvent with no prospect of restoring viable operations on its own. University Credit Union, located in Westwood, immediately assumed CBS Employees’ assets, loans, and all member shares.
According to an affidavit filed with the criminal complaint, beginning before 2000 and continuing until this month, Rostohar 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.
The alleged scheme was exposed beginning on March 6 when a credit union employee found a $35,000 check made payable to Rostohar, and the check did not include the reason for the high dollar amount, according to court documents. The employee conducted an audit of the credit union checks issued since January 2018 and discovered $3,775,000 in checks made payable to Rostohar and which contained the forged signature of another employee without the employee’s knowledge or consent. On March 12, the credit union informed Rostohar that he had been suspended from his job after an internal investigation uncovered “irregularities in the performance of your job duties,” according to court documents. Later that day, Rostohar’s wife called 911 and told the dispatcher that her husband had stolen money from work and was leaving the country, court papers state. Rostohar was taken into custody and admitted that he stole money from the credit union for 20 years, beginning by paying the monthly balances on his personal credit cards with funds from the credit union’s online accounts or by forging checks, and later by forging his coworker’s signature on credit union checks and depositing them into his personal accounts, court papers state. Rostohar allegedly estimated he stole $40 million from the credit union. An NCUA examination up to February 28 revealed a potential loss to the credit union of $40,541,130.
Prior to his 30 years of employment at the CBS Employees credit union, Rostohar was an examiner at NCUA, court documents state. Rostohar allegedly told law enforcement that this background gave him knowledge of what NCUA examiners look for when examining credit unions and allowed him to avoid detection, the affidavit states. Rostohar allegedly said 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. He also said he purchased two cars – a Porsche and a Tesla – with money he stole from the credit union, court papers state. Rostohar allegedly also admitted to starting a 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 cost as well as to pay a $5,000 monthly mortgage on a home in Reno he recently purchased.
If convicted on both charges, Rostohar faces a statutory maximum sentence of 30 years in federal prison and a $1 million fine on the bank fraud count and a mandatory consecutive term of two years in federal prison on the aggravated identity theft count.
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 is being investigated by the Federal Bureau of Investigation and the Los Angeles Police Department.
This case is being prosecuted by Assistant United States Attorney Andrew Brown of the Major Frauds Section.
Brothers Who Allegedly Ran Unlicensed Financial Advisory Business Out of Their Parents’ Encino Home Face Wire Fraud ChargesRead the Press Release
LOS ANGELES – Two brothers who allegedly operated an unlicensed investment advisory business out of their parents’ Encino home were arrested today on federal wire fraud charges for an alleged scheme in which they used false account statements to hide multi-million dollar losses of their investors’ funds.
Motty Mizrahi, 46, of Encino, and Sassi Mizrahi, 53, of Sherman Oaks, were arrested this morning and made their initial appearances today in United States District Court.
According to the criminal complaint filed in this case, Motty Mizrahi falsely portrayed himself as a licensed broker, certified public accountant, and experienced trader who employed sophisticated financial option- and insurance-hedging strategies through the brothers’ business, MBIG Company. The Mizrahi brothers operated MBIG out of their parents’ home in Encino, court documents state. From November 2012 until March 2019, Motty Mizrahi raised millions of dollars from investors, promised them “guaranteed” returns between 2 percent and 3 percent per month, and assured them that their funds could be withdrawn after an initial holding period on an on-demand basis. Motty Mizrahi allegedly submitted phony monthly account statements that purported to show consistent monthly gains and also falsely showed that MBIG’s account balances were between $6 million and $9 million. However, Motty Mizrahi instead lost the investors’ money – losses he and Sassi Mizrahi denied when confronted by victims who unsuccessfully demanded their money back, the affidavit states.
The complaint also alleges that Motty Mizrahi distributed to investors a financial prospectus that contained false and fraudulent representations concerning MBIG’s past investment performance. The Mizrahi brothers also allegedly misled investors about their company’s E*Trade brokerage account, which was supposed to be used for investors’ money but in reality did not exist. Instead, Motty Mizrahi routed all victim-investor funds into his own personal trading account, the affidavit states. After E*Trade closed Motty Mizrahi’s personal accounts, Motty and Sassi Mizrahi allegedly continued to mislead investors by assuring them that MBIG had an E*Trade account containing adequate balances to cover the victim-investors’ initial investments.
If convicted on the wire fraud charges, the defendants would each 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.
In a related action, the U.S. Securities and Exchange Commission filed a civil fraud action against Motty Mizrahi and MBIG Company and obtained emergency relief including a temporary restraining order and an asset freeze order against the defendants.
The criminal case is being investigated by the Federal Bureau of Investigation.
This matter is being prosecuted by Assistant United States Attorney Adam P. Schleifer of the Major Frauds Section.
Two SoCal Men Named in 19-Count Indictment Alleging Chinese Money Funded Inland Empire Marijuana Grow HousesRead the Press Release
LOS ANGELES – A federal grand jury today returned a 19-count felony indictment charging two men with participating in a scheme where nine residential homes in San Bernardino County were purchased, mostly with money wired from China, and then the homes were converted into illegal marijuana grow houses.
Lin Li, a.k.a. Aaron Li, 37, of Chino, the U.S.-based coordinator of the alleged scheme, and Jimmy Yu, 44, of Pasadena, an alleged grow house caretaker, have been charged with conspiracy to manufacture, distribute, and possess with intent to distribute marijuana, and to maintain a drug-involved premises. Li and Yu are scheduled to be arraigned on the charges on April 4 in United States District Court.
According to the indictment, unindicted co-conspirators wired millions of dollars from China to bank accounts controlled by Li, a real estate agent. Li allegedly then used straw buyers, shell companies, straw tenants, fake utility subscribers, and phony leases to disguise the properties’ illegal purpose of housing commercial marijuana grows.
For example, in relation to one of the homes, an affidavit filed with a criminal complaint in the case describes how a straw buyer purchased a Chino Hills residence for $782,000 in 2015. The straw buyer was named as chief executive officer of a Li-established limited liability company, and that LLC received a $1 million wire transfer from a Hong Kong-based investment group. The vast majority of the purchase price of the house was then wired from the LLC’s bank account, the affidavit states. Li allegedly received a commission check as the realtor for the sale and also served as the home’s property manager. In early 2018, a neighbor complained to law enforcement about the “overwhelming” smell of marijuana coming from the Chino Hills home and how no one seemed to live there, court papers state.
Li also has been charged with nine counts of knowingly and intentionally possessing with intent to distribute marijuana plants – 4,342 marijuana plants in total – and nine counts of knowingly maintaining a place for the manufacturing and distribution of marijuana. Yu faces five counts of possession with intent to distribute marijuana plants and five counts of maintaining a place for the manufacturing and distribution of marijuana. Ben Chen, 42, of Alhambra, who also allegedly took care of the marijuana grows, is being charged separately. The indictment also seeks the forfeiture of eight properties – five in Chino, two in Chino Hills, and one in Ontario – that allegedly were used in the marijuana grow house scheme.
If convicted, each defendant faces a statutory maximum sentence of life in federal prison and a mandatory minimum sentence of 10 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 is the result of a 14-month investigation initiated by the San Bernardino County Sheriff’s Department which later was joined by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).
This case is being prosecuted by Assistant United States Attorneys Carley Palmer of the Organized Crime Drug Enforcement Task Force Section and Jonathan Galatzan of the Asset Forfeiture Section.
Fugitive Who Allegedly Obtained $9 Million in Fraudulent Real Estate Loans Surrenders to Federal AgentsRead the Press Release
LOS ANGELES – A long-time international fugitive who is charged with nine felonies for allegedly participating in a $9 million bank fraud scheme against Wells Fargo has been taken into federal custody in Los Angeles.
Napoleon Olarte, 41, formerly of Reseda, lived in South America as a fugitive since approximately 2011 and was indicted by a federal grand jury in 2017. He self-surrendered to federal law enforcement yesterday and his initial appearance on the criminal charges is scheduled for today in United States District Court.
Olarte is the third and final defendant charged in the mortgage fraud scheme. Olarte’s two co-conspirators – Juan Jose Calle and Nancy Karina Coleman – previously pleaded guilty to charges in the scheme. Olarte fled to Venezuela when federal agents began investigating the case, and he had been living in Venezuela for much of his time as a fugitive. He relocated with his family to Uruguay in approximately November 2018. Shortly before to his move to Uruguay, federal agents established communication with Olarte and, after numerous conversations between Olarte and federal agents between October 2018 and March 2019, Olarte agreed to self-surrender. Olarte was arrested yesterday as he entered the United States at Miami International Airport. Agents then transported Olarte to Los Angeles to face the criminal charges alleged in the indictment.
According to court documents, Coleman worked as a mortgage consultant at Wells Fargo while Olarte and Calle ran Fast Escrow, a rogue brokerage and escrow company in Northridge. Between August 2008 and January 2009, Coleman accepted bribes and other favors in exchange for approving $9 million in fraudulent loans for Olarte and Calle, according to an affidavit filed with a criminal complaint in the case. Olarte allegedly submitted fraudulent loan applications to Wells Fargo that contained false information for borrowers’ income, assets and employment. On some of the Wells Fargo-financed loans, Olarte allegedly failed to pay off existing loan holders and failed to record liens in favor of the bank, leaving Wells Fargo with no collateral when the loans defaulted.
Olarte has been charged with one count of conspiracy, six counts of bank fraud, and two counts of making false statements to a financial institution. If convicted on all counts, Olarte would face a statutory maximum sentence of 30 years in federal prison for each of the nine counts.
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 case was investigated by the Federal Bureau of Investigation, and the United States Department of Housing and Urban Development’s Office of Inspector General.
Olarte’s arrest involved the participation of and coordination with Interpol Washington, the United States Department of Justice Office of International Affairs, the Federal Bureau of Investigation, the United States Marshals Service, United States Customs and Border Protection, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and the U.S. State Department’s Diplomatic Security Service.
This matter is being prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.