Central District of California

          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.

          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.

          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.

          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.

          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.

Park Jin Hyok - COMPLAINT

 

          LOS 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.

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.

          LOS ANGELES – Federal authorities this morning arrested a Los Angeles man on federal charges that allege he targeted seven women with online threats to publish nude photos unless the victims provided him with additional explicit pictures.

          Richard Gregory Bauer, 28, a former contractor at NASA Armstrong Flight Research Center, and who used several aliases including “Steve Smith,” “John Smith,” and “Garret,” was arrested by special agents with NASA’s Office of Inspector General.

          Bauer was arrested at his Mid-Wilshire residence without incident pursuant to a 14-count indictment returned by a federal grand jury on August 28. The indictment charges Bauer with stalking, unauthorized access to a protected computer, and aggravated identity theft.

          The indictment alleges that over the past several years, Bauer, who until recently lived in the High Desert communities of Palmdale and Lancaster, harassed the victims on Facebook and through emails. In the communications in which Bauer masked his identity, Bauer claimed to possess nude photos of the victims, which he did in relation to six of the seven victims discussed in the indictment. Bauer sent the victims nude photos of themselves, claimed to have additional photos, and threatened to post the nude photos of the victims online unless the women sent him additional photos in various stages of undress.

          Bauer is also charged in the indictment with unauthorized access to computers and accounts owned by victims. During the course of the alleged stalking, according to the indictment, Bauer, using his true identity, contacted some 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.

          In other instances, again using his true identity, Bauer allegedly convinced victims to install malware by claiming that he needed the victims’ help in testing software he claimed to have written. 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. On at least two instances, Bauer is alleged to have used logins and passwords belonging to victims to log on to their Facebook and Google email accounts.

          Bauer is expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.

          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 14 charges in the indictment, Bauer would face a statutory maximum sentence of 64 years in federal prison.

          This case is the result of an ongoing investigation being conducted by NASA’s Office of Inspector General. Members of the public who have information about Bauer’s online activities or believe they may be victims of his activities are encouraged to contact NASA OIG Special Agent Joseph Bennett at (818) 354-9768.

          This matter is being prosecuted by Assistant United States Attorney Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section.

          LOS ANGELES – A former public official in Los Angeles County’s Real Estate Division involved in awarding contracts to real estate developers and contractors has agreed to plead guilty to lying to FBI agents and subscribing to a false tax return in an effort to cover up his receipt of illegal bribes.

          In a plea agreement filed today, Thomas M. Shepos, 68, of Palmdale, agreed to plead guilty to two felony offenses – making false statements in which he denied receiving bribes and kickbacks while working for the county, and subscribing to a false tax return for the year 2014 in which he failed to report $139,400 in income, including more than $100,000 in bribe payments. In the plea agreement, Shepos admits that he failed to report a total of $434,000 in income he received over a seven-year period.

          As part of his plea agreement, Shepos has agreed to cooperate with an ongoing federal investigation.

          For approximately 20 years, until he retired last year, Shepos worked in the county’s Real Estate Division, where he negotiated leases and contract terms with private developers and contractors. According to the plea agreement, because of his seniority, Shepos had “significant autonomy to contractually bind the county.”

          In the plea agreement, Shepos admitted accepting bribes from Arman Gabaee, a Beverly Hills real estate developer who was indicted in May on bribery and wire fraud charges in connection with his attempts to secure a $45 million county lease in the Hawthorne Mall. Beginning in 2010 or 2011, Gabaee began giving Shepos monthly bribe payments of $1,000 or more in exchange for Shepos providing Gabaee with non-public information and preferential treatment, according to the plea agreement filed today.

          The plea agreement further states that Gabaee offered to buy a million-dollar property in Northern California as a bribe for Shepos. In exchange for the property, Gabaee sought Shepos’ assistance securing a lease for the county’s Department of Public Social Services in the Hawthorne Mall, which Gabaee owned and was redeveloping.

          Shepos also admitted in the plea agreement that he accepted bribes totaling $250,000 to $300,000 from an unnamed electrical contractor in exchange for Shepos’ assistance securing five to seven county contracts ultimately awarded to the contractor.

          When interviewed by federal agents in November 2016, Shepos lied about the bribery schemes, falsely claiming that he had never received anything of value from anyone doing business with the county. He also lied about numerous unexplained deposits into his bank accounts, claiming that the funds were gambling proceeds, as opposed to bribes or kickbacks.

          “Corrupt officials who abuse their power to line their own pockets undermine the public’s trust in government,” said United States Attorney Nick Hanna. “We are committed to ending these backroom deals and bringing these criminals to justice.”

          “Public officials like defendant Shepos, who misuse their position of trust for personal gain, undermine the integrity of their office and deny honest services to the residents they purport to serve,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI will continue to work with our partners to restore the public’s trust in our county officials.”

          In relation to the tax charge, Shepos admitted that he received a total of $434,400 from 2010 through 2016 that he failed to report on his federal income tax returns. Shepos has agreed to file corrected tax returns and pay back taxes – estimated to be approximately $110,000, plus a yet-to-be-determined fraud penalty.

          “Public officials need to be reminded of the trust and duty bestowed upon them by the taxpayers to serve the public’s interest, not their own,” said Special Agent in Charge R. Damon Rowe, IRS Criminal Investigation. “IRS Criminal Investigation stands committed to weeding out individuals who abuse the privilege of their positions for personal gain, while dodging the federal tax system.”

          Shepos will be summonsed to appear for an arraignment in United States District Court, likely later this month.

          Once he enters the guilty pleas to the two charges, Shepos will face a statutory maximum sentence of eight years in prison.

          Gabaee is currently scheduled to go on trial on February 26, 2019.

          The case against Shepos is part of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS Criminal Investigation.

          This matter is being prosecuted by Assistant United States Attorneys Ruth C. Pinkel and Lindsey Greer Dotson of the Public Corruption and Civil Rights Section.

          BOSTON – A California man was arrested today and charged with making violent threats against Boston Globe employees in retaliation for the newspaper’s editorial response to political attacks on the media.

          Robert D. Chain, 68, of Encino, California, is charged with one count of making threatening communications in interstate commerce. Chain will appear in federal court in Los Angeles this afternoon and be transferred to Boston at a later date.

          “In the past few months, this office has charged people with threatening to bomb a minority commencement ceremony at Harvard, threatening to shoot people at a Second Amendment rally, offering money to anyone who kills a federal agent, and mailing white powder and threatening notes to certain public figures,” said U.S. Attorney Andrew Lelling. “Anyone – regardless of political affiliation – who puts others in fear for their lives will be prosecuted by this office. In a time of increasing political polarization, and amid the increasing incidence of mass shootings, members of the public must police their own political rhetoric. Or we will.”

          “Everyone has a right to express their opinion, but threatening to kill people, takes it over the line and will not be tolerated,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “Today’s arrest of Robert Chain should serve a warning to others, that making threats is not a prank, it’s a federal crime. All threats are taken seriously, as we never know if the subject behind the threat intends to follow through with their actions. Whether potentially hoax or not, each and every threat will be aggressively run to ground. These investigations are expensive and are costly to the taxpayers, can put innocent people at risk, divert law enforcement from responding to actual emergencies, and cause undue stress to victims. I commend the great work of the Boston and Los Angeles Joint Terrorism Task Forces for their diligence and professionalism, and continue to seek the public’s support to immediately report threats or suspicious activity to law enforcement.”

          On Aug. 10, 2018, the Boston Globe announced that it was requesting that other newspaper publications around the country publish a coordinated editorial response to political attacks on the media. The coordinated editorial response was to be published on Thursday, Aug. 16, 2018.

          According to court documents, immediately following the announcement, Chain began making threatening calls to the Boston Globe’s newsroom. In the calls, Chain referred to the Globe as “the enemy of the people” and threatened to kill newspaper employees. In total, it is alleged that Chain made approximately 14 threatening phone calls to the Globe between August 10 and 22, 2018.

          It is further alleged that on Aug. 16, 2018, the day the coordinated editorial response was published in the Boston Globe, Chain called the Globe newsroom and threatened to shoot Globe employees in the head “later today, at 4 o’clock.” As a result of that call, local law enforcement responded to the Globe’s offices and maintained a presence outside the building to ensure the safety of the employees.

          The charge of making threatening communications in interstate commerce provides for a sentence of no greater than five years, one year of supervised release, and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

          U.S. Attorney Lelling and FBI SAC Shaw made the announcement today. Valuable assistance was provided by the Bureau of Alcohol Tobacco, Firearms and Explosives, Los Angeles Field Division; the Drug Enforcement Administration, Los Angeles Division; the U.S. Postal Inspection Service, Los Angeles Division; the California Highway Patrol; and the Los Angeles Police Department. Assistant U.S. Attorney George P. Varghese of Lelling’s National Security Unit is prosecuting the case.

          The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

          LOS ANGELES – Authorities have arrested 10 members and associates of an Inglewood-based street gang on federal narcotics-trafficking and firearms charges contained in a grand jury indictment that outlines how the defendants obtained cocaine, used a purported convenience store to convert it into crack cocaine, and distributed the drugs on the streets of Inglewood and South Los Angeles.

          The indictment targets the leadership and key members of the 92 Osage Legend Crips (OLC), a violent street gang that allegedly manufactured and distributed crack cocaine from the “Stop and Shop Market” in a strip mall on South Prairie Avenue. After cooking and packaging the crack cocaine at the Stop and Shop, members of the drug-trafficking conspiracy allegedly delivered drugs to customers at various locations, including at a U.S. VETS office and the Social Security office in Inglewood.

          Various defendants charged in this case, some of them previously convicted felons, allegedly possessed firearms in relation to their drug-trafficking activities. The street gang members and their associates “used violence and intimidation, including firearms, to maintain and expand their drug-dealing territory, to protect themselves, their drugs, and their drug proceeds from rival gangs and drug-dealing organizations, and to collect payment from drug customers,” according to the indictment.

          The indictment charges 15 defendants, 10 of whom were arrested last night and this morning. Out of the remaining five defendants, one was already in state custody, and four are currently fugitives.

          The 16-count indictment charges all 15 defendants in a conspiracy to manufacture, distribute, and possess with intent to distribute crack cocaine. The indictment also charges various defendants with maintaining a drug-involved premises; possession with intent to distribute, and distribution, of crack cocaine; possession of firearms in furtherance of a drug-trafficking crime; and felon in possession of firearms and ammunition.

          “Street gangs use violence and intimidation as tools to control narcotics trafficking in their territory,” said United States Attorney Nick Hanna. “We are committed to making significant improvements in our communities by targeting gangs that bring the dual scourges of drugs and violence into neighborhoods.”

          “This multi-year investigation began in partnership with the Inglewood Police Department following a spike in violence in the city involving the Osage Legend Crips and indications that the gang had evolved from a local street gang to an organized criminal enterprise,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI and our local partners will continue to target the most violent gangs whose members hijack Los Angeles neighborhoods in furtherance of their illegal narcotics sales and criminal interests.”

          The lead defendants in the indictment – Glen Dwight Love, also known as “Big Luck,” 46, of Pasadena; Deshay Lewann King, also known as “Shay Bone,” 45, of South Los Angeles; and Wiley Venoy Ivory II, also known as “Slim,” 38, an Inglewood resident who was already in state custody on unrelated charges – ran the Stop and Shop, which from the exterior appeared to be a convenience store, but in reality was nothing more than a drug processing and storage facility. According to the indictment, several defendants “discussed attempting to make the shop look like an actual retail store and getting window signs to tell drug customers and co-conspirators when to avoid going into the shop.”

          Various members of the conspiracy allegedly sold crack cocaine by driving in and around Inglewood, making stops at regular locations where street-level customers knew they could find dealers. Many of the gang’s narcotics sales were for small amounts, but the indictment discusses a series of larger transactions, some involving ounce quantities of crack cocaine. Intercepted communications during the investigation revealed members of the conspiracy discussing a transaction involving four kilograms of cocaine.

          The defendants taken into custody since last night are scheduled to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.

          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, each of the defendants would face decades in federal prison. The conspiracy count alone carries a mandatory minimum sentence of 10 years in prison and a statutory maximum sentence of life without parole.

          The investigation targeting the OLC was conducted by the Federal Bureau of Investigation and the Inglewood Police Department.

          The case is being prosecuted by Assistant United States Attorney Joshua O. Mausner of the Violent and Organized Crime Section.

          LOS ANGELES – A Thousand Oaks man who fraudulently obtained more than $11 million in loans he used to purchase a gas station and two car washes was sentenced today to nearly five years in federal prison.

          Mohsen Hass, 60, was sentenced to 57 months in prison by United States District Judge Dale S. Fischer.

          In addition to the prison term, Judge Fischer ordered Hass to pay $5,737,585 in restitution to the victim financial institutions.

          Hass, who is also known as “Mike Hass” and “Mohsen Hassanshahi,” pleaded guilty in March to one count of making false statements to a financial institution

          Hass purchased the businesses after receiving loans that were approved after he submitted loan applications in 2006 and 2007 that contained false information, including fake assets Hass claimed he was using for a down payment. Hass used the proceeds of the loans to purchase a gas station in Santa Paula and two car washes in South Los Angeles. The lenders suffered losses when Hass defaulted on the loans. Hass was initially charged in 2014, but he fled to Iran for nearly four years before surrendering in February.

          At least one bank insider participated in the scheme and allowed loans to go through despite knowing about the false information. Ataollah Aminpour has pleaded guilty and is pending sentencing.

          Hass “obtained multi-million dollar businesses to run without putting his own money at risk and allowing at least one bank insider to profit,” prosecutors wrote in a sentencing memorandum filed in relation to today’s sentencing.

          The victims in this case include the Federal Deposit Insurance Corporation, which served as receiver for one of the financial institutions, Mirae Bank, which went into receivership as a result of the fraudulent conduct involving Aminpour and Hass.

          This matter was investigated by the Federal Bureau of Investigation; the Federal Deposit Insurance Corporation, Office of the Inspector General; the Federal Housing Finance Agency, Office of Inspector General; and the Office of the Special Inspector General of the Troubled Asset Relief Program.

          The case is being prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.

          LOS ANGELES – A federal jury today convicted a Lancaster doctor of conspiracy for his role in a Medicare kickback conspiracy involving a Los Angeles-area home health agency.

          Dr. Kanagasabai Kanakeswaran, 65, was found guilty of one count of conspiracy to pay and/or receive kickbacks for Medicare referrals and four counts of receiving kickbacks for Medicare referrals. The jury rendered its verdicts following a six-day trial.

          According to evidence presented at trial, from 2008 to 2016, Kanakeswaran and others engaged in a conspiracy to refer Medicare patients to Star Home Health Resources (Star), a home health agency located in La Verne, in exchange for illegal kickback payments. Kanakeswaran received kickback payments in cash, as well as through checks payable to a company Kanakeswaran owned, Digital Perfection Corporation.

          As a result of the conspiracy, the owners and operators of Star submitted claims to Medicare based on the Medicare beneficiaries that Kanakeswaran referred to Star, and Medicare paid approximately $4.1 million based on those claims, the evidence showed.

          Kanakeswaran is scheduled to be sentenced by United States District Judge Philip S. Gutierrez on January 7. At that time, Kanakeswaran will face a statutory maximum penalty of 25 years in federal prison.

          This case was investigated by the U.S. Department of Health and Human Services’ Office of Inspector General and the Federal Bureau of Investigation.

          Assistant United States Attorney Alexander F. Porter of the Major Frauds Section and DOJ Trial Attorney Claire Yan of the Criminal Division’s Fraud Section are prosecuting the case.

A federal jury in Los Angeles, California found a Lancaster, California doctor guilty today of conspiracy for his role in a Medicare kickback conspiracy involving a Los Angeles-area home health agency. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services

Office of Inspector General’s (HHS-OIG) Los Angeles Regional Office and Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division made the announcement.

Kanagasabai Kanakeswaran, M.D., 65, was convicted of one count of conspiracy to pay and/or receive kickbacks for Medicare referrals and four counts of receiving kickbacks for Medicare referrals after a six-day trial.  Sentencing has been scheduled for Jan. 7, 2019 before U.S. District Judge Philip S. Gutierrez of the Central District of California, who presided over the trial. 

According to evidence presented at trial, from 2008 to 2016, Kanakeswaran and others engaged in a conspiracy to refer Medicare patients to Star Home Health Resources (Star), a home health agency located in La Verne, California in exchange for illegal kickback payments.  Kanakeswaran received cash kickback payments, as well as kickback payments by check through a company Kanakeswaran owned called Digital Perfection Corporation, the evidence showed. 

As a result of the conspiracy, the owners and operators of Star submitted claims to Medicare based on the Medicare beneficiaries that Kanakeswaran referred to Star, and Medicare paid approximately $4.1 million based on those claims, the evidence showed.

This case was investigated by HHS-OIG and the FBI.  Trial Attorney Claire Yan of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Alexander F. Porter of the Major Frauds Section of the Central District of California are prosecuting the case. 

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud Strike Force operates in 10 locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,700 defendants who collectively have falsely billed the Medicare program over $14 billion.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

          SANTA ANA, California – A Dana Point man has been charged in a recently unsealed indictment with participating in a conspiracy to procure and illegally ship export-controlled computer servers to Iran.

          Johnny Paul Tourino, 64, was named in a 23-count grand jury indictment filed on March 7 and unsealed by a federal judge on August 17. Federal prosecutors today learned that the case had been unsealed.

          The indictment accuses Tourino and Spectra Equipment, Inc., which Tourino owned and operated, with violating the International Emergency Economic Powers Act (IEEPA), which controls and restricts the export of certain goods from the United States to foreign nations. Tourino and Spectra are also charged with conspiracy, smuggling goods out of the United States and money laundering.

          According to the indictment, from January 2014 through July 2017, Tourino, Spectra, and at least two others purchased and sent computer servers to Iran without obtaining licenses from the U.S. government that are required under IEEPA. The computer servers were dual-use commercial goods, meaning they had both a commercial application and a military or strategic one. The computers were controlled by the Commerce Control List for anti-terrorism and national security reasons.

          Tourino allegedly falsely told the manufacturer that the computer servers were intended for Kuwait and Slovenia, when he knew they were intended for Bank Mellat, an Iranian financial institution. On one occasion, according to the indictment, Tourino forwarded an email to the manufacturer after removing references to “Tehran” and “Iran.”

          Under IEEPA, it is a crime to willfully export or attempt to export items to Iran without a license from the U.S. government. These are items authorities have determined could be detrimental to regional stability and national security.

          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.

          Tourino was arrested in this case on February 7 and was released on bond. Following the indictment, he was arraigned and pleaded not guilty on March 12. A trial is currently scheduled for March 5, 2019.

          If convicted of the 23 charges in the indictment, Tourino would face up to a statutory maximum sentence of 430 years in prison, and Spectra would face fines that could total as much as $13.25 million.

          This case is the result of an ongoing investigation being conducted by the FBI, the U.S. Department of Commerce’s Office of Export Enforcement, and IRS Criminal Investigation.

          The case against Tourino is being prosecuted by Assistant United States Attorney Mark Takla of the Terrorism and Export Crimes Section.

          LOS ANGELES – The owner of a parking lot business was sentenced today to 70 months in federal prison for orchestrating a long-running bribery scheme that allowed him to bilk the U.S. Department of Veterans Affairs out of more than $13 million that should have been paid in relation to the operation of parking facilities on the VA’s Los Angeles medical campuses.

          David Richard Scott, 58, of Santa Monica, the owner of Westside Services LLC (WSS), was sentenced this afternoon by United States District Judge R. Gary Klausner. In addition to the prison sentence, Judge Klausner ordered Scott to pay $12,619,693 in restitution to the VA, a figure that takes into account some money already repaid to the agency.

          Additionally, Judge Klausner has ordered the forfeiture of millions of dollars worth of assets Scott amassed during the scheme to defraud the VA, which lasted approximately 14 years. The assets include three condominiums in Santa Monica, with a cumulative estimated value of $7 million; numerous high-end collectible cars, including several classic Corvettes and three Ferrari automobiles; a Cigarette “Top Gun” racing boat; and bank and brokerage accounts that contained more than $1 million; and just over $213,000 in cash that was seized from Scott’s residence.

          Scott, who has been in custody since his arrest last November, was sentenced after pleading guilty on May 17 to conspiracy and wire fraud.

          The scheme, which resulted in the payment of nearly $300,000 in bribes to VA contracting officer Ralph Tillman, cost the VA more than $13 million it should have received under a contract with WSS to operate parking lots on the campuses of the VA Greater Los Angeles Healthcare System (VA GLAHS). The vast majority of the activity authorized under the contract took place at the West Los Angeles VA Medical Center near Westwood and included parking for UCLA baseball games, the Wadsworth and Brentwood theaters, and the PGA golf tournament at the Riviera Country Club.

          “This defendant engaged in reprehensible and disgraceful conduct that had a direct impact on our nation’s veterans,” said United States Attorney Nick Hanna. “This elaborate scheme stole money from the federal agency charged with providing important services and medical care to the men and women who bravely served this nation.”

          For approximately 18 years, Scott had a contract to operate parking lots at VA GLAHS that required him to pay 60 percent of the gross revenues from the parking lots. Scott was required to submit annual reports detailing revenue generated by parking fees, as well as improvements and services his company provided that could be used to offset payments due to the VA.

          As part of the scheme, Scott maintained at least two sets of financial books, according to court documents. The numbers reported to the VA contained false revenue and expense statements, while a second set of books maintained by Scott’s bookkeeper/tax preparer contained the actual revenues and expenditures, except for unreported cash. Scott’s “goal was to pay the VA as little as possible,” he admitted in a plea agreement filed in court.

          Scott began bribing Tillman in 2003 and continued to bribe him on a regular basis until Tillman abruptly retired in 2014 after he was confronted by federal agents. Scott continued making “hush money” payments to Tillman after his retirement to continue the scheme and attempt to avoid termination of his parking contract. Scott used cash collected at the parking lots – cash revenue he rarely reported to the VA – to pay Tillman at least $286,000 in bribes.

          Over the course of the scheme, Scott underreported at least $4.6 million in revenues and failed to report an unknown amount of cash collected at the parking lots, according to the plea agreement. Additionally, Scott avoided making payments to the VA by marking up expenses associated with the parking lots – in some cases, up to 600 percent – and claiming to have spent $11.6 million to improve and maintain the facilities. During the scheme, Scott managed to avoid making payments to the VA for nearly 10 years.

          Tillman, who cooperated in the federal investigation, pleaded guilty in February to charges of making false statements to VA criminal investigators and subscribing to a false tax return. Tillman is scheduled to be sentenced by Judge Klausner on August 27.

          “Veterans Affairs employees who engage in collusive relationships with contractors will be aggressively pursued by the Office of Inspector General and prosecuted to the full extent of the law,” said Special Agent in Charge A.E. Pleasant, U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, Western Field Office.

          The cases against Scott and Tillman are the result of an investigation by the United States Department of Veterans Affairs, Office of Inspector General; the Federal Bureau of Investigation; and IRS Criminal Investigation.

          The prosecution of these cases is being handled by Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section.

          LOS ANGELES – A Los Angeles man pleaded guilty today in U.S. District Court to willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR), which would have disclosed his foreign bank accounts, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

          According to court documents, Ben Zion Birman held offshore accounts in Israel at Bank Leumi Le-Israel B.M. from 2006 to 2011. Birman willfully failed to file with the Department of Treasury an FBAR for calendar year 2010, despite having over $1 million in Bank Leumi accounts. In an effort to further hide his money, Birman 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 Birman to have funds issued by Leumi’s U.S. branch that were secretly secured by funds in his undeclared accounts in Israel.

          In December 2014, Bank Leumi entered into a deferred prosecution agreement after 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 locations around the world. 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.

          Birman faces a maximum sentence of five years in prison, as well as a period of supervised release, restitution and monetary penalties. Birman's sentencing is scheduled for December 10, 2018.

          “The Department of Justice is committed to vigorously investigating and prosecuting offshore account holders who maintain undeclared accounts and willfully ignore their U.S. reporting and tax obligations,” said Principal Deputy Assistant Attorney General Zuckerman.

          Principal Deputy Assistant Attorney General Zuckerman commended special agents from IRS-Criminal Investigation, who are investigating the case, and Tax Division Trial Attorneys Leslie Goemaat and Melissa Schraibman Grinberg, who are prosecuting the case. The Tax Division thanks Assistant U.S. Attorney Robert F. Conte for his assistance.

          Additional information about the Tax Division and its enforcement efforts may be found on the division’s website

A Los Angeles man pleaded guilty today in U.S. District Court for the Central District of California to willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR), which would have disclosed his foreign bank accounts, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. 

According to court documents, Ben Zion Birman, of Los Angeles, California held offshore accounts in Israel at Bank Leumi Le-Israel B.M. from 2006 to 2011. Birman willfully failed to file with the Department of Treasury an FBAR for calendar year 2010, despite having over $1 million in Bank Leumi accounts.  In an effort to further hide his money, Birman 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 Birman to have funds issued by Leumi’s U.S. branch that were secretly secured by funds in his undeclared accounts in Israel.

In December 2014, Bank Leumi entered into a deferred prosecution agreementafter 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 locations around the world.  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.

Birman faces a maximum sentence of five years in prison, as well as a period of supervised release, restitution and monetary penalties. Birman's sentencing is scheduled for December 10, 2018. 

“The Department of Justice is committed to vigorously investigating and prosecuting offshore account holders who maintain undeclared accounts and willfully ignore their U.S. reporting and tax obligations,” said Principal Deputy Assistant Attorney General Zuckerman.

Principal Deputy Assistant Attorney General Zuckerman commended special agents from IRS-Criminal Investigation, who are investigating the case, and Tax Division Trial Attorneys Leslie Goemaat and Melissa Schraibman Grinberg, 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.     

          LOS ANGELES – Federal authorities have arrested 12 defendants on federal narcotics and fraud charges stemming from an investigation into the Puente 13 street gang. Those arrested last night and this morning are among 17 defendants named in a series of indictments returned by a federal grand jury that allege various offenses, including narcotics, bank fraud and aggravated identity theft. The other five charged defendants were already in federal and state custody.

          The investigation into the Mexican Mafia-affiliated Puente 13 street gang was led by the United States Secret Service and the Drug Enforcement Administration, and included a series of wiretaps that revealed criminal activity by gang members, gang associates and others.

          The 17 defendants are charged in 12 indictments and one criminal complaint that allege a wide range of crimes, including possession with the intent to distribute methamphetamine and heroin, conspiracy to distribute methamphetamine, possession of a firearm in furtherance of drug trafficking, felon in possession of a firearm, bank fraud, conspiracy to commit bank fraud, aggravated identity theft, illegal possession of access devices (credit cards), possession of access device making equipment, and possession of stolen mail.

          The investigation began when authorities learned that Puente 13 member Victor Ponce De Leon was allegedly involved in drug trafficking, with intercepted communications indicating he was willing to sell methamphetamine. One of the indictments that names Ponce De Leon specifically alleges a drug transaction in which he sold a quarter ounce of methamphetamine while armed with a 9mm handgun.

          As the investigation expanded, authorities also uncovered an identity theft ring. While most of the participants are charged in separate cases, stolen credit cards and personal identifying information from numerous common victims were found in the possession of multiple defendants.

          During the five-month investigation, law enforcement also uncovered a scheme to smuggle narcotics into the Pitchess Detention Center in Castaic. That conduct is captured in an indictment alleging that Ricky Lee Thornburg, another Puente 13 member who was an inmate at the Pitches Detention Center, planned to receive smuggled methamphetamine from fellow co-conspirators and distribute the drugs to other inmates. This indictment, which charges the alleged supplier of the drugs and a woman who allegedly attempted to smuggle the methamphetamine into the facility, alleges that more than two ounces of methamphetamine and some heroin, all of which was concealed in plastic drinking straws, was intercepted as the woman was preparing to visit De Leon at Pitchess in May.

          The 17 defendants charged as a result of this investigation are:

• Victor Ponce De Leon, a convicted felon also known as “Dopey,” 26, of La Puente, who in charged in two indictments with conspiring to possess with intent to distribute methamphetamine, distributing methamphetamine, possessing a firearm in furtherance of drug trafficking, being a felon in possession of a firearm, bank fraud, conspiring to commit bank fraud, aggravated identity theft, and possessing stolen mail;

• James W. Butcher, 54, of Covina, who allegedly agreed to purchase methamphetamine from Ponce De Leon for redistribution;

• Ricky Lee Thornburg, also known as “Shorty,” 39, of Glendora, who is charged in two indictments with orchestrating the plot to smuggle narcotics into Pitchess, as well as possessing methamphetamine with the intent to distribute it and carrying a firearm in furtherance of drug trafficking;

• Beatris Gomez, 39, of Glendora, who allegedly supplied the narcotics to be smuggled into the jail and drove to the facility, is also charged with possessing an access device reader/encoder;

• Patricia Marie Jimenez, 32, of La Puente, who is charged in two indictments with attempting to smuggle the narcotics into the Pitchess by hiding the drug-laden straws in her boots, as well as possessing counterfeit currency, possessing unauthorized access devices, aggravated identity theft and possession of stolen mail;

• Melody Basye, 38, of San Bernardino, who allegedly possessed methamphetamine with intent to distribute it, possessed counterfeit access devices and possessed an access-device maker;

• Joseph Anthony Castro, 37, of Azusa, who allegedly possessed with intent to distribute heroin, possessed counterfeit access devices (including social security numbers), committed aggravated identity theft, and possessed approximately $4,650 in counterfeit currency;

• Matthew Burciaga, also known as “Porky,” 32, of La Puente, who allegedly possessed an access device reader/encoder;

• Yvonne Marie Estrada, 35, of Covina, who allegedly possessed with intent to distribute methamphetamine;

• Maribel Gomez, 25, of Azusa, who allegedly committed bank fraud, aggravated identity theft, and possessed with intent to distribute methamphetamine;

• Elizabeth Joyce McDowell, also known as “Lilly,” 23, of West Covina, who allegedly conspired to commit bank fraud, and committed aggravated identity theft;

• Priscilla Telles, also known as “Babydoll,” 31, of La Puente, who allegedly conspired to commit bank fraud and committed aggravated identity theft;

• David Ortega, also known as “No-No,” 23, of Hacienda Heights, who allegedly possessed unauthorized access devices, committed aggravated identity theft, and possessed stolen mail;

• Ulices Ramon Soto, also known as “Uli,” 36, of Whittier, who allegedly was a felon in possession of a firearm and ammunition, possessed unauthorized access devices, committed aggravated identity theft, possessed device-making equipment, and possessed stolen mail;

• Thomas Arroyave, 34, of Azusa, who allegedly possessed unauthorized access devices, committed aggravated identity theft, possessed with intent to use or transfer at least five identification documents, possessed access device-making equipment, possessed stolen mail, and was a convicted felon in possession of a firearm and ammunition;

• Edward Padilla, also known as “Spunks,” 24, of Chino Hills, who allegedly was a felon in possession of firearms and ammunition; and

• Ruby Escarcega, 22, of Chino Hills, who allegedly aided and abetted a felon in possession of firearms and ammunition;

          The 12 defendants arrested last night and today are expected to be arraigned this afternoon in United States District Court in downtown Los Angeles. The other five – Thornburg, Basye, Arroyave, Maribel Gomez and Jimenez – are expected to be brought into federal court for arraignments in these cases in the near future.

          Indictments and criminal complaints contain allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

          If convicted, those facing narcotics offenses general face mandatory minimum sentences of five years in federal prison and maximum possible sentences of 40 years. Those charged with fraud offenses face a range of penalties, with bank fraud carrying a statutory maximum sentence of 30 years in prison and aggravated identity theft carrying a mandatory consecutive two-year sentence.

          These cases are the result of an investigation by the United States Secret Service, the Drug Enforcement Administration. Substantial assistance was provided by the Glendora Police Department and the Culver City Police Department.

          These case are being prosecuted by Assistant United States Attorneys Scott M. Lara, William M. Rollins, Veronica M.A. Alegría, Julia S. Choe and Sara B. Milstein of the General Crimes Section.

          RIVERSIDE, California – A former special agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) was arrested this morning on federal civil rights charges that allege he sexually assaulted one woman and twice raped another woman after abusing his official position to convince them not to report his violent conduct.

          John Jacobs Olivas, 43, of Riverside, was arrested this morning without incident by special agents from FBI and ICE’s Office of Professional Responsibility.

          Olivas, who was arrested pursuant to a three-count indictment returned by a federal grand jury on August 1, was arraigned this afternoon in United States District Court in Riverside. Olivas entered a not guilty plea, was ordered released on a $50,000 bond, and was ordered to stand trial on October 9.

          Olivas – who began with his career with ICE in 2007 and resigned in September 2015 after working as an HSI special agent for just over six years – allegedly sexually assaulted the two victims in 2012.

          The indictment alleges that Olivas attempted to rape one victim in January 2012 after making it clear to her “that the police would not be responsive to any report she may make about defendant Olivas because of defendant Olivas’ position as a federal law enforcement officer.” Olivas allegedly violated the victim’s constitutional right to be free from deprivations of liberty without due process, which includes the right to bodily integrity.

          The indictment also alleges that Olivas raped another victim in September 2012 and then again in November 2012. Olivas allegedly also made clear to this woman that police would not respond to any report she might make about attacks by Olivas.

          Olivas is charged with three counts of deprivation of rights under color of law, each of which carries a statutory maximum sentence of life in federal prison.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

          The case against Olivas is being investigated by the Federal Bureau of Investigation and U.S. Immigration and Customs Enforcement’s Office of Professional Responsibility. Anyone who has information about Olivas’ conduct, or who believes they may have been a victim, is encouraged to call the FBI at 855-324-7257.

          This matter is being prosecuted by Assistant United States Attorney Joseph B. Widman, Chief of the Riverside Branch Office.

          SANTA ANA, California – A Walnut man has pleaded guilty to a charge of conspiring to export U.S.-origin tactical gear to Syria in violation of the International Emergency Economic Powers Act and Syria Sanctions.

          Rasheed Al Jijakli, 57, a Syrian-born naturalized U.S. citizen, pleaded guilty Monday before United States District Judge James V. Selna.

          In a plea agreement filed in this case, Jijakli admitted that, from April 2012 through March 2013, he conspired with other individuals to export tactical gear, including U.S.-origin laser boresighters, day- and night-vision rifle scopes, and other items from the United States to Syria.

          Jijakli and one of the co-conspirators purchased the tactical gear, and on July 17, 2012, Jijakli traveled with the tactical gear from Los Angeles to Istanbul, Turkey with the intent that it would be provided to Syrian rebels training in Turkey and fighting in Syria. Jijakli provided some of the equipment, specifically the laser boresighters, to a second co-conspirator, who Jijakli learned was a member of Ahrar Al-Sham. Jijakli also provided the goods to other armed Syrian insurgent groups in Syria and Turkey.

          In total, Jijakli and his co-conspirators provided at least 43 laser boresighters, 85 day rifle scopes, 30 night-vision rifle scopes, tactical flashlights, a digital monocular, five radios, and a bulletproof vest to Ahrar Al-Sham and other Syrian rebels in Syria, or with knowledge that the tactical gear was going to Syria.

          Further, in August and September 2012, Jijakli directed co-conspirators to withdraw thousands of dollars from Palmyra Corporation, a check-cashing services company where Jijakli was the chief executive officer, to pay for tactical gear for Syrian rebels.

          Judge Selna is scheduled to sentence Jijakli on December 4, at which time he will face a maximum statutory sentence of 20 years in federal prison.

          This case is the product of an investigation conducted by the FBI, U.S. Immigration and Custom’s Enforcement’s Homeland Security Investigations, the U.S. Department of Commerce’s Office of Export Enforcement, and IRS Criminal Investigation.

          This matter is being prosecuted by Assistant United States Attorney Mark Takla of the Terrorism and Export Crimes Section and DOJ Trial Attorney Christian Ford of the National Security Division’s Counterintelligence and Export Control Section.

          LOS ANGELES – A man who was already serving a 25-year sentence for providing material support to a foreign terrorist organization was sentenced today to serve an additional 20-year prison term for trying to kill the warden of the federal prison where he was housed.

          Fazliddin Kurbanov, 36, was sentenced today by United States District Judge Virginia A. Phillips.

          Kurbanov pleaded guilty on March 13 to one count of attempted murder of a federal officer. As part of his plea, Kurbanov admitted making and using a prison-made knife to attack the warden at the Federal Correctional Institute-II in Victorville on May 31, 2016, and attempting to slit his throat. The warden suffered serious injuries in the attack but has since recovered and now serves at another United States Bureau of Prisons facility.

          At today’s hearing, Kurbanov, speaking through an interpreter, told the court he was not sorry for his actions and that the victim was supposed to die. Kurbanov also expressed extreme animosity toward the United States.

          In handing down the maximum possible sentence for the attempted murder offense, Judge Phillips noted the impact to the victim and his family, and she concluded Kurbanov remains an extreme danger. Judge Phillips ordered that today’s 20-year sentence run consecutively to the 25-year sentence imposed in the previous case and that he be on lifetime supervised release once he completes the prison terms.

          The investigation into the attack on the warden was conducted by the Federal Bureau of Investigation.

          This case is being prosecuted by the National Security Division of the United States Attorney’s Office.

          LOS ANGELES – A former Los Angeles County deputy sheriff pleaded guilty today to conspiring to distribute methamphetamine, cocaine and marijuana as part of an interstate drug trafficking scheme in which the deputy agreed to use his position as a law enforcement officer to ensure the successful transport of narcotics.

          Deputy Sheriff Kenneth Collins, 50, of Chino, who separated from the LASD in late February, admitted that he conspired with at least two other individuals to accept cash payments in exchange for distributing large quantities of controlled substances and actively thwarting the enforcement of state and local law – in exchange for cash payments as high as $250,000.

          According to a plea agreement filed in federal court, during an FBI undercover operation, Collins agreed that he and his team would provide an armed escort for the narcotics and take calculated steps to prevent legitimate law enforcement from intercepting the shipments.

          Collins pleaded guilty before United States District Judge Otis D. Wright, II, who scheduled a sentencing hearing for November 19, 2018. As a result of today’s guilty plea, Collins faces a mandatory minimum sentence of 10 years in federal prison, and he could be sentenced to as much as life without parole.

          “Law enforcement officers are sworn to uphold the law, which is why we hold them to a higher standard of conduct,” said United States Attorney Nick Hanna. “Deputy Collins didn’t just break the law, he trampled his oath by agreeing to sell his badge to assist drug traffickers.”

          "Former Deputy Collins broke the law he swore to uphold by misusing his badge as a guarantee that crimes would go undetected, while enriching himself in the process," said Paul Delacourt, the Assistant Director in Charge of the FBI's Los Angeles Field Office. "The cooperation with the Los Angeles County Sheriff's Department during this investigation was instrumental to the resolution of this case."

          In January, special agents with the FBI arrested Collins and two co-defendants – David Easter, 52, of the Hyde Park District of Los Angeles, and Grant Valencia, 34, of Pomona – after they arrived in Pasadena to provide security for the transport of nearly 45 pounds of cocaine and more than 13 pounds of methamphetamine to Las Vegas, Nevada. Unbeknownst to Collins and his co-defendants, the narcotics transport was part of an FBI sting operation. Collins had previously negotiated a cash payment of $250,000 for this transport with an undercover FBI agent posing as the partner of a wealthy investor financing a drug trafficking operation.

          Collins had met Valencia through a life-skills class called the Emerging Leaders Academy where Collins was an instructor, according to court documents. The purpose of the academy was for LASD deputies to teach and mentor adult ex-offenders, like Valencia, in order to help those ex-offenders successfully reintegrate into society.

          Collins admitted in court that he and his two co-defendants previously provided security in November 2017 for a shipment of what Collins believed to be six kilograms of methamphetamine, as well as marijuana and counterfeit cigarettes, from Pasadena to Las Vegas. In exchange for his team’s security services that day, Collins received $25,000 in cash.

          In justifying the high fees for his services, Collins told the undercover agent “we’re cops” and “all of our transports make it through.” During a recorded meeting with the undercover agent, Collins displayed his Los Angeles County Sheriff’s Department badge and firearm to prove that he was, in fact, a law enforcement officer, thereby rendering his services more valuable to a drug trafficking organization.

          In October 2017, Collins sold two pounds of marijuana to the undercover agent for $6,000 as a “test run” to entice the undercover agent to purchase larger quantities of marijuana in the future. Collins also offered to facilitate the sale of up to $4 million of marijuana to the undercover agent every month, according to court documents. Collins claimed to have a “connection” through which he could secure up to 2,000 pounds of marijuana every month.

          In his plea agreement, Collins further admitted that, while on duty in May 2014, he conducted an unlawful traffic stop of a vehicle and illegally seized approximately $160,000 in cash from the vehicle. Prior to the traffic stop, Collins was aware that there would be a large sum of cash in the vehicle. Collins conducted the bogus traffic stop to illegally seize the cash, which was never reported to the LASD.

          Easter and Valencia are scheduled to be tried in this case before Judge Wright on October 23.

          The case against Collins and his co-defendants is the result of an investigation by the Federal Bureau of Investigation. The Los Angeles County Sheriff’s Department cooperated in the federal investigation.

          This case is being prosecuted by Assistant United States Attorney Lindsey Greer Dotson of the Public Corruption and Civil Rights Section.

          LOS ANGELES – Capping a three-year investigation by the Los Angeles Strike Force, authorities this morning arrested 20 defendants named in a series of indictments that allege the smuggling of large quantities of narcotics from Mexico on behalf of the Sinaloa Cartel.

          Those arrested this morning are among 57 defendants named in three indictments that were unsealed this morning. Two of the defendants were already in state custody and are being turned over today to federal authorities. The remaining 35 defendants are currently fugitives, with most of those believed to be in Mexico at this time.

          The investigation – dubbed Operation Narconetas – targeted three drug trafficking organizations that allegedly transported bulk quantities of cocaine, methamphetamine and heroin from Mexico to the Los Angeles metropolitan area and other locations across the United States. The investigation revealed that Sinaloa Cartel operatives moved narcotics to the northern reaches of Mexico, and the defendants charged in the indictments transported the drugs into the United States, often using vehicles with hidden compartments. One of the indictments alleges that money generated from illegal drug sales in the United States transported in bulk quantities from the United States into Mexico.

          As a result of Operation Narconetas, authorities seized approximately 850 pounds of methamphetamine, nearly one ton of cocaine, 93 pounds of heroin, almost 50 pounds of marijuana, and $1.42 million in United States currency.

          The Los Angeles Strike Force investigation was led by the Federal Bureau of Investigation, in partnership with the Drug Enforcement Administration. Agencies participating in Operation Narconetas include the Los Angeles Police Department; IRS Criminal Investigation; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the United States Marshals Service; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the California Highway Patrol; the Torrance Police Department; the Glendale Police Department; the Pomona Police Department; the Fullerton Police Department; and the Azusa Police Department.

          These Strike Force members uncovered several sophisticated international drug trafficking organizations that regularly transported narcotics across the U.S.-Mexico border and at times stored drugs in “stash houses” in cities across the Southland. The narcotics then were distributed throughout the United States.

          The Los Angeles Strike Force was formed in 2014 to target Mexican drug cartels that utilize the Los Angeles metropolitan region as a primary hub for the distribution of narcotics across the United States. The goals of the Strike Force are to target high-level narcotics traffickers, disrupt and dismantle the cartels’ narcotics trafficking and related money laundering activities, and arrest and prosecute the cartels’ leaders and operatives.

          “More than simply seizing large quantities of drugs and money, this investigation was able to identify the top-level, Mexican-based traffickers who directed the transactions, and who thought they were using secure communication devices to commit their crimes,” said First Assistant United States Attorney Tracy L. Wilkison. “Our ability to obtain those communications continues to be an important part of our ability to solve these crimes. The Los Angeles Strike Force has become a leader in using innovative investigative techniques to target Mexico-based drug trafficking organizations.”

          “This investigation was responsible for removing over 1,300 kilograms of narcotics from the streets of Los Angeles and other cities, and no doubt prevented violence in our communities, said Paul Delacourt, the Assistant Director in Charge of the FBI in Los Angeles. “We expect this case will have a significant impact on the transportation abilities of these organizations.”

          “The Greater Los Angeles Area is utilized by criminal organizations as a hub for the transportation and distribution of illicit drugs throughout the United States,” said DEA Associate Special Agent in Charge Bill Bodner. “Today’s joint operation sends a clear message that law enforcement is committed to stemming the flow of narcotics into our country and protecting Americans from the violence that accompanies drug trafficking.”

          The three drug trafficking indictments each allege conspiracies to distribute controlled substances. The indictments also contain asset forfeiture allegations in which the government is seeking to forfeit any property used to commit or facilitate the drug trafficking offenses. One of the indictments alleges a conspiracy to launder money and bulk cash smuggling.

          “Today’s arrest of multiple defendants for their alleged role in smuggling funds from illegal drug transactions in and out of the United States is a victory for the American public and a defeat to drug traffickers everywhere. The special agents of IRS Criminal Investigation continue in their mission to disrupt the flow of ill-gotten gains that is the life-blood for these criminals,” said Special Agent in Charge R. Damon Rowe, Los Angeles Field Office, IRS Criminal Investigation. “We will continue to be relentless in our mission to dismantle these drug trafficking organizations and bring the criminals who run them to justice.”

          The defendants arrested today in the Central District of California are being arraigned, starting this morning, in United States District Court in Los Angeles.

          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 are convicted in this case, most of the defendants would be subject to mandatory minimum sentences of 10 years in federal prison and potential sentences of life without parole.

          LOS ANGELES – A Burbank man who operated a string of allegedly sham medical clinics – and who already faces federal charges of using the clinics to orchestrate a massive narcotics scheme – was arrested today on new charges that he unlawfully procured United States citizenship.

          Armen Simonyan, 44, who was free on bond in the narcotics-trafficking case, was arrested after being named in a two-count indictment returned today by a federal grand jury. The new indictment charges Simonyan with unlawful procurement of United States citizenship and making a false statement on a passport application.

          Today’s indictment outlines Simonyan’s 15-year history of securing United States immigration benefits via fraud and identity theft. Simonyan allegedly entered the United States from Armenia under a stolen identity and a fraudulent passport. Simonyan then sought asylum in the United States, allegedly concocting a false narrative that he was born in Azerbaijan to parents of supposed mixed Armenian-Azerbaijani nationality; that his family suffered ethnic violence, including the murder of both his parents; and that he fled to the United States via Russia. The indictment alleges that, in fact, Simonyan was born in Armenia to Armenian parents, that he entered the United States from Armenia, and that both of his parents were alive.

          Simonyan will lose his United States citizenship if convicted of the immigration fraud charge.

          The indictment also charges Simonyan with lying on his application for a United States passport after he gained citizenship. The alleged false statements related to his place of birth, his date of birth, and his claim that his mother was deceased.

          Simonyan was previously indicted in August 2017 on charges that he and other conspirators disseminated more than 2 million pills of controlled prescription drugs to the black market, mostly oxycodone and hydrocodone. Simonyan is currently scheduled to go on trial in that case on February 12, 2019.

          In the immigration fraud case, Simonyan is expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

          If convicted of the charges in the new indictment, Simonyan would face a statutory maximum of 20 years in prison, in addition to the statutory maximum of 60 years in federal prison that he faces in the narcotics case.

          The immigration investigation was conducted by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the U.S. Department of State’s Diplomatic Security Service, and was conducted under the aegis of HSI’s Document and Benefit Fraud Task Force. Substantial assistance was provided by U.S. Citizenship and Immigration Services’ Fraud Detection and National Security unit, the Drug Enforcement Administration, and the U.S. Department of Health and Human Services’ Office of Inspector General.

          The case is being prosecuted by Assistant United States Attorneys Benjamin Barron and Jamie Lang of the Organized Crime Drug Enforcement Task Force.

          LOS ANGELES – Prime Healthcare Services, Inc.; Prime Healthcare Foundation, Inc.; Prime Healthcare Management, Inc.; and Prime’s Founder and chief executive officer, Dr. Prem Reddy, have agreed to pay the United States $65 million to settle allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare by admitting patients who required only less costly, outpatient care and by billing for more expensive patient diagnoses than the patients had (a practice known as “up-coding”).

          Under the settlement agreement, Reddy will pay $3.25 million and Prime will pay $61.75 million.

          Headquartered in Ontario, California, Prime Healthcare Services and the not-for-profit Prime Healthcare Foundation constitute one of the largest hospital systems in the nation, with 45 acute-care hospitals located in 14 states.

          The following 10 hospital defendants owned by Prime Healthcare Services are parties to the settlement agreement: Alvarado Hospital Medical Center, Garden Grove Medical Center, La Palma Intercommunity Hospital, Desert Valley Hospital, Chino Valley Medical Center, Paradise Valley Hospital, San Dimas Community Hospital, Shasta Regional Medical Center, West Anaheim Medical Center and Centinela Hospital Medical Center. Four other hospital defendants owned by Prime Healthcare Foundation are also parties to the settlement agreement: Sherman Oaks Hospital, Montclair Hospital Medical Center, Huntington Beach Hospital and Encino Hospital Medical Center. Prime Healthcare Management, a subsidiary of Prime Healthcare Services, provides management, consulting and support services to hospitals owned and operated by Prime.

          The settlement resolves allegations that, from 2006 through 2013, Prime engaged in a deliberate, corporate-driven scheme to increase inpatient admissions of Medicare beneficiaries who originally presented to the Emergency Departments at the 14 Prime hospitals in California. The government claimed that the inpatient admission of these beneficiaries was not medically necessary because their symptoms and treatment needs should have been managed in a less-costly outpatient or observation setting. Hospitals generally receive significantly higher payments from Medicare for inpatient admissions as opposed to outpatient treatment; therefore, the admission of beneficiaries who do not need inpatient care, as alleged here, can result in substantial financial harm to the Medicare program.

          The settlement also resolves allegations that, from 2006 through 2014, Prime engaged in up-coding by falsifying information concerning patient diagnoses, including complications and comorbidities, in order to increase Medicare reimbursement.

          “Patients and taxpayers who finance health care programs such as Medicare deserve to know that doctors are making decisions solely based on medical need – and not based on a corporate desire to increase billings,” said First Assistant United States Attorney Tracy Wilkison. “The Justice Department is committed to preserving the integrity of public health programs and preventing improper billing practices.”

          “This settlement reflects our ongoing commitment to ensure that health care providers appropriately bill Medicare,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Charging the government for higher cost inpatient services that patients do not need, and for higher-paying diagnoses than the patients have, wastes the country’s valuable health care resources.”

          Prime also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) requiring the company to engage in significant compliance efforts over the next five years. Under the agreement, Prime is required to retain an independent review organization to review the accuracy of the company’s claims for services furnished to Medicare beneficiaries.

          “When health care companies try to boost their profits by billing federal health care programs for more expensive services than they needed to provide, the Office of Inspector General will ensure they are held accountable for their deceptive schemes,” said Christian J. Schrank, Special Agent in Charge for the HHS-OIG’s, Los Angeles Regional Office.

          “Those who engage in health care fraud, including corrupt doctors and medical professionals driven by greed, exploit helpless or unwitting patients in violation of the oath they took to protect us – and often American taxpayers are the victims,” said Paul D. Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “By reaching this settlement, the FBI and our partners are holding Prime Healthcare accountable for exaggerating patients’ needs and inflating the severity of their symptoms while handsomely lining their pockets. This case should send a clear message to others who intend to engage in similar schemes that rout the American healthcare system.”

This settlement resolves a False Claims Act (FCA) lawsuit filed in federal court in Los Angeles by Karin Berntsen, the former director of performance improvement at Alvarado Hospital Medical Center in San Diego. Under the qui tam, or whistleblower, provisions of the FCA, private citizens are permitted to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery. The FCA also permits the government to intervene and take over the lawsuit, as it did in this case as to some of Ms. Berntsen’s allegations. Ms. Berntsen will receive $17,225,000 as her portion of the settlement amount.

          Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

          The settlement was a result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Central District of California, the Federal Bureau of Investigation’s Los Angeles Field Office, FBIHQs Major Provider Response Team, and HHS-OIG.

          The case is United States ex rel. Karin Berntsen v. Prime Healthcare Services, Inc., et al., CV11-08214-PJW (C.D. Cal.). The claims resolved by this settlement are allegations only and there has been no determination of liability.

Prime Healthcare Services, Inc., Prime Healthcare Foundation, Inc., and Prime Healthcare Management, Inc. (collectively Prime), and Prime’s Founder and Chief Executive Officer, Dr. Prem Reddy, have agreed to pay the United States $65 million to settle allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare by admitting patients who required only less costly, outpatient care and by billing for more expensive patient diagnoses than the patients had (a practice known as “up-coding”), the Justice Department announced today. Under the settlement agreement, Dr. Reddy will pay $3,250,000 and Prime will pay $61,750,000.      

“This settlement reflects our ongoing commitment to ensure that health care providers appropriately bill Medicare,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Charging the government for higher cost inpatient services that patients do not need, and for higher-paying diagnoses than the patients have, wastes the country’s valuable health care resources.”

Headquartered in Ontario, California, Prime Healthcare Services and not-for-profit Prime Healthcare Foundation constitute one of the largest hospital systems in the nation, with 45 acute-care hospitals located in 14 states. The following 10 hospital defendants owned by Prime Healthcare Services are parties to the settlement agreement:  Alvarado Hospital Medical Center, Garden Grove Medical Center, La Palma Intercommunity Hospital, Desert Valley Hospital, Chino Valley Medical Center, Paradise Valley Hospital, San Dimas Community Hospital, Shasta Regional Medical Center, West Anaheim Medical Center and Centinela Hospital Medical Center. The following 4 hospital defendants, owned by Prime Healthcare Foundation, are also parties to the settlement agreement: Sherman Oaks Hospital, Montclair Hospital Medical Center, Huntington Beach Hospital and Encino Hospital Medical Center. Prime Healthcare Management, a subsidiary of Prime Healthcare Services, provides management, consulting and support services to hospitals owned and operated by Prime.

The settlement resolves allegations that from 2006 through 2013, Prime engaged in a deliberate corporate-driven scheme to increase inpatient admissions of Medicare beneficiaries who originally presented to the Emergency Departments at 14 Prime hospitals in California.  The government claimed that the inpatient admission of these beneficiaries was not medically necessary because their symptoms and treatment needs should have been managed in a less costly outpatient or observation setting. Hospitals generally receive significantly higher payments from Medicare for inpatient admissions as opposed to outpatient treatment; therefore, the admission of beneficiaries who do not need inpatient care, as alleged here, can result in substantial financial harm to the Medicare program.  The settlement also resolves allegations that, from 2006 through 2014, Prime engaged in up-coding by falsifying information concerning patient diagnoses, including complications and comorbidities, in order to increase Medicare reimbursement.

“Patients and taxpayers who finance health care programs such as Medicare deserve to know that doctors are making decisions solely based on medical need – and not based on a corporate desire to increase billings,” said First Assistant United States Attorney Tracy Wilkison for the Central District of California. “The Justice Department is committed to preserving the integrity of public health programs and preventing improper billing practices.”

Prime also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) requiring the company to engage in significant compliance efforts over the next five years. Under the agreement, Prime is required to retain an independent review organization to review the accuracy of the company’s claims for services furnished to Medicare beneficiaries.

“When health care companies try to boost their profits by billing federal health care programs for more expensive services than they needed to provide, the Office of Inspector General will ensure they are held accountable for their deceptive schemes,” said Christian J. Schrank, Special Agent in Charge for the HHS-OIG’s, Los Angeles Regional Office.

“Those who engage in health care fraud, including corrupt doctors and medical professionals driven by greed, exploit helpless or unwitting patients in violation of the oath they took to protect us - and often American taxpayers are the victims,” said Paul D.  Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office.  “By reaching this settlement, the FBI and our partners are holding Prime Healthcare accountable for exaggerating patients’ needs and inflating the severity of their symptoms while handsomely lining their pockets.  This case should send a clear message to others who intend to engage in similar schemes that rout the American healthcare system.”

This settlement resolves a lawsuit filed under the False Claims Act (FCA) in the U.S. District Court for the Central District of California by Karin Berntsen, former Director of Performance Improvement at Alvarado Hospital Medical Center in San Diego. Under the qui tam or whistleblower provisions of the FCA, private citizens are permitted to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery. The FCA also permits the government to intervene and take over the lawsuit, as it did in this case as to some of Ms. Berntsen’s allegations.  Ms. Berntsen will receive $17,225,000 as her portion of the settlement amount.  

The government’s resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The settlement was a result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Central District of California, the Federal Bureau of Investigation’s Los Angeles Field Office, FBIHQs Major Provider Response Team, and the HHS-OIG.  

The case is captioned United States ex rel. Karin Berntsen v. Prime Healthcare Services, Inc., et al.  No. CV 11-08214 PJW (C.D. Cal.).  The claims resolved by this settlement are allegations only and there has been no determination of liability.

          SANTA ANA, California – The leader of a ring that staged a series of daytime smash-and-grab robberies at Southern California jewelry stores that netted the thieves $6 million worth of Rolex and other high-end watches was sentenced today to 55 years in federal prison.

          Keith Marvel Walton, 47, of South Los Angeles, a senior member of the Inglewood Family Gangster Bloods criminal street gang who organized the armed robberies, was sentenced by United States District Judge Cormac J. Carney.

          During today’s sentencing hearing, Judge Carney said the robberies – which were “planned, organized and led” by Walton, and were carried out during the daytime in public shopping malls – “terrified people and traumatized them for the rest of their lives.”

          Walton, who is also known by the monikers “Green Eyes” and “Fly Guy,” “is likely the most dangerous, prolific, and incorrigible criminal who has ever appeared before the Court for sentencing,” prosecutors said in a sentencing memorandum filed with the court.

          Walton was one of five men convicted following a five-week trial last summer in United States District Court (guilty verdicts against the fifth defendant were overturned by the court in a matter currently being appealed by prosecutors). The jury convicted Walton of conspiring to violate the Hobbs Act by planning the jewelry store robberies, as well as participating in three of the robberies, two of which involved firearms. Walton committed these offenses soon after pleading guilty in federal court to being a convicted felon in possession of firearms and ammunition. Walton’s extensive criminal record, according to court documents, also includes a 1995 federal conviction for participating in a Hobbs Act robbery of Texas drug store and using a firearm in that robbery.

          “Walton is dangerous, violent, and manipulative,” according to the sentencing memorandum. “He knows little else but crime and violence.”

          Prosecutors have secured convictions against a total of 19 defendants who were involved in at least one of the smash-and-grab robberies.

          Last week, one of those defendants – Stanley Ford, 49, of Lancaster – was sentenced to 25 years in prison for participating in five of the robberies.

          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 in the scheme 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 conspiracy was responsible for 14 robberies or attempted robberies between early August 2014 and April 2016. One heist at a store in the Century City mall netted more than $1.6 million in watches and involved one of the robbers firing a shot from a rifle at a security guard who was trying to secure the store. Members of the conspiracy stole watches and other jewelry that was cumulatively worth approximately $6 million.

          The other three trial defendants pending sentencing are:

          Robert Wesley Johnson, 29, of Inglewood – who recruited robbers, scouted the jewelry stores leading up to the robberies, and supplied firearms, hammers, backpacks and other tools to the robbers who went into the jewelry stores – is scheduled to be sentenced on September 7;

• Evan Scott, 29, of Compton, who was a gunman in two of the robberies, and pepper sprayed an employee in a third robbery and is expected to be sentenced later this year; and

• Jameson Laforest, 26, of Inglewood, who received watches stolen during robberies in Hollywood and Torrance and smashed glass cases during a robbery in Manhattan Beach and is scheduled to be sentenced on August 20.

          The evidence at trial showed that the defendants participated in at least one of the following eight robberies:

• the August 3, 2014 robbery of Prestige Jewelers in Manhattan Beach, during which 19 Rolex watches with an approximate retail value of $92,000 were stolen;

• the August 24, 2015 armed robbery of Rolex Boutique Geary’s in the Century City Mall, during which 40 Rolex watches with an approximate retail value of $1.63 million were stolen;

• the October 21, 2015 armed robbery of Frederic H. Rubel Jewelers in the Shops at Mission Viejo, during which 40 Rolex watches and David Yurman jewelry with an approximate retail value of $595,000 were stolen;

• the January 22, 2016 armed robbery of Manya Jewelry in Woodland Hills, during which three Rolex watches and other assorted watches and jewelry with an approximately retail value of $108,888 were stolen;

• the February 7, 2016 robbery of Ben Bridge Jewelers in the Oaks Mall in Thousand Oaks, during which 35 Rolex watches with an approximate retail value of $298,000 were stolen;

• the February 17, 2016 armed robbery of Westime in West Hollywood, during which 15 Audemars Piguet watches with an approximately retail value of $576,200 were stolen;

• the February 29, 2016 armed robbery of Ben Bridge Jewelers in the Del Amo Fashion Center in Torrance, during which 30 Rolex watches with an approximate retail value of $456,325 were stolen;

• the March 22, 2016 robbery of Westime in Malibu, during which 66 Audemars Piguet, Breitling, Franck Muller, Omega and Hublot watches with an approximate retail value of $1.42 million were stolen; and

• the April 24, 2016 robbery of Ben Bridge Jewelers in Santa Monica, during which 24 Tag Heuer watches with an approximate retail value of $67,500 were stolen.

          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.

          LOS ANGELES – A meat processor that supplied Southern California grocery chains, the company’s owner and a plant manager have pleaded guilty to federal charges related to the sale of “misbranded” beef, pork and poultry products that illegally bore the official USDA mark and falsely indicated the meats had been inspected by federal authorities.

          As a result of the illegal conduct related to a facility operated by AA Meat Products in the City of Commerce, investigators with the United States Department of Agriculture seized approximately 568,000 pounds of meat and poultry products, and the USDA issued a Class I recall led to the recovery of another nearly one-half million pounds of meat – all of which had to be destroyed. A Class I recall, according to court documents, is based on a “health hazard situation where there is a reasonable probability that the use of the product will cause serious, adverse health consequences, or death.” AA Meat voluntarily participated in the massive Class I recall to protect public safety.

          AA Meat operated a processing facility in Maywood, which was operating under a USDA grant of inspection, where the meat and poultry food products were properly federally inspected, as well as a second facility in Commerce, which was not. The illegal conduct in this case occurred in 2012 when AA Meat misbranded its meat and poultry food products and intended to defraud its customers by falsely claiming that meat processed at its Commerce facility had been federally inspected.

          The three defendants who pleaded guilty Tuesday in United States District Court are:

• Golden Key Food, Inc., operating under the business name of AA Meat Products Corp., which pleaded guilty to a felony offense of offering to sell misbranded meat, specifically beef tripe, with the intent to defraud;

• Bai Zhi Yan, who is also known as Pat Yan, 47, of Temple City, the owner of AA Meat, who pleaded guilty to two misdemeanor counts of offering to sell misbranded meat (pork uteri) and poultry products (duck feet); and

• Yan’s wife, Lianjie Kitty Jiang, 44, also of Temple City, the plant manager at AA Meat’s Maywood facility, who pleaded guilty to the same counts as her husband.

          The defendants admitted in court documents that the Commerce facility was not operating under a USDA grant of inspection, and they were preparing and selling millions of pounds of misbranded and uninspected meat and poultry food products.

          All three defendants pleaded guilty before United States District Judge R. Gary Klausner, who ordered the defendants to appear for sentencing on September 17.

          Prosecutors have agreed to recommend that AA Meat be sentenced to five years of probation and ordered to pay a $1 million fine. The company has agreed to be subject to a food safety compliance plan. As for Yan and Jiang, prosecutors will recommend a sentence of two years of probation and 100 hours of community service, as well as a $20,000 fine for Jiang and a $5,000 fine for Yan.

          This case is the product of an investigation by the United States Department of Agriculture’s Office of the Inspector General (USDA-OIG) and the USDA Food Safety and Inspection Service (FSIS).

          This case is being prosecuted by Assistant United States Attorney Amanda M. Bettinelli of the Environmental and Community Safety Crimes Section.

          LOS ANGELES – A Filipino woman and her family members were indicted by a federal grand jury today for conspiring to funnel in and out of the United States approximately $20 million in Philippine public funds obtained through a multi-year bribery and fraud scheme. Charged in the indictment for Conspiracy to Commit Money Laundering, Domestic Money Laundering and International Money Laundering were:

          Jannet Lim Napoles, 54,

          Jo Christine Napoles, 34,

          James Christopher Napoles, 33,

          Jeane Catherine Napoles, 28,

          Reynald Luy Lim, 52, and

          Ana Marie Lim, 47.

          Four defendants together with approximately 20 Philippines legislators and other government officials not charged in U.S. indictments converted to their own benefit hundreds of millions of dollars in Philippine public funds through the intricate scheme and then transmitted approximately $20 million from that scheme into the United States to purchase assets, including real property and luxury vehicles.

          The defendants fraudulently converted money from a lump-sum discretionary “Priority Development Assistance Fund” granted to each member of the Philippines Congress as well as other government funds designed to benefit poor Filipinos.

          The money was paid to dozens of non-governmental organizations controlled by Jannet Napoles pursuant to contracts that required the money to be spent on development projects. The projects were not performed. Instead, the money was diverted to kickbacks for the legislators and other government officials, and for the personal use of the Napoles family.

          Approximately $20 million of those funds were diverted to money remitters in the Philippines and then wired to Southern California bank accounts where the money was used to purchase real estate, shares in two businesses, two Porsche Boxsters, and finance the living expenses of three family members residing in the United States: Jeane Napoles, Reynald Lim, and Ana Lim.

          The charges handed down today pertain to events beginning in September 2012 and continuing through August 2014. In September 2012, an audit discovered the fraud. In July 2013, the fraud and the U.S. proceeds were exposed in the Filipino press. In August 2013, Jannet was arrested by Philippine authorities and Napoles family bank accounts were frozen in the Philippines. Thereafter, Napoles and her family members attempted to quietly liquidate the assets in the United States, secretly repatriate most of the resulting funds back to the Philippines and to other accounts in the U.S. and United Kingdom, and disburse some of the funds to Jeane Napoles, who used the money to finance her lifestyle and open a fashion business.

          “Even after Jannet Napoles made a highly publicized statement admitting that she had bribed Philippine legislators in connection with these ‘ghost projects,’ the defendants attempted to convert the proceeds of this crime to their own use,” said United States Attorney Nick Hanna. “The efforts of the Philippine and American investigators demonstrates that there are consequences to abusing the public trust and we hope to deter such conduct in the future. To do this, we will work with our Philippine counterparts to secure the extradition of the defendants to the United States.”

          According to court documents, approximately $12.5 million in Southern California real estate has been seized by the United States Attorney’s Office and is subject to a civil forfeiture case pending before United States District Judge James V. Selna. If the court orders the assets forfeited, the United States will work with Philippine officials in an attempt to return the stolen funds back to the Philippine government.

          U.S. authorities have received ongoing cooperation and substantial assistance from the Philippine government, including the Department of Justice, the Office of the Ombudsman, the Anti-Money Laundering Council, and the Commission on Audit, which responded to official requests pursuant to the Mutual Legal Assistance Treaty between the Philippines and the United States and through the Financial Crimes Enforcement Network.

          This case is being investigated by the Federal Bureau of Investigation.

          The case is being prosecuted by Assistant United States Attorney Daniel O’Brien, Deputy Chief of the Public Corruption and Civil Rights Section.

          LOS ANGELES – A Russian national was sentenced today to 70 months in federal prison for hacking into the accounts of two companies and issuing unauthorized debit cards associated with dependent care accounts to conspirators around the world, leading to losses of more than $4 million.

          Mikhail Konstantinov Malykhin, 36, an illegal alien who was living in the Park La Brea district of Los Angeles, was sentenced by United States District Judge Dolly M. Gee after admitting to hacking into the accounts and conspiring to use the fraudulent debit cards.

          In addition to the 70-month sentence, Judge Gee ordered Malykhin to pay $4,131,731 in restitution. Malykhin has agreed to forfeit approximately $1.3 million in cash and more than $22,000 in gift cards previously seized by FBI agents from Malykhin’s safe deposit boxes, as well as several gold bars, nearly $30,000 that Malykhin sent to a plastic surgery center, and a 1966 Ford Mustang.

          Judge Gee today described Malykhin’s offenses as “reprehensible,” noting that he had “caused much pain” and “ruined the lives of many of his victims.”

          Malykhin pleaded guilty in 2016 to two felony offenses – conspiracy to use unauthorized access devices (the stolen debit cards) and unauthorized access to a protected computer.

          According to court documents, in late 2015 and early 2016, Malykhin used login credentials supplied to him by another hacker to illegally access the online software platform of a Massachusetts company, which other companies used to manage flexible spending accounts and dependent care accounts. Once he illegally accessed the platform, Malykhin reactivated dormant dependent care accounts associated with an Oregon company and issued debit cards from these accounts with limits of up to $5 million. Malykhin also illegally accessed the platform and issued debit cards linked to a Colorado company that later went out of business as the result of the losses suffered through the hack.

          Malykhin caused the debit cards to be sent to conspirators around the world, including to people in the United States and Russia, where the cards were used to purchase big-ticket items at retail stores, such as Best Buy and Apple in the Los Angeles area. For his part, Malykhin received cash payments, luxury items, and gift cards obtained when items purchased with the fraudulent debit cards were returned.

          Malykhin’s conduct resulted in over $4 million in losses, with the now-defunct Colorado company suffering the bulk of those loses, which had to be shouldered by the Massachusetts company in the wake of the primary victim’s insolvency. As a result of the losses caused by Malykhin, employees of the Oregon and Colorado companies lost their jobs, as well as investments in those small businesses and retirement savings.

          Judge Gee today described some of the victim-impact letters submitted to the court as “heart-breaking” and noted the “lasting emotional harm” that Malykhin had caused the victims.

          Last year, five local “runners” who used the fraudulent debit cards at retail locations were sentenced to federal prison.

          The case against Malykhin was investigated by the Federal Bureau of Investigation.

          The case against Malykhin was prosecuted by Assistant United States Attorney Anil J. Antony of the Cyber & Intellectual Property Crimes Section, with assistance provided by Assistant United States Attorney Jonathan Galatzan of the Asset Forfeiture Section.

          LOS ANGELES – A United States Postal Service employee and his half-brother were arraigned this morning after being indicted by a federal grand jury on charges of participating in a conspiracy that caused nearly a quarter million dollars in losses in two armed robberies and the burglary of USPS trucks carrying cash.

          William Crosby, 31, the USPS employee, and Myron Crosby, 27, both of Inglewood, were named in a four-count indictment filed on Tuesday. At today’s arraignment, both men pleaded not guilty and were ordered to stand trial on September 18.

          The Crosbys allegedly participated in the armed robbery of a USPS truck driver on March 1 after the vehicle was forced to stop on an off-ramp of the Harbor Freeway. The indictment also alleges that William Crosby participated in the February 1 armed robbery of a Postal Service driver, as well as the burglary of a Postal Service truck on August 1, 2017.

          As a former supervisor, William Crosby knew when the USPS transported cash generated from the sale of money orders and USPS merchandise – information that is not known to all Postal Service employees, according to the indictment, which alleges that the burglary and two armed robberies caused cash losses of $238,457.

          According to the indictment:

• On August 1, 2017, William Crosby told unknown co-conspirators that a Postal Service truck carrying a large amount of cash was on the loading dock at the Dockweiler Post Office in South Los Angeles. A man wearing a Postal Service shirt walked onto the loading dock and stole a container inside the truck that contained more than $128,000 in cash. About a month after this burglary, Myron Crosby allegedly used Instagram to send his half-brother a photo of stacks of $100, $50 and $20 bills with the caption “the count.”

• On February 1, William Crosby, then assigned to the Wagner Post Office in Los Angeles, provided information to unknown co-conspirators that a USPS truck carrying cash was leaving the facility. During an incident in which William Crosby acted as a lookout, a minivan blocked the USPS truck just outside the Wagner Post Office, a man threatened the truck driver at gunpoint, and the robber stole over $37,000 in cash.

• On March 1, William Crosby again acted as a source of information and a lookout in a robbery of a USPS truck that departed from the Dockweiler Post Office. Myron Crosby allegedly rented a Mercedes SUV and used that vehicle to box in the truck when it exited the southbound 110 Freeway at Slauson Avenue, which allowed another unidentified man to brandish a gun and steal over $72,000 in cash.

          The indictment charges both Crosbys with conspiracy and robbery of United States property in relation to the March 1 incident. William Crosby is additionally charged with theft of government property and an additional count of robbery of United States property.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.

          If they were to be convicted of the crimes alleged in the indictment, William Crosby would face a statutory maximum sentence of 65 years in federal prison, and Myron Crosby would face up to 30 years in prison for the conspiracy count.

          The case is being investigated by the United States Postal Inspection Service and the United States Secret Service.

          The case is being prosecuted by Assistant United States Attorney Thomas Rybarczyk of the Public Corruption and Civil Rights Section.

          SANTA ANA, California – A former captain with Alaska Airlines who admitted piloting a plane carrying more than 80 passengers while under the influence of alcohol was sentenced today to one year and one day in federal prison.

          David Hans Arntson, 63, of Newport Beach, was sentenced by United States District Judge Cormac J. Carney, who also ordered Arntson to pay a $10,000 fine.

          Judge Carney said Arntson engaged in “a very dangerous offense.”

          Arntson pleaded guilty in February to one felony count of operating a common carrier while under the influence.

          When he pleaded guilty, Arntson admitted that he piloted two Alaska Airlines flights on June 20, 2014. The first flight was from San Diego International Airport to Portland, Oregon. He then flew a plane from Portland to John Wayne Airport in Orange County.

          After landing at John Wayne Airport, Arntson was selected for random drug and alcohol testing by Alaska Airlines. A technician for Alaska Airlines performed two breathalyzer tests that showed the pilot had a blood alcohol concentration of 0.134 percent and 0.142 percent – both of which were well above the federal limit of 0.04.

          After the technician informed Alaska Airlines of the test results showing alcohol in his system, the airline removed Arntson from all safety-sensitive duties. Following the June 20, 2014, incident, Arntson retired from the Alaska Airlines, and the Federal Aviation Administration revoked his ability to pilot a plane.

          “This defendant was at the controls during hundreds of flights carrying innumerable passengers – undoubtedly under the influence of alcohol during many of those trips,” said United States Attorney Nicola T. Hanna. “Fortunately, he was finally caught, and the risk to passengers was stopped. This case sends a message to everyone in the aviation industry that passenger safety is paramount, and we will aggressively investigate and prosecute any threat to that safety.”

          In a sentencing memorandum filed with the court, prosecutors said that “during at least a substantial portion” of his more than 20 years as a captain for Alaska Airlines, Arntson was an alcoholic who concealed his drinking from the airline and the Federal Aviation Administration.

          The investigation into Arntson was conducted by the United States Department of Transportation, Office of Inspector General.

          “The sentencing in this U.S. Department of Transportation, Office of Inspector General (DOT-OIG) investigation demonstrates our commitment to safeguarding the Nation’s air transportation system for the traveling public,” said Lisa Glazzy, Acting DOT-OIG Regional Special Agent-in-Charge. “Working with our prosecutorial partners, we will continue our efforts to prevent and pursue those who seek to compromise the safety of our National Airspace System.”

          This case was prosecuted by Assistant United States Attorneys Dennis Mitchell and Mark A. Williams of the Environmental and Community Safety Crimes Section.

          RIVERSIDE, California – Federal authorities this morning concluded a 2½-year wiretap investigation into a drug trafficking organization based in the Coachella Valley by arresting eight defendants linked to the distribution of wholesale quantities of methamphetamine.

          The eight people arrested today by special agents with the Drug Enforcement Administration are among 16 defendants named in two indictments returned by a federal grand jury on June 14. In addition to today’s arrests, three defendants already were in custody, and five defendants are fugitives, with three of those believed to be in Mexico.

          The investigation – which was dubbed Operation “Narco Navigator” – targeted a significant methamphetamine distribution network overseen by a Coachella man that was responsible for sending narcotics to local sellers, as well as to customers in other states. During the course of this investigation, the DEA and its law enforcement partners seized over 50 pounds of methamphetamine and four firearms.

          The main indictment charges 15 defendants, 11 of whom were arrested today or were already in custody. The charged defendants are:

• Raul Lopez-Valenzuela, 42, of Coachella, an illegal alien and the alleged leader of the drug trafficking organization;

• Balbino Valenzuela-Verdugo, also known as “Manuel,” 42, of Coachella, an illegal alien who is currently a fugitive and who allegedly was the primary distributor for the drug ring;

• Antonio Zamora, also known as “Foca,” 30, of Coachella, who currently is a fugitive and allegedly was a supplier of narcotics for the drug organization – including approximately 16 pounds of methamphetamine seized in 2015 and 2016;

• Jesus Garcia, also known as “Chuy,” 37, of Coachella, who allegedly was another supplier of narcotics to the Lopez-Valenzuela organization;

• Ernesto Alonzo Flores, also known as “Negro,” 36, of Coachella, another person who allegedly supplied narcotics to the drug ring – including approximately 24 pounds of methamphetamine seized from Valenzuela-Verdugo in 2016;

• Jesus Ramirez Granados, also known as “Chuy2,” 35, of Coachella, an illegal alien who allegedly distributed narcotics on behalf of the Lopez-Valenzuela drug trafficking organization;

• Daniel Kenneth Dalpezzo, 48, of Yucca Valley, who allegedly was a significant customer of the drug ring, purchasing large quantities of methamphetamine for further distribution;

• Charmaine Raygina Florio, 53, of Cathedral City, who is Dalpezzo’s former wife and allegedly purchased methamphetamine from the drug ring along with Dalpezzo;

• Tracy Cross, 45, of Palm Desert, who was already in custody;

• Alejandro Jose Rojas, 36, of Palm Springs, who was already in custody;

• Anthony Osteen, 38, of La Mesa, who allegedly worked with Rojas to coordinate obtaining narcotics;

• Roland Roe, 46, of Palm Springs, who was already in custody and who allegedly arranged for the supply of narcotics for at least one other defendant;

• Warren Barry, 54, of La Quinta, currently a fugitive, who allegedly was a courier for Lopez-Valenzuela, who was carrying a load of more than 10 pounds of methamphetamine that was seized by law enforcement authorities in late 2015 in Nebraska;

• Jason Sills, 37, of Palm Springs, an alleged distributor of narcotics in the Coachella Valley; and

• Ruben Arredondo-Diaz, 53, of Lexington, Nebraska, who is currently a fugitive and who allegedly arranged the distribution of drugs in Nebraska.

          All 15 defendants named in this indictment are accused of participating in a conspiracy to distribute methamphetamine and to possess with the intent to distribute methamphetamine. If they were to be convicted, each defendant would face a potential sentence of life in federal prison.

          Those arrested today are expected to be arraigned on the indictment this afternoon in United States District Court in Riverside (with the exception of Osteen, who is expected to appear tomorrow in federal court in San Diego).

          The second indictment unsealed today charges Sills and Salvador Lemus Ramos, also known as “Eddie,” 39, of Palm Springs, who is also a fugitive, with distributing methamphetamine. The indictment describes a transaction in late 2015 in Cathedral City involving two pounds of methamphetamine where the buyer was an undercover DEA agent.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.

          The investigation in this matter was conducted by the DEA, which received assistance from the United States Border Patrol; the Palm Springs Police Department; the Palm Springs Fire Department; the Coachella Valley Narcotics Task Force; the Riverside County Sheriff’s Department; U.S. Customs and Border Protection; the San Bernardino County Sheriff’s Department; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Federal Bureau of Investigation, the United States Marshal’s Service; the California Department of Corrections and Rehabilitation; the California Highway Patrol; the Riverside County District Attorney’s Gang Impact Team; and the Nebraska State Patrol.

          The two indictments are being prosecuted by Assistant United States Attorney Puneet V. Kakkar of the Organized Crime Drug Enforcement Task Force.

          LOS ANGELES – The central players in a scheme to recycle stolen postal pallets have been sentenced to two years in federal prison after pleading guilty to conspiracy to convert government property and conspiracy to launder money.

          Jorge Villalobos, 41, of Riverside, was sentenced in April, and Hugo Guzman, 40, of Fontana, was sentenced yesterday, both by United States District Judge Manuel L. Real. In addition to the prison time, they were ordered to pay $3.4 million in restitution, the largest restitution amount ordered for theft of United States Postal Service (USPS) property, according to the USPS. Based on court records, this restitution has been paid in full.

          Villalobos is President and Guzman is Vice President of Go Green Industries in Riverside. The business is a plastics recycler, processor, and compounder. According to court records, between 2008 and 2014, Villalobos and Guzman, through Go Green Industries, knowingly acquired stolen USPS plastic pallets, shredded them, and sold the resulting plastic on the open market for corporate profit. Further, Villalobos and Guzman laundered the proceeds from this illegal activity by transferring the money to two straw-person accounts, and then using those accounts to promote further unlawful activity.

          “These defendants siphoned millions of dollars from the USPS by actively seeking out stolen pallets, and pumping money from the sales into their business,” said United States Attorney Nicola T. Hanna. “They intentionally incentivized theft of government property and their sentences should deter those who would follow in their footsteps.”

          “Delivering mail over 1.5 billion miles last year to over 157 million residences, businesses and P.O. Boxes each day takes many containers, pallets, carts and trays,” said Nichole Cooper, Inspector in Charge of the Los Angeles Division of the Postal Inspection Service. “Theft of this equipment feeds an industry and Postal Inspectors are dedicated to identifying and recovering postal equipment and assets, and seeking prosecution when necessary. The Inspection Service is proud at the result of this investigation and the award of over $3.4 million in restitution to the Postal Service.”

          In its sentencing papers, the government argued that these executives directed the affairs of a company that “played an integral role in the black market of stolen government property in Southern California” and that the company “aggregated the efforts of multiple plastics thieves” and “created a demand for further theft.”

          “Villalobos and Guzman executed a money laundering scheme whereby they used bank accounts in the names of two other individuals to hide proceeds of Go Green’s dirty activity,” said R. Damon Rowe, Special Agent in Charge of IRS Criminal Investigation. “We are proud to work with our law enforcement partners to investigate and prosecute individuals who attempt to enrich themselves by fraudulent means and to help put a stop to this and other types of white collar crime.”

          This case is being investigated by the United States Postal Inspection Service and the Internal Revenue Service – Criminal Investigation.

          This case is being prosecuted by Assistant United States Attorney Puneet V. Kakkar of the Organized Crime Drug Enforcement Task Force Section.

          LOS ANGELES – A federal grand jury returned a 16-count indictment yesterday charging three companies, including the company that produces bottled water under the name “Crystal Geyser,” with violating the Resource Conservation and Recovery Act (“RCRA”) and the Hazardous Materials Transportation Act (“HMTA”). The charges center on the alleged failure of the defendants to disclose information regarding arsenic in wastewater transported from Crystal Geyser’s Olancha, California, facility in March and May 2015.

          The indictment charges three companies:

• CG Roxane, LLC (“Crystal Geyser”), a limited liability corporation that does business under the name “Crystal Geyser” and produces bottled drinking water in Olancha, California;

• United Pumping Services, Inc. (“United Pumping”), a corporation located in the City of Industry that provides transportation services for customers needing transportation of hazardous and nonhazardous waste; and

• United Storm Water, Inc. (“United Storm Water”), a corporation located in the City of Industry that provided environmental and lake draining services.

          The investigation and indictment in this case focused on alleged violations involving Crystal Geyser’s wastewater, not the safety or quality of Crystal Geyser’s bottled water.

          According to the indictment, in producing its bottled water, Crystal Geyser would draw water from natural sources that contained naturally occurring arsenic. Crystal Geyser would use sand filters to reduce the concentration of arsenic so that the water met federal drinking water standards. To maintain the effectiveness of the sand filters, Crystal Geyser would regenerate them by back-flushing a hydroxide and water solution through the sand filters, causing the filters to release arsenic into the hydroxide and water solution. This process would generate thousands of gallons of arsenic-contaminated wastewater.

          The indictment alleges that Crystal Geyser discharged the arsenic-contaminated wastewater into a nearby manmade pond which Crystal Geyser called “the Arsenic Pond.”  In September 2014, testing by the California Department of Toxic Substances Control (“DTSC”) showed that the wastewater stored in the Arsenic Pond constituted a hazardous waste. In October 2014, DTSC testing also showed that arsenic-contaminated wastewater generated by the regeneration process was a hazardous waste. After October 2014, Crystal Geyser stopped discharging regeneration wastewater into the Arsenic Pond.

          The indictment further alleges that, in March 2015, Crystal Geyser regenerated and back-flushed the sand filters and, it hired United Pumping and United Storm Water to transport the resulting several thousand gallons of high pH, arsenic-contaminated wastewater to a hazardous waste facility in Los Angeles County. In transporting that hazardous wastewater, the defendants utilized manifests that did not disclose any information about the arsenic content of the wastewater, contrary to law.

          According to the indictment, after that March regeneration, in April 2015, DTSC informed Crystal Geyser that the wastewater in the Arsenic Pond constituted a hazardous waste and instructed Crystal Geyser to remove that wastewater from the Arsenic Pond and to transport it, using a hazardous waste manifest, to an authorized facility permitted to accept that specific type of hazardous waste.

          In May 2015, Crystal Geyser again hired United Pumping and United Storm Water, this time to drain and transport the Arsenic Pond. United Pumping and United Storm Water transported the contents of the Arsenic Pond to a facility in Fontana, California despite the fact that that facility was not permitted to treat hazardous waste. According to the indictment, Crystal Geyser, United Pumping, and United Storm Water transported the contents of the Arsenic Pond using non-hazardous waste manifests and did not identify the arsenic in the wastewater, even though they knew that the water constituted arsenic hazardous waste.

          “Our nation’s environmental laws are specifically designed to ensure that hazardous wastes are properly handled from beginning to end – from the point of generation to the point of disposal,” said United States Attorney Nick Hanna. “The alleged behavior of the three companies charged in this indictment undermines that important objective and jeopardizes the safety of our community.”

          Each of the defendants faces a statutory maximum fine of $8 million if convicted on all of the 16 counts in the indictment.

         “EPA and its law enforcement partners are committed to the protection of public health and safety,” said Special Agent-in-Charge Jay M. Green of EPA’s criminal enforcement program in California.  “This case was opened due to the hazards posed by illegal management and transportation of hazardous wastes. Today’s charges demonstrate that those who refuse to comply with the law will be held to account and prosecuted.”

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

          The investigation in this matter is being conducted by the United States Environmental Protection Agency Criminal Investigations Division and the United States Department of Transportation’s Office of Inspector General, with assistance from the California Department of Toxic Substances Control.

         This case is being prosecuted by Assistant United States Attorneys Dennis Mitchell and Erik M. Silber of the Environmental and Community Safety Crimes Section.

          SANTA ANA, California – A former Orange County real estate investor was sentenced yesterday by United States District Judge David O. Carter to 78 months in prison for defrauding 70 investors out of more than $12 million.

          Francisco Plascencia Esparza, 46, formerly of Coto De Caza now residing in Cumming, Georgia, solicited millions of dollars from investors in Southern California, promising to use the money to acquire real estate and pay a fixed rate of return on their investments.

          Esparza pleaded guilty in September to wire fraud, admitting that he had lured investors over a seven-year period by falsely claiming that he had run successful businesses and investment ventures when, in fact, his prior business ventures failed. Esparza engaged in a Ponzi scheme, using funds from new victims to pay off prior investors. Esparza also admitted using investor money for personal purposes, including purchasing a home, luxury cars, a wedding, and vacations.

          Judge Carter found that dozens of victims suffered substantial financial harm from the fraud, including for some, the loss of their 401k retirement accounts and the inability to retire as planned, if at all.

          Judge Carter ordered Esparza to pay $12.6 million in restitution.

          The investigation was conducted by the Federal Bureau of Investigation.

          This case was prosecuted by Assistant United States Attorneys Daniel S. Lim and Joseph T. McNally of the Santa Ana Branch Office.

          SANTA ANA, California – An Orange County man was sentenced to federal prison for his leadership role in a “builder bailout” mortgage fraud scheme.

          Momoud Aref Abaji, 37, of Huntington Beach, was sentenced to 108 months in prison by United States District Judge Andrew Guilford and ordered to pay more than $10 million in restitution to the financial institutions that were victims of the fraud. The scheme Abaji operated resulted in the fraudulent purchase of more than 100 condominium units around the country, causing more than $10 million in losses when the properties went into foreclosure.

          Abaji, along with several co-conspirators, operated the scheme through Excel Investments and related companies based in Santa Ana and Irvine. The scheme involved kickbacks from condominium builders during the 2008 financial crisis, that Abaji and his co-conspirators hid from lenders to convince them to fund loans in excess of the actual purchase price.

          During the course of the scheme, co-conspirators identified condominium developments around the country where the builders were struggling to sell units and arranged to purchase multiple units at a discount. The builders benefitted by making it appear that their condos were selling and maintaining their value, while members of the conspiracy obtained the kickbacks.

          The co-conspirators negotiated with condominium builders in California, Florida and Arizona for discount units. The defendants bought units for themselves, their relatives, and on behalf of “straw buyers” whom they brought into the scheme. They identified straw buyers by looking for individuals with good credit scores and then recruited them into the scheme by giving them an upfront payment for their participation and by presenting the scheme as an investment opportunity that required no down payment and would generate income through rental payments.

          To obtain mortgages for the properties, Abaji and other co-conspirators prepared loan applications with false information about the straw buyers – including fake employment, income and assets, as well as fabricated W2s, pay stubs and bank statements. The mortgage applications also included false information about the terms of the transactions, such as concealing the large kickbacks from builders through false and misleading HUD-1 forms. As a result of the false statements in the fraudulent loan applications, mortgage lenders provided over $21 million in financing to purchase more than 100 properties.

          Many of these loans went into default, and mortgage lenders lost more than $10 million after foreclosing on the properties. The Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) purchased dozens of these loans on the secondary mortgage market and suffered losses of at least $1.3 million as a result of defaults and foreclosures on the properties.

          Several other defendants were charged in connection with the same scheme.

• Abaji’s brother, Maher Obagi, 32, of Huntington Beach, who was sentenced in June 2018 to 78 months in prison and ordered to pay just over $10 million in restitution.

• Mohamed Salah, 43, of Mission Viejo, who was sentenced in June 2018 to 57 months in prison and ordered to pay just over $7 million in restitution.

• Ali Khatib, 53, of Newport Coast, pleaded guilty in a related case and is scheduled to be sentenced on September 10th;

• Jacqueline Burchell, 57, of Orange, pleaded guilty in June 2013 and is scheduled to be sentenced on October 1st;

• Wajieh Tbakhi, 53, who is currently a fugitive; and

• Mohamed El Tahir, now deceased.

          This matter was investigated by the Federal Bureau of Investigation; the Federal Housing Finance Agency, Office of the Inspector General; and IRS Criminal Investigation.

          The case is being prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.

          SANTA ANA, California – An Orange County man has pleaded guilty to a federal wire fraud offense and admitted operating a $6 million scheme that bilked investors who were promised large profits from the resale of tickets to high-profile sporting events, including the Super Bowl and the World Cup.

          Seyed Reza Ali Fazeli, 49, of Aliso Viejo, a professional poker player, ran a Las Vegas-based ticket business called Summit Entertainment, which also operated under the names onlinetickets.com and pacertickets.com.

          According to court records, from May 2016 through May 2017, Fazeli solicited investors in Orange County, Houston and Las Vegas to send approximately $6 million to Summit Entertainment to purchase tickets to the 2017 Super Bowl and the 2018 World Cup games. Fazeli told the victims that Summit Entertainment would resell the tickets at a substantial profit and share the proceeds with them.

          After numerous investors wired approximately $6 million to Summit for sports tickets, Fazeli failed to provide any profit distribution. Fazeli falsely told the victims that the ticket sales went poorly because the NFL prohibited their resale and that he was negotiating a settlement with the NFL.

          According to court documents, Fazeli never purchased large numbers of Super Bowl or World Cup tickets as promised. Instead, he used the money for gambling expenses at Las Vegas Casinos and for personal expenses.

          United States District Judge David O. Carter set sentencing for January 28, 2019. Fazeli faces a statutory maximum penalty of 20 years in federal prison.

          The investigation is being conducted by the Federal Bureau of Investigation.

          Anyone who may have been victimized by Summit Entertainment or Fazeli is encouraged to contact the FBI’s Los Angeles Field Office at 310-477-6565.

          This case is being prosecuted by Assistant United States Attorney Joseph T. McNally of the Santa Ana Branch office.

          LOS ANGELES – Two local physicians were indicted by a federal Grand Jury Thursday as part of Operation “Spinal Cap,” which targeted a long-running health care fraud scheme that generated nearly $1 billion in fraudulent claims to the federal government, the state of California, and private insurers. The scheme involved more than $40 million in illegal kickbacks paid to doctors and other medical professionals in exchange for referring thousands of patients who received surgeries and other services at Pacific Hospital.

          Jacob Tauber, 66, of Beverly Hills, an orthopedic surgeon, and Serge Obukhoff, 62, of Malibu, a neurosurgeon, were charged for their roles in receiving illegal kickbacks to influence the referral of patients to Pacific Hospital. The indictment also includes honest services fraud and Travel Act charges against both Tauber and Obukhoff.

          “These two physicians leveraged vulnerable patients to participate in a fraudulent kickback scheme,” said First Assistant United States Attorney Tracy Wilkison. “Their scheme violated their oaths as physicians as well as the law.”

          According to the indictment, Tauber performed non-spinal surgeries and referred patients to other surgeons for procedures at Pacific Hospital of Long Beach. Obukhoff practiced out of various medical clinics in Southern California. Influenced by the promise of kickbacks and bribes, Tauber and Obukhoff caused patients with insurance or other covered claims to receive surgeries and services at Pacific Hospital.

          In the same indictment, Tauber was separately charged with receiving illicit payments to refer urinalysis specimens to a specific lab.

          “Today’s indictment should send a clear message to all health care providers that health care fraud is a federal crime that carries serious consequences and will not be tolerated.” said USPS-OIG Special Agent in Charge Brian Washington. “The USPS-OIG, along with our law enforcement partners, will continue to aggressively investigate those who engage in fraudulent activities intended to defraud federal benefit programs and the Postal Service.”

          The case is being investigated by the United States Postal Service, Office of the Inspector General and the Federal Bureau of Investigation.

          The case is being prosecuted by Assistant United States Attorneys Ashwin Janakiram of the Major Frauds Section and Joseph T. McNally and Scott D. Tenley of the Santa Ana Branch Office.

WASHINGTON – Three owners and/or managers of Los Angeles, California-area foreclosure rescue companies, Dorothy Matsuba, Jamie Matsuba, and Thomas Matsuba, were sentenced to 240, 135, and 168 months in prison today for their roles in a foreclosure rescue scheme, respectively.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna for the Central District of California, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division, Acting Deputy Inspector General for Investigations Paul Conlon of the Federal Housing Finance Agency-Office of Inspector General (FHFA-OIG), Special Agent in Charge R. Damon Rowe of Internal Revenue Service Criminal Investigation’s (IRS-CI) Los Angeles Field Office, and Sheriff Jim McDonnell of the Los Angeles County Sheriff’s Department made the announcement.

Dorothy Matsuba, 67, her daughter Jamie Matsuba, 33, and her husband, Thomas Matsuba, 67, all of Chatsworth, California, were sentenced by U.S. District Judge R. Gary Klausner of the Central District of California. Judge Klausner also ordered the defendants to serve three years of supervised release. Restitution and forfeiture will be decided at a hearing on Aug. 13. All three defendants were remanded into custody. Dorothy Matsuba pleaded guilty on Dec. 4, 2017, to one count conspiracy to commit wire fraud, false statements to a federally insured bank or mortgage lending business, and identity theft, five counts of wire fraud, six counts of false statements to federally insured banks, and six counts of aggravated identity theft. On Dec. 13, 2017, after a one-week trial, Jamie Matsuba and Thomas Matsuba were both convicted of one count of conspiracy to commit wire fraud, making false statements to federally insured banks, and committing identity theft and one count of making false statements to federally insured banks.

According to evidence presented at trial, from January 2005 to August 2014, Dorothy Matsuba, Jamie Matsuba, Thomas Matsuba and others engaged in a scheme to defraud financially distressed homeowners by offering to prevent foreclosure on their properties through short sales. Instead, the conspirators rented out the properties to third parties, did not pay the mortgages on the properties, and submitted false and fraudulent documents to mortgage lenders and servicers to delay foreclosure. The evidence further established that the conspirators obtained mortgages in the names of stolen identities. The defendants also used additional tactics, including filing bankruptcy in the names of distressed homeowners without their knowledge and fabricating liens on the distressed properties, the evidence showed.

Two other defendants have been charged in this matter. Defendant Jane Matsuba-Garcia, 42, of Camarillo, California, previously pleaded guilty and is awaiting sentencing. Defendant Young Park of Los Angeles, California, is a fugitive. In addition, in related cases, Jason Hong, 36, of Chatsworth, and Ryu Goeku, 48, of Canoga Park, California, previously pleaded guilty and are awaiting sentencing.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

This case was investigated by the FBI, FHFA-OIG, IRS-CI, the U.S. Attorney’s Office for the Central District of California, the U.S. Trustee Program, Woodland Hills Field Office, Peter C. Anderson U.S. Trustee and the Los Angeles County Sheriff’s Department. Trial Attorney Niall M. O’Donnell, Senior Litigation Counsel David A. Bybee and Trial Attorney Jennifer L. Farer of the Criminal Division’s Fraud Section are prosecuting the case. Senior Trial Attorney Nicholas Acker previously worked on the investigation. Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website for more information.

Three owners and/or managers of Los Angeles, California-area foreclosure rescue companies, Dorothy Matsuba, Jamie Matsuba, and Thomas Matsuba, were sentenced to 240, 135, and 168 months in prison today for their roles in a foreclosure rescue scheme, respectively.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna for the Central District of California, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division, Acting Deputy Inspector General for Investigations Paul Conlon of the Federal Housing Finance Agency-Office of Inspector General (FHFA-OIG), Special Agent in Charge R. Damon Rowe of Internal Revenue Service Criminal Investigation’s (IRS-CI) Los Angeles Field Office, and Sheriff Jim McDonnell of the Los Angeles County Sheriff’s Department made the announcement.

Dorothy Matsuba, 67, her daughter Jamie Matsuba, 33, and her husband, Thomas Matsuba, 67, all of Chatsworth, California, were sentenced by U.S. District Judge R. Gary Klausner of the Central District of California.  Judge Klausner also ordered the defendants to serve three years of supervised release. Restitution and forfeiture will be decided at a hearing on Aug. 13.  All three defendants were remanded into custody. Dorothy Matsuba pleaded guilty on Dec. 4, 2017, to one count conspiracy to commit wire fraud, false statements to a federally insured bank or mortgage lending business, and identity theft, five counts of wire fraud, six counts of false statements to federally insured banks, and six counts of aggravated identity theft.  On Dec. 13, 2017, after a one-week trial, Jamie Matsuba and Thomas Matsuba were both convicted of one count of conspiracy to commit wire fraud, making false statements to federally insured banks, and committing identity theft and one count of making false statements to federally insured banks.

According to evidence presented at trial, from January 2005 to August 2014, Dorothy Matsuba, Jamie Matsuba, Thomas Matsuba and others engaged in a scheme to defraud financially distressed homeowners by offering to prevent foreclosure on their properties through short sales.  Instead, the conspirators rented out the properties to third parties, did not pay the mortgages on the properties, and submitted false and fraudulent documents to mortgage lenders and servicers to delay foreclosure.  The evidence further established that the conspirators obtained mortgages in the names of stolen identities.  The defendants also used additional tactics, including filing bankruptcy in the names of distressed homeowners without their knowledge and fabricating liens on the distressed properties, the evidence showed.

Two other defendants have been charged in this matter.  Defendant Jane Matsuba-Garcia, 42, of Camarillo, California, previously pleaded guilty and is awaiting sentencing.  Defendant Young Park of Los Angeles, California, is a fugitive.  In addition, in related cases, Jason Hong, 36, of Chatsworth, and Ryu Goeku, 48, of Canoga Park, California, previously pleaded guilty and are awaiting sentencing.   

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

This case was investigated by the FBI, FHFA-OIG, IRS-CI, the U.S. Attorney’s Office for the Central District of California, the U.S. Trustee Program, Woodland Hills Field Office, Peter C. Anderson U.S. Trustee and the Los Angeles County Sheriff’s Department.  Trial Attorney Niall M. O’Donnell, Senior Litigation Counsel David A. Bybee and Trial Attorney Jennifer L. Farer of the Criminal Division’s Fraud Section are prosecuting the case.  Senior Trial Attorney Nicholas Acker previously worked on the investigation.

Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website for more information.

          SANTA ANA, California – An Orange County man who was convicted at trial of defrauding a local businessman through a fraudulent investment scheme was sentenced this morning by United States District Judge David O. Carter to 41 months in federal prison.

          Aiman Alexander Ataba, 52, of Irvine, was found guilty on March 20, 2018, of eight counts of mail fraud and three counts of money laundering. The jury’s verdicts followed a two-day trial in the United States District Court in Orange County.

          The jury found that Ataba defrauded a Riverside County man out of $648,070 by convincing him to invest in Ataba’s Fountain Valley business, Innovation Validation and Design Technologies. Ataba falsely claimed that the investments would be used to manufacture and sell a device that would be used in hospitals for stem cell research.

          Ataba claimed that his company was on the verge of being acquired, and he told the investor that stock in the company could be obtained at a discounted price if he invested quickly. Based on Ataba’s false representations, the victim invested $648,070 in Ataba’s company over the course of 4½ years.

          According to court records, after receiving the victim’s money, Ataba immediately spent the money on personal expenses. The money was not invested in any company for the development of a device involving stem cell research. Instead, Ataba simply misappropriated and converted all of the victim’s money to his own personal uses, using the money to pay for rent, living expenses, dining out, and gambling, as well as overseas wire transfers.

          Ataba diverted funds from his business account to his personal account and made approximately $350,000 in cash withdrawals. Many of the withdrawals were made at casinos in Las Vegas and on local Indian reservations. Some of the victim’s money was spent to purchase a new Toyota vehicle, which was seized in 2016 by the Federal Bureau of Investigation.

          In addition to imposition of the prison term, Judge Carter today ordered Ataba to pay restitution to the victim in the amount of $648,070.

          The investigation into Ataba was conducted by the Federal Bureau of Investigation.

          The case was prosecuted by Assistant United States Attorneys Robert J. Keenan and Gina J. Kong of the Santa Ana Branch Office.

          LOS ANGELES – A former staffer for a member of the United States Congress was sentenced today to 18 months in prison for bribery and attempted extortion after demanding and accepting $5,000 to prevent the closure of a marijuana shop in the City of Compton.

          Michael Kimbrew, 45, of Santa Clarita, was sentenced by United States District Judge R. Gary Klausner for attempting to extort a marijuana dispensary in Compton and threatening to shut down the shop if the owners did not pay him a $5,000 bribe.

          According to court testimony, in exchange for the payoff, Kimbrew promised to wield his power as a federal employee and public official to help the shop obtain a lucrative permit to continue operating.

          According to the evidence presented at trial, Kimbrew claimed to “oversee all activities in Compton” and threatened the shop’s owners, an employee of the shop, and later an undercover FBI agent in recorded meetings that he was going to shut down the shop unless he received the bribe. He claimed that, by virtue of his federal employment for the Congress member, he had “authority” and “jurisdiction” over what Compton public officials and departments did. In exchange for the $5,000, he promised to exercise that authority and jurisdiction to keep the shop in business.

          Ultimately, during a lunch meeting in Compton, Kimbrew accepted $5,000 in cash hidden inside of a restaurant menu from the undercover agent. When he pocketed the cash, Kimbrew pledged his “undying support” to protect the shop.

          “The conviction in this case demonstrates our ongoing commitment to the people of the District to root out public corruption,” said United States Attorney Nicola T. Hanna.

          In sentencing documents, the government argued for imprisonment, citing, among other factors “the need to send a message to both [Kimbrew] and other public servants that corruption will not be tolerated.”

          In addition to the prison term, Judge Klausner ordered Kimbrew to serve three years of supervised release and pay $5,000 in restitution and $4,000 in fines.

          This case was investigated by the Federal Bureau of Investigation.

          The case is being prosecuted by Assistant United States Attorney Lindsey Greer Dotson of the Public Corruption and Civil Rights Section.

          LOS ANGELES – An Ethiopian diplomat was arrested today by federal agents for visa fraud violations arising out of the use of non-immigrant diplomatic visas for family members who did not qualify under federal regulations.

          Desta Woldeyohannes Delkasso, 54, an Ethiopian national assigned to the Ethiopian government’s Consulate General as the Deputy Consul General in Los Angeles, was charged in a three-count indictment unsealed this morning. She is charged with three counts of visa fraud, including falsely stating that her brother and his wife were “single” and “fully supported by her” and that their minor child was her “son.”

          According to the allegations in the indictment, Delkasso caused the Ethiopian Ministry of Foreign Affairs to send letters required for the visas to the Embassy of the United States in July and August 2016, stating that Delkasso would be accompanied by family members who would stay in Los Angeles until the end of the diplomatic term. The letters stated that her nephew was her “son” and that her brother and sister-in-law were “dependents” and “fully supported by her.”

          Based on this information, her family members were then issued A-1 diplomatic visas to enter the United States.

          Delkasso’s brother and his son have lived in Washington, D.C. since their arrival in the United States, and as alleged in the indictment, never resided in Los Angeles. 

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.

          If convicted, the defendant faces a maximum sentences of 30 years in prison.

          This case was investigated by the U.S. Department of State’s Diplomatic Security Service (DSS) Criminal Investigations Division with assistance from the DSS Los Angeles Field Office.

          The case is being prosecuted by Assistant U.S. Attorney Lana Morton-Owens of the Violent and Organized Crime Section.

WASHINGTON - A federal grand jury in Riverside, California, returned a five-count indictment against Eric Scott Kindley, 50, a private prisoner transport officer, for crimes related to his sexual assaults of two different females in his custody during two different transports, and for brandishing his firearm during one of the sexual assaults.

Count One of the indictment charges Kindley with committing a civil rights offense on July 26, 2012, that included aggravated sexual abuse and kidnapping. Counts Two, Three, and Four charge Kindley with committing civil rights offenses on Jan. 26, 2017, against a second female that included aggravated sexual abuse. Count Two also alleges that Kindley’s crime resulted in bodily injury and included kidnapping and the use of a dangerous weapon. Count Five charges Kindley with knowingly brandishing and using a firearm during and in relation to a crime of violence.

Kindley was previously indicted on Sept. 12, 2017, in Little Rock, Arkansas, for committing similar offenses related to his sexual assault of a third female in his custody. That indictment also charges Kindley with possessing his firearm in furtherance of that sexual assault.

If convicted of the charges in the most recent indictment, Kindley faces a mandatory minimum sentence of seven years in prison for brandishing his firearm, and a maximum sentence of life in prison. If convicted of the charges pending in Arkansas, Kindley faces a mandatory minimum of sentence of five years in prison for possession of the firearm, and a maximum sentence of life in prison. If Kindley is convicted of the firearms offenses in both indictments, he faces a mandatory minimum sentence of 25 years in prison, consecutive to any other sentence he receives.

This investigation remains ongoing. Anyone with additional information is encouraged to call the Phoenix Division of the FBI at (623) 466-1999, or email the Criminal Section of the Civil Rights Division at the U.S. Department of Justice at [email protected].

An indictment is merely a formal accusation of criminal conduct, and the defendant is presumed innocent unless proven guilty.

This case is being investigated by the Phoenix Division of the Federal Bureau Investigation and is being prosecuted by Special Litigation Counsel Fara Gold and Trial Attorney Maura White of the Criminal Section of the Civil Rights Division of the U.S. Department of Justice.

          LOS ANGELES – The leader of a narcotics distribution ring that imported a powerful fentanyl analogue from China and produced hundreds of thousands of opioid pills that were distributed in bulk across the nation was sentenced yesterday to 320 months in federal prison.

          Gary Resnik, 33, of Long Beach, led a conspiracy that imported acetylfentanyl, a drug very similar to fentanyl, a powerful and highly addictive opioid. Acetylfentanyl, which is many times more potent that heroin, is not approved for any legal use in the United States.

          Resnik pled guilty in August 2017 to two felony offenses – conspiracy to manufacture and distribute narcotics (including acetylfentanyl and ecstasy), and possession with the intent to distribute acetylfentanyl.

          According to court documents, Resnik “was the leader of a conspiracy to manufacture, possess with intent to distribute, and distribute hundreds of thousands of pills designed to look like legitimate pharmaceuticals such as Vicodin and OxyContin, but which actually contained highly potent, illegal drugs that defendant imported from China,” including acetylfentanyl, ecstasy, alprazolam, and a designer drug known on the street as PVP.

          “Resnik led a sophisticated operation that used dangerous Chinese-made chemicals to manufacture counterfeit pharmaceuticals,” said United States Attorney Nick Hanna. “Through his makeshift labs, he put thousands of fentanyl analogue pills on the streets, risking the lives of unsuspecting people. This sentence is well-deserved.”

          When he pled guilty last year, Resnik admitted to importing from China bulk chemicals, including acetylfentanyl, that were used to manufacture opioid pills. His drug organization also illegally imported pill presses from China that were used to make pills in homemade labs in a Long Beach storage unit and Baldwin Park house. Resnik acknowledged that drug enforcement agents seized over 11 kilograms of acetylfentanyl from the Long Beach lab in addition to other large quantities of acetylfentanyl and other illegal drugs from both labs.

          “Mr. Resnik preyed on our communities by flooding our streets with fentanyl. Today’s lengthy prison sentence is appropriate and further emphasizes the dangers that fentanyl and opioids pose to our communities,” said DEA Los Angeles Acting Special Agent in Charge Daniel C. Comeaux. “The DEA will tirelessly collaborate with our local, state and federal counterparts to take vicious drug traffickers, like Mr. Resnik, off the street.”

          Over the course of nine months in 2015 and 2016, Resnik’s organization sold approximately 40,000 to 45,000 pills each month, for between $4 to $8 per pill, according to prosecutors.

          On one occasion during the course of an investigation by the Drug Enforcement Administration, authorities seized narcotics – including thousands of opioid pills containing acetylfentanyl, alprazolam pills, and ecstasy pills – from a man who had just purchased the drugs from members of the drug-trafficking organization operated by Resnick.

          A co-defendant in this case – Christopher Bowen, 32, of downtown Los Angeles – was sentenced in May of this year to 320 months in federal prison for participating in the drug-trafficking conspiracy.

          The case was investigated by agents with the Drug Enforcement Administration with substantial assistance from the Huntington Beach Police Department.

          This case was prosecuted by Assistant United States Attorneys Michael G. Freedman of the Organized Crime Drug Enforcement Task Force Section and David Ryan of the General Crimes Section.

          LOS ANGELES, California - The so-called “Bitcoin Maven,” who admitted to operating an unlicensed bitcoin-for-cash exchange business and laundering bitcoin that was represented to be proceeds of narcotics activity, was sentenced today to 12 months and one day in federal prison, three years of supervised release, and a fine of $20,000.

          Theresa Lynn Tetley, 50, of Southern California, a former stockbroker and real estate investor, was sentenced by United States District Judge Manuel L. Real for conducting an illegal business and engaging in unlawful monetary transactions involving bitcoins. Tetley was also ordered to forfeit 40 Bitcoin, $292,264.00 in cash, and 25 assorted gold bars that were the proceeds of her illegal activity.

          Tetley pleaded guilty to one count of operating an unlicensed money transmitting business and one count of money laundering.

          The government’s case against Tetley is the first of this kind charged in the Central District of California. According to court documents, Tetley offered bitcoin-for-cash exchange services without registering as a money services business with the Financial Crimes Enforcement Network (FinCEN), and without implementing anti money-laundering mechanisms such as customer due diligence and reporting certain transactions required for these types of businesses. Tetley advertised on localbitcoins.com and exchanged, in total, between $6 and $9.5 million for customers across the country, charging rates higher than institutions that were registered with FinCEN.

          As a result of operating this unregistered business, Tetley facilitated laundering for one individual who is suspected of receiving bitcoin from unlawful activity, such as sales of drugs on the dark web. In the course of her business, Tetley also conducted an exchange of bitcoin-for-cash for an undercover agent who represented that his bitcoin were the proceeds of narcotics trafficking.

          According to sentencing documents, the government argued that “[i]n light of the growth of the dark web and the use of digital currency, unlicensed exchangers provide an avenue of laundering for those who use digital currency for illicit purposes.” The government asserted that Tetley’s business “fueled a black-market financial system” that “purposely and deliberately existed outside of the regulated bank industry.”

          The investigation into Tetley was conducted by the Drug Enforcement Administration and IRS Criminal Investigation.

          The case is being prosecuted by Assistant United States Attorney Puneet V. Kakkar of the Organized Crime Drug Enforcement Task Force Section.

          SANTA ANA, California – A man currently on both state parole and federal supervised release has been charged with conspiracy to distribute controlled substances for selling more than one pound of methamphetamine, as well as cocaine.

          Matthew Belling, 28, of La Mirada, who goes by the moniker “Miagi,” was arrested this morning by special agents with the Drug Enforcement Administration.

          A federal criminal complaint filed last week alleges that Belling sold more than one pound of methamphetamine in a December 2017 drug deal that was captured on surveillance by the DEA and local law enforcement. The complaint charges Belling with one count of conspiracy to distribute methamphetamine and cocaine.

          The affidavit in support of the criminal complaint alleges that Belling set up the drug deal and delivered the drugs to the buyer at a location in Garden Grove. During the drug deal, Belling boasted to the buyer that the drugs he was selling were “real good.”

          According to the criminal complaint, Belling has an extensive criminal history, including state felony convictions for attempted murder, possession of marijuana for sale, making/possessing a dangerous weapon, and bringing a controlled substance into a correctional facility. He also has a federal felony conviction for counterfeiting U.S. currency. Belling is also currently on state parole and federal supervised release.

          Belling is scheduled to make his initial court appearance in Santa Ana federal court this afternoon.

          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 he were to be convicted of the conspiracy count alleged in the complaint, Belling would face a mandatory minimum sentence of 10 years in federal prison and maximum possible sentence of life without parole.

          This matter is being investigated by the DEA and the Cypress Police Department.

          LOS ANGELES – A South Los Angeles man who made a series of online threats to kill law enforcement personnel and others at the Los Angeles Superior Court’s Inglewood Courthouse, a nearby school, and a private business pled guilty yesterday to a federal offense of making online threats.

          John Patrice Hale, 43, who used the online moniker “Frost K Blizzard,” pled guilty to one count of making threats to injure in interstate commerce.

          Hale sent the online threats over several days in May 2017. Some of the threats invoked ISIS, but authorities have not uncovered any evidence linking Hale to international terrorism. Hale made the threats using techniques designed to make his internet communications anonymous, which included using Tor and proxy servers.

          In a plea agreement filed in this case, Hall specifically admitted making the following threats:

• “Our brotherhood will celebrate today when allah sets the explosives planted in Inglewood sheriff vehicles at Inglewood court,” which was sent on May 12. This threat prompted the evacuation of the Inglewood Courthouse, and the LASD’s Arson and Explosives Unit and the Threat Interdiction Unit responded.

• Two similar threats sent on May 15, one of which read, in part: “Allah willing we will be able to take out as many officers that pull out your parking structure. It will be a plus to take part of your american school across the street. ISIS will have revenge today.” Law enforcement again responded to the Inglewood Courthouse, which was not evacuated after a threat assessment.

• Two threats made on May 16, one of which read: “Item under deputy car. Impact for half city block. 6 hours to locate it. At Inglewood sheriff station. If you have units out better call them back in.” These communications again prompted a significant response by law enforcement and evacuation of the Inglewood Courthouse.

• A threat to a private business through its website on May 23 that read: “All praises to Allah. Today, we will detonate an explosive at your La Brea and Arbor Vitae location if our needs aren’t met by your company. ISIS.”

          Hale further admitted that he submitted bogus information to the FBI’s “Tips and Public Leads” webpage, despite a warning posted on that webpage that submitting a false tip could result in a fine and/or imprisonment. In the submission, Hale made the false claim that he knew a man who “would supply ISIS with explosives even planting them for them” and who had received instructions from ISIS “to send inglewood sheriff department bomb threats via email.”

          As a result of the guilty plea, Hale faces a statutory maximum sentence of five years in federal prison. Hale is scheduled to be sentenced by United States District Judge Dale S. Fischer on October 29.

          The investigation into Hale was conducted by the FBI’s Joint Terrorism Task Force and was led by special agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Federal Bureau of Investigation.

          This case is being prosecuted by Assistant United States Attorney George E. Pence of the Terrorism and Export Crimes Section.