Central District of California
Press releases recorded for this federal judicial district.
Federal Indictment Targets South Bay Street Gang Involved in Drug Trafficking, including Smuggling Meth into a California State PrisonRead the Press Release
LOS ANGELES – Authorities have arrested eight members and associates of the East Side Torrance street gang on federal narcotics trafficking and firearms charges stemming from an investigation that led to a number of seizures, including 20 pounds of methamphetamine that was discovered in a Torrance apartment complex.
A federal grand jury indictment targets the leadership and key members of the gang, which distributed methamphetamine and other drugs out of the South Bay and the Harbor Gateway area of Los Angeles. The indictment alleges the gang trafficked pound-quantities of methamphetamine to Colorado, and also smuggled methamphetamine and heroin into Kern Valley State Prison in Delano, California.
Various defendants allegedly possessed firearms to maintain control of their gang “territory,” to control drug trafficking, and to retaliate against rivals, the indictments allege.The seven-count indictment charges 10 defendants in a conspiracy to traffic methamphetamine, heroin and other illegal drugs. In addition to the eight arrested today, two defendants are currently in state custody.
The indictment unsealed today is the result of a three-year investigation by the FBI, the Drug Enforcement Administration and the Torrance Police Department.
“Street gangs bring the twin plagues of narcotics and violence to their neighborhoods, endangering everyone who lives there,” said United States Attorney Nick Hanna. “This case is the product of an excellent working relationship between federal and local law enforcement authorities, all of whom are committed to increasing public safety in every community.”
“Street gangs such as East Side Torrance are responsible for pushing drugs onto our streets and putting our citizens in serious danger,” said DEA Special Agent in Charge David J. Downing. “Nevertheless, the coordinated enforcement action that occurred this morning illustrates how effective our law enforcement alliances are in disrupting and dismantling these criminal organizations.”
“Today’s arrests targeted the leaders of a criminal enterprise who used firearms and the threat of violence to run a drug distribution network from the South Bay of Los Angeles to Colorado and even inside prison walls,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Today’s arrests are the results of a collaborative effort among federal and local partners to target the most violent gangs that continue to plague our communities.”
“The Torrance Police Department is dedicated to working with our state and federal partners to ensure our communities are safe and that offenders are brought to justice,” said Torrance Police Chief Eve R. Irvine.
The lead defendant in the indictment – Carmen Merejil, a.k.a. “Caveman,” 52, of Carson – allegedly directed the drug trafficking operation and used his East Side Torrance gang associates to sell large amounts of methamphetamine, heroin and other drugs in the gang’s territory. Merejil also allegedly directed the trafficking of large quantities of methamphetamine to a distributor in Delta, Colorado for redistribution there. Finally, Merejil and other defendants are alleged to have packaged and smuggled controlled substances into Kern Valley State Prison, where an incarcerated East Side Torrance street gang member distributed the drugs and sent money back to Merejil and other defendants.
In March 2016, law enforcement seized more than 20 pounds of methamphetamine – along with cocaine, MDMA and other drugs – from a stash house maintained by Merejil and his associates. Authorities also intercepted nearly two ounces of methamphetamine that had been smuggled into Kern Valley State Prison. Other large quantities of methamphetamine were seized from other alleged co-conspirators at various points during the investigation, including the seizure of nearly one pound of methamphetamine by agents executing a search warrant in Colorado.
The defendants taken into custody this morning are scheduled to be arraigned this afternoon in United States District Court in downtown Los Angeles. The defendants currently in state prison are expected to be arraigned in federal court in the coming weeks.
If convicted, each of the defendants would face decades in federal prison. The charge of conspiracy to distribute more than 50 grams of methamphetamine carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life without parole.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The investigation targeting the East Side Torrance gang was conducted by the Federal Bureau of Investigation, the Drug Enforcement Administration and the Torrance Police Department.
During the investigation, substantial assistance was received from the California Department of Corrections and Rehabilitation, the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the Redondo Beach Police Department, the Hermosa Beach Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The case is being prosecuted by Assistant United States Attorneys Gregory Lesser and Shawn Andrews of the Violent and Organized Crime Section.
Former IT Administrator Found Guilty of Federal Charges for Hacking into Computers of His Former Employer in IrvineRead the Press Release
LOS ANGELES – An Arizona man has been convicted of federal computer intrusion charges for deleting electronic files after hacking into computer systems operated by an Irvine-based company where he used to work.
Nikishna Polequaptewa, 36, of Phoenix, was found guilty Tuesday afternoon by a federal jury. Following a five-day trial, the jury convicted Polequaptewa of one count of unauthorized impairment of a protected computer and causing over $50,000 in loss.
Beginning in April 2014, Polequaptewa worked at Blue Stone Strategy Group, which provided consulting services to Native American tribal governments throughout the United States. In addition to his consulting responsibilities, Polequaptewa led information technology and marketing at Blue Stone.
In November 2014, Polequaptewa was relieved of IT and marketing duties after he began falling behind on work. Following this change in responsibilities, Polequaptewa was assigned to a consulting project in Florida for the Seminole Tribe. While on that project, Polequaptewa deleted Blue Stone’s website and marketing materials that the company had developed over eight years.
Polequaptewa resigned in Florida and continued to delete Blue Stone files, including client information, Blue Stone work product, and the company’s backup files held by a third-party. Polequaptewa’s final deletion was done by sending a “wipe” command to a Blue Stone desktop computer in Irvine.
In court documents, prosecutors described Polequaptewa’s actions as “a coordinated campaign to delete information and data.” Polequaptewa’s deletions cost Blue Stone over $50,000 to assess the damage and respond to the offense.
During the time of the criminal conduct in 2014, Polequaptewa lived in Garden Grove.
As a result the guilty verdict, Polequaptewa faces a statutory maximum penalty of 10 years in federal prison when he is sentenced on February 25, 2019 by United States District Judge Cormac J. Carney.
The investigation into Polequaptewa was conducted by the Federal Bureau of Investigation. The Broward County Sheriff’s Office in Florida and the Irvine Police Department provided assistance.
This case is being prosecuted by Assistant United States Attorneys Vibhav Mittal and Bradley E. Marrett of the Santa Ana Branch Office.
Hawthorne Man Charged in Federal Case Alleging Scheme to Collect Insurance Proceeds by Intentionally Killing His Two Autistic ChildrenRead the Press Release
LOS ANGELES – A Hawthorne man is due in court this afternoon after being arrested last week on federal charges that allege he intentionally drove his domestic partner and two severely autistic children off a pier into the ocean to collect proceeds on accidental death insurance policies he had purchased on their lives.
Ali F. Elmezayen, 44, is scheduled to appear before a United States Magistrate Judge, who will consider a motion by prosecutors to have him held in jail without bond.
Elmezayen was arrested on November 7 by special agents with the FBI after being charged with defrauding insurance companies. Elmezayen made his initial appearance on November 8, when he was ordered held without bond pending this afternoon’s detention hearing.
According to a criminal complaint, Elmezayen purchased several accidental death insurance policies providing more than $6 million in coverage on himself, his domestic partner and his children in 2012 and 2013. Elmezayen allegedly paid nearly $6,000 a year for these policies – even though he was earning less than $30,000 a year – and he called at least two of the insurance companies to confirm they would not investigate claims made two years after the policies were purchased.
On April 9, 2015 – two years and 12 days after he bought the last of his insurance policies – Elmezayen drove a car with his partner and two youngest children off a wharf at the Port of Los Angeles. Elmezayen swam out the open driver’s side window of the car. His partner, who did not know how to swim, survived when a nearby fisherman threw her a flotation device. The two children, ages 8 and 13, were unable to escape the car and drowned.
Elmezayen then collected more than $260,000 in insurance proceeds from American General Life Insurance and Mutual of Omaha Life Insurance on the accidental death insurance policies he had taken out on the children’s lives, according to the complaint. In addition to posing as his domestic partner in communications with the insurance companies without her knowledge, Elmezayen allegedly made several false statements, including stating that the cause of his children’s deaths was accidental and that he had no other insurance policies on his children.
“This case alleges a calculated and cold-hearted scheme to profit off the deaths of two helpless children,” said United States Attorney Nick Hanna. “The alleged conduct shocks the conscience, and we will use every tool available to us to ensure that justice is done.”
“The defendant is accused of orchestrating a scheme to defraud insurance companies by taking the lives of his vulnerable young sons,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The defendant faces serious consequences as we seek justice on their behalf.”
“IRS Criminal Investigation is proud to flex our financial fraud expertise in bringing this alleged killer to justice,” stated R. Damon Rowe of IRS Criminal Investigation’s Los Angeles Field Office. “Would-be fraudsters should be warned that it is very difficult to profit from death and steal from life insurance companies with impunity.”
The criminal complaint specifically charges Elmezayen with mail fraud, wire fraud and aggravated identity theft for posing as his domestic partner in calls to the insurance companies.
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.
During last week’s court hearing, a preliminary hearing was scheduled for November 23, and Elmezayen was ordered to appear for an arraignment on November 29.
If he were to be convicted of the charges in the complaint, Elmezayen would face a statutory maximum sentence of 20 years in federal prison for each of the fraud counts. The charge of aggravated identity theft carries a mandatory consecutive sentence of two years in prison.
This case is being investigated by the Federal Bureau of Investigation and IRS Criminal Investigation. The federal investigators received substantial assistance from the Los Angeles Police Department, the Los Angeles Port Police and the Los Angeles City Attorney’s Office.
The case is being prosecuted by Assistant United States Attorneys Alex Wyman and David Ryan.
Assistant United States Attorney Michael Sew Hoy of the Asset Forfeiture Section obtained a seizure warrant that led to the seizure Thursday of approximately $80,000 from an Elmezayen bank account.
L.A. Sheriff’s Deputy, Two Other Men Arrested on Federal Charges for Stealing 600 Pounds of Marijuana and $100,000 during Bogus SearchRead the Press Release
LOS ANGELES – A Los Angeles County Sheriff’s Deputy and two alleged cohorts are scheduled to make their first court appearances this afternoon after they were arrested Thursday on federal drug distribution charges that allege they stole 600 pounds of marijuana and $100,000 in cash during an armed robbery at a downtown Los Angeles warehouse by falsely portraying themselves as law enforcement officers executing a search warrant.
LASD Deputy Marc Antrim, 41, of South El Monte, who is assigned to the LASD station in Temple City; Eric Rodriguez, a.k.a. “Rooster,” 32, of Adelanto; and Kevin McBride, 43, of Glendora, were all arrested Thursday morning without incident.
“Deputy Antrim allegedly was able to use his law enforcement expertise and his access to Sheriff’s Department gear to stage a robbery that netted over a million dollars in marijuana and cash,” said United States Attorney Nick Hanna. “We cannot tolerate this type of behavior from sworn officers, and this case demonstrates our commitment to quickly address corrupt behavior by law enforcement. The rapid response by the Sheriff’s Department, and the collaborative work with their federal colleagues in the DEA, FBI and ATF, is a perfect example of law enforcement joining together to ensure the integrity of the criminal justice system.”
“Today’s arrests send a clear message that law enforcement will not tolerate criminal activity committed by those entrusted to uphold the law and protect the public,” said DEA Special Agent in Charge David J. Downing. “Drug traffickers will be held accountable, regardless of their standing in the community.”
“The alleged actions by the defendants detail an egregious level of corruption that posed a safety risk to victims and fellow police officers,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI and our partners will continue to root out corruption which undermines the law enforcement mission and stains the reputation of those committed to serve and protect.”
“This is an example of local and federal law enforcement partners collaborating to make our community a safer place for all,” said Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge of Los Angeles Field Division Bill McMullan. “Law-enforcement personnel are held to a higher standard as they are chosen to protect our communities. It is always disheartening when an individual thinks he is above the law because he wears a badge. It won’t be tolerated in any form.”
“Our Department has a great working relationship with our federal partners in protecting the public and maintaining trust,” said Sheriff Jim McDonnell. “This case serves as an example of the thorough processes in place and our commitment to holding anyone who violates the law accountable.”
According to two criminal complaints filed in this case, security camera footage shows Antrim, McBride and another unnamed co-conspirator approaching the warehouse during the early morning hours of October 29, driving an unmarked Ford Explorer. The Ford Explorer’s license plate shows it was an LASD-registered vehicle assigned to the Temple Station, where Antrim worked.
Antrim and his co-conspirators allegedly gained access to the warehouse by purporting to be deputies executing a lawful search. All three men allegedly were dressed as deputies, Antrim in a green vest that said “Sheriff” and McBride and the other cohort in green jackets with LASD patches on the sleeve. All were wearing duty belts often worn by law enforcement officials, each had a holstered handgun, and one man appeared to be holding a long gun, according to court documents. Antrim allegedly showed a security guard a piece of paper inside a folder, which investigators believe was a document purporting to be a search warrant for the warehouse.
At the beginning of the two-hour robbery, Antrim, McBride and the third man allegedly detained three warehouse employees, including two security guards, in the backseat of the LASD Ford Explorer. Soon after the guards and the employee were detained, a fourth man arrived at the warehouse in a large rental truck, and all four men began loading what appeared to be marijuana into the truck.
When Los Angeles Police Department officers legitimately responded to a call for service at the warehouse during the robbery, Antrim’s three co-conspirators allegedly fled the warehouse through a back door and two of them discarded their LASD jackets. Antrim then falsely told the LAPD officers that he was an LASD narcotics deputy conducting a legitimate search, court documents said. To facilitate the sham, Antrim allegedly handed his phone to one of the LAPD officers so that the officer could speak to someone on the phone claiming to be Antrim’s LASD sergeant. According to court documents, the individual on the phone was not Antrim’s sergeant, and Antrim did not have a legitimate search warrant for the warehouse.
After LAPD officers left the warehouse about 20 minutes later, McBride and another co-conspirator allegedly returned to the scene and continued the robbery with Antrim. Rodriguez allegedly showed up at the warehouse in his pickup truck, and all four men loaded more marijuana and two safes into the rental truck.
Several days later, an attorney representing the marijuana distribution warehouse contacted the Sheriff’s Department about the robbery.
At the time of the robbery, Antrim was a patrol deputy assigned to the Temple City station, but he was not on duty, was not assigned to the department’s narcotics unit, was not a detective and would not have had a legitimate reason to search a marijuana distribution warehouse in the City of Los Angeles, according to the complaint.
As set forth in the complaint naming McBride, which was filed this morning, the rental truck went to McBride’s house after the robbery. During searches conducted Thursday in conjunction with the arrests, federal investigators recovered a total of approximately $300,000 to $400,000 from Antrim’s and McBride’s residences. Federal agents also seized about two pounds of marijuana packaged for commercial sale from McBride’s residence, as well as firearms from both men.
A review of Sheriff’s Department records and interviews with LASD personnel indicated no evidence of any legitimate search warrant of the warehouse being executed on October 29.
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.
Antrim, McBride and Rodriguez are charged with conspiracy to distribute controlled substances. If convicted of this offense, each would face a statutory maximum sentence of 40 years in federal prison.
This case is being investigated by the Drug Enforcement Administration; the Federal Bureau of Investigation; and the Bureau of Alcohol, Tobacco, Firearms and Explosives. LASD’s Internal Criminal Investigations Bureau provided substantial assistance to the federal investigation.
This matter is being prosecuted by Assistant United States Attorney Lindsey Greer Dotson of the Public Corruption and Civil Rights Section, and Assistant United States Attorney Joseph Axelrad of the Violent and Organized Crime Section.
Man Accused of Being Serial Fraudster Taken into Federal Custody for Allegedly Bilking People while Free on Bond in Prior CaseRead the Press Release
LOS ANGELES – A West Hollywood man was taken into federal custody today in relation to new fraud charges that alleged he participated in a series of scams while free on bond and after pleaded guilty in a prior federal case.
Jeffrey Craig Yohai, 36, who is the former son-in-law of Paul Manafort, was arrested on charges of conspiracy to commit wire fraud and aggravated identity theft.
A criminal complaint outlining alleged criminal conduct over the past year was unsealed today. Yohai made his initial appearance in the new case this afternoon in United States District Court, where he was ordered held without bond pending trial.
The case unsealed today outlines several fraud schemes, which are similar to the criminal conduct outlined in the original federal case. In both criminal cases, Yohai obtained money for what he claimed was a legitimate purpose, such as an investment, but he then used the money for personal expenses or to pay debts. According to court documents, Yohai typically lulled victims into believing that the money had been used properly. When a victim demanded repayment, Yohai often sent checks with insufficient funds, according to court documents. When he was called to account for the bounced checks, he typically claimed that he had wired the money to the victim, a claim he would support with bogus documentation of a wire transfer.
The first case, which resulted in a guilty plea, involved approximately $15 million in real estate loans that supposedly would be used to purchase and rehabilitate properties in the Hollywood Hills. According to court documents, Yohai defaulted on the loans and the properties went into foreclosure – which Yohai tried to delay with bankruptcy filings.
The case unsealed today discusses the prior loan fraud case, as well as evidence of prior scams, including a $6 million investment scheme and a check-kiting scheme involving more than $500,000 in checks that bounced.
The new case alleges a loan fraud scheme related to two of the properties at issue in the original federal case. Here, Yohai allegedly submitted a loan request that contained inflated appraisals. He also attempted to defraud another lender as he attempted to refinance the two properties, and Yohai contacted yet another lender with dramatically inflated appraisals to obtain refinancing – an effort that was rebuffed when that third lender learned of Yohai’s guilty plea earlier this year, according to court documents.
The case unsealed today also contains allegations that Yohai defrauded the owner of a rental property and attempted to lull the owner by showing him a $60,000 check he falsely claimed had been remitted from his ex-wife’s account. There are additional fraudulent acts outlined in the complaint which are the subject of criminal cases filed in state court, including a scam in which he sold non-existent artist passes to the music festival in Coachella.
The charges in the complaint contain 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 charges in the complaint, Yohai would face a statutory maximum sentence of 20 years in federal prison for the charge of conspiracy to commit wire fraud. The charge of aggravated identity theft carries a mandatory consecutive sentence of two years in prison.
Yohai was originally taken into custody on October 31 by the Los Angeles Police Department on cases filed by local prosecutors. Yohai was in state custody until he was turned over to federal authorities this morning.
The case against Yohai is being investigated by the Federal Bureau of Investigation and the Los Angeles Police Department’s Major Crimes Division.
The two case against Yohai are being handled by Assistant United States Attorney Andrew Brown of the Major Frauds Section.
Former Employee of Dunbar Armored Named in Federal Indictment Alleging $300,000 Theft from Company’s Cash Storage FacilityRead the Press Release
LOS ANGELES – A former Dunbar Armored employee has pleaded not guilty to federal conspiracy and bank theft charges contained in a grand jury indictment that alleges a scheme to smuggle $300,000 in cash out of Dunbar’s storage facility in Vernon.
Eric Miranda, 37, of East Los Angeles, was arraigned on November 2 and, while bond was set, he remains in federal custody at this time.
Miranda was arrested on October 21 as he entered the United States from Mexico, and he subsequently made his first court appearance in federal court in San Diego. He was arraigned after being transported to Los Angeles by the United States Marshals Service.
Miranda is named in a four-count indictment charging him with conspiracy to commit bank theft from the Dunbar cash storage facility. He also is charged with three counts of bank theft.
The indictment alleges that Miranda stole cash from the Dunbar vault by using “dummy” stacks of $100 bills that he switched out for real stacks of $100,000. First, Miranda created “dummy” stacks of $100,000 by taking hundreds of $1 bills and sandwiching them between $100 bills – in order to make them appear to be stacks of $100 bills totaling $100,000. Miranda allegedly then smuggled the “dummy” stacks into the Dunbar vault, where he and his co-conspirator switched them for real stacks of $100,000. Miranda and his co-conspirator then marked the dummy stacks to ensure they were not placed into circulation. Finally, Miranda smuggled the real stacks of money out of the vault room by hiding it in a postal box. On more than three occasions in late 2017 and early 2018, Miranda smuggled a total of approximately $300,000 out of the Dunbar facility.
At his arraignment on Friday, Miranda was ordered to stand trial on December 18.
If convicted of the charges in the indictment, Miranda would face a statutory maximum sentence of 35 years in federal prison.
Miranda’s alleged co-conspirator – Monique Castruita, 35, of Maywood – has also been charged in relation to this case and is scheduled to be arraigned later this month.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The case was investigated by special agents with the Federal Bureau of Investigation, who received substantial assistance from the City of Vernon Police Department.
This case is being prosecuted by Assistant United States Attorneys Jeffrey M. Chemerinsky and Joseph D. Axelrad of the Violent and Organized Crime Section.
Federal Law Enforcement Agent Sentenced to Federal Prison for Helping Mexican National with Criminal Record Re-Enter the U.S.Read the Press Release
LOS ANGELES – A special agent with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) has been sentenced to 12 months and one day in federal prison for his conviction on four federal offenses related to assistance he provided to a Mexican national with a criminal record to re-enter the United States and then lying to cover it up.
Felix Cisneros Jr., 44, of Murrieta, an 11-year veteran of ICE who is now on indefinite suspension from the agency, was sentenced by United States District Judge Christina A. Snyder, who said the prison term should deter both the defendant and other law enforcement agents from engaging in criminal conduct.
In April, a jury found Cisneros guilty of four felony counts: conspiracy to aid and assist the entry of an alien convicted of an aggravated felony into the United States, acting as agent of another person in a matter affecting the government, falsification of records in a federal investigation, and making false statements.
According to court documents and the evidence presented to the jury, Cisneros agreed to help a suspected crime figure, Levon Termendzhyan, by facilitating Termendzhyan’s business associate re-enter the United States after traveling to Mexico City in September 2013. Termendzhyan was named in a federal indictment filed in August in the District of Utah that charges him with money laundering.
Termendzhyan’s business associate, Santiago Garcia-Gutierrez, was a lawful permanent resident of the United States, but because of prior criminal convictions and an outstanding warrant for his arrest, he was barred from being legally admitted into the United States upon his return. Two months earlier, United States Customs and Border Protection (CBP) had seized Garcia’s Mexican passport and his “Green Card” when he attempted to enter the United States, but he was paroled in –meaning he was temporarily allowed into the United States – pending the resolution of his criminal case.
As part of the conspiracy, Cisneros persuaded CBP officers to return Garcia’s passport, ensured that Garcia would be allowed to re-enter the United States after the September 2013 trip, and urged CBP to extend Garcia’s parole that allowed him to remain in the United States pending resolution of his immigration status. Cisneros provided assistance to Garcia knowing about his prior convictions. Cisneros also accepted a financial benefit from Garcia, namely, Dodger playoff tickets, for his agreement to use his status as an HSI special agent to intervene with CBP on Garcia’s behalf.
As part of the conspiracy, Cisneros had queried a law enforcement database, which provided him information about Garcia’s prior convictions, as well as information that Garcia was suspected of participating in criminal activities. Cisneros also improperly utilized the database to determine whether federal law enforcement was monitoring Termendzhyan’s activities.
In a sentencing memorandum filed with the court, prosecutors wrote, “After conspiring with Garcia to facilitate Garcia’s travel to and from the United States, [Cisneros] engaged in a series of deceptive acts to conceal both his assistance to Garcia and his knowledge of Termendzhyan’s illicit activities.”
The falsification of records and the false statements charges relate to Cisneros lying about his longstanding relationship with Garcia during a regular background investigation being conducted as part of his employment as an ICE agent.
The case against Cisneros is the product of an investigation by the Federal Bureau of Investigation; the Department of Homeland Security, Office of Inspector General; and the ICE Office of Professional Responsibility.
This case is being prosecuted by Assistant United States Attorneys Patricia A. Donahue, Chief of Trials, Integrity and Professionalism, and Sheila Nagaraj of the Public Corruption and Civil Rights Section.
Assistant United States Attorneys to Serve as District Election Officers for Seven Counties during November 6 General ElectionRead the Press Release
LOS ANGELES – United States Attorney Nicola T. Hanna announced today that Assistant United States Attorneys Erik M. Silber and Lindsey Greer Dotson will serve as the District Election Officers during Tuesday’s general election and will lead the local efforts in connection with the Justice Department’s nationwide Election Day Program.
As the District Election Officers, AUSAs Dotson and Silber will be responsible for overseeing the handling of complaints related to election fraud and voting rights abuses. If complaints are received, the AUSAs will coordinate with the FBI Field Office in Los Angeles and will consult with the Justice Department in Washington.
AUSAs Silber and Dotson will serve as the District Election Officers for the Central District of California, which includes the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo.
The Justice Department has an important role in deterring election fraud and discrimination at the polls, and will combat these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and seeks to ensure public confidence in the integrity of the election process, by providing local points of contact within the Justice Department for the public to report possible election fraud and voting rights violations while the polls are open on Tuesday, November 6.
Federal law protects against crimes such as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.
Federal law also contains special protections for the rights of voters and provides that they can vote free from intimidation or harassment. For example, actions designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.
The FBI will have special agents available across the country to receive allegations of election fraud and other election abuses on Election Day. Agents at the FBI’s Los Angeles Field Office, which serves the same seven counties as the United States Attorney’s Office, can be reached by the public at (310) 477-6565.
In order to respond to complaints of election fraud or voting rights abuses on November 6 and to ensure that such complaints are directed to the appropriate authorities, AUSAs Dotson and Silber will be on duty while the polls are open. Members of the public can reach them at the United States Attorney’s Office by calling (213) 894-2400.
On Election Day, the Justice Department’s Civil Rights Division staff members will be available all day by telephone to receive complaints from the public related to possible violations of the federal voting rights laws (1-800-253-3931 or TTY 202-305-0082). In addition, individuals may also report complaints by fax to 202-307-3961, by email to [email protected], and by a complaint form on the Department’s website: www.justice.gov/crt/votercomplaint.
Complaints related to disruption at a polling place should always be reported immediately to local election officials, including officials in the polling place. Complaints related to violence, threats of violence or intimidation at a polling place should be reported immediately to local police authorities by calling 911. These complaints should also be reported to the Justice Department after local authorities have been contacted.
Last week, the Department of Justice provided information about its efforts through the Civil Rights Division and Criminal Division to ensure that all qualified voters have the opportunity to cast their ballots and have their votes counted free of discrimination, intimidation or fraud in the election process.
U.S. Attorney’s Office Honors over 200 Law Enforcement Officials in Annual Awards Ceremony for Outstanding Efforts in Fighting CrimeRead the Press Release
LOS ANGELES – United States Attorney Nick Hanna is presenting awards today to more than 200 members of law enforcement agencies for their outstanding work in dozens of cases prosecuted by the United States Attorney’s Office. During the office’s annual Law Enforcement Awards ceremony, officials from federal and local agencies – as well as six Canadian police officers – are being honored for their work in rooting out criminal wrongdoing in Southern California.
“We honor these brave and committed agents, officers and employees of our partner agencies for their tirelessness commitment to maintain public safety and preserve the freedoms all Americans enjoy,” said U.S. Attorney Hanna.
The award recipients are being honored for their contributions towards protecting U.S. national security, responding to the opioid epidemic, combating fraud, fighting public corruption, preventing cyber-crime attacks, and enforcing the nation’s environmental laws.
Those honored included two FBI Special Agents who worked tirelessly to track down witnesses and evidence from two decades ago that helped secure a guilty plea from a gang member who participated in the slaying of an African-American man in Highland Park in 1999. Merced Cambero, who along with fellow gang members shot and killed Kenny Wilson as part of a series of racially motivated crimes, was brought to justice last year after more than a decade as a fugitive. Earlier this year, Cambero pleaded guilty to federal civil rights charges and was sentenced to 20 years in federal prison.
More than a dozen FBI agents, intelligence analysts and specialists received awards for groundbreaking work that culminated in a criminal complaint charging a North Korean computer programmer with being part of a government-backed conspiracy to conduct a series of destructive cyberattacks around the world, including an attack that decimated Sony Pictures Entertainment and others that targeted financial institutions and U.S. defense contractors. The charges were the first ever brought by the U.S. against a North Korean citizen for malicious cyber activity.
A team from the FBI, the U.S. Department of Veteran Affairs’ Office of Inspector General, and IRS Criminal Investigation were honored for their work leading to the conviction of David Richard Scott, a parking lot operator who cheated the VA out more than $13 million. Scott received a 70-month prison sentence, was ordered to pay $12.6 million in restitution, and was ordered to forfeit $8 million in assets. The Veterans Affairs’ contracting official who took bribes from Scott for 15 years pleaded guilty and was sentenced to prison in September.
The honorees at today’s ceremony came from the following law enforcement agencies:
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Federal Bureau of Investigation
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Bureau of Alcohol, Tobacco, Firearms and Explosives
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Internal Revenue Service – Criminal Investigation
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Simi Valley Police Department
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Los Angeles County Sheriff’s Department
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U.S. Immigration and Customs Enforcement’s Homeland Security Investigations
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Alcohol and Tobacco Tax and Trade Bureau
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U.S. Department of Health & Human Services, Office of Inspector General
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California Department of Insurance – Fraud Division
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U.S. Department of Labor, Office of Inspector General
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U.S. Department of State
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U.S. Postal Service, Office of Inspector General
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U.S. Postal Inspection Service
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U.S. Department of Homeland Security, Office of Inspector General
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Drug Enforcement Administration
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U.S. Department of Veteran Affairs, Office of Inspector General
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Riverside County Probation Department
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Riverside County Sheriff’s Department
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U.S. Environmental Protection Agency
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U.S. Department of Transportation, Office of Inspector General
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Los Angeles County Fire Department, Arson Investigation Unit
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South Gate Police Department
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El Monte Police Department
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Los Angeles County Sheriff’s Department, Special Enforcement Bureau – Arson Explosive Detail
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U.S. Coast Guard Investigative Service
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U.S. Coast Guard
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U.S. Environmental Protection Agency, Criminal Investigation Division
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Royal Canadian Mounted Police
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Sûreté du Québec
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Sûreté du Québec de police de la Ville de Montréal
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U.S. Department of State, Diplomatic Security Service
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Federal Housing Finance Authority, Office of Inspector General
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U.S. Department of State, Bureau of Diplomatic Security
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U.S. Department of State, Foreign Service National Investigator
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Torrance Police Department
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Los Angeles Police Department
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U.S. Immigration and Customs Enforcement, Office of Professional Responsibility
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Los Angeles County Probation Department
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Long Beach Police Department
U.S Attorney Hanna said, “We are eternally grateful the hard work and sacrifice given by these members of law enforcement. Every one of the honorees serves as a prime example of the outstanding commitment shown by every law enforcement officer who serves the public.”
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San Diego County Man Found Guilty of Laundering Ransom Money Paid by Relatives of Kidnapping Victims Held Hostage in TijuanaRead the Press Release
LOS ANGELES – A man who laundered ransom money for a violent kidnapping organization that held hostage two dozen Mexican nationals has been convicted on federal conspiracy charges.
Luis Francisco Murillo Morfin, 33, of National City, was found guilty Wednesday of conspiracy to commit money laundering. United States District Judge John F. Walter issued the verdict after a two-day bench trial.
The kidnapping victims were lured by false promises of being smuggled into the United States. In August 2015, members of the Mexico-based conspiracy picked up victims in Northern Mexico, drove them in the trunks of cars through a fake border “checkpoint,” and then took them to a stash house in Tijuana, where they were threatened, beaten and raped. One kidnapping victim testified at trial about being raped, while another testified about being sexually assaulted.
While the kidnapping victims were held hostage in Tijuana, their captors extorted their relatives in the United States, ordering them to deposit ransom money in U.S. bank accounts and wire ransom money to co-conspirators in Mexico. Extortion victims testified at trial about being threatened that, if they did not pay, their relatives would be beaten, murdered or disemboweled.
As relatives of the kidnapping victims deposited money, Murillo, a lawful permanent resident of the United States, twice drove from Mexico to the United States and withdrew the ransom payments from his bank account for delivery to his co-conspirators to Mexico.
The evidence at trial showed that Murillo opened a Wells Fargo bank account in his name on April 30, 2015, and made monthly payments to keep it open, but did not use the account until August 4, 2015 – one day after his co-conspirators kidnapped and held for ransom nine victims.
The extortion victims deposited $62,000 in ransom money into Murillo’s account from bank branches in Ontario, Santa Maria, Northern California, Idaho and Mississippi. Murillo withdrew all $62,000 within less than 48 hours, lying to a Wells Fargo bank employee about the money’s purpose. Murillo did not use the account again, and Wells Fargo closed it on August 19, 2015. Murillo later admitted to law enforcement that he knew the money constituted the proceeds of criminal activity.
Judge Walter is scheduled to sentence Murillo on February 4, 2019, at which time he will face a statutory maximum penalty of 10 years in federal prison.
Murillo was charged along with four other defendants, all of whom are Mexican nationals believed to be residing in Mexico. The other defendants are: Jesus Antonio Rivera Gaxiola, a.k.a. “The Cook,” Manuel Roman Velazquez, a.k.a. “The Caller,” Alberto Jimenez Bautista, a.k.a. “Jefe,” and Luis Perez Martinez.
The case was investigated by the Federal Bureau of Investigation and IRS Criminal Investigation, with the assistance of U.S. Customs and Border Protection.
This case is being prosecuted by Assistant United States Attorneys Victoria Degtyareva and Carley Palmer of the Organized Crime Drug Enforcement Task Force Section.
Federal Grand Jury Indicts Four Members of White Supremacy Group on Charges Stemming from Attacks at Political RalliesRead the Press Release
LOS ANGELES – A federal grand jury this afternoon returned a two-count indictment that charges four Southern California men linked to a white supremacy extremist group with planning and engaging in riots at political rallies across California.
The four defendants – all of whom are in federal custody, currently being held without bond – are charged with conspiracy for their activities in connection with the white supremacist organization known as the Rise Above Movement, or RAM. “RAM represented itself publicly as a combat-ready, militant group of a new nationalist white supremacy and identity movement,” according to the indictment.
The four defendants named in the indictment are:
Robert Rundo, 28, of Huntington Beach, allegedly a founding member of RAM;
Robert Boman, 25, of Torrance;
Tyler Laube, 22, of Redondo Beach; and
Aaron Eason, 38, who resides in the Riverside County community of Anza.
All four defendants are charged with one count of conspiracy. Rundo, Boman and Eason are additionally charged with one count of rioting
The four defendants are scheduled to be arraigned on the indictment later this month, starting with Rundo on November 9.
According to the indictment, the four men participated the conspiracy in varying ways, including by engaging in recruitment of RAM members, coordinating and participating in hand-to-hand and other combat training, traveling to political rallies to attack protesters and other persons, and publishing photographs and videos of violent acts to recruit other members for future events.
The indictment alleges that various members of the conspiracy directly participated in attacks at political rallies in Huntington Beach on March 25, 2017; in Berkeley on April 15, 2017; and in San Bernardino on June 10, 2017. In the months following these events, the defendants allegedly trained for future events and celebrated their assaults, which included online posts with photos of RAM members assaulting people.
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.
Both the conspiracy and riots charges in the indictment carry statutory maximum sentences of five years in federal prison.
This case is being investigated by the FBI’s Joint Terrorism Task Force.
This matter is being prosecuted by Assistant United States Attorney David T. Ryan of the Terrorism and Export Crimes Section in the National Security Division of the United States Attorney’s Office.
Today’s indictment follows the filing of an indictment in United States District Court in Charlottesville, Virginia that charges four other California RAM members with violating the riots statute during violent altercations in Charlottesville in August 2017.
Fullerton Man Arrested on Federal Charges Alleging Illegal Importation and Sale of Male Sexual Enhancement DrugsRead the Press Release
SANTA ANA, California – A Fullerton man was arrested this morning after being named in a federal grand jury indictment that accuses him of illegally importing and selling erectile dysfunction drugs that he falsely marketed as herbal supplements for men.
Nam Hyun Lee, 60, who is sometimes known as “Daniel Lee,” a South Korean national believed to be illegally residing in the United States, was arrested without incident at his residence.
The grand jury issued a 12-count indictment against Lee following an investigation by the United States Food and Drug Administration’s Office of Criminal Investigations (FDA OCI), U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Los Angeles Police Department’s Major Crimes Division, U.S. Customs and Border Protection, and the Federal Bureau of Investigation.
The indictment charges Lee with conspiracy, three counts of smuggling misbranded drugs into the United States, and eight counts of introducing misbranded drugs into interstate commerce.
In 2016 and 2017, Lee established a number of companies based in Buena Park and Cypress, but neither Lee nor his companies possessed licenses to distribute wholesale drugs or prescription medications, according to the indictment.
FDA OCI began investigating Lee in late 2015 for illegally smuggling Tadalafil and Sildenafil Citrate from China and Hong Kong into the United States. These compounds are the active ingredients in the brand name prescription drugs Cialis and Viagra.
The indictment specifically alleges that Lee arranged large shipments of Tadalafil and Sildenafil to be smuggled into the United States under manifests that falsely declared the drugs were products such as acrylic paint and glass bottles.
Viagra and Cialis can be prescribed only be licensed medical practitioners. “Due to toxicity and other potentially harmful effects (e.g., life-threatening drops in blood pressure; loss of vision; loss of hearing; and prolonged, painful erections that result in permanent injury to the penis), drugs similar to Viagra and Cialis were not safe for use except under the supervision of a practitioner licensed by law to administer them, and they were thus prescription drugs as well,” the indictment states.
According to court documents, Lee was illegally importing these controlled drugs in powder form, and then creating individual-dose capsules which he sold to distributers across the county as non-prescription herbal male sexual enhancement products. When Lee sold his products, “labeling stated that no prescription was necessary and did not disclose the presence of Tadalafil and Sildenafil.” The indictment details shipments of capsules to distributors in Baltimore and Beaumont, Texas.
Lee’s products were eventually sold by various online businesses and retail outlets, including at several Orange County convenience stores, under names such as “Rhino,” “Orgazen,” “Black Panther,” “libigrow,” “Black Stallion” and “Black Mamba.” The indictment alleges the illegal sales continued into 2018.
Lee is expected to be arraigned on the indictment this afternoon in United States District Court in Santa Ana.
An indictment complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The conspiracy count in the indictment carries a statutory maximum penalty of five years in federal prison. Each smuggling count could bring a sentence as high as 20 years. The charges alleging the introduction of misbranded drugs each carry a maximum sentence of three years.
The indictment also seeks the forfeiture of a $1.2 million residence in Fullerton that prosecutors allege was purchased with proceeds from the illegal activity charged in the indictment. The indictment also seeks the forfeiture of funds contained in several bank accounts, an as-yet undetermined amount of cash seized during the execution of search warrants this morning, and all drugs illegally smuggled into the United States.
This case is being prosecuted by Assistant United States Attorney Jake Nare of the Santa Ana Branch Office and Assistant United States Attorney Katharine Schonbachler of the Asset Forfeiture Section.
Hidden active pharmaceutical ingredients have been identified in products promoted not only for sexual enhancement, but also for weight loss, bodybuilding and pain relief. 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.
Huntington Beach Man Pleads Guilty to Filing a False Tax Return That Failed to Report over $2 Million Held in Offshore Israeli Bank AccountRead the Press Release
A Huntington Beach man pleaded guilty yesterday to filing a false tax return that failed to report millions of dollars in foreign bank accounts and the resulting income, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
According to court documents, Elie Waknine, of Huntington Beach, California, held millions of dollars in an offshore account in Israel at Bank Leumi Le-Israel B.M. from approximately 1994 to 2011. Despite having this account, Waknine filed a tax return for 2007 that falsely claimed he did not have financial interest in or signature authority over any foreign financial accounts. In an effort to further hide his money, Waknine instructed Bank Leumi to hold bank mail from delivery to the United States, and obtained access to his offshore funds through the use of “back-to-back” loans, which were designed to enable borrowers to tap their concealed accounts. These lending arrangements permitted Waknine to have funds issued by Leumi’s U.S. branch that were secretly secured by funds in his undeclared accounts in Israel. In 2011, Waknine closed his Bank Leumi Israel account, but used the $2.4 million he received from closing the account to open a new undisclosed foreign bank account at another bank in Israel. Over the period 1994-2015, Waknine held undisclosed foreign bank accounts in four banks in three countries, each with assets of at least $1 million.
In December 2014, Bank Leumi entered into a deferred prosecution agreement, in which the bank admitted to conspiring from at least 2000 until early 2011 to aid and assist U.S. taxpayers to prepare and present false tax returns by hiding income and assets in offshore bank accounts in Israel and other foreign locations. Under the terms of the deferred prosecution agreement, Bank Leumi paid the United States a total of $270 million and continues to cooperate with respect to civil and criminal tax investigations.
U.S. citizens, resident aliens, and permanent legal residents with a foreign financial interest in or signatory authority over a foreign financial account worth more than $10,000 are required to file an FBAR each year disclosing the account, and are required to report the account and any resulting income on their annual tax returns.
Waknine faces a maximum sentence of three years in prison, as well as a period of supervised release, restitution and monetary penalties. District Court Judge David O. Carter set Waknine’s sentencing for January 28, 2019.
Principal Deputy Assistant Attorney General Zuckerman commended special agents from IRS-Criminal Investigation, who investigated the case, and Tax Division Assistant Chief Elizabeth Hadden and Trial Attorney Eric Schmale, who are prosecuting the case. The Tax Division thanks the U.S. Attorney’s Office of the Central District of California for its assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Broadway Crips Gangster Convicted of Narcotics Offenses and Implicated in Two Murders Sentenced to 35 Years in Federal PrisonRead the Press Release
LOS ANGELES – A prominent member of the Five Deuce Broadway Gangster Crips (BGC) – who was found guilty by a jury last year of three counts of distribution of crack cocaine, which included him selling crack cocaine near schools – has been sentenced to 35 years in federal prison.
Marquis Shaw, also known as “Tiny Looney,” 43, of South Los Angeles, was sentenced Wednesday afternoon by United States District Judge S. James Otero after a nearly three-hour sentencing hearing.
Following a four-week jury trial in March, Shaw was convicted of three drug trafficking offenses. Shaw had previously been convicted of felony narcotics offenses in two prior cases, as well as voluntary manslaughter, assault with a firearm, assault with a deadly weapon, and being a felon in possession of a firearm.
Two other defendants also were convicted in relation to the trial earlier this year. Joshua Perez, aka “Tiny Ange,” 26, of Los Angeles, pleaded guilty during the trial to racketeering and drug trafficking conspiracy charges and admitted participating in a murder that Shaw supervised. Anthony Ingram, aka “Big Toon,” 55, of Los Angeles, was also convicted of drug charges.
Although the jury did not convict Shaw of racketeering charges, Judge Otero at Wednesday’s sentencing hearing determined that the evidence presented at trial established that Shaw was responsible for two slayings. Judge Otero said that Shaw was one of the most sophisticated and culpable defendants in the BGC criminal enterprise, and that Shaw posed “a clear and continuing danger to the community.”
The evidence presented at trial earlier this year showed that Shaw and other gang members murdered a man on Sunset Boulevard in 2003 after a concert at the House of Blues. According to the testimony at trial, Shaw was driving one of two cars that surrounded the victims’ car and sprayed it with bullets from both sides. The driver of that car, Luis Roaches, who was not a gang member, died after being shot in the head and chest; another passenger was injured. Following the shooting, Shaw led police on a high-speed chase through West Hollywood and Beverly Hills, during which he tossed what was later determined to be one of the murder weapons. Shaw later pleaded guilty in state court to voluntary manslaughter in this shooting.
Additionally, evidence presented at trial showed that Shaw participated in and supervised another BGC shooting attack in 2012. Several BGC members, including Perez, traveled into rival gang territory near the Hyde Park District of Los Angeles and fired a barrage of more than 40 bullets into a crowd of people walking into a rival gang’s party. William Sherman, who was not a member of that rival gang, was killed, and two others were injured. When Perez pleaded guilty, he admitted his participation in Sherman’s murder.
Shaw was one of 72 defendants named in a 2014 RICO indictment that described the criminal activities of the BGC, a street gang that claims territory in South Los Angeles and controls drug sales in an area just west of Skid Row in Downtown Los Angeles. The indictment outlined two decades of criminal conduct, including murders, robberies, extortion, illegal firearms possession, witness intimidation and narcotics trafficking.
The investigation into the BGC was called Operation “Gremlin Riderz” because authorities focused on a particularly violent “clique” – or subset of the gang. During his trial, Shaw was also identified as a member of this hit squad, which was known as the “Gremlins.”
All 72 defendants charged in the case have been convicted by guilty plea or at trial. All but six of the defendants have been sentenced, with the lengthiest prison term, prior to Shaw’s sentence, being 30 years. The remaining defendants, including Perez, are due to be sentenced in the coming months.
The multi-year investigation into the BGC, known as Operation Gremlin Riderz, was conducted by agents and officers with the Federal Bureau of Investigation and the Los Angeles Police Department. Considerable assistance was provided during this investigation by the California Department of Corrections and Rehabilitation, the Torrance Police Department, the Buena Park Police Department, the El Segundo Police Department, the San Bernardino Police Department and the Los Angeles City Attorney’s Office.
This case is being prosecuted by Assistant United States Attorney Mack Jenkins, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Max Shiner, Wilson Park and Aron Ketchel of the Violent and Organized Crime Section.
Four Local Members of White Supremacy Group Face Federal Charges in Attacks at Political Rallies across CaliforniaRead the Press Release
LOS ANGELES – Four Southern California men who allegedly are members of a white supremacy extremist group have been named in a federal criminal complaint that charges them of travelling to political rallies across California, where they violently attacked counter-protesters, journalists and a police officer.
Three of the four defendants are now in custody, and authorities are continuing to search for the fourth defendant.
The criminal complaint unsealed today alleges that the four defendants are members of the Southern California-based “Rise Above Movement” (RAM) and that they used the internet “with the intent to organize, promote, encourage, participate in, or carry on riots.”
The four RAM members allegedly engaged in a series of violent attacks at political rallies in 2017, including events in Huntington Beach, Berkeley and San Bernardino.
The affidavit in support of the complaint alleges that the men used the internet to coordinate “combat training,” attendance and travel prior to the events, and then to “celebrate their acts of violence in order to recruit members for future events.”
The three men taken into custody are:
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Robert Rundo, 28, of Huntington Beach, allegedly a founding member of RAM and the man behind RAM’s Twitter account, who made his first court appearance on Monday, and at a hearing this morning in United States District Court was ordered detained pending trial;
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Robert Boman, 25, of Torrance, who was arrested this morning by special agents with the Federal Bureau of Investigation and is expected to appear in federal court this afternoon; and
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Tyler Laube, 22, of Redondo Beach, who also was arrested this morning by the FBI and is expected to appear in court this afternoon.
The fourth defendant named in the complaint – Aaron Eason, 38, who resides in the Riverside County community of Anza – is currently being sought by federal authorities.
“Every American has a right to peacefully organize, march and protest in support of their beliefs – but no one has the right to violently assault their political opponents,” said United States Attorney Nick Hanna. “The allegations describe an orchestrated effort to squelch free speech as members of the conspiracy travelled to multiple locations to attack those who hold different views. This case demonstrates our commitment to preserve and protect the freedoms guaranteed by the Constitution.”
“The safeguarding of Constitutionally-protected activity is at the heart of the FBI’s mission,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “There is no place in our democracy, however, for lawbreaking by individuals who cross the line from protected free speech to violence in the name of extremist ideology.”
According to the complaint, which charges the four defendants with violating the federal conspiracy and riots statutes:
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At the Huntington Beach “Make America Great Again” rally on March 25, 2017, members of RAM broke off from the main rally and confronted counter-protesters, where Rundo, Boman and Laube attacked a number of people, including two journalists.
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In the weeks following this melee, RAM members celebrated the attacks, which were noted on a neo-Nazi website, and solicited others to attend an upcoming rally in Berkeley, as well as combat training to be held in a park in San Clemente.
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At the Berkeley rally on April 15, 2017, Rundo, Boman and Eason were involved in violent attacks, which resulted in Rundo being arrested after punching a “defenseless person” and a Berkeley Police Officer.
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In the subsequent months, RAM members celebrated the assaults in Berkeley, which included Boman posting photos of himself attacking people and RAM members engaging in combat training.
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On June 10, 2017, Rundo and other RAM members attended an “Anti-Islamic Law” rally in San Bernardino, where they participated in violent attacks.
The case announced today follows the filing of an indictment in federal court in Charlottesville, Virginia that charges four other California RAM members with violating the riots statute during violent altercations at a torch-lit march at the University of Virginia and Unite the Right Rally in August 2017. The affidavit unsealed today in Los Angeles noted the connections between the defendants in both cases.
RAM and its members documented and promoted their white supremacy ideology through postings on various internet platforms and through graffiti, including tags found in Irvine. In a video posted online earlier this year and described in the complaint, Rundo said he was “a big supporter of the fourteen,” which is a reference to the “14 words,” a slogan used by white supremacists and neo-Nazis that reads: “We must secure the existence of our people and a future for white children.”
In the spring of 2018, Rundo and two of the men charged in the Charlottesville case travelled to Europe to celebrate Adolf Hitler’s birthday and to meet with members of other white supremacy extremist groups, according to the complaint.
“Rundo, Boman, Laube, and Eason, along with other RAM members, have used the internet to prepare to incite and participate in violence at various political events, have committed violent assaults while at those events, and have applauded each other for it and publicly documented their assaults in order to recruit more members to engage in further assaults,” the complaint alleges.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If convicted of the conspiracy and riots charges in the complaint, each defendant would face a statutory maximum sentence of 10 years in federal prison.
This case is being investigated by the FBI’s Joint Terrorism Task Force.
The Los Angeles Sheriff's Department, the Redondo Police Department and the Torrance Police Department provided assistance in relation to this morning’s arrests.
This matter is being prosecuted by Assistant United States Attorney David T. Ryan of the Terrorism and Export Crimes Section in the National Security Division of the United States Attorney’s Office.
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O.C. Man Sentenced to 6½ Years in Federal Prison for Running Three Investment Schemes that Cost Victims $7.4 MillionRead the Press Release
SANTA ANA, California – A Laguna Beach man was sentenced today to 78 months in federal prison for his conviction in a wire fraud case for stealing $7.4 million from the victims of three separate investment fraud schemes.
Peter Heinrich Conrad Reinert, 63, was sentenced by United States District Judge Josephine L. Staton, who also ordered him to pay $7,360,855 in restitution.
When he pleaded guilty in March to one count of wire fraud, Reinert admitted running three separate schemes. In one scam run through the Irvine-based Fazer Technologies, Reinert claimed he was developing, among other things, a product that could increase gas mileage for any car up to 150 miles per gallon. In another fraud, this one related to Global Encryption Imaging Corporation, Reinert claimed the company was developing, among other things, anti-counterfeiting technology to be used on state-issued identification documents. In the third scheme, Reinert told victims that another company he ran, Income from Waste Corporation, was developing a technology to convert used tires into oil.
Through the various false claims, Reinert induced victims to send him approximately $7.4 million. These victims came from around the nation and included farmers from Missouri.
As part of the schemes, to gain legitimacy with victims, Reinert falsely claimed to be a United States Secret Service agent and an intelligence officer in the United States Marines. Reinert’s “use of the trust the victims placed in Secret Service agents was particularly ironic since the Secret Service was the agency that investigated [Reinert] in the late 1990s for his prior federal felonies related to identity theft,” prosecutors wrote in court documents.
“He makes up stories about who he is to get what he wants,” Judge Staton said in court today.
Reinert also falsely claimed that companies such as Tesla and General Electric were interested in Fazer’s product – and that Tesla had stolen Fazer’s technology and used it in their cars.
Noting that Reinert made false statements about his German citizenship to a court official who was preparing a pre-sentence report, Judge Staton said his claim of American citizenship was “riddled with more holes than Swiss cheese.”
Reinert ran the schemes from 2010 through April 2015. Instead of using the victims’ money to develop the purported technologies, Reinert used the money to pay for various expenses, including luxury automobiles, sales commissions, purchases at Apple’s iTunes store, and wire transfers to an account in Poland.
As part of his plea agreement, Reinert agreed to forfeit approximately $300,000 that the FBI had seized in 2015, as well as a 2009 Mercedes Benz S63 AMG and a 2011 Mercedes Benz.
The investigation into Reinert was conducted by the Federal Bureau of Investigation and IRS Criminal Investigation. The Department of Defense, the United States Secret Service, U.S. Customs and Border Protection, the State Department, and the Laguna Beach Police Department provided substantial assistance.
The case is being prosecuted by Assistant United States Attorneys Vibhav Mittal and Daniel Lim of the Santa Ana Branch Office.
Koreatown Consultant and Former California Dept. of Alcoholic Beverage Control Official Indicted in Long-Running Bribery SchemeRead the Press Release
LOS ANGELES – A former official with the California Department of Alcoholic Beverage Control (ABC) allegedly accepted thousands of dollars in bribes from a consultant in exchange for taking official acts to financially benefit the consultant, including initiating ABC enforcement actions designed to generate consulting fees, according to a federal grand jury indictment announced today by United States Attorney Nick Hanna and FBI Assistant Director in Charge Paul Delacourt.
The two men charged in the corruption scheme are:
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Wilbur M. Salao, 46, of Bellflower, a 21-year ABC employee who was a district administrator in the Los Angeles Metro ABC office from 2010 until he left the agency in May 2017; and
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Scott Seo, also known as “Seung Hye Seo” and “Scott Hoon Seo,” 49, of San Pedro, who was employed by the ABC for 15 years before starting his consulting business, Alcoholic Beverage Control LLC (ABC LLC), in 2006.
The 13-count indictment was unsealed on Wednesday when Salao was arraigned in United States District Court. At that time, Salao entered a not guilty plea, was released on a $20,000 bond and was ordered to stand trial on December 11 before United States District Judge John A. Kronstadt.
Seo surrendered on Thursday and was arraigned that afternoon. He also pleaded not guilty and was released on a $20,000 bond.
The indictment specifically alleges that Seo paid Salao over $28,000 in bribes and kickbacks from the beginning of 2014 through the spring of 2016.
In exchange for the payments, Salao allegedly performed official acts, including directing ABC enforcement operations and disciplinary actions against businesses selected by Seo, sharing non-public information with Seo, revealing confidential law enforcement activities in Koreatown, and expediting the licensing process for Seo’s clients.
“We will not tolerate the shakedown of local businesses by corrupt public officials and their cohorts,” said United States Attorney Nick Hanna. “The brazen conduct alleged in this case compromised the integrity of a state agency, provided preferential treatment to businesses that paid bogus consulting fees, and padded the pockets of a senior ABC official. All businesses subject to enforcement and licensing requirements should be able to play on the same level field.”
“Mr. Salao is alleged to have enriched himself with bribe payments in exchange for using his government position to target businesses in Koreatown on behalf of his codefendant, Mr. Seo. Moreover, the pair attempted to thwart legitimate law enforcement action, putting police officers in harm’s way,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Rooting out this kind of corruption is necessary in order for businesses to operate legitimately, without fear of reprisal by those in positions of power or influence.”
Seo has operated ABC LLC over the past 13 years, marketing his services through various means in Koreatown, a neighborhood located in City Council District 10 in central Los Angeles.
As part of the scheme, Seo targeted Koreatown businesses for ABC enforcement actions, which allowed Seo to sign new clients, generate consulting fees from existing clients, and attempt to force a business to sell its establishment to Seo and his associates, the indictment alleges.
The indictment outlines a series of official acts allegedly taken by Salao that implicate at least eight businesses in Koreatown and were designed to benefit Seo’s consulting business. For example, in late 2011, after the ABC raided a Koreatown establishment, Seo charged the business $60,000 in cash, some of which was used to pay Salao, who issued a temporary license that allowed the establishment to continue operating.
Between 2014 and 2016, Seo allegedly sent Salao lists of businesses for the ABC to target, which included suggested violations, such as operating after hours. In communications between the two men outlined in the indictment, they discussed how Salao would provide benefits to Seo’s clients and would impose more severe penalties on businesses that did not utilize Seo’s services.
In private discussions outlined in the indictment, Seo and Salao referred to their scheme as “Asian Persuasion Control” and “Asian Persuasion Coalition.”
Additionally, according to the indictment, Salao learned of impending enforcement actions by the ABC and the Los Angeles Police Department in Koreatown and provided information to Seo, including a photo of an undercover LAPD officer. This information allowed Seo to warn his clients and shield their illegal activity from police.
Salao and Seo are charged in the indictment with conspiracy, four counts of honest services mail fraud and four counts of honest services wire fraud. Seo is charged additionally with four counts of bribery.
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 convicted of the charges in the indictment, Seo would face a statutory maximum sentence of 205 years in federal prison, and Salao would face up to 164 years.
This case is part of an ongoing investigation being conducted by the Federal Bureau of Investigation.
Any member of the public who has knowledge about this case – or who would like to report similar allegations of corruption by public officials – is encouraged to contact their local FBI Field Office. In Los Angeles, the FBI can be reached 24 hours a day at (310) 477-6565. Foreign language speakers can be made available.
This case is being prosecuted by Assistant United States Attorney Veronica Dragalin of the Public Corruption and Civil Rights Section.
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Iranian Television Personality Sentenced to Federal Prison for Paying $39,000 in Cash Bribes to Corrupt Immigration OfficersRead the Press Release
LOS ANGELES – A personality on a Persian-language television network who formerly acted as an “immigration consultant” was sentenced today to one year and one day in federal prison for paying cash bribes to corrupt U.S. Citizenship and Immigration Services (USCIS) officers in exchange for the immigration officers approving applications for citizenship.
Vida Heravi, 59, of Beverly Hills, who co-hosts a talk show host on the Tapesh TV Network, was sentenced by United States District Judge Michael W. Fitzgerald.
Heravi pleaded guilty in May to one count of conspiracy to bribe public officials employed by USCIS. When she pleaded guilty, Heravi specifically admitted paying at least $39,000 in cash bribes to corrupt USCIS officers.
During the course of the scheme, corrupt immigration officers approved the applications of ineligible aliens to become naturalized citizens, typically receiving $1,000 per alien. Heravi paid at least $39,000 on behalf of 43 ineligible aliens.
Heravi also admitted in court that she submitted to USCIS at least 20 fraudulent medical waivers that falsely indicated a doctor had diagnosed the aliens as suffering from conditions that exempted them from the English-reading and language requirements in the naturalization process. Heravi used the fraudulent medical waivers to assist the corrupt USCIS officers in evading detection and to mislead other officers.
The USCIS officers accepted cash in exchange for falsely certifying that immigrants had met requirements for citizenship such as “passing” the English competency and civics portions of the naturalization interview and examination administered by USCIS. The corrupt immigration service also accepted the fraudulent medical waivers without questioning the interviewing aliens’ medical disability.
Another woman charged in the bribery conspiracy along with Heravi in a grand jury indictment – Mohdeh Erfani, 50, of Irvine – has pleaded guilty and is pending sentencing.
Previously in this investigation, former USCIS officer Daniel Espejo Amos was sentenced to three years in federal prison for taking bribes from Heravi and other immigration consultants.
The prosecution of Heravi and the others is the result of a joint investigation by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Department of Homeland Security’s Office of the Inspector General, and the Federal Bureau of Investigation.
This matter was prosecuted by Assistant United States Attorney Elisa Fernandez of the Public Corruption and Civil Rights Section.
Former CFO at Two Irvine Companies Sentenced to 3 Years in Federal Prison for Embezzling over $2 Million from his EmployersRead the Press Release
SANTA ANA, California – A former executive at two Irvine-based engineering firms was sentenced today to 36 months in federal prison for embezzling more than $2 million by making over 800 unauthorized withdrawals from company accounts over a five-year period.
Deepak Kharbanda, 44, a Mission Viejo resident who formerly lived in Irvine, was sentenced by United States District Judge James V. Selna. In addition to the prison term, Judge Selna ordered Kharbanda to pay $1,363,496 in restitution.
Kharbanda, who was the chief financial officer at Applied GeoKinetics and Advanced Construction Technologies, stole $2,074,496 from his employers from 2010 to 2015. Kharbanda admitted in court that he made 841 unauthorized withdrawals from the companies’ bank accounts and that he used the money to pay personal expenses, including costs associated with a girlfriend, trips to Las Vegas, upgrades to his home and the lease on a Lamborghini.
Kharbanda “stole more than $2 million dollars from companies where he was a trusted C-suite executive,” prosecutors wrote in a sentencing memorandum. “He stole from them repeatedly, and did so time and time again over a five-year period.”
Prosecutors noted that the companies suffered during this time because they were forced to cut salaries and they lost some employees as a result of Kharbanda’s conduct, which included attempts to cover up the crimes by preparing phony payroll accounts and summaries.
Kharbanda pleaded guilty in September 2017 to two counts of wire fraud. Soon after entering his guilty pleas and while free on bond, Kharbanda forged a letter and sent it to a potential employer, claiming it was a communication from the court’s Pretrial Services Agency, which supervises defendants who have been freed on bond. The bogus letter claimed that Kharbanda was only a witness – not the defendant – in this case. After Pretrial Services obtained a copy of the letter, Kharbanda admitted he authored the letter and was remanded into custody by Judge Selna in December 2017.
“The illegal and fraudulent conduct of forging the seal and signature of Pretrial Services, creating a counterfeit Pretrial Service letterhead, writing a false statement on that counterfeit document, and hiding his actions from Pretrial Services is the epitome of being untruthful with Pretrial Services,” prosecutors wrote in court documents earlier this year. “In fact, Pretrial Services was able to discover defendant’s illegal conduct only because the employment background investigator contacted Pretrial Services.”
This case was investigated by the United States Secret Service.
This matter was prosecuted by Assistant United States Attorneys Daniel H. Ahn and Gina J. Kong of the Santa Ana Branch Office.
Methamphetamine Trafficking Ring Allegedly Shipped Drugs to Hawaii Disguised as Aztec Calendars and StatuesRead the Press Release
SANTA ANA, California – Federal authorities this morning arrested eight defendants named in a grand jury indictment that alleges a scheme to send methamphetamine to Hawaii, including nearly 12 kilograms of narcotics made to look like decorative Aztec calendars and statues.
Today’s arrests follow the filing of a seven-count indictment on October 10. A ninth defendant charged in the indictment was already in federal custody on an unrelated case.
The indictment alleges a conspiracy to distribute methamphetamine, including an attempted shipment on July 17 of 11.7 kilograms of pure methamphetamine from a post office in Garden Grove. Those drugs were part of a nearly 90-pound shipment that appeared to be colorful, decorative Mexican items, including replicas of the 500-year-old Aztec calendar stone.
The indictment also alleges that members of the conspiracy, over the past year, sent to Hawaii a package containing about two pounds of methamphetamine and another with nearly five pounds of the drug.
All three of the narcotic shipments alleged in the indictment were intercepted by law enforcement.
The nine defendants named in the indictment are:
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Felix Salgado, 28, of Perris, who allegedly obtained wholesale quantities of methamphetamine on behalf of the conspiracy;
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Vaimanino Lee Pomele, 49, of Garden Grove, who allegedly orchestrated the drug shipments to Hawaii;
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German Bastidas Nunez, also known as “Cheque,” 46, of Moreno Valley, who allegedly supplied narcotics to Salgado and who was already in custody;
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Fernando Caballero Rascon, 42, of Garden Grove, who allegedly purchased methamphetamine from Pomele;
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James Arnold Borbon, also known as “Dino,” 58, of Garden Grove, an alleged customer of the drug ring;
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Moises Rey Avina, 39, of Santa Ana, who allegedly purchased methamphetamine from Pomele;
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Gary Wayne Minter, 55, of Victorville, who allegedly used his residence as a stash house;
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Alejandra Pomele, who is Vaimanino’s wife; 44, also of Garden Grove, who allegedly delivered narcotics to a customer on at least one occasion; and
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Stephen Dgewell Martin, 30, of Anaheim, who allegedly dropped off the shipment containing the methamphetamine disguised as Aztec calendars and statues at the post office.
The eight defendants taken into custody this morning are expected to be arraigned on the indictment this afternoon in United States District Court in Santa Ana.
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 convicted of the charges in the indictment, each defendant would face a mandatory minimum sentence of at least five years in federal prison, and each potentially could be sentenced to decades in prison.
The matter is being is being investigated by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Drug Enforcement Administration and the Cypress Police Department.
This case is being prosecuted by Assistant United States Attorney Rosalind Wang of the Santa Ana Branch Office.
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Coachella Valley-Based Conman Sentenced to 10 Years in Federal Prison in Fraud Schemes that Cost Victims Nearly $2 MillionRead the Press Release
RIVERSIDE, California – A La Quinta man with a criminal history going back nearly five decades has been sentenced to 120 months in federal prison for masterminding a series of fraud schemes that cost victims nearly $2 million.
Jerome Arthur Whittington, 68, received the 10-year sentence late Monday from United States District Judge Jesus G. Bernal, who said the defendant had “ruined the lives of some of the victims.”
Whittington was sentenced after pleading guilty in May 2016 to 33 counts of conspiracy, wire fraud and passport fraud.
Whittington orchestrated a series of fraud schemes in which he posed as various figures, including a former federal prosecutor, a successful attorney, a special agent with the FBI, and a wealthy real estate investor.
“Whittington’s criminal conduct was exceptional – the sheer volume and breadth of his fraudulent conduct is unlike anything I’ve seen from the bench,” Judge Bernal said on Monday.
In one of the schemes, Whittington posed as an attorney and falsely promised a victim that he could help the victim recover losses suffered after investing in two bogus companies. Whittington claimed he was able to seize assets from the two fraudulent companies, but the victim needed to provide money that would be used to “post bonds” that were required prior to seizing the assets. After Whittington falsely claimed that he had obtained a $4 million judgment, Whittington told the victim that representatives from the companies and other victims were very angry and that he should leave the country to avoid confrontations and harassment.
As a result of this “reloading” scheme, the victim paid Whittington approximately $290,000 to recover the losses – but Whittington simply spent the money on personal expenses, which included making payments to other victims of his schemes.
During the sentencing hearing, the victim told Judge Bernal that Whittington “ruined” his life by stealing retirement savings he had built up during a 40-year career.
In imposing the sentence, Judge Bernal said: “Whittington’s criminal history of defrauding people spanned from 1971 – 47 years. Most people recidivate less when they become older. But Whittington started the [latest] schemes while he was in the sixties.”
Once he completes the prison, Whittington will be on supervised release for seven years.
Judge Bernal also ordered that Whittington is responsible for paying nearly $1.7 million in restitution to the victims.
Two criminal cases against Whittington were part of an investigation conducted by the Federal Bureau of Investigation and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
This matter was handled by Assistant United States Attorney Jerry C. Yang of the Riverside Branch Office.
U.S. Attorney’s Office and FBI to Host 10th Annual Cybercrime Prevention SymposiumRead the Press Release
LOS ANGELES – The United States Attorney’s Office, the FBI, and a coalition of law enforcement agencies and community organizations will host the 10th Annual Cybercrime Prevention Symposium on Monday, October 15 at the California Endowment in Los Angeles. The day-long seminar for more than 450 educators, parents, and middle and high school students is marking 10 years of providing cutting-edge information on cybersafety and digital reputation.
The Symposium will address a wide range of cyber-related security and safety topics with speakers conducting informative discussions on issues that will include online exploitation of children and teens, cyberbullying, the implications of digital communication on health, digital reputation, navigating peer pressure, cyberabuse, internet dangers, and sextortion.
This year’s Symposium will feature an interactive presentation on sextortion by students from the Theatre Department at California State University, Northridge and the traditional lunchtime appearance of surprise celebrity guests from Disney television programs.
“It has become more important than ever for adults and children alike to have the necessary skills to stay safe in cyberspace,” said United States Attorney Nick Hanna. “For the past 10 years, this Symposium has played a significant and important role in presenting strategies that will help protect children from online threats.”
“Educating our youth is half the battle in combatting cyber criminals who target children with sextortion schemes, bullying, grooming and more,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “In ten years of participating in the cyber symposium, the FBI and our partners have educated hundreds of kids who know how to avoid being victimized as a result of attending this important event.”
Student teams from each of the schools attending this year’s Symposium will also be invited to participate in the 8th Annual Cybersafety Challenge. This contest asks attending students to develop a cybersafety program at their respective schools to educate the entire student body on the various risks associated with cybercrime. The contest promotes good cyber etiquette by challenging students to engage in creating the cybersafety programs. Students participating in this challenge will have their contest entries judged by a panel of experts, and the winning school will be announced in May 2019.
“With technology ever-expanding, our children are increasingly vulnerable targets for online predators and bullies,” said Los Angeles City Attorney Mike Feuer. “Partnering with law enforcement, educators, parents and students, we are working to address these threats to our kids’ safety and well-being.”
Organized under the aegis of the Inter-Agency Council on Child Abuse and Neglect (ICAN), law enforcement agencies participating in this year’s conference include the United States Attorney’s Office, the Federal Bureau of Investigation, the Los Angeles City Attorney’s Office, the Los Angeles County Sheriff’s Department, the Los Angeles District Attorney’s Office, and the Los Angeles Police Department - Internet Crimes Against Children Task Force (ICAC). The Cyber Crime Prevention Symposium is hosted this year by the Archdiocese of Los Angeles, and the planning committee also includes participation by Santa Monica-UCLA Medical Center, the Anti-Defamation League, Fox Entertainment Group, the Walt Disney Company, and Warner Bros. Entertainment.
“Children who are growing up in this high tech age are being targeted by online predators at an alarmingly high rate,” said Deanne Tilton Durfee, Executive Director for the ICAN. “This Symposium will provide participants with resources and tools to help children learn how to protect themselves and be safe in the cyber world, while enjoying all of the benefits of the fast-growing technologies.”
Houston Man Faces Arraignment in Federal Case Alleging Manufacture of Fake Airline IDs to Obtain Free FlightsRead the Press Release
LOS ANGELES – A Houston man who was arrested earlier this month in Texas is scheduled to be arraigned this afternoon on federal fraud and identity theft charges that allege a scheme to manufacture counterfeit Mesa Airlines employee identification badges that were used to obtain free flights on another airline.
Alphonso Lloyd, 25, is set to appear in United States District Court on charges contained in a six-count indictment that was returned by a federal grand jury on August 17. After being arrested last month in Texas, Lloyd was freed on bond and ordered to appear before a United States Magistrate Judge in Los Angeles.
The indictment charges Lloyd and two other defendants with conspiracy to commit wire fraud. The indictment also alleges charges related to the illegal possession of use of identity documents and aggravated identity theft.
The other two defendants charged in this case previously were arraigned and entered not guilty pleas. Kamille Jemison, 26, a former Houston resident who recently relocated to the Beverly Grove District of Los Angeles, was arrested on September 19 and subsequently freed on a $20,000 bond. Hubbard Bell, 30, a Houston resident and former Mesa airlines employee has been in federal in custody in Los Angeles since mid-2017 in relation to another case, was arraigned on October 1. United States District Judge Michael W. Fitzgerald ordered both defendants to stand trial next month.
The indictment alleges that, through most of 2016 and 2017, Bell and Jemison used Mesa Airline employee identification information to book free flights on Spirit Airlines through Spirit’s web portal for themselves and others, including Lloyd. Bell, Jemison, Lloyd and others took hundreds of flights – across the United States and to Nicaragua – on “non-rev” passes, which is a perk offered to airline employees.
Bell and Jemison allegedly manufactured fake Mesa employee identification cards that the fliers used to board the fraudulently obtained flights. The indictment alleges that Lloyd attempted to use such a fake identification to board a Spirit flight leaving from Los Angeles International Airport on May 6, 2017.
An indictment is merely an allegation and each defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
If they were to be convicted of the charges in the indictment, Bell would face a statutory maximum sentence of 30 years in federal prison. If there were to be convicted, Jemison and Lloyd would face a maximum sentence of 37 years in prison.
The case was investigated by special agents with the Federal Bureau of Investigation, who received substantial assistance from the Federal Air Marshal Service and the Transportation Security Administration.
This case is being prosecuted by Joseph D. Axelrad of the Violent and Organized Crime Section, and Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.
Bell has been in custody since June 2017 in relation to a gun-trafficking case. In that case, Bell pleaded guilty on August 13 to conspiracy to engage in the business of dealing in firearms without a license. In a plea agreement filed in that case, Bell admitted transporting firearms on flights between Houston and Los Angeles, and the guns were resold in California and Nevada. The gun case led to the investigation that culminated with the fraud and identity theft case being announced today. Bell is scheduled to be sentenced in the gun case by Judge Fitzgerald on December 3, at which time he will face a statutory maximum sentence of five years in federal prison.
Former NASA Contractor Pleads Guilty and Admits Computer Hacking and Threats Made to Obtain Nude Photos of Female VictimsRead the Press Release
LOS ANGELES – A Los Angeles man pleaded guilty this afternoon to federal charges of hacking into email and social media accounts to obtain nude photographs of women and then threating to publish the nude photos unless victims provided him with additional explicit pictures.
Richard Gregory Bauer, 28, a former contractor at NASA Armstrong Flight Research Center, pleaded guilty to three charges – stalking, computer hacking and aggravated identity theft.
Bauer, who used aliases that included “Steve Smith,” “John Smith,” and “Garret,” pleaded guilty before United States District Judge John F. Walter, who scheduled a sentencing hearing for December 17.
Bauer, who currently resides in the Mid-Wilshire District of Los Angeles, and who recently lived in the High Desert communities of Palmdale and Lancaster, admitted in court that he obtained unauthorized access to victims’ online accounts and threatened the women starting in early 2015 and continuing through early 2018.
In a plea agreement filed in United States District Court, Bauer acknowledged that he sent victims anonymous online messages threatening to disseminate nude pictures if they did not send additional photographs of themselves. In some cases, but not all, Bauer had explicit photographs in his possession. Bauer knew all of his victims, who were friends, family, acquaintances from high school and college, co-workers, and friends of friends.
Bauer hacked into the victims’ online accounts in two ways. In some cases, Bauer, using his true identity, contacted victims on Facebook and posed a series of questions, purportedly as part of a project he was working on for his “human societies class.” Some of the questions included typical questions used to reset online passwords, such as the name of your first pet or the city where your parents met. Armed with that information, Bauer reset passwords to gain access to his victims’ online accounts, primarily cloud-based iPhone backups, from which he harvested photographs, videos and documents containing passwords for other accounts.
In other instances, again using his true identity, Bauer convinced victims to install malware that he claimed was software that he needed help testing. The malware gave Bauer unauthorized access to the computers, and allowed him, among other things, to capture from the victims’ computers passwords for web sites and e-mail accounts.
As a result of today’s guilty pleas, Bauer faces a statutory maximum sentence of five years in federal prison for the stalking and computer hacking counts. The aggravated identity theft count carries a two-year, consecutive prison term.
This case is the result of an investigation conducted by NASA’s Office of Inspector General.
This matter is being prosecuted by Assistant United States Attorney Khaldoun Shobaki of the Cyber and Intellectual Property Crimes
San Diego Woman Charged in Federal Indictment Alleging Ponzi Scheme that Claimed to Offer Investments in Construction LoansRead the Press Release
SANTA ANA, California – A San Diego woman has been arrested on federal fraud and identity theft charges that allege she ran a multi-million dollar Ponzi scheme in which she solicited funds from investors by falsely claiming their money would be used to make short-term construction loans to other investors seeking to defer capital gains taxes through “1031 like-kind exchanges.”
Susan Margaret Werth, 57, was arrested by FBI special agents at her residence on October 4. Later that day, after being transported to United States District Court in Santa Ana, Werth entered a not guilty plea to charges contained in a four-count indictment returned on October 3 by a federal grand jury in Los Angeles.
The indictment charges Werth with two counts of wire fraud and two counts of aggravated identity theft related to the alleged scheme she ran out of two San Diego-based companies, Commercial Exchange Solutions, Inc. (CES) and Exchange Solutions Company, Inc. (ESC).
Werth and others working at her direction allegedly solicited millions of dollars from victims by falsely claiming their funds would be used to provide short-term construction loans to clients who were engaged in like-kind exchanges of commercial properties. According to the indictment, a 1031 like-kind exchange is a method of deferring the payment of capital gains taxes pursuant to section 1031 of the tax code in which a taxpayer sells an investment property and reinvests the proceeds to buy a like-kind investment property of equal or greater value.
Werth falsely promised victims that their investments were risk-free and 100 percent guaranteed by CES’s “collateral account” at Wells Fargo Bank, according to the indictment. Werth allegedly lulled victims by creating fictitious Wells Fargo bank statements to show that CES had an account with a balance of $7.2 million, as well as fabricating emails she claimed were from an employee of Wells Fargo Asset Management. Werth also falsely told investors that her companies were investing in properties that had been evaluated by the international valuation firm of Duff & Phelps.
In return for their short-term investments of 30 to 90 days, Werth promised victims a rate of return of at least 15 percent.
According to the indictment, “[i]n truth and in fact, as defendant Werth then well knew, the representations described above were false and fraudulent in that defendant Werth operated CES/ESC as a Ponzi scheme, in which the vast majority of its incoming revenue was comprised of victim-investor funds, which defendant Werth used to repay prior victim-investors, to pay her personal expenses, to withdraw cash, to repay investors’ principal, and to make fictitious profit payments to some investors.”
The identity theft charges stem from communications Werth allegedly sent under the names of the Well Fargo employee and an employee of Duff & Phelps
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If she were to be convicted of the charges in the indictment, Werth would face a statutory maximum sentence of 20 years in federal prison for each of the wire fraud charges, as well as a mandatory two-year consecutive sentence for identity theft.
At her arraignment last week, Werth was released on a $100,000 bond. She was ordered to stand trial in United States District Court in Santa Ana on November 27.
On October 1, the Securities and Exchange Commission filed a civil complaint in this matter that alleges Werth raised approximately $26 million in her Ponzi scheme, and spent $2 million to fund her personal lifestyle.
The case against Werth is being investigated by the Federal Bureau of Investigation.
This matter is being prosecuted by Assistant United States Attorney Valerie Makarewicz of the Tax Division.
Federal Prosecutors Bring Child Pornography and Other Exploitation Cases as Part of Ongoing Efforts to Combat Victimization of ChildrenRead the Press Release
LOS ANGELES – United States Attorney Nick Hanna and FBI Assistant Director in Charge Paul D. Delacourt today announced a series of child exploitation cases involving the victimization of minors through crimes that include the production of child pornography.
FBI agents on Thursday arrested two defendants as part of a multi-agency sweep that led to eight defendants being taken into custody over the past 10 days. Several of the cases involved agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). These cases are part of Project Safe Childhood, which is the Justice Department’s ongoing initiative to combat the growing epidemic of child exploitation crimes.
The internet has dramatically increased the availability of child pornography, and digital equipment has made it relatively easy to create, distribute and collect these disturbing images. But underlying each case in which an individual uses technology, there is a young victim who was abused, molested or coerced to engage in sexual activity to fulfill the deviant interests of a perpetrator. Every child exploitation prosecution is designed to end this horrific behavior, to stop the cycle of abuse, and to bring offenders to justice.
“These cases involve acts of depravity against vulnerable young people, many of whom will continue to be victimized as photos documenting their abuse spread across the internet,” said United States Attorney Nick Hanna. “These cases are a reminder that child predators cannot hide behind the perceived anonymity of the internet. Those who engage in the child pornography industry – whether they create new images or collect videos – can and will be caught as a result of the concerted efforts of local, state and federal law enforcement authorities. Our aggressive investigators and prosecutors will continue to diligently work to protect innocent children and to seek justice for those who are victimized.”
“The cases being announced today range from individuals who continuously feed the demand for child pornography by sharing it, to those who document the sexual abuse of children through images and video, and others who travel abroad for the purpose of molesting children. In each case, a voiceless child is victimized for life,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI and our partners have a clear mission that includes rescuing these precious victims from this unspeakable abuse and delivering some justice by putting their abusers in prison.”
The two defendants arrested Thursday by the FBI are:
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Nestor Ramirez, 36, of South Los Angeles, who is charged with production, distribution and possession of child pornography. The production charge relates to images that Ramirez allegedly created, and he allegedly distributed videos over a peer-to-peer network on at least two occasions. During his arraignment Thursday afternoon, Ramirez pleaded not guilty to the charges in a four-count indictment and was ordered to stand trial on November 27. Ramirez was detained – meaning held without bond – pending trial.
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Victor Manuel Diaz Romo, 53, of Lawndale, who is named in an indictment alleging receipt of child pornography over a peer-to-peer network and five counts of possession of child pornography. During his arraignment on Thursday, Romo pleaded not guilty and was ordered to stand trial on November 27. Romo was ordered detained pending trial.
The FBI-led sweep resulted in the arrest of six other defendants last week. Each of those defendants has entered not guilty pleas and are facing trials later this year. Those arrested on September 26 and 27 pursuant to grand jury indictments are:
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Christopher Norman Strinden, 57, of Long Beach, who is charged with three counts of possession of child pornography he obtained from a now-defunct website called Playpen, which was operating on the dark web. Many of the more than 17,000 images in this case allegedly involve minors under the age of 12, including toddlers.
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Kenneth Rudy Smith, 31, of Lawndale, who is charged with one count of possession of child pornography involving victims under the age of 12 that was found during a search of his residence.
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Justin Schobey, 19, of Canyon Country, who is charged with production, distribution and possession of child pornography. Schobey allegedly used text messages to coerce a boy in another state to produce child pornography.
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Jorge De Los Santos, 31, of South Los Angeles, who is charged with two counts of receipt of child pornography and one count of possession. De Los Santos allegedly used an online peer-to-peer network to obtain sexually explicit videos depicting young males.
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Fernando Vazquez Garcia, 30, of South Los Angeles, who is charged with receipt of child pornography, as well as possessing videos he allegedly obtained over a file-sharing network.
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Nathan Pham, 27, of Long Beach, who is charged with both receipt and possession of child pornography obtained through a peer-to-peer network. The possession count alleges images involving minors under the age of 12.
“No crime impacts us as law enforcement agents and as parents more deeply as the abuse of an innocent child,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “As these cases vividly illustrate, the internet has left our children vulnerable to exploitation by sexual predators not just around the corner, but around the globe. The staggering number of arrests achieved through interagency cooperation is a testament to our combined passion to prevent future harm to innocent children."
In recent weeks, federal prosecutors have filed cases against additional defendants who allegedly committed child exploitation offenses. Those case include:
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A former music teach from Ventura – John Zeretzke, 60– who is charged with production of child pornography, attempted enticement of a minor, and traveling to the Philippines with the intent to engage in illicit sexual conduct. This case is being investigated by the United States Postal Inspection Service.
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Members of the Los Angeles Regional Human Trafficking Task Force arrested a Long Beach man on charges of coercing a minor to produce child pornography and travelling to Mexico to engage in illicit sexual conduct. Jonathan Sandoval-Lepe, 31, was taken into custody by deputies with the Los Angeles County Sheriff’s Department and FBI agents pursuant to a five-count indictment.
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Israel Sanchez, 52, of Sylmar, who was arrested on August 30 pursuant to an indictment that charges him with 13 counts of production of child pornography and one count of possession. Sanchez was arrested after he was released from state custody on child molestation charges involving one of the very young victims in the child pornography case.
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Alex Primitibo Campos, 25, of Palmdale, who was arrested on September 5 on charges of distributing child pornography and three counts of possession. The distribution charge relates to videos depicting children as young as approximately 7 that Campos allegedly made available to others via download from a peer-to-peer network.
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Joseph Natale, 24, of Lancaster, who was indicted on September 18 on two counts of distributing child pornography and two counts of possession. This case stems from an undercover FBI investigation in which agents downloaded images that Natale allegedly made available via a peer-to-peer network.
There have been developments recently in other child exploitation cases being prosecuted by the United States Attorney’s Office. Those cases involve:
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Michael Joseph Farber, 50, of West Los Angeles, who pleaded guilty on September 14 to one count of possession of child pornography. Farber specifically admitted that he possessed videos showing a child under the age of 12 engaged in sexually explicit conduct. Farber is scheduled to be sentenced on December 10.
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Richard Celestino, 48, of Green Valley (on the eastern edge of the Antelope Valley), who pleaded guilty on July 30 to possession of child pornography, admitting that he used a peer-to-peer file-sharing network to distribute and possess child pornography, including images depicting children under the age of 2. Celestino’s sentencing hearing is now scheduled for November 19.
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Edward Anthony Contes, 36, of San Pedro, is scheduled to be tried on January 29 on charges of traveling to Mexico for the purpose of engaging in illicit sexual conduct with minor boys, use of the internet in an attempt to entice a minor to engage in prostitution, and attempted sex trafficking of two boys in the Los Angeles area. Contes was arrested in June after allegedly traveling to Tijuana in May and making contact on the internet with a person he thought was a child sex trafficker, but who in fact was an undercover law enforcement agent. In addition to seeking a boy in Mexico, Contes allegedly made arrangements with the undercover agent to pay to have sex with a 7-year-old and a 9-year-old at a hotel in Long Beach. This investigation is being conducted by HSI’s Long Beach Child Exploitation Investigation Group and the FBI’s Long Beach Resident Agency.
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An elementary school teacher from Burbank, Sean David Sigler, is scheduled to be tried on April 11, 2019, on charges related to the sexual exploitation of a 15-year-old student. Sigler has been in custody since his arrest in May.
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Daniel Patrick Diaz, 34, of Wilmington, was arrested in July pursuant to a six-count indictment that alleges the production, distribution, receipt and possession of child pornography. Diaz is currently scheduled for trial on January 22.
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Charles Patrick Miller, 49, of Lancaster, was sentenced on August 13 to nine years in federal prison for distributing child pornography on a peer-to-peer network. Miller admitted possessing tens of thousands of images and videos depicting child pornography, and his distribution of child pornography continued even after the FBI served a search warrant at his residence. Once he completes his prison sentence, Miller will be on supervised release for the rest of his life.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The charge of producing child pornography carries a mandatory minimum sentence of 15 years in federal prison and a statutory maximum penalty of 30 years in prison.
The charges of distributing and receiving child pornography carry a five-year mandatory minimum sentence and a statutory maximum penalty of 20 years in prison.
Possession of child pornography does not carry a mandatory minimum sentence, but a conviction on this charge can bring a sentence of up to 20 years in federal prison.
The recent arrests are the product of investigations by the Federal Bureau of Investigation, often working in conjunction with the Internet Crimes Against Children Task Force, as well as U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The Los Angeles County Sheriff’s Department participated in several of the investigations.
Assistant United States Attorney Devon Myers of the Violent and Organized Crimes Section is the office’s Project Safe Childhood Coordinator. In addition to the cases she is prosecuting, some of the cases being announced today are being handled by Assistant United States Attorneys Jeffrey C. Chemerinsky, Shawn R. Andrews, Wilson Park, Lana Morton Owens, Joey L. Blanch, Damaris Diaz, Joanna M. Curtis, Joseph D. Axelrad, Bruce K. Riordan and Scott M. Lara of the Violent and Organized Crime Section. Assistant United States Attorney Robyn K. Bacon of the Cyber and Intellectual Property Crimes Section, Assistant United States Attorney Kathy Yu of the Organized Crime and Drug Enforcement Task Force Section, and Assistant United States Attorney MiRi Song of the General Crimes Section are also handling cases.
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Van Nuys Man Arrested for Selling Fentanyl That Resulted in Death in First Case Investigated by DEA-led Opioid Overdose Task ForceRead the Press Release
LOS ANGELES – A Van Nuys man has been arrested on federal charges that he sold the powerful synthetic opioid fentanyl to a 23-year-old victim, who then suffered a fatal overdose.
James Dorion Rodriguez, 27, was arrested Wednesday afternoon at a motel in Mission Hills.
Rodriguez was taken into custody by officers with the Los Angeles Police Department, with the assistance of agents with the Drug Enforcement Administration. The arrest followed Rodriguez being charged in the first indictment brought under a new task force to investigate opioid overdoses.
The indictment, which was returned by a federal grand jury on September 28, charges Rodriguez with distributing the lethal dose of fentanyl. The case was unsealed today after Rodriguez was turned over to federal authorities.
The arrest of Rodriguez signals the first case brought under a new state-federal law enforcement partnership established to aggressively investigate opioid overdose deaths and prosecute the responsible drug dealers. The Drug Enforcement Administration’s newly formed Tactical Diversion Squad is part of the Southern California Drug Task Force, which operates under the auspices of the Los Angeles High Intensity Drug Trafficking Area (HIDTA) program.
“With this state and federal partnership, we are going after drug dealers who leave a trail of death and misery in their wake,” said United States Attorney Nick Hanna. “Fentanyl is a highly dangerous synthetic drug that has caused countless overdose deaths in our community, and we will use every tool at our disposal to send the dealers to federal prison.”
“DEA wants to send a very strong and clear message to street opioid dealers: You are predators and the federal law enforcement system will not tolerate you,” said DEA Associate Special Agent in Charge Daniel Comeaux.
A search warrant also unsealed today details an investigation after the overdose victim was found deceased in his crashed car in a restaurant parking lot on Ventura Boulevard in Sherman Oaks on the morning of March 18. The affidavit in support of the search warrant reflects how investigators used surveillance video, phone records and witness statements to determine that Rodriguez supplied the narcotics to the victim only hours before he was found dead. The affidavit also states that Rodriguez had intended to sell cocaine to the man, but accidentally gave him fentanyl instead. The overdose was the result of him snorting the drugs.
The affidavit documents how Rodriguez sold the fentanyl only one month after he was convicted on felony cocaine trafficking charges in Los Angeles Superior Court. When he was arrested on that state case in April 2017, Rodriguez was in possession of cocaine, various pharmaceutical narcotics and marijuana.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
Rodriguez is expected to be arraigned on the indictment this afternoon in United States District Court.
If convicted of the charge in the new indictment, Rodriguez would face a mandatory minimum sentence of 20 years in federal prison. The statutory maximum sentence for the narcotics distribution charge is life without parole.
The investigation was conducted by the Los Angeles Police Department’s Valley Homicide Bureau and the Drug Enforcement Administration.
This case is being prosecuted by Assistant United States Attorney Benjamin Barron of the Organized Crime Drug Enforcement Task Force.
Arizona Truck Driver Found Guilty of Involuntary Manslaughter for Causing Bus Crash that Left One Man Dead on Fort Irwin Army BaseRead the Press Release
RIVERSIDE, California – An Arizona man has been convicted of involuntary manslaughter for his role in a fatal bus crash that happened after he parked his truck – without any lights or warning cones – on a highway on the Fort Irwin Army Base in the Mojave Desert.
Steven Kilty, 51, of Apache Junction, Arizona, was found guilty of the federal offense late Tuesday, which ended a five-day trial in United States District Court.
On the evening of June 1, 2014, Kilty was delivering a military tactical truck to the Army’s National Training Center at Fort Irwin. Kilty had arrived at the base the night before his scheduled delivery, and he parked his tractor-trailer in the right lane of the road on Fort Irwin property. Kilty turned off the lights on the truck and, instead of putting out any safety triangle reflectors or turning on his hazard lights, he went to sleep in the berth of his truck – while the truck was still parked in the middle of the roadway.
Just after 5:00 a.m. on June 2, prior to sunrise, a Victor Valley Transit Authority bus transporting commuters to Fort Irwin collided with the parked truck. As a result of the collision, one man was killed and seven people suffered significant injuries, including an arm amputation.
The evidence presented at trial showed that Kilty was “grossly negligent” because his truck was blocking traffic on the roadway and he failed to place any warning reflectors, both of which are violations of the California Vehicle Code.
Kilty is scheduled to be sentenced by United States District Judge Jesus G. Bernal on January 7, at which time he will face a statutory maximum sentence of eight years in federal prison.
Kilty was indicted in this case in March 2016. He was initially tried in this matter in late 2017, but a jury was unable to reach a unanimous verdict, and a mistrial was declared.
This case was investigated by the Federal Bureau of Investigation, California Highway Patrol, the U.S. Army Criminal Investigation Command, and the Fort Irwin Police Department.
This matter was tried by Special Assistant United States Attorney Paul D. Levers and Assistant United States Attorney Jerry C. Yang of the Riverside Branch Office.
Bank Branch Manager and Bank Customer Convicted of Conspiracy to Commit Money Laundering at East West BankRead the Press Release
LOS ANGELES – A federal jury has returned guilty verdicts against an East West Bank branch manager and a bank customer who conspired to launder over $25,000 in cash by converting the currency into cashier’s checks.
Vivian Tat, 54, of Hacienda Heights, who is a vice president at East West Bank, as well as the manager of the San Gabriel branch, and Ruimin Zhao, 48, of Temple City, each were convicted Friday evening of one count of conspiring to commit money laundering. Additionally, Tat was convicted of two counts of causing a false statement in a bank record.
The guilty verdict were the result of a conspiracy in which Tat, Zhao and Zhao’s husband – Raymond Tan, 62, of Temple City – laundered cash through East West Bank’s San Gabriel branch.
The evidence presented during a week-long trial showed that Tat, Zhao and Tan led an informant into the bank’s conference room, where the informant provided $25,500 in cash that was then laundered into three “clean” cashier’s checks issued off of the account of a bank client.
However, what Tat, Zhao and Tan did not know was that the informant, working as part of a long-running money laundering investigation dubbed Operation “Phantom Bank,” was wearing a secret recording device. Throughout the transaction, Tat, Zhao and Tan made clear their knowledge that money laundering was illegal, but they nevertheless completed the transaction.
To cover their tracks, Tat facilitated false entries to be made in East West Bank’s records, which made it appear that this transaction was legitimate.
Tat and Zhao are scheduled to be sentenced by United States District Judge Otis D. Wright in February 2019, at which time each defendant will face up to 20 years in federal prison for the money laundering conspiracy. Additionally, Tat will face a statutory maximum sentence of 30 years in prison for each of the false statement charges.
Tan previously pleaded guilty to money laundering conspiracy and money laundering in this case and in two other cases brought as part of Operation Phantom Bank.
Six separate indictments arose out of Operation Phantom Bank. With the recent convictions of Tat and Zhao, a total of nine defendants have been convicted, and 16 defendants are pending trial.
This case is the result of an investigation by the Federal Bureau of Investigation, IRS Criminal Investigation, and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
The case against Tat and Zhao was tried by Assistant United States Attorneys Karen I. Meyer and Joseph D. Axelrad of the Violent and Organized Crime Section.
Pomona Woman Sentenced to Federal Prison in Scheme to Smuggle Restricted Space Communications Technology to ChinaRead the Press Release
SANTA ANA, California – A Chinese national who pleaded guilty to participating in a scheme that illegally exported sensitive space communications technology to China was sentenced today to serve 46 months in federal prison.
Si Chen, 33, a Pomona resident who has been in custody since her arrest in May 2017, was sentenced by United States District Judge Cormac J. Carney.
Chen, who used various aliases, included “Cathy Chen,” pleaded guilty in July to conspiracy to violate the International Emergency Economic Powers Act (IEEPA), which controls and restricts the export of certain goods and technology from the United States to foreign nations. Chen also pleaded guilty to money laundering and using a forged passport with her photo but a different name that appeared to have been issued by the People’s Republic of China.
“This defendant knowingly participated in a plot to secretly send items with military applications to China,” said United States Attorney Nick Hanna. “The smuggled items could be used in a number of damaging ways, including in equipment that could jam our satellite communications. We will aggressively target all persons who provide foreign agents with technology in violation of U.S. law.”
According to court documents, from March 2013 through the end of 2015, Chen purchased and smuggled sensitive items to China without obtaining licenses from the U.S. Department of Commerce that are required under IEEPA. Those items included components commonly used in military communications “jammers.” Additionally, Chen smuggled communications devices worth more than $100,000 that are commonly used in space communications applications. Chen falsely under-valued the items on the shipping paperwork to avoid arousing suspicion. Chen received payments for the illegally exported products through an account held at a bank in China by a family member.
Under IEEPA, it is crime to willfully export or attempt to export items that appear on the Commerce Control List without a license from the U.S. Department of Commerce. These are items authorities have determined could be detrimental to regional stability and national security.
“The export of sensitive technology items to China or anywhere else in the world is tightly regulated for good reason,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “One of HSI’s top enforcement priorities is preventing U.S. military products and sensitive technology from falling into the hands of those who might seek to harm America or its interests. We will continue to work closely with its law enforcement partners to aggressively target and investigate those who jeopardize our nation’s security – or the welfare of those devoted to protecting it.”
In addition to participating in the scheme to violate IEEPA, Chen used several aliases and a forged Chinese passport to conceal her smuggling activities. Chen used a Chinese passport bearing her photo and a false name – “Chunping Ji” – to rent an office in Pomona where she took delivery of the export-controlled items. After receiving the goods, Chen shipped the devices to Hong Kong, and from there the items were transshipped to China. The parcels shipped to Hong Kong bore her false name, along with false product descriptions and monetary values, all done in an effort to avoid attracting law enforcement scrutiny.
“Today’s sentencing is the result of outstanding collaborative investigative work by the Office of Export Enforcement and its law enforcement partners to prevent the illegal shipment of sophisticated U.S.-origin technology. We will continue to pursue violators wherever they may be,” said Richard Weir, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Los Angeles Field Office.
“Today’s sentencing of Chen demonstrates the Defense Criminal Investigative Service’s unwavering commitment to protect our country from those who would do harm,” said Chris Hendrickson, Special Agent in Charge, DCIS Western Field Office. “DCIS, along with our federal law enforcement partners, will relentlessly pursue those who put our military at risk by illegally exporting protected military assets and sensitive technology to bad actors.”
The investigation in this case was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the U.S. Department of Commerce’s Office of Export Enforcement, and the Defense Criminal Investigative Service.
The case against Chen is being prosecuted by Assistant United States Attorney Judith A. Heinz of the National Security Division.
Medicare Advantage Provider to Pay $270 Million to Settle False Claims Act LiabilitiesRead the Press Release
HealthCare Partners Holdings LLC, doing business as DaVita Medical Holdings LLC (DaVita), has agreed to pay $270 million to resolve its False Claims Act liability for providing inaccurate information that caused Medicare Advantage Plans to receive inflated Medicare payments, the Justice Department announced today. DaVita is headquartered in El Segundo, California.
“Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that managed care plans receive the appropriate compensation,” said Assistant Attorney General Joseph H. Hunt of the Department of Justice’s Civil Division. “We will pursue those who undermine the integrity of the Medicare program and the data it relies upon. This also illustrates that the Department encourages and incentivizes health care organizations to make voluntary disclosures to the government when they identify false claims.”
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in and obtaining health care from Medicare Advantage Plans (MA Plans) that are owned and operated by private Medicare Advantage Organizations (MAOs). Unlike traditional Medicare, where payments to health providers are based on the services they render to the patient, MA Plans are paid a fixed, monthly amount to provide health care to beneficiaries who enroll in their plans. To accommodate costs that may be associated with patients that require more care than an average patient, Medicare payments to MA plans are “risk adjusted” to reflect, in significant part, the health status of the beneficiary. The result is that MAO plans receive higher payments for patients who are diagnosed with conditions that require greater care.
To provide the patient care, MAOs may contract directly with physicians and other healthcare providers, or they may contract with Medical Services Organizations (MSOs), which in turn either employ or contract with healthcare providers. These health care providers then render the patient care and provide the diagnoses that MAOs submit, in turn, to Medicare to obtain the risk-adjusted payments from CMS.
DaVita operated an MSO and contracted with MAOs in various states, including California, Nevada, and Florida, to provide care to the MAOs’ enrolled Medicare beneficiaries. In connection with the medical services it provided to those beneficiaries, DaVita collected and submitted diagnoses to the MAOs. As payment for its services, DaVita received from the MAOs a share of the payments that the MAOs received from CMS for the beneficiaries under DaVita’s care.
DaVita voluntarily disclosed to the government various practices that were instituted by HealthCare Partners, a large California-based independent physician association that DaVita acquired in 2012, that caused MAOs to submit incorrect diagnosis codes to CMS and obtain inflated payments in which DaVita and HealthCare Partners shared. For example, HealthCare Partners disseminated improper medical coding guidance instructing its physicians to use an improper diagnosis code for a particular spinal condition that yielded increased reimbursement from CMS. Based on these self-disclosures, and DaVita’s cooperation with the government’s subsequent investigation, the United States agreed to a favorable resolution of potential claims arising from the conduct.
The settlement also resolves allegations made by a whistleblower that HealthCare Partners engaged in “one-way” chart reviews in which it scoured its patients’ medical records for diagnoses its providers may have failed to record. It then submitted these “missed” diagnoses to MAOs to be used by them in obtaining increased Medicare payments. At the same time, it ignored inaccurate diagnosis codes that should have been deleted and that would have decreased Medicare reimbursement or required the MAOs to repay money to Medicare.
“This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare,” said United States Attorney Nick Hanna. “This case involved illegal conduct in which patients’ medical conditions were improperly reported and were not corrected after further review – all for the purpose of boosting the bottom line. We will continue to pursue and hold accountable any entity that seeks to illegally increase revenue at the expense of the Medicare Advantage so that the program may continue to remain viable for all who need it.”
“DaVita’s alleged conduct was irresponsible and compromised the integrity of the Medicare program,” said Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Region. “HHS-OIG will continue to ensure that companies that do business with federally funded health care programs do so in an honest fashion.”
The allegations of “one way” chart reviews were brought in a lawsuit under the qui tam, or whistleblower, provisions of the Federal False Claims Act. This statute permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The whistleblower in this action is James Swoben, who was a former employee of an MAO that did business with DaVita. Mr. Swoben will receive $10,199,100 for the settlement of the “one way” allegations.
The corporate affiliates related to Health Care Partners and which are part of today’s settlement are: DaVita Medical Group Nevada (Coats), Ltd; DaVita Medical Group California, P.C.; DaVita Medical Group Associates California, Inc.; HealthCare Partners Affiliates Medical Group and its subsidiary medical groups; DaVita Medical Group ARTA Health Network California, P.C.; and DaVita Medical Group ARTA Western California, Inc.
The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorneys Office for the Central District of California, and HHS-OIG.
The claims resolved by the settlement are allegations only, and there has been no determination of liability. The case is captioned United States ex rel. Swoben v. Secure Horizons, et al., 09-5013 (C.D. Cal.).
Medicare Advantage Provider to Pay $270 Million to Settle False Claims Act LiabilitiesRead the Press Release
LOS ANGELES – HealthCare Partners Holdings LLC, doing business as DaVita Medical Holdings LLC, has agreed to pay $270 million to resolve its False Claims Act liability for providing inaccurate information that caused Medicare Advantage Plans to receive inflated Medicare payments, the Justice Department announced today. DaVita is headquartered in El Segundo.
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in and obtaining health care from Medicare Advantage Plans (MA Plans) that are owned and operated by private Medicare Advantage Organizations (MAOs). Unlike traditional Medicare, where payments to health providers are based on the services they render to the patient, MA Plans are paid a fixed, monthly amount to provide health care to beneficiaries who enroll in their plans. To accommodate costs that may be associated with patients that require more care than an average patient, Medicare payments to MA plans are “risk adjusted” to reflect, in significant part, the health status of the beneficiary. The result is that MAO plans receive higher payments for patients who are diagnosed with conditions that require greater care.
To provide the patient care, MAOs may contract directly with physicians and other healthcare providers, or they may contract with Medical Services Organizations (MSOs), which in turn either employ or contract with healthcare providers. These health care providers then render the patient care and provide the diagnoses that MAOs submit, in turn, to Medicare to obtain the risk-adjusted payments from CMS.
DaVita operated an MSO and contracted with MAOs in various states, including California, Nevada and Florida, to provide care to the MAOs’ enrolled Medicare beneficiaries. In connection with the medical services it provided to those beneficiaries, DaVita collected and submitted diagnoses to the MAOs. As payment for its services, DaVita received from the MAOs a share of the payments that the MAOs received from CMS for the beneficiaries under DaVita’s care.
DaVita voluntarily disclosed to the government various practices that were instituted by HealthCare Partners, a large California-based independent physician association that DaVita acquired in 2012, that caused MAOs to submit incorrect diagnosis codes to CMS and obtain inflated payments in which DaVita and HealthCare Partners shared. For example, HealthCare Partners disseminated improper medical coding guidance instructing its physicians to use an improper diagnosis code for a particular spinal condition that yielded increased reimbursement from CMS.
Based on these self-disclosures, and DaVita’s cooperation with the government’s subsequent investigation, the United States agreed to a favorable resolution of potential claims arising from the conduct.
“Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that managed care plans receive the appropriate compensation,” said Assistant Attorney General Joseph H. Hunt of the Department of Justice’s Civil Division. “We will pursue those who undermine the integrity of the Medicare program and the data it relies upon. This also illustrates that the Department encourages and incentivizes health care organizations to make voluntary disclosures to the government when they identify false claims.”
The settlement also resolves allegations made by a whistleblower that HealthCare Partners engaged in “one-way” chart reviews in which it scoured its patients’ medical records for diagnoses its providers may have failed to record. It then submitted these “missed” diagnoses to MAOs to be used by them in obtaining increased Medicare payments. At the same time, it ignored inaccurate diagnosis codes that should have been deleted and that would have decreased Medicare reimbursement or required the MAOs to repay money to Medicare.
“This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare,” said United States Attorney Nick Hanna. “This case involved illegal conduct in which patients’ medical conditions were improperly reported and were not corrected after further review – all for the purpose of boosting the bottom line. We will continue to pursue and hold accountable any entity that seeks to illegally increase revenue at the expense of the Medicare Advantage so that the program may continue to remain viable for all who need it.”
The allegations of “one-way” chart reviews were brought in a lawsuit under the qui tam, or whistleblower, provisions of the Federal False Claims Act. This statute permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The whistleblower in this action is James Swoben, who was a former employee of an MAO that did business with DaVita. Mr. Swoben will receive $10,199,100 for the settlement of the “one-way” allegations. The case is captioned United States ex rel. Swoben v. Secure Horizons, et al., CV09-5013 (C.D. Cal.).
The corporate affiliates related to Health Care Partners and which are part of today’s settlement are DaVita Medical Group Nevada (Coats), Ltd; DaVita Medical Group California, P.C.; DaVita Medical Group Associates California, Inc.; HealthCare Partners Affiliates Medical Group and its subsidiary medical groups; DaVita Medical Group ARTA Health Network California, P.C.; and DaVita Medical Group ARTA Western California, Inc.
This settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorneys’ Office for the Central District of California, and HHS-OIG.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Los Angeles Attorney Arrested on Bank Fraud Charge for Allegedly Depositing Stolen Tax Refund Check Worth over $1 MillionRead the Press Release
LOS ANGELES – Federal tax authorities this morning arrested an attorney on bank fraud charges for allegedly depositing a stolen U.S. Treasury check for just over $1 million.
Thaddeus Julian Culpepper, 44, of South Los Angeles, was arrested this morning at his residence without incident by special agents with the Treasury Inspector General for Tax Administration (TIGTA).
Culpepper is named in a criminal complaint filed on September 27 that charges him with one count of bank fraud. The affidavit in support of the criminal complaint alleges that Culpepper deposited 21 stolen tax refund checks worth more than $1.3 million into several attorney client trust accounts.
In relation to one check for more than $1 million that he deposited into one of his client trust accounts, Culpepper allegedly told a bank representative that the payees were clients and had endorsed the check to him. Investigators have determined that Culpepper personally deposited the $1,003,814 check at a Well Fargo Bank branch in Pasadena in August 2017. “The listed payees, however, have confirmed that they never received their tax refund check, and that they do not know Culpepper,” according to the affidavit.
The affidavit outlines 20 other checks that were deposited into client trust accounts that Culpepper opened at Chase Bank and Citibank. Investigators believe that the 21 checks deposited into Culpepper’s client trust accounts were stolen from the U.S. Mail.
Culpepper is expected to make his initial court appearance in this case this afternoon in United States District Court in downtown Los Angeles.
A complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The bank fraud charge alleged in the complaint carries a statutory maximum sentence of 30 years in federal prison.
The case against Culpepper is being investigated by TIGTA.
This matter is being prosecuted by Assistant United States Attorney Veronica Dragalin of the Public Corruption and Civil Rights Section.
Santa Ana Man Indicted on Federal Drug Trafficking Charges that Allege Possession of Methamphetamine, Heroin and FentanylRead the Press Release
SANTA ANA, California – A federal grand jury today returned an indictment that charges a Santa Ana man with possessing significant quantities of narcotics – including the extremely potent synthetic opioid fentanyl – that he intended to distribute.
Guillermo Ernesto Sanchez Hermosillo, 41, of Santa Ana, who is currently in custody in an Orange County jail on state charges, was named in a five-count indictment.
After receiving information that Hermosillo was engaging in drug-trafficking activities, officers with the Huntington Beach Police Department and an ATF special agent went to Hermosillo’s apartment on July 31 to conduct a probation compliance check. Hermosillo was on probation after sustaining a conviction in a domestic violence case in March.
Inside a closet in a bedroom, the law enforcement officers discovered 2,722 grams of methamphetamine, 1,992 grams of heroin, and 891 grams of fentanyl. At the time of the search, there were three minors in the apartment, including a 3-week-old baby.
In addition to the narcotics that were wrapped in plastic, authorities seized a .45-caliber Glock handgun and eight rounds of ammunition.
Hermosillo was taken into local custody following the discovery of the narcotics and the firearm.
Today’s indictment charges Hermosillo with possession with intent to distribute methamphetamine, possession with intent to distribute heroin, possession with intent to distribute fentanyl, possession of a firearm in furtherance of a drug trafficking crime, and being a prohibited person in possession of a firearm and ammunition.
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.
Because of the quantities of narcotics involved, each of the three drug-trafficking charges carries a mandatory minimum sentence of 10 years in federal prison, and a potential life sentence. The charge of possessing a firearm in furtherance of a drug-trafficking crime carries a mandatory, five-year consecutive sentence to any sentence imposed for the narcotics offenses. The charge of being a prohibited person in possession of a firearm carries a maximum possible penalty of 10 years in prison.
This case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Huntington Beach Police Department.
This matter is being prosecuted by Assistant United States Attorney Anne C. Gannon of the Santa Ana Branch Office.
Four Inmates Charged with First-Degree Murder in Beating Death of Fellow Inmate at Federal Prison in VictorvilleRead the Press Release
SANTA ANA, California – An indictment unsealed today charges four prison inmates with first-degree murder in the beating death of another inmate at the Federal Correctional Institution II in Victorville, an offense that carries a potential death sentence.
In addition to the premeditated murder charge, all four defendants are charged with conspiracy to commit murder.
The indictment unsealed today was returned by a federal grand jury on August 29. The four defendants are accused in the October 1, 2013 killing of a 38-year-old inmate identified in the indictment as “J.S.,” who was repeatedly hit and kicked, dying as a result of blunt force head trauma.
The defendants charged in the indictment are:
- Aurelio Patino, also known as “Augie,” 35, most recently of Riverside, who at the time of the alleged murder was serving a 16-month sentence for being a felon in possession of a firearm and ammunition, and who is currently serving a 100-month sentence in a California state prison;
- Adilson Reyes, aka “Shanky,” 37, most recently of Los Angeles, who is serving a 135-month sentence in a cocaine distribution case;
- Christopher Ruiz, aka “Sneaky,” 44, most recently of San Diego, who is serving a 10-year sentence after being convicted on racketeering and methamphetamine charges; and
- Jose Villegas, aka “Torch,” 37, most recently of Los Angeles, who is serving a 15-year sentence in a methamphetamine case.
All four defendants are currently being housed in different prisons and in the near future will be brought to the Central District of California for arraignments in United States District Court.
According to the indictment, J.S. was escorted to the recreation yard in the prison, where he was attacked. Patino, Ruiz and Villegas allegedly used their hands and feet to strike J.S. When Reyes was informed that J.S. was no longer breathing, he instructed the other three defendants to continue beating J.S., the indictment alleges.
The indictment contains allegations that all four defendants participated in the attack, intentionally killed J.S., and “[c]omitted the offense in an especially heinous, cruel, or depraved manner in that it involved torture or serious physical abuse to the victim.”
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 they were to be convicted of the first-degree murder charge in the indictment, each defendant would face a mandatory sentence of life without parole in federal prison or, potentially, the death penalty.
This case was investigated by the Federal Bureau of Investigation.
Inland Empire Man Surrenders to Face Charges of Filing Bankruptcy Petitions after Being Order to Stop and Found in Contempt of CourtRead the Press Release
RIVERSIDE, California – An Ontario man who worked as a bankruptcy petition preparer (BPP) surrendered this morning to federal authorities to face criminal charges of lying to the United States Bankruptcy Court about his role in preparing petitions under assumed names and overcharging his clients – actions he took after repeatedly being ordered to cease his activities.
Hernan Martin Rojas, 49, who operated H.M.R. & Associates in Ontario, surrendered to special agents with the FBI after being named in an indictment returned on September 19 by a federal grand jury.
The indictment charges Rojas with four counts of making false statements in Bankruptcy Court. Rojas allegedly filed Bankruptcy petitions on behalf of clients from 2016 through this year that failed to disclose that he was the BPP. The filed documents falsely declared, under penalty of perjury, that another person had prepared the paperwork and that the clients were charged a legally permissible $200, when in fact Rojas had charged the clients substantially more, according to the indictment.
Rojas was found in contempt of court in 2013 for failing to abide by a 2012 injunction that prohibited him from acting as a BPP. As the contempt motion brought by the United States Trustee’s Office pointed out, Rojas had actually violated two prior injunctions issued by Bankruptcy Court judges.
Rojas is expected to be arraigned on the indictment this afternoon in United States District Court in Riverside.
An indictment contains allegations, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
If convicted of the charges in the indictment, Rojas would face a statutory maximum sentence of five years in federal prison for each count.
The case was investigated by the Federal Bureau of Investigation, which received substantial assistance from the Office of the United States Trustee.
This case is being prosecuted by Assistant United States Attorney Jerry C. Yang of the Riverside Branch Office.
Owner of Los Angeles-Area Clothing Outlets Pleads Guilty and Admits Failing to Report $3.7 Million in Income to the Internal Revenue ServiceRead the Press Release
LOS ANGELES – A Downey man who operates second-hand clothing stores across the Los Angeles area pleaded guilty today to failing to report $3.7 million in corporate income to the Internal Revenue Service.
Jose Martin Andrade Flores, 53, the owner and operator of American Superior Used Clothing, Inc., pleaded guilty this afternoon to subscribing to a false corporate tax return for the 2013 tax year.
According to a plea agreement filed in this case, American Superior was in the business of recycling used clothing, which it then resold at retail stores located on Melrose Boulevard and in Hollywood, Echo Park and Pasadena. The company also engaged in bulk wholesale transactions with buyers worldwide, as well as selling merchandise at Rose Bowl swap meets and sidewalk locations in East Los Angeles.
From 2012 through 2016, Flores concealed from his corporate tax preparer cash sales and deposits into foreign bank accounts that were made on behalf of American Superior. As a result, Flores admitted in court, the tax returns he filed for American Superior for those five years failed to report a total of $3,766,473 in income to the IRS.
At today’s hearing, Flores specifically pleaded guilty to subscribing to a false corporation income tax return (Form 1120) that he filed for American Superior for 2013. In that year, American Superior had income of approximately $3,440,769, but Flores instead reported only $2,505,183, omitting income of $935,586.
Flores pleaded guilty before United States District Judge Christina A. Snyder, who scheduled a sentencing hearing for December 3. As a result of today’s guilty plea, Flores faces a statutory maximum sentence of three years in federal prison.
As part of this case, Flores agreed to pay all back taxes, interest and penalties associated with his willful failure to accurately report American Superior’s income. Flores has paid the IRS $1,189,331, which includes $439,632 in penalties.
This case was investigated by IRS Criminal Investigation.
This matter is being prosecuted by Assistant United States Attorney Ranee Katzenstein, Chief of the Major Frauds Section.
Three Inland Empire Residents Indicted for Distributing Nearly 26,000 Pills Containing Carfentanil, an Extremely Powerful Synthetic OpioidRead the Press Release
RIVERSIDE, California – A federal grand jury has indicted three people allegedly involved with a local drug-trafficking organization on charges related to the distribution of carfentanil, a powerful fentanyl analogue that is sometimes used to sedate elephants and other large animals.
The indictment filed Wednesday alleges that Alejandra Romero-Agredano, 49, of Fontana; Jorge Martin 27, also of Fontana; and Jose Jesus Camacho-Martinez, 32, of Downey, participated in a drug ring that distributed nearly 26,000 carfentanil pills to undercover agents with the Drug Enforcement Administration agents over a four-month period.
According to the indictment, Romero-Agredano coordinated the distribution of carfentanil, which is many times more potent than fentanyl and heroin.
Earlier this year, undercover agents negotiated delivery of the pills with a Mexican-based co-conspirator. Romero-Agredano, working with Camacho-Martinez and Martin, then delivered three separate shipments each containing thousands of carfentanil pills to undercover DEA agents in the Inland Empire.
This is the first federal carfentanil distribution case charged in the Central District of California.
The three defendants were arrested by the DEA on September 7 pursuant to a criminal complaint. The following week, Romero-Agredano was released on a $300,000 bond, and both Camacho-Martinez and Martin were ordered detained without bond.
The indictment charges all three defendants with conspiracy to distribute and possess with the intent to distribute and controlled substance. Romero-Agredano is additionally charged in three counts that allege the distribution of carfentanil, while Camacho-Martinez and Martin are each charged in one substantive distribution count.
Romero-Agredano will be arraigned on October 3. Camacho-Martinez will be arraigned on October 11. Martin will be arraigned on September 26.
An indictment is merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
If convicted of the charges in the indictment, each defendant will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment.
The case was investigated by special agents with the Drug Enforcement Administration, who received substantial assistance from the Fontana Police Department and the Ontario Police Department.
This case is being prosecuted by Assistant United States Attorney Jerry C. Yang of the Riverside Branch Office.
Six People Linked to Santa Fe Springs Street Gang Have Been Convicted of Federal Racketeering and Drug Trafficking OffensesRead the Press Release
LOS ANGELES – Six members of the Canta Ranas Organization (CRO) – a violent, Mexican Mafia-affiliated criminal enterprise composed of members and associates of the Canta Ranas street gang – have been convicted of numerous federal offenses, including participating in a racketeering scheme.
The six defendants linked to Canta Ranas, a gang that operates primarily in Santa Fe Springs and Whittier, each were found guilty of being part of a conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act. The convictions came in two jury trials, the second of which ended this week.
“This dangerous organization caused misery in several communities by regularly engaging in acts of violence, drug trafficking and other criminal acts,” said United States Attorney Nick Hanna. “These convictions are part a larger case that illustrates our dedication to improve our communities by combating the mayhem caused by violent criminal gangs. I am grateful to our law enforcement partners, including local police agencies like the Whittier Police Department, who make it possible for us to bring significant criminal cases that reduce the negative impacts caused by groups like the Mexican Mafia.”
After three weeks of testimony, the first trial concluded on August 27 with three CRO members being found guilty of various federal offenses, including violating the RICO Act. The defendants found guilty by the federal jury were:
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Enrique Holguin, also known as “Boxer,” 56, a senior member of the Canta Ranas gang, who was shown to have been in direct communication with the leader of the CRO – Mexican Mafia member David Gavaldon, who is currently serving a life sentence in state prison after being convicted of murder. Prosecutors argued that Holguin played a key role in the CRO, which included acting on behalf of Gavaldon to set up a “mesa” – an ad hoc commission of Mexican Mafia-affiliated inmates designed to control illegal activities – inside the California Institute for Men in Chino. In addition to the RICO conspiracy count, the jury also convicted Holguin of committing a violent act in aid of racketeering (VICAR) for his role in the attempted assault of a fellow inmate at the federal Metropolitan Detention Center in downtown because the intended target was perceived to be an informant for law enforcement authorities.
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Donald Goulet, also known as “Wacky,” 31, was a foot soldier involved in drug trafficking, collecting extortionate “taxes,” and committing violent crimes on behalf of Gavaldon and the CRO. At trial, prosecutors presented evidence that Goulet was also tasked with helping Gavaldon to expand the CRO’s territory into Riverside. Prosecutors also presented evidence of 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. The federal jury convicted Goulet of participating in the RICO conspiracy, conspiracy to distribute methamphetamine, and conspiracy to commit money laundering.
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Emanuel Higuera, also known as “Blanco,” 33 – who was a member of the Brown Brotherhood, another gang controlled by Gavaldon – was found guilty of trafficking drugs on behalf of the CRO. In addition to the RICO conspiracy, Higuera was found guilty of methamphetamine-related offenses, one of which involved Higuera attempting to assault law enforcement officers.
On the second day of the August trial, a fourth defendant, Juan Nila, 25, pleaded guilty to his involvement in the RICO conspiracy and drug trafficking conspiracy.
The second trial concluded on Tuesday after a jury heard testimony for one week. After only two hours of deliberations, the jury convicted two more members of the CRO on charges of conspiracy to violate RICO, conspiracy to distribute methamphetamine, and conspiracy to commit money laundering. The two defendants found guilty were:
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Monica Rodriguez, also known as “Smiley,” 40, one of Gavaldon’s “secretaries,” who passed gang-related messages between Gavaldon and gang members, and generally acted as Gavaldon’s eyes and ears on the street. During the trial, the jury saw a video of a meeting between Rodriguez and Gavaldon, who at the time was being housed in Pelican Bay State Prison, in which Rodriguez asked Gavaldon to order the death of another member of the organization.
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Alexis Jaimez, also known as “Lex,” 30, another CRO “foot soldier,” who was involved in a failed scheme to smuggle drugs into a California state prison. The evidence presented at the trial also showed that that Jaimez was involved in a gang-related assault that resulted in severe, permanent injuries to the victim.
As a result of these convictions, all six defendants face a statutory maximum penalty of life in federal prison. Additionally, Goulet, Higuera, Rodriguez, and Jaimez face mandatory minimum prison terms of 10 years, while Nila faces a mandatory minimum prison term of five years. United States District Judge R. Gary Klausner is scheduled to sentence these defendants later this year.
These two trials arise from a federal grand jury indictment charging 48 defendants that was the result of Operation “Frog Legs.” With the recent convictions and guilty pleas from several other defendants, 38 defendants remain scheduled to go to trial in groups beginning in November.
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 the two recent trials were Assistant United States Attorneys Carol Alexis Chen, Jamie A. Lang, Victoria A. Degtyareva, Kathy Yu, and Chelsea Norell, who are all members of the Organized Crime Drug Enforcement Task Force.
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Federal Court Shuts Down Pasadena-Based Tax Return Preparer after Finding that Her Fraudulent Returns Cost the IRS Millions of DollarsRead the Press Release
LOS ANGELES – A federal court has issued an order that permanently bars a tax return preparer who operated offices in Pasadena – as well as other cities in California, Colorado and Kansas – from preparing federal income tax returns, United States Attorney Nick Hanna announced today.
Maria Del Consuelo Vazquez is the subject of a permanent injunction filed Monday by United States District Judge Fernando M. Olguin. In Monday’s order, Judge Olguin also prohibited Vazquez from owning a tax return preparation business.
Vasquez operated tax preparation business in Pasadena; Corona; Santa Ana; Brighton, Colorado; and Hutchinson, Kansas under a Nevada corporation she called MCV Business Network, Inc. In recent years, Vazquez filed thousands of tax returns for clients under her IRS-issued Preparer Tax Identification Number (PTIN).
According to a lawsuit filed by federal prosecutors on July 13 and testimony presented to the court, Vazquez substantially inflated or completely fabricated charitable contributions and unreimbursed employee business expenses to illegally generate federal income tax refunds for her clients or to substantially understate clients’ tax liabilities.
“Vazquez prepared and filed a total of 9,216 tax returns from January 1, 2015 to May 21, 2018 with her PTIN,” Judge Olguin wrote. “Based on the average deficiency of $2,830.29 from her audited returns, that suggests Vazquez’s fraudulent returns have resulted in harm of over $26 million to the United States from January 1, 2015 to present.”
This case against Vazquez was handled by Assistant United States Attorney Melissa Briggs of the Tax Division.
On its website, the IRS has ten tips for choosing a tax preparer. Each year, the IRS releases the top 12 scams, known as the Dirty Dozen. Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2018, and taxpayers seeking a return preparer should remain vigilant. The IRS has published information on choosing a return preparer and has launched a free directory of federal tax preparers.
Over the past decade, the Justice Department has obtained injunctions against hundreds of unscrupulous tax preparers and has published an alphabetical listing of persons enjoined from preparing returns and promoting tax schemes. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division at [email protected] with details.
Beverly Hills Plastic Surgeon Sentenced to Year in Federal Prison for Concealing Offshore Bank Account from Federal OfficialsRead the Press Release
LOS ANGELES – A Beverly Hills plastic surgeon was sentenced today to one year and one day in federal prison for failing to disclose to federal authorities a foreign bank account in which he deposited some of the nearly $1.3 million he earned while working in Dubai.
Marc Edward Mani, 50, was sentenced by United States District Judge R. Gary Klausner.
Mani pleaded guilty In July 2017 to one count of failing to file a foreign bank and financial account report (FBAR) for the 2013 tax year. When he pleaded guilty, Mani admitted failing to file FBARs with the Treasury Department for both the 2012 and 2013 tax years. He also admitted that he failed to report on his federal income tax returns the vast majority of the approximately $1.28 million in foreign income he earned in Dubai for the years 2012, 2013 and 2014.
Mani began to travel to Dubai in 2011 to perform plastic surgery for a foreign medical center. Mani’s accountant, who was aware that Mani was earning foreign income, informed him that he would be required to report to U.S. authorities any foreign bank accounts under his control. In 2012, Mani opened an account with a Dubai-based bank and began depositing income he earned from abroad into this account. He liquidated the account in 2013, when it held more than $400,000 in foreign currency.
United States citizens who have an interest in or authority over a financial account in a foreign country with assets over $10,000 are required to disclose and report the foreign financial account to the United States Department of Treasury for each year the financial account exists.
This case is the product of an investigation by IRS Criminal Investigation.
The case was prosecuted by Assistant United States Attorney James C. Hughes of the Tax Division.
New York Man Convicted of Federal Fraud Charges Related to Multi-Million Dollar Pyramid Scheme that Targeted Chinese-AmericansRead the Press Release
LOS ANGELES – A federal jury has returned guilty verdicts against a New York man who was a high-level promoter of a fraudulent company that solicited more than $200 million for a company that purported to market web-based children’s educational courses, but in reality was nothing more than a pyramid scheme.
Daliang “David” Guo, 55, of Hyde Park, New York, was convicted Thursday afternoon of conspiracy and nine counts of wire fraud for participating in the scheme that solicited investments primarily from members of Chinese-American communities in Los Angeles, San Francisco and New York City.
Guo and other members of the conspiracy made false representations about the company – known as CKB 168, but also sometimes known as CKBMax and Cyber Kids Best Education Limited – including claiming that it generated substantial revenues from the sale of courses, that investments could be quickly liquidated for significant returns, that investors would get pre-IPO shares of CKB, and that the company would go public through an IPO. The evidence presented at trial showed that, in reality, the only way for investors to earn any meaningful returns was for them to actively recruit new investors.
Guo and his co-conspirators promoted CKB through YouTube videos and other postings on the internet, as well as through meetings with prospective investors and live presentations about the purported investment opportunity.
Four other defendants charged in this case previously pleaded guilty and are pending sentencing. They are:
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Cheong Wha “Heywood” Chang, 50, formerly of Hacienda Heights;
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Chang’s wife, Toni Chen, 49;
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Wen Chen “Wendy” Lee, 56, formerly of Rowland Heights; and
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Chih Hsuan “Kiki” Lin, 53, formerly of Los Angeles and Las Vegas.
During the course of the scheme, which ran from mid-2011 until January 2014, Guo and his co-conspirators solicited investments in increments of $1,380, which gave investors “Profit Reward Points” they claimed were worth $750 in cash, would only increase in value, and could be converted to pre-IPO shares of CKB. Guo and his co-conspirators collected money from new investors and simply pocketed the cash to pay themselves the “commission” they earned from CKB, and lulled investors by providing them with essentially worthless Profit Reward Points.
Guo and his group of promoters collected approximately $142 million out of the more than $200 million raised by CKB from investors.
Guo is scheduled to be sentenced by United States District Judge Dale S. Fischer on January 14, 2019, at which time he will face a statutory maximum sentence of five years in federal prison for the conspiracy count and up to 20 years in prison for each of the wire fraud charges.
This case is the result of an investigation by the Federal Bureau of Investigation.
The Securities and Exchange Commission provided valuable assistance.
The case against Guo was tried by Assistant United States Attorneys Jill Feeney and Ann C. Kim of the Major Frauds Section.
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Indictment Targeting Massive International Cocaine Conspiracy Unsealed with Arrival in U.S. of Extradited Colombian KingpinRead the Press Release
LOS ANGELES – A high-level member of a global drug ring arrived in Southern California last night after being extradited from Colombia on charges that he conspired to transport cocaine worth hundreds of millions of dollars from South America to Mexico for eventual sale in the United States. The extradition resulted from a coordinated, international law enforcement operation that has led to arrests of co-conspirators on three continents.
In conjunction with the extradition, federal authorities on Thursday arrested seven defendants named in a 22-count indictment that outlines how the organization obtained ton-quantities of cocaine manufactured in South American labs; used airplanes, submarines and “go-fast” boats to move the narcotics to Mexico; and then used various means to smuggle the loads across the U.S.-Mexico border, with significant quantities of cocaine being delivered to and subsequently sold in the Los Angeles area.
In addition to the extradition of Victor Hugo Cuellar-Silva last night and yesterday’s arrests of codefendants in California and Massachusetts, six other defendants are pending extradition after being previously taken into custody in Colombia and Thailand. Authorities continue to work to secure the arrests of a number of fugitives, including Angel Humberto Chavez-Gastelum, the alleged ringleader of the international trafficking ring, who is believed to be in Mexico.
The indictment, which was unsealed yesterday, is unique in charging high-level traffickers across the entire drug-distribution supply chain – from Colombia-based supply sources, to Mexico-based investors and transportation coordinators, to U.S.-based stash-house operators and distributors.
Cuellar-Silva is alleged to have been the organization’s top representative in Colombia, where he oversaw operations for Chavez-Gastelum, a Mexican national who has been designated by the U.S. government as one of the world’s most-wanted drug traffickers. Chavez-Gastelum’s drug distribution network controlled its own supply routes from Colombia to Central America, and from Mexico to the United States. Chavez-Gastelum’s criminal organization was also responsible for at least two killings, with one victim’s torture and dismemberment captured on a video that has been obtained by law enforcement authorities.
“This drug ring has spread death and misery across the Americas and to other parts of the world, which makes this case among the most significant drug trafficking cases ever brought in this district,” said United States Attorney Nick Hanna. “We are deeply grateful to the government of Colombia for helping us bring one of the key defendants to justice. Prosecutors in my office are united with our domestic and foreign partners in the fight against drug trafficking. This case shows that law enforcement will apply all of its resources to dismantle international criminal organizations that terrorize communities both here and abroad.”
Over the course of a three-year investigation into the organization, law enforcement authorities around the world seized approximately 7,700 pounds of cocaine, with a potential U.S. street value of $500 million. Significant seizures during the investigation included:
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approximately 1,329 kilograms of cocaine recovered when a plane that departed from Venezuela crashed into the Caribbean Sea;
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approximately 833 kilograms of cocaine contained in bales floating off the coast of Tumaco, Colombia;
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more than 700 kilograms of cocaine and over 30 kilograms of methamphetamine seized from a Tijuana stash house;
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approximately 80 kilograms of cocaine seized during two operations in Azusa;
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nearly 50 kilograms of cocaine and one-half pound of methamphetamine seized in Montebello; and
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approximately 8 kilograms of cocaine, $125,000 in cash, and a firearm seized in North Hollywood.
“This organization is responsible for the manufacture and cross-continent distribution of exorbitant amounts of cocaine, a complex money laundering conspiracy, and a myriad of violent crimes to include murder,” said DEA Associate Special Agent in Charge Daniel Comeaux. “The indictment, arrests and extradition demonstrate the international reach of the Southern California Drug Task Force, and we will continue to work with our U.S. and international law enforcement partners to bring transnational criminal organizations to justice.”
“This extradition serves as a stern warning to other fugitives who think they can evade U.S. law enforcement by hiding out in another country,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations Los Angeles. “I commend the government of Colombia and all of our foreign and domestic law enforcement partners for their hard work. Their support was instrumental in our joint effort to dismantle international criminal organization's ability to bring dangerous drugs into our communities and ensure the perpetrators of such attempts are brought to justice."
Cuellar-Silva is expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.
During Thursday’s law enforcement operation, authorities arrested seven defendants named in the indictment. They are:
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Hugo Atienzo, 55, of Azusa;
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Juan Antonio Brizuela, 29, of Lompoc;
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Richard Dennis, 54, of Studio City;
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Gerardo Mojarro, 42, of South Gate;
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Jesus Manuel Monrreal, 33, of Van Nuys;
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Jonathan Zamora, 28, of Cerritos; and
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Amparo Yokasta Melo Peguero, 44, who was arrested in her hometown of Boston.
The six defendants arrested Thursday in Southern California were arraigned on the indictment Thursday afternoon, which each entering not guilty pleas. A trial date was scheduled for November 13.
Chavez-Gastelum, Cuellar-Silva, and three other defendants are charged with participating in a continuing criminal enterprise. If they were to be convicted of just this charge, Chavez-Gastelum would face a mandatory life sentence because he is accused of being the principal manager of the enterprise, and the other four would face mandatory minimum sentences of 20 years in federal prison.
In addition to the continuing criminal enterprise and the related allegations of two murders, the indictment alleges a series of drug trafficking, firearms, and money laundering offenses. All of the defendants named in this case, if convicted, would face decades in federal prison due to the amount of narcotics involved in the case.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
This investigation previously resulted in the extradition from Colombia to Los Angeles of two other drug kingpins who allegedly were responsible for orchestrating cocaine shipments by aircraft from Colombia to Mexico in conjunction with Chavez-Gastelum’s organization. Those two defendants previously extradited to the United States are both pending sentencing.
The investigation into this narcotics trafficking organization is being conducted by special agents with the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and IRS Criminal Investigation, which received substantial assistance from the Colombian, Dutch, Aruban and Thai governments. The investigation is being conducted under the auspices of the Southern California Drug Task Force and the High Intensity Drug Trafficking Area Task Force.
A number of law enforcement agencies provided substantial assistance during the investigation, including the United States Marshals Service, the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the Whittier Police Department and the Colton Police Department.
This case is being prosecuted by Assistant United States Attorneys Carol Alexis Chen, Benjamin Barron, Ryan Weinstein, and Alexander Schwab of the Organized Crime Drug Enforcement Task Force.
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Ventura Man Arrested on Federal Child Exploitation CrimesRead the Press Release
LOS ANGELES – A former music teacher who contracted with a number of school districts in Southern California was arrested today pursuant to a federal grand jury indictment that alleges multiple crimes against children, including the production of child pornography.
John Edward Zeretzke, 60, of Ventura, was arrested late this morning without incident by the United States Postal Inspection Service and the Los Angeles County Sheriff’s Department. Zeretzke is expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.
The five-count indictment alleges that Zeretzke coerced a female minor to produce child pornography, that he attempted to entice another victim to send him sexually explicit images, that he traveled to the Philippines with the intent to engage in illicit sexual conduct with other minor victims, and that he twice received child pornography over the internet.
None of the victims in this case are located in Southern California.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
If convicted of the charges in the indictment, Zeretzke would face a statutory maximum penalty of life in federal prison. He also would face mandatory minimum sentences for several of the offenses, including a mandatory 15-year prison for the offense of producing child pornography.
This case is being investigated by the United States Postal Inspection Service and the Los Angeles Sheriff’s Department, Special Victims Bureau.
This matter is being prosecuted by Assistant United States Attorney Justin Rhoades, Chief of the Violent and Organized Crime Section.
Two More Key Players in Ring that Conducted Series of Jewelry Store Armed Robberies Receive Lengthy Federal Prison SentencesRead the Press Release
SANTA ANA, California – Two key figures in a ring that conducted a string of violent smash-and-grab robberies at Southland jewelry stores that resulted in the theft of approximately $6 million worth of high-end watches each have been sentenced to over two decades in federal prison.
Jameson Laforest, 26, of Inglewood, who participated in the scheme for nearly two years, was sentenced on Friday to 22 years and 8 months in prison. The evidence at trial proved that Laforest was involved in three of the jewelry store robberies – at Prestige Jewelers in Manhattan Beach, Westime in West Hollywood, and Ben Bridge Jewelers in the Del Amo Fashion Center. Among participants in the robberies, Laforest’s “role was the most wide-ranging,” prosecutors argued in court, pointing out that he was on the two-member robbery team that carried out a smash-and-grab robbery at Prestige Jewelers and then took on a more senior role in the robberies that followed, including recruiting other participants, scouting locations, distributing supplies for the robbers to carry into the stores, and receiving the stolen merchandise after the robbery.
Robert Wesley Johnson, 29, of Inglewood, who prosecutors said in court papers “played a critical leadership and organizational role in the robbery conspiracy,” was sentenced on Friday to 22 years in prison. Johnson recruited robbers and scouted the jewelry stores, and he supplied the firearms, hammers, backpacks and other tools used in the robberies.
Laforest and Johnson, both members of the Inglewood Family Gangster Bloods, were sentenced by United States District Judge Cormac J. Carney, who presided over a five-week trial last year that led to the conviction of four men.
The sentencings of Johnson and Laforest follow last month’s sentencing of the robbery crew’s leader, Keith Marvel Walton, who was ordered to serve 55 years in federal prison. Johnson and Laforest were two of Walton’s top lieutenants.
The fourth defendant found guilty at last year’s trial, Evan Scott, who was a gunman in two of the robberies and pepper sprayed an employee in a third robbery, is expected to be sentenced by Judge Carney later this year.
During last year’s trial, a federal jury convicted the four defendants of planning and, in some cases, actively participating in the robberies, as well as brandishing a firearm during the heists.
Another 15 defendants, each of whom was involved in at least one of the smash-and-grab robberies, have pleaded guilty. One of those men who pleaded guilty, Stanley Ford, 49, of Lancaster, was sentenced in July to 25 years in prison for participating in five of the robberies.
The conspiracy was responsible for 14 robberies or attempted robberies between early August 2014 and April 2016. One heist at a store in the busy Westfield Century City mall netted more than $1.6 million in watches and involved one of the robbers firing a warning shot from a rifle after a security guard tried to secure the store doors. Members of the conspiracy stole watches and other jewelry that were cumulatively worth approximately $6 million.
“These robberies were dangerous and violent – the precise reason they were successful,” prosecutors wrote in court papers. “The stunning show of force and intimidation prevented employees and customers from resisting, as they feared for their lives if they attempted to do so.”
Members of the conspiracy selected jewelry stores based on their inventory of expensive watches, including those manufactured by Rolex, Audemar Piguet and TAG Heuer. Walton and other organizers, including Laforest and Johnson, recruited financially desperate young men to perform the robberies, often by promising large sums of money if they were successful. The organizers planned the details of the robberies, including selecting the display cases to be smashed and providing the firearms, tools, disguises and stolen cars that were used in the robberies.
The investigation into the robbery ring was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Los Angeles County Sheriff's Department.
The prosecutors handing this matter are Assistant United States Attorneys Scott D. Tenley of the Santa Ana Branch Office, Jeffrey M. Chemerinsky of the Violent and Organized Crime Section, and Julia L. Reese of the Criminal Appeals Section.
High Desert Man Sentenced to 5 Years in Federal Prison for Lighting Fire in Oasis of Mara in Joshua Tree National ParkRead the Press Release
LOS ANGELES – A Twentynine Palms man today received a statutory maximum sentence of 60 months in federal prison for illegally starting a fire in the Oasis of Mara in Joshua Tree National Park, which damaged historic trees and other resources earlier this year.
George William Graham, 26, was sentenced by United States District Judge Manuel L. Real. In addition to the five-year prison sentence, Judge Real ordered Graham to pay $21,019 in restitution to the National Park Service.
Graham pleaded guilty in June to a felony charge of unlawfully setting a fire (technically known as timber set afire). Graham specifically admitted in the plea agreement that he started the March 26 fire by igniting a palm frond with a handheld lighter, and “[t]he fire eventually grew to approximately 9,989 square feet, and destroyed numerous grasses, bushes, palm trees, vegetation, and other items of significance within the Oasis of Mara.” Seven California fan palms and scores of other plants were essentially destroyed in the blaze.
National Park Service Law Enforcement Rangers arrested Graham at the scene of the fire after he was observed watching the blaze.
When he started the fire in Joshua Tree National Park, Graham already had two prior arson convictions for which he received sentences of four years in state prison. Graham was still on parole for one of those convictions at the time.
The investigation in this case was conducted by the National Park Service, with assistance from the United States Bureau of Land Management, the San Bernardino Sheriff’s Department, and the San Bernardino County Fire Department.
The sentencing in this case was handled by Assistant United States Attorneys Carolyn Small of the General Crimes Section and Julia L. Reese of the Criminal Appeals Section.
Canadian Man Sentenced to over 11 Years in Federal Prison for Running Telemarketing Scheme that Bilked 60,000+ VictimsRead the Press Release
LOS ANGELES – The owner of a Canadian telemarketing operation – who was extradited to the United States last year after more than 10 years of litigation in Canada – was sentenced today to 135 months in federal prison for orchestrating a telemarketing scheme that falsely promised credit card fraud protection and defrauded at least 60,000 primarily elderly victims out of more than $18 million.
Mark Eldon Wilson, 57, of Vancouver, British Columbia, was sentenced by United States District Judge S. James Otero.
As he imposed the sentence, Judge Otero noted that the criminal conduct was egregious both in scope and in terms of targeting elderly victims, who suffered both financial and emotional harm resulting from the fraud.
Following a five-day trial in March, a federal jury convicted Wilson of seven counts of mail fraud and two counts of wire fraud for having orchestrated a fraudulent cross-border telemarketing scheme that targeted American victims.
The evidence at trial showed that Wilson operated the fraudulent scheme through various companies – including OPCO International Inc. and American Fraud Watch Services – and that he directed his telemarketers to mislead victims into believing they were affiliated with the victims’ credit card companies. As part of the sales pitch, telemarketers falsely suggested to victims that they were vulnerable to credit card fraud and would be held liable for fraudulent charges on their cards. They sold the victims a non-existent credit card “protection” service for approximately $300 that purportedly would be in effect for 10 years, and they falsely promised a 100 percent money-back guarantee. In many instances, even when the victims did not authorize payment for these purported services, Wilson’s companies charged victims’ credit cards for the full amount of the “protection” service fee, even though victims were told the fee was as little as $3 per month.
In reality, Wilson and his companies were not associated with the victims’ credit card companies, the credit card companies would not actually hold victims liable for charges arising from fraud, and Wilson’s companies did not provide the promised credit-card-monitoring and protection services.
Between 1998 and 2001, Wilson and his telemarketers solicited over $18 million from more than 60,000 victims in 37 different states, including a number of victims in Southern California. Wilson “then converted the victims’ money to his own personal use, using a portion of the fraud proceeds to fund his businesses and a portion to fund his own lavish lifestyle, including the purchase of different luxury boats, a fleet of cars used by himself and various employees of his businesses, setting up an offshore bank account in the South Pacific to house a portion of his fraud proceeds, and travelling periodically to Las Vegas to gamble and meet with other telemarketers at luxury hotels,” according to court documents filed by prosecutors.
This case was jointly investigated by the Federal Bureau of Investigation, the United States Postal Inspection Service, the Royal Canadian Mounted Police, and the Federal Trade Commission. The Justice Department’s Office of International Affairs and the Department of Justice – Canada provided invaluable assistance to ensure Wilson was compelled to answer the charges through a lengthy extradition process.
The case was prosecuted by Assistant United States Attorney Paul Stern of the Major Frauds section, and Assistant United States Attorneys Roger Hsieh and Joseph Woodring of the General Crimes section.
Former Pasadena Police Lieutenant Agrees to Plead Guilty to Illegally Trafficking ‘Off Roster’ Guns and Lying on ATF FormRead the Press Release
LOS ANGELES – A Sierra Madre man who until earlier this year served as a lieutenant in the Pasadena Police Department has agreed to plead guilty to two federal felony offenses related to the illegal sale of more than 100 firearms over the course of three years.
Vasken Kenneth Gourdikian, 48, who resigned from the Pasadena Police Department in March after a 22-year career, has signed a plea agreement that was filed this morning in United States District Court.
Gourdikian agreed to plead guilty to engaging in the business of dealing in firearms without a license, and making a false statement during the purchase of a firearm.
Gourdikian has agreed to appear before United States District Judge Stephen V. Wilson on September 20 to formally enter guilty pleas to the two felony offenses.
From March 2014 through February 2017, Gourdikian sold at least 108 firearms without a license. Gourdikian used his official status as a police officer to purchase firearms that were not available to the general public, and then sold restricted firearms, known as “off roster” firearms, through third-party transfers to members of the public, Gourdkian would often highlight the unique status of “off roster” firearms in order to solicit a buyer’s interest and to generate higher sale prices. “Many of the firearms that defendant sold were “off roster” firearms, that is, firearms that defendant’s non-law enforcement customers could not have purchased directly from a licensed firearms dealer,” according to the plea agreement.
While police officers were not prohibited from selling “off roster” firearms to members of the general public, Gourdikian “made a business of dealing firearms without a license, in part, by abusing exemptions made available to him under California law as a sworn peace officer,” he admitted in the plea agreement.
The false statement offense relates to an ATF “re-certification” form Gourdikian signed in 2014 when he took possession of a handgun. Gourdikian admitted in the plea agreement that he “misrepresented that he was the actual buyer of a firearm when, in fact, and as defendant then well knew, he was purchasing the firearm for another individual.” Gourdikian admitted that he re-sold the gun to another person on the same day he acquired it from the gun dealer.
Gourdikain further admitted that he “capitalized on his peace officer status” that allowed him to circumvent the usual 10-day waiting period and enabled him to purchase more than one handgun in a 30-day period.
“Mr. Gourdikian used his positon as a law enforcement officer to purchase firearms generally not available to the public so he could turn around and illegally sell them for profit,” said United States Attorney Nick Hanna. “His actions clearly violated federal law and introduced unauthorized firearms into the community. By his participating in these illegal acts, Gourdikian compromised public safety and violated the public’s trust.”
“It is ATF’s duty and obligation to conduct criminal investigations whenever presented with credible evidence of violations of federal firearms laws,” said ATF Los Angeles Field Division (LAFD) Special Agent in Charge Bill McMullan. “Through analysis conducted by ATF’s Crime Gun Intelligence Center, it was discovered that one of the firearms sold by Gourdikian was recovered at a crime scene two months after its purchase, increasing the risk to the public and law enforcement personnel. ATF’s mission is to focus our efforts on firearms traffickers and trigger pullers and we will continue to pursue individuals engaged in this type of illegal activity.”
In the plea agreement, the government, in exchange for Gourdikian’s acceptance of responsibility and agreement to forfeit 68 firearms, has agreed to recommend a prison sentence of 30 months. This recommendation, however, will not be binding on Judge Wilson, who could impose a sentence of up to 15 years in prison after Gourdikian pleads guilty to the two charges.
This matter is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
This case is being prosecuted by Assistant United States Attorneys Elisa Fernandez of the Public Corruption and Civil Rights Section and Jennifer Chou of the Violent and Organized Crime Section.
North Korean Regime-Backed Programmer Charged in Conspiracy to Conduct Multiple Cyberattacks and IntrusionsRead the Press Release
Park Jin Hyok - COMPLAINTLOS ANGELES – A criminal complaint made public today charges a North Korean citizen for his involvement in a conspiracy to conduct a series of destructive cyberattacks around the world, which resulted in damage to massive amounts of computer hardware and extensive loss of data, money and other resources.
The complaint alleges that Park Jin Hyok (박진혁) was a member of a hacking team sponsored by the Democratic People’s Republic of Korea and known to the private sector as the “Lazarus Group.” Park allegedly worked for a North Korean government front company, Chosun Expo Joint Venture, which was also known as Korea Expo Joint Venture, or KEJV, to support the DPRK government’s malicious cyber actions.
The conspiracy’s malicious activities included the creation of the malware used in the 2017 WannaCry ransomware attack; the 2016 theft of $81 million from Bangladesh Bank; the 2014 attack on Sony Pictures Entertainment; and numerous other attacks or intrusions on the entertainment, financial services, defense, technology and virtual currency industries, as well as academia and electric utilities.
“The complaint charges members of this North Korean-based conspiracy with being responsible for cyberattacks that caused unprecedented economic damage and disruption to businesses in the United States and around the globe,” said First Assistant United States Attorney Tracy Wilkison. “The scope of this scheme was exposed through the diligent efforts of FBI agents and federal prosecutors who were able to unmask these sophisticated crimes through sophisticated means. They traced the attacks back to the source and mapped their commonalities, including similarities among the various programs used to infect networks across the globe. These charges send a message that we will track down malicious actors no matter how or where they hide. We will continue to pursue justice for those responsible for the huge monetary losses and attempting to compromise the national security of the United States.”
“The scale and scope of the cyber-crimes alleged by the complaint is staggering and offensive to all who respect the rule of law and the cyber norms accepted by responsible nations,” said Assistant Attorney General for National Security John C. Demers. “The complaint alleges that the North Korean government, through a state-sponsored group, robbed a central bank and citizens of other nations, retaliated against free speech in order to chill it half a world away, and created disruptive malware that indiscriminately affected victims in more than 150 other countries, causing hundreds of millions, if not billions, of dollars’ worth of damage. The investigation, prosecution, and other disruption of malicious state-sponsored cyber activity remains among the highest priorities of the National Security Division and I thank the FBI agents, DOJ prosecutors, and international partners who have put years of effort into this investigation.”
“This complaint exposes a vast and audacious scheme by the North Korean government to utilize computer intrusions as a means to support the varied goals of their regime,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “From computer network attacks on private entertainment companies and financial institutions, to the development of malware which crippled thousands of victims’ computer systems, North Korean cyber aggressions were pursued – and revealed – thanks to the thorough technical and collaborative work of Los Angeles-based FBI agents, computer scientists, federal prosecutors and intelligence analysts. The criminal complaint details key findings of a complex, multi-year investigation based on evidence collected within the U.S. and internationally."
According to the allegations contained in the criminal complaint, which was filed on June 8 in United States District Court in Los Angeles and made public today, Park was a computer programmer who worked for over a decade for KEJV. The company had offices in China and the DPRK, and is affiliated with Lab 110, a component of DPRK military intelligence. In addition to the programming done by Park and his group for paying clients around the world, the conspiracy also engaged in malicious cyber activities. Security researchers that have independently investigated these activities referred to this hacking team as the “Lazarus Group.” The conspiracy’s methods included spear-phishing campaigns, destructive malware attacks, exfiltration of data, theft of funds from bank accounts, ransomware extortion, and propagating “worm” viruses to create botnets.
The complaint describes a broad array of malicious cyber activities, both successful and unsuccessful, in the United States and abroad, with a particular focus on four specific examples.
Targeting the Entertainment Industry
In November 2014, the conspirators launched a destructive attack on Sony Pictures Entertainment (SPE) in retaliation for the movie “The Interview,” a comedy that depicted the assassination of the DPRK’s leader. The conspirators gained access to SPE’s network by sending malware to SPE employees, and then stole confidential data, threatened SPE executives and employees, and damaged thousands of computers.
Around the same time, the group sent spear-phishing messages to other victims in the entertainment industry, including a movie theater chain and a U.K. company that was producing a fictional series involving a British nuclear scientist taken prisoner in DPRK.
Targeting Financial Services
In February 2016, the conspiracy stole $81 million from Bangladesh Bank. As part of the cyberheist, the conspiracy accessed the bank’s computer terminals that interfaced with the Society for Worldwide Interbank Financial Telecommunication (SWIFT) communication system after compromising the bank’s computer network with spear-phishing emails, then sent fraudulently authenticated SWIFT messages directing the Federal Reserve Bank of New York to transfer funds from Bangladesh to accounts in other Asian countries. The conspiracy attempted to and did gain access to several other banks in various countries from 2015 through 2018 using similar methods and “watering hole attacks,” attempting the theft of at least $1 billion through such operations.
Targeting of U.S. Defense Contractors
In 2016 and 2017, the conspiracy targeted a number of U.S. defense contractors, including Lockheed Martin, with spear-phishing emails. These malicious emails used some of the same aliases and accounts seen in the SPE attack, at times accessed from North Korean IP addresses, and contained malware with the same distinct data table found in the malware used against SPE and certain banks, the complaint alleges. The spear-phishing emails sent to the defense contractors were often sent from email accounts that purported to be from recruiters at competing defense contractors, and some of the malicious messages made reference to the Terminal High Altitude Area Defense (THAAD) missile defense system deployed in South Korea. The attempts to infiltrate the computer systems of Lockheed Martin, the prime contractor for the THAAD missile system, were not successful.
Creation of Wannacry
In May 2017, a ransomware known as WannaCry 2.0 infected hundreds of thousands of computers around the world, causing extensive damage, including significantly impacting the United Kingdom’s National Health Service. The conspiracy is connected to the development of WannaCry 2.0, as well as two prior versions of the ransomware, through similarities in form and function to other malware developed by the hackers, and by spreading versions of the ransomware through the same infrastructure used in other cyber-attacks.
Park and his co-conspirators were linked to these attacks, intrusions, and other malicious cyber-enabled activities through a thorough investigation that identified and traced email and social media accounts that connect to each other and were used to send spear-phishing messages; aliases, malware “collector accounts” used to store stolen credentials; common malware code libraries; proxy services used to mask locations; and North Korean, Chinese and other IP addresses. Some of this malicious infrastructure was used across multiple instances of the malicious activities described in the complaint. Taken together, these connections and signatures – revealed in charts attached to the criminal complaint – show that the attacks and intrusions were perpetrated by the same actors.
Accompanying Mitigation Efforts
Throughout the course of the investigation, the FBI and the Justice Department provided specific information to victims about how they had been targeted or compromised, as well as information about the tactics and techniques used by the conspiracy with the goals of remediating any intrusion and preventing future intrusions. That direct sharing of information took place in the United States and in foreign countries, often with the assistance of foreign law enforcement partners. The FBI also has collaborated with certain private cybersecurity companies by sharing and analyzing information about the intrusion patterns used by the members of the conspiracy. In connection with the unsealing of the criminal complaint, the FBI and prosecutors provided cybersecurity providers and other private sector partners detailed information on accounts used by the conspiracy in order to assist these partners in their own independent investigative activities and disruption efforts.
Park is charged with one count of conspiracy to commit computer fraud and abuse, which carries a maximum sentence of five years in prison, and one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendant will be determined by the assigned judge.
The charges contained in the criminal complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
In addition to the criminal charges, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) today designated Park and KEJV under Executive Order 13722 based on the malicious cyber and cyber-enabled activity outlined in the criminal complaint.
This matter is being prosecuted by Executive Assistant United States Attorney Stephanie S. Christensen, Assistant United States Attorney Anthony J. Lewis of the Terrorism and Export Crimes Section, Assistant United States Attorney Anil J. Antony of the Cyber and Intellectual Property Crimes Section, and DOJ Trial Attorneys David Aaron and Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section. The Criminal Division’s Office of International Affairs provided assistance throughout this investigation, as did many of the FBI’s Legal Attachés, and foreign authorities around the world.
North Korean Regime-Backed Programmer Charged with Conspiracy to Conduct Multiple Cyber Attacks and IntrusionsRead the Press Release
A criminal complaint was unsealed today charging Park Jin Hyok (박진혁; a/k/a Jin Hyok Park and Pak Jin Hek), a North Korean citizen, for his involvement in a conspiracy to conduct multiple destructive cyberattacks around the world resulting in damage to massive amounts of computer hardware, and the extensive loss of data, money and other resources (the “Conspiracy”).
The complaint alleges that Park was a member of a government-sponsored hacking team known to the private sector as the “Lazarus Group,” and worked for a North Korean government front company, Chosun Expo Joint Venture (a/k/a Korea Expo Joint Venture or “KEJV”), to support the DPRK government’s malicious cyber actions.
The Conspiracy’s malicious activities include the creation of the malware used in the 2017 WannaCry 2.0 global ransomware attack; the 2016 theft of $81 million from Bangladesh Bank; the 2014 attack on Sony Pictures Entertainment (SPE); and numerous other attacks or intrusions on the entertainment, financial services, defense, technology, and virtual currency industries, academia, and electric utilities.
The charges were announced by Attorney General Jeff Sessions, FBI Director Christopher A. Wray, Assistant Attorney General for National Security John C. Demers, First Assistant United States Attorney for the Central District of California Tracy Wilkison and Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Field Office.
In addition to these criminal charges, Treasury Secretary Steven Mnuchin announced today that the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Park and KEJV under Executive Order 13722 based on the malicious cyber and cyber-enabled activity outlined in the criminal complaint.
“Today’s announcement demonstrates the FBI’s unceasing commitment to unmasking and stopping the malicious actors and countries behind the world’s cyberattacks,” said FBI Director Christopher Wray. “We stand with our partners to name the North Korean government as the force behind this destructive global cyber campaign. This group’s actions are particularly egregious as they targeted public and private industries worldwide – stealing millions of dollars, threatening to suppress free speech, and crippling hospital systems. We’ll continue to identify and illuminate those responsible for malicious cyberattacks and intrusions, no matter who or where they are.”
“The scale and scope of the cyber-crimes alleged by the Complaint is staggering and offensive to all who respect the rule of law and the cyber norms accepted by responsible nations,” said Assistant Attorney General Demers. “The Complaint alleges that the North Korean government, through a state-sponsored group, robbed a central bank and citizens of other nations, retaliated against free speech in order to chill it half a world away, and created disruptive malware that indiscriminately affected victims in more than 150 other countries, causing hundreds of millions, if not billions, of dollars’ worth of damage. The investigation, prosecution, and other disruption of malicious state-sponsored cyber activity remains among the highest priorities of the National Security Division and I thank the FBI agents, DOJ prosecutors, and international partners who have put years of effort into this investigation.”
“The complaint charges members of this North Korean-based conspiracy with being responsible for cyberattacks that caused unprecedented economic damage and disruption to businesses in the United States and around the globe,” said First Assistant United States Attorney Tracy Wilkison. “The scope of this scheme was exposed through the diligent efforts of FBI agents and federal prosecutors who were able to unmask these sophisticated crimes through sophisticated means. They traced the attacks back to the source and mapped their commonalities, including similarities among the various programs used to infect networks across the globe. These charges send a message that we will track down malicious actors no matter how or where they hide. We will continue to pursue justice for those responsible for the huge monetary losses and attempting to compromise the national security of the United States.”
“We will not allow North Korea to undermine global cybersecurity to advance its interests and generate illicit revenues in violation of our sanctions,” said Treasury Secretary Steven Mnuchin. “The United States is committed to holding the regime accountable for its cyber-attacks and other crimes and destabilizing activities.”
Park is charged with one count of conspiracy to commit computer fraud and abuse, which carries a maximum sentence of five years in prison, and one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.
About the Defendant Park and Chosun Expo Joint Venture
According to the allegations contained in the criminal complaint, which was filed on June 8, 2018 in Los Angeles federal court, and posted today: Park Jin Hyok, was a computer programmer who worked for over a decade for Chosun Expo Joint Venture (a/k/a Korea Expo Joint Venture or “KEJV”). Chosun Expo Joint Venture had offices in China and the DPRK, and is affiliated with Lab 110, a component of DPRK military intelligence. In addition to the programming done by Park and his group for paying clients around the world, the Conspiracy also engaged in malicious cyber activities. Security researchers that have independently investigated these activities referred to this hacking team as the “Lazarus Group.” The Conspiracy’s methods included spear-phishing campaigns, destructive malware attacks, exfiltration of data, theft of funds from bank accounts, ransomware extortion, and propagating “worm” viruses to create botnets.
The Conspiracy’s Cyber Attacks, Heists, and Intrusions
The complaint describes a broad array of the Conspiracy’s alleged malicious cyber activities, both successful and unsuccessful, and in the United States and abroad, with a particular focus on four specific examples.
Targeting the Entertainment Industry
In November 2014, the conspirators launched a destructive attack on Sony Pictures Entertainment (SPE) in retaliation for the movie “The Interview,” a farcical comedy that depicted the assassination of the DPRK’s leader. The conspirators gained access to SPE’s network by sending malware to SPE employees, and then stole confidential data, threatened SPE executives and employees, and damaged thousands of computers. Around the same time, the group sent spear-phishing messages to other victims in the entertainment industry, including a movie theater chain and a U.K. company that was producing a fictional series involving a British nuclear scientist taken prisoner in DPRK.
Targeting Financial Services
In February 2016, the Conspiracy stole $81 million from Bangladesh Bank. As part of the cyber-heist, the Conspiracy accessed the bank’s computer terminals that interfaced with the Society for Worldwide Interbank Financial Telecommunication (SWIFT) communication system after compromising the bank’s computer network with spear-phishing emails, then sent fraudulently authenticated SWIFT messages directing the Federal Reserve Bank of NY to transfer funds from Bangladesh to accounts in other Asian countries. The Conspiracy attempted to and did gain access to several other banks in various countries from 2015 through 2018 using similar methods and “watering hole attacks,” attempting the theft of at least $1 billion through such operations.
Targeting of U.S. Defense Contractors
In 2016 and 2017, the Conspiracy targeted a number of U.S. defense contractors, including Lockheed Martin, with spear-phishing emails. These malicious emails used some of the same aliases and accounts seen in the SPE attack, at times accessed from North Korean IP addresses, and contained malware with the same distinct data table found in the malware used against SPE and certain banks, the complaint alleges. The spear-phishing emails sent to the defense contractors were often sent from email accounts that purported to be from recruiters at competing defense contractors, and some of the malicious messages made reference to the Terminal High Altitude Area Defense (THAAD) missile defense system deployed in South Korea. The attempts to infiltrate the computer systems of Lockheed Martin, the prime contractor for the THAAD missile system, were not successful.
Creation of Wannacry 2.0
In May 2017, a ransomware attack known as WannaCry 2.0 infected hundreds of thousands of computers around the world, causing extensive damage, including significantly impacting the United Kingdom’s National Health Service. The Conspiracy is connected to the development of WannaCry 2.0, as well as two prior versions of the ransomware, through similarities in form and function to other malware developed by the hackers, and by spreading versions of the ransomware through the same infrastructure used in other cyber-attacks.
Park and his co-conspirators were linked to these attacks, intrusions, and other malicious cyber-enabled activities through a thorough investigation that identified and traced: email and social media accounts that connect to each other and were used to send spear-phishing messages; aliases, malware “collector accounts” used to store stolen credentials; common malware code libraries; proxy services used to mask locations; and North Korean, Chinese, and other IP addresses. Some of this malicious infrastructure was used across multiple instances of the malicious activities described herein. Taken together, these connections and signatures—revealed in charts attached to the criminal complaint—show that the attacks and intrusions were perpetrated by the same actors.
Accompanying Mitigation Efforts
Throughout the course of the investigation, the FBI and the Department provided specific information to victims about how they had been targeted or compromised, as well as information about the tactics and techniques used by the conspiracy with the goals of remediating any intrusion and preventing future intrusions. That direct sharing of information took place in the United States and in foreign countries, often with the assistance of foreign law enforcement partners. The FBI also has collaborated with certain private cybersecurity companies by sharing and analyzing information about the intrusion patterns used by the members of the conspiracy.
In connection with the unsealing of the criminal complaint, the FBI and prosecutors provided cybersecurity providers and other private sector partners detailed information on accounts used by the Conspiracy in order to assist these partners in their own independent investigative activities and disruption efforts.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendant will be determined by the assigned judge.
This case is being prosecuted by Assistant United States Attorneys Stephanie S. Christensen, Anthony J. Lewis, and Anil J. Antony of the United States Attorney’s Office for the Central District of California, and DOJ Trial Attorneys David Aaron and Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section. The Criminal Division’s Office of International Affairs provided assistance throughout this investigation, as did many of the FBI’s Legal Attachés, and foreign authorities around the world.
The charges contained in the criminal complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
For the U.S. Department of Treasury’s press release announcing corresponding sanctions please visit www.treasury.gov.