Central District of California
Press releases recorded for this federal judicial district.
United States Customs and Border Protection Officer Convicted for Making False Statements for Personal GainRead the Press Release
LOS ANGELES – A federal jury in Los Angeles convicted a U.S. Customs and Border Protection (CBP) officer for abusing a program that provided discounted homes to law enforcement officers and misleading an investigator during a background investigation for security clearance.
Kanit Kunnaragthai, 49, of Palmdale, was found guilty Thursday afternoon following a three-day trial in United States District Court.
The jury found Kunnaragthai guilty of three felony counts: two counts of making a false statement to the U.S. Department of Housing and Urban Development (HUD) in relation to a house in Moreno Valley that he purchased under the Good Neighbor Next Door (GNND) Sales Program, and one count of making a false statement to an Office of Personnel Management (OPM) investigator to maintain his security clearance as a CBP officer.
Kunnaragthai exploited HUD’s GNND Sales Program, which seeks to revitalize distressed communities by incentivizing law enforcement, firefighters, teachers, and emergency medical technicians to live in those communities. The incentive is a 50 percent discount on the purchase price of HUD-owned properties in those communities. In return for the substantial discount, the GNND Sales Program requires that purchasers live continuously in the property as their sole residence for at least three years and sign a yearly certification confirming compliance.
According to court documents and the evidence presented to the jury, Kunnaragthai did not live in the property in Moreno Valley. Instead, he was a landlord and rented the three-bedroom house to college students. The evidence showed that Kunnaragthai actually lived with his family nearly 70 miles away in the Eagle Rock neighborhood of Los Angeles. Nevertheless, he provided HUD with annual certifications during the three-year period stating that he lived at the property in Moreno Valley as his sole residence.
Kunnaragthai also omitted his Eagle Rock residence on a security clearance form. When confronted with this omission, Kunnaragthai told the background investigator with OPM that he “never” lived at the Eagle Rock apartment.
The case against Kunnaragthai was investigated by the Department of Housing and Urban Development, Office of Inspector General; Department of Homeland Security, Office of Inspector General; Customs and Border Protection, Office of Professional Responsibility; and Department of Homeland Security, Immigration and Customs Enforcement. The case was prosecuted by Assistant U.S. Attorneys MiRi Song and Roger A. Hsieh of the Central District of California, General Crimes Section.
Two Orange County Men Sentenced to Federal Prison in $21 Million ‘Builder Bailout’ Fraud Scheme Operated during 2008 Financial CrisisRead the Press Release
SANTA ANA, California – Two men from Orange County have been sentenced to federal prison for participating in a “builder bailout” mortgage fraud scheme that 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.
Maher Obagi, 32, of Huntington Beach, was sentenced to 78 months in prison and ordered to pay just over $10 million in restitution. A second defendant – Mohamed Salah, 43, of Mission Viejo – was sentenced to 57 months in prison and was ordered to pay just over $7 million in restitution. Both defendants were sentenced on Tuesday by United States District Judge Andrew Guilford.
Obagi and Salah, along with several co-conspirators, operated the scheme through Excel Investments and related companies that were based in Santa Ana and then Irvine. The scheme involved kickbacks from condominium builders during the 2008 financial crisis, kickbacks that were hidden from lenders to convince them to fund loans in excess of actual purchase price.
During the course of the scheme, co-conspirators identified condominium developments around the country in which the builders were struggling to sell units and then arranged with the builders 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, Obagi 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 lenders 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.
Following a trial in 2015, Obagi was found guilty of one count of conspiracy and three counts of wire fraud. Salah was found guilty by the same federal jury of one count of conspiracy.
Several other defendants were charged in connection with the same scheme. They are:
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Ali Khatib, 53, of Newport Coast, who pleaded guilty in a related case and is scheduled to be sentenced on July 16;
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Momoud Aref Abaji, 37, of Huntington Beach, who was convicted at trial and is scheduled to be sentenced on June 14;
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Jacqueline Burchell, 57, of Orange, who pleaded guilty and is scheduled to be sentenced on July 16;
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Wajieh Tbakhi, 53, who is a fugitive; and
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Mohamed El Tahir, who is 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.
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Department of Justice Files Complaint Against California Hand Sanitizer Company Marketing Unapproved New DrugsRead the Press Release
The United States filed a civil complaint to enjoin a California company from distributing hand sanitizer products that are unapproved new drugs, the Justice Department announced today.
The complaint, filed June 6, 2018, seeks to enjoin defendants Innovative BioDefense, Inc., of Lake Forest, California and its President and Chief Executive Officer, Colette Cozean, from distributing “Zylast” antiseptic hand sanitizer products that qualify as unapproved new drugs under the Federal Food, Drug, and Cosmetic Act. According to the complaint, the defendants market various Zylast products as being effective against, among other things, infection by pathogens such as the norovirus, rhinovirus, rotavirus, flu virus, Methicillin-Resistant Staphylococcus Aureus bacteria and Ebola virus, despite a lack of proof of the products’ safety and effectiveness for such uses and no approval from the U.S. Food and Drug Administration (FDA). The Zylast product line includes Zylast Broad Spectrum Antimicrobial Antiseptic, Zylast XP (Extended Protection) Antiseptic Lotion and Zylast XP (Extended Protection) Antiseptic Foaming Soap.
The Justice Department filed the complaint in U.S. District Court for the Central District of California at the request of the FDA.
“Consumers deserve confidence that the drugs they use are safe and effective,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice will continue to work with the FDA to ensure that manufacturers do not circumvent the drug approval process.”
The defendants distribute their Zylast products through the internet directly to consumers. According to the complaint, the Zylast website, www.zylast.com, features a “Buy Now” button that links consumers to a second website, zylastdirect.com, where customers can purchase the products. The complaint further alleges that the Zylast products are misbranded because the second website contains the false and misleading claim that FDA considers Zylast’s active ingredient “safe and effective in open wounds” and “safe and effective for first aid” when FDA has not made such determinations.
A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.
The case is being handled by Trial Attorney Douglas Ross of the Civil Division’s Consumer Protection Branch, with the assistance of the U.S. Attorney’s Office for the Central District of California and Associate Chief Counsel for Enforcement Yen Hoang of FDA’s Office of the Chief Counsel.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch.
California Man Sentenced to 10 Years in Prison for Traveling to Thailand and Sexually Abusing Minor BoysRead the Press Release
WASHINGTON – A Los Angeles resident was sentenced today to 10 years in prison for two child exploitation offenses, including engaging in illicit sexual conduct in foreign places and traveling in foreign commerce for the purpose of engaging in illicit sexual conduct, announced Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and Special Agent in Charge Joseph Macias of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Los Angeles.
Paul Alan Shapiro, 71, a retired auto dealership employee, pleaded guilty one day before he was set to go on trial on July 24, 2017. Under the terms of the plea agreement, Shapiro will serve 10 years in federal prison, 20 years of supervised release following his prison sentence, and will pay $20,000 total to two victims, both of whom are citizens of the Kingdom of Thailand. U.S. District Court Judge Dolly M. Gee of the Central District of California presided over today’s sentencing.
According to plea documents, Shapiro traveled from Los Angeles to Thailand on numerous occasions over the past 20 years, and engaged in sexual acts with male boys under the age of 16 on multiple occasions. On at least two occasions in September 2012, Shapiro paid minors as young as 13 years old small amounts of local currency in order to engage in various sex acts with them. According to other documents filed in the case, Shapiro photographed these encounters of himself engaging in sexually explicit conduct with the boys.
HSI conducted the investigation. Trial Attorneys Austin M. Berry and Ralph Paradiso of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc.
Former Fugitive Gang Member Sentenced to 20 Years in Federal Prison for Racially Motivated MurderRead the Press Release
LOS ANGELES – An Avenues gang member who was captured last year after more than a decade on the run was sentenced Monday to 20 years in prison on federal hate crime and firearms charges that were filed against him in 2004.
Merced Cambero Jr., 39, who used the gang moniker “Shadow,” pleaded guilty in February to participating, along with other gang members, in a conspiracy to use violence against African Americans to interfere with their right to live in Highland Park. Cambero also admitted that he participated in the 1999 racially motivated murder of Kenneth Wilson, an African-American man who was shot and killed in furtherance of that conspiracy.
Cambero was sentenced by United States District Judge Percy Anderson, who in 2006 presided over the trial of four co-defendants who were convicted by a federal jury. Cambero and three of the four co-defendants – Gilbert “Lucky” Saldana, Alejandro “Bird” Martinez and Fernando “Sneaky” Cazares – shot and killed Mr. Wilson because of his race and because he was using the public streets in Los Angeles. These defendants were also found guilty – along with a fourth co-defendant, Porfirio “Dreamer” Avila – of conspiring to use violence to interfere with the federal housing rights of African Americans in Highland Park, including another African-American man, Christopher Bowser, who was shot and killed in 2000. Saldana, Martinez, Cazares and Avila each were sentenced to life in prison. Although Cambero was charged in the same indictment, he was not arraigned in the case until after he was captured in Mexico last year.
At the 2006 trial of the four co-defendants, the jury heard testimony from two Avenues gang members who participated in the murder of Kenneth Wilson and implicated Cambero and three co-defendants. The gang members also testified about an agreement among Avenues gang members to try to preserve the primarily Latino make-up of Highland Park by engaging in violence against African Americans. Their testimony was corroborated by numerous African-American residents of the Highland Park neighborhood who described acts of racially motivated violence directed at them by the defendants and their fellow gang members.
In court filings connected with Cambero’s guilty plea and sentencing, Cambero admitted that he and his fellow gang members were in a stolen van when they saw Wilson, whom they did not know, and decided to kill him because of his race. Cambero admitted that he and two other gang members then got out of the van and fired guns at Wilson, who was killed by a single gunshot through the neck.
“This defendant was part of a reprehensible scheme that targeted an entire class of people simply because of skin color,” said United States Attorney Nick Hanna. “The Justice Department is committed to preserving and protecting everyone’s civil rights – particularly when violent acts are used to violate those rights. Mr. Cambero attempted to avoid prosecution for many years, but we persisted to bring him to justice and send a message to the entire community that this type of conduct will not be tolerated and will be punished.”
“This Justice Department will not tolerate any act of violence motivated because of another’s race,” said Acting Assistant Attorney General John Gore. “The defendant’s egregious actions were unlawful, and as this sentencing demonstrates, will not go without punishment. The Civil Rights Division will continue to vigorously prosecute those who commit violent acts of hate.”
After hearing from the mothers of two African-American men killed by the gang during Monday’s sentencing hearing, Judge Anderson accepted the guilty plea and sentenced Cambero to 20 years in prison. Among the considerations Judge Anderson cited as influencing his sentence were the defendant’s acceptance of responsibility and the desire of the victims and witnesses to be spared the trauma of another trial.
This case was investigated by the FBI’s Los Angeles Field Office and the Los Angeles Police Department.
The case was prosecuted by Deputy Chief Bobbi Bernstein of the Civil Rights Division’s Criminal Section, Assistant United States Attorney Jennifer Chou of the Violent and Organized Crime Section, and Assistant United States Attorney Daniel O’Brien of the Public Corruption and Civil Rights Section.
Orange County Commodities Trader Sentenced to over 10 Years in Prison in Scheme that Took $1.6 Million from InvestorsRead the Press Release
SANTA ANA, California – An Irvine man who pleaded guilty to federal fraud charges related to a bogus commodities trading program that caused losses of approximately $1.6 million was sentenced today to 121 months in federal prison.
Rawle Gerard Suite, 57, was sentenced by United States District Judge James V. Selna.
Suite, who also used the name “Jerry Snead” and other aliases, was sentenced after pleading guilty in June 2017 to four counts of wire fraud. To perpetrate the fraud that took place over a 3½-year period that ended in May 2016, Suite concealed his true identity from investors and used a series of companies with names such as STA Opus, TBT Analysis LLC, and Another Winning Trade that purportedly were trading in commodities that included soybeans, gold, oil and unleaded gas.
As part of the fraudulent scheme, Suite made a series of false claims to investors, such as that STA Opus had annual returns of at least 60 percent, when in fact the company had continually suffered trading losses.
Suite was a registered commodity trading advisor and commodity pool operator from late 1985 until May 3, 1990, when his registration was revoked. Since then, Suite has been targeted twice by the California Department of Corporations, which in 2012 obtained a $2.5 million judgment against Suite, in part for violating a prior order issued by the agency.
“Though this is [Suite]’s first criminal case for investment fraud, it is clear that defendant has a history of fraud and violating court orders,” prosecutors wrote in a sentencing memorandum filed with the court. “Shortly after being enjoined by the Los Angeles Superior Court, defendant began this fraud scheme.”
The case against Suite was investigated by the Federal Bureau of Investigation, which received substantial assistance from the Commodity Futures Trading Commission.
This matter was prosecuted by Assistant United States Attorney Vibhav Mittal of the Santa Ana Branch Office.
Santa Barbara County Man Sentenced to More than Twenty Years in Federal Prison for Distribution of Child PornographyRead the Press Release
LOS ANGELES – A federal judge yesterday sentenced a Santa Barbara County man to 246 months’ incarceration for distribution of child pornography.
Christopher Robin Coates, 43, of Carpinteria, met minors in online chat rooms dedicated to youths seeking father figures and manipulated them into sending him child pornography images of themselves. According to court records, Coates would also share the minors’ online "handles" with other persons seeking to exploit children.
When law enforcement officers searched his digital devices, they found more than 1,000 images and 128 videos depicting child pornography. According to court documents, Coates used the Kik Messenger app to distribute child pornography to underage victims. Coates had several prior convictions for possessing child pornography in addition to a conviction for sexual battery on a disabled adult.
In July, 2015, based on a tip to the Postal Inspection Service by the National Center for Missing & Exploited Children, law enforcement officers conducted a parole search of Coates’ residence. During the search, authorities recovered a Samsung tablet under a mattress that contained hundreds of images and videos of child pornography.
Coates was originally arrested and charged with multiple child exploitation crimes in Santa Barbara County by Santa Barbara District Attorney Joyce Dudley. The District Attorney’s Office subsequently dismissed the state charges when the federal indictment was filed.
The case was investigated by the United States Postal Inspection Service and the Federal Bureau of Investigation. The Santa Barbara Sheriff’s Department, the California Department of Corrections and Rehabilitation and the Los Angeles Joint Regional Intelligence Center provided substantial assistance.
The case was prosecuted by Assistant United States Attorneys Devon Myers and Vanessa Baehr-Jones of the Violent and Organized Crime Section.
Burbank Elementary School Teacher Indicted for Producing Child Pornography and Enticement for Engaging in Sexual Conduct with Former StudentRead the Press Release
LOS ANGELES – A federal grand jury yesterday named a Burbank teacher in a criminal indictment that accuses him of sexually exploiting a fifteen-year-old former student for purposes of producing child pornography images of the minor.
Sean David Sigler, 53, of Burbank – who previously taught fifth-grade students at Bret Harte Elementary School in Burbank and at Gardner Street Elementary School in Los Angeles – was indicted Thursday on eleven counts including obtaining custody and control of a minor with intent to produce child pornography, production of child pornography, enticement of a minor, and possession of child pornography. The United States Attorney’s Office previously filed a criminal complaint against Sigler charging him with production of child pornography.
According to the complaint, Sigler inserted himself into the victim’s life shortly after the child left Sigler’s classroom and used his position as former teacher, mentor, and father-figure to gain the trust of the victim and her parent. Sigler then exploited that trust to gain sexual access to the minor victim. Over the course of 15 months, Sigler regularly transported the victim to his home, where he would give her alcohol and pills and then photograph and film his sexual activity with her. Sigler began having sex with the minor victim when she was just fifteen.
Sigler’s digital devices contained numerous images and videos of his sexual acts with the victim, as well as thousands of images of child pornography depicting unknown pre-pubescent minors, non-pornographic images of minor female students in Sigler’s classroom, and images copied and saved from the social media accounts of former students.
The violation of obtaining custody and control of a minor with intent to produce child pornography carries a mandatory minimum prison sentence of 30 years and a maximum of life imprisonment. The charges of producing child pornography each carry a mandatory minimum prison sentence of 15 years and a statutory maximum sentence of 30 years in federal prison. The charge of enticement carries a mandatory minimum prison sentence of 10 years and a maximum of life imprisonment. The charges of possessing child pornography each carry a statutory maximum sentence of 10 years in federal prison.
A complaint and indictment contain allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Sigler is currently in federal custody and will be arraigned on the indictment in the coming weeks.
The case was investigated by Homeland Security Investigations and the Burbank Police Department.
The case is being prosecuted by Assistant United States Attorneys Damaris Diaz and Devon Myers of the Violent and Organized Crime Section.
Inland Empire Man Who Admitted Selling Fentanyl Analogue that Resulted in Overdose Death Sentenced to 26 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Riverside man who sold a powerful synthetic opioid very similar to fentanyl to a friend – who then suffered a fatal overdose from the drug – was sentenced today to 312 months in federal prison.
Adam Scott Caward, 33, received the 26-year sentence from United States District Judge John A. Kronstadt after admitting that he sold and possessed acetyl fentanyl.
Caward pleaded guilty on November 30 to distribution of acetyl fentanyl resulting in death, and possession with the intent to distribute acetyl fentanyl.
The federal investigation into Caward began in June 2017, when U.S. Customs and Border Protection intercepted a package sent to Caward from China. The shipment contained a compound known as 4-FIBF, which is another analogue of fentanyl – meaning that the narcotic is chemically similar to fentanyl and designed to cause an effect similar to the powerful synthetic opioid.
A subsequent investigation by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Drug Enforcement Administration, in cooperation with the Riverside Police Department, led to the discovery of controlled substances at Caward’s Riverside home in July. The investigation linked Caward to other fentanyl analogues and synthetic opioids that he possessed nine months earlier at his then-residence in Chino Hills.
According to court documents, Caward exchanged a series of text messages with a friend on November 7 and 8, 2016, which culminated in Caward selling his friend a purple powder containing acetyl fentanyl. Within hours of purchasing the narcotic from Caward, the friend died of acute acetyl fentanyl intoxication.
On November 16, 2016, the Riverside Police Department executed a state court search warrant on Caward’s Chino Hills residence, where they found a number of controlled substances, including fentanyl analogues. Among the drugs that Caward possessed was approximately 19.5 grams of the same purple powder containing acetyl fentanyl that was sold to the friend.
One week prior to his death, the friend had purchased acetyl fentanyl from Caward and suffered an overdose while driving, which resulted in a serious car accident that injured the friend and several people in another vehicle, according to prosecutors.
The investigation determined that Caward continued to use the dark web to contact Chinese suppliers and order more fentanyl analogues after the death of his friend.
During today’s sentencing hearing, prosecutors noted that the 2016 overdose death was not the first fatality linked to narcotics sold by Caward. In August 2015, Caward sold a fentanyl analogue to another man, who died of a drug overdose, prosecutors argued.
“Caward had no regard for human life and his conduct caused misery and death,” said United States Attorney Nick Hanna. “Synthetic opioids, such as fentanyl from China, are extremely dangerous and this sentence should send a message to drug dealers that we will seek to hold them responsible for the deaths caused by their criminal behavior.”
Because the narcotics involved in the distribution offense resulted in death, Caward faced a mandatory minimum sentence of 20 years in federal prison.
This case is being prosecuted by Assistant United States Attorney Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section.
United States Moves to Forfeit Antiquity from Time of Roman Empire that was Looted from Syria and Recovered from High Desert HomeRead the Press Release
LOS ANGELES – The United States this week filed an asset forfeiture complaint against an ancient mosaic depicting Hercules, believed to have been made in the 3rd or 4th Century, that likely was looted from war-torn Syria, allegedly illegally imported into the United States, and seized by the Federal Bureau of Investigation (FBI) and Homeland Security Investigations (HSI) at a Palmdale residence.
The mosaic, which is approximately 18 feet long and weighs approximately one ton, was seized by FBI and HSI special agents in March 2016 as part of an investigation into the “smuggling [of] looted items believed to be from a foreign conflict area into the United States.”
The complaint, which was filed Wednesday in United States District court under the caption United States v. One Ancient Mosiac, alleges that a Palmdale man smuggled the antiquity into the United States with false and fraudulent documents with the intent to avoid import duties.
The complaint alleges that Mohamad Yassin Alcharihi further violated federal law by concealing the mosaic at his residence.
After the mosaic was seized, an expert retained by the government concluded that that the artwork “was an authentic mosaic from the Byzantine Period depicting Roman mythology, and was consistent with the iconography of mosaics found in Syria, in particular in and around the city of Idlib, Syria.” The complaint alleges that the mosaic was imported into the United States with paperwork indicating that it was part of a shipment of vases and mosaics worth only about $2,200, but Alcharihi later admitted paying $12,000 for the items. Preliminary estimated values for the mosaic at issue in this case are much higher, according to the complaint.
The United States has adopted import restrictions on archaeological and ethnological material from Syria, according to the complaint, which quotes a statement from U.S. Customs and Border Protection stating: “[f]or decades, the United States has shared the international concern for the need to protect endangered cultural property. The appearance in the United States of stolen or illegally exported artifacts from other countries where there has been pillage has, on occasion, strained our foreign and cultural relations. This situation, combined with the concerns of museum, archaeological, and scholarly communities, was recognized by the President and Congress. It became apparent that it was in the national interest of the United States to join with other countries to suppress illegal trafficking of such objects in international commerce.”
The civil forfeiture case is being handled by Assistant United States Attorney Katharine Schonbachler of the Asset Forfeiture Section.
The mosaic at issue in this case is approximately 18 feet in length, 8 feet in height, and weighs approximately 2,000 pounds. This photograph was taken by FBI after the mosaic was seized pursuant to a federal warrant:
Federal Racketeering Indictment Targets Mexican Mafia Control of Inmates and Drug Trafficking Inside Los Angeles County Jail SystemRead the Press Release
LOS ANGELES – More than 500 law enforcement personnel executed a major operation this morning, taking into custody 32 defendants who are charged in two federal racketeering indictments, one of which outlines how members of the Mexican Mafia were able to control drug smuggling, narcotics sales and the extortion of prisoners inside the Los Angeles County jail system (LACJ).
The defendants arrested this morning are among 83 defendants who were charged by a federal grand jury in the two indictments unsealed today. A total of 35 defendants are already in custody in state prison or county jail facilities and are expected to be brought to federal court in the near future. Authorities continue to search for 16 fugitive who are expected to be arrested in the near future.
The indictments – which allege a host of criminal violations, including conspiracies to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) – detail the power structure of the Mexican Mafia and its violent exercise of authority over Latino street gangs in Southern California and inside the sprawling LACJ.
According to the indictment that focuses on the LACJ, a criminal enterprise led by members of the Mexican Mafia allegedly engaged in five broad areas of criminal activities that collectively served to enrich members of the enterprise and to maintain control and authority over LACJ, which includes the Men’s Central Jail and the Twin Towers Correctional Facility in downtown Los Angeles. The criminal offenses carried out by this enterprise fall generally into five categories:
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the Mexican Mafia-sanctioned smuggling of drugs into LACJ, narcotics that were sold to inmates to generate profits for the enterprise;
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the “taxing” of other drugs smuggled into LACJ in what the indictment labels “widespread extortion”;
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another LACJ extortion scheme in which all Latino inmates were required to contribute a percentage of their commissary spending on food and hygiene items into a “kitty” that generated additional income for the Mexican Mafia member when the kitty was sold to an inmate;
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the disciplining and extortion – through assaults and fines – of Mexican Mafia associates who ran afoul of the rules imposed by the organization; and
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money laundering of the criminal proceeds from these activities.
“These cases have delivered a major blow to the Mexican Mafia and leaders of many of the street gangs under the control of the organization,” said United States Attorney Nick Hanna. “By taking out the gang members who control the jails, and by disrupting their communications network, we undermined the Mexican Mafia’s ability to coordinate street gang activity.”
Today’s takedown is the result of an investigation done under the auspices of the FBI’s San Gabriel Valley Safe Streets Task Force, which is made up of agents and officers with the Federal Bureau of Investigation, the Los Angeles County Sheriff’s Department, the Pomona Police Department, the Drug Enforcement Administration and the California Department of Corrections and Rehabilitation (CDCR).
“Gang violence in the jails also spills over to the streets and adversely affects our communities,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This three-year investigation focused on players at all levels for their role in the conspiracy – from the shot-caller, to the secretary, to the dealer, to the smuggler. Today’s successful operation is a direct result of law enforcement partners working cooperatively at all levels of government.”
The jails indictment focuses on a period when Mexican Mafia member Jose Landa-Rodriguez and two now-deceased members of the prison gang allegedly controlled the criminal enterprise in LACJ. The indictment explains how Landa-Rodriguez, who was incarcerated in LACJ at the time, and other leaders of the enterprise exercised power with the help of trusted “shot-callers,” facilitators and associates. “These Mexican Mafia members and associates, working together to control criminal activity within LACJ, have become their own entity or enterprise and effectively function as an illegal government within LACJ custody facilities,” the indictment states.
Landa-Rodriquez, 55, orchestrated a host of criminal activities, according to the indictment, which alleges that he sanctioned murders, a series of assaults, and the kidnapping and planned murder of the relative of a gang member who had defied him.
A second Mexican Mafia member, Luis Vega, 33, is named as the number 2 defendant in the LACJ indictment. Vega allegedly ordered a murder and directed assaults against those who showed disrespect or failed to follow Mexican Mafia rules.
“Operation Dirty Thirds lifts the veil on only one aspect of the complicated factors behind inmate-on-inmate assaults and the dangers to our custody staff,” said Sheriff Jim McDonnell. “Many assaults have been directed, and carried out, by the Mexican Mafia and are documented in this investigation that took more than four years.”
One of the key facilitators for Landa-Rodriguez allegedly was attorney Gabriel Zendejas-Chavez, who was arrested this morning. The indictment, which notes that attorneys are particularly valued members of the operation because attorney-client privilege can serve as a shield to conceal criminal activity from law enforcement, accuses Zendejas-Chavez of conveying messages and orders related to the criminal enterprise. According to the indictment, Zendejas-Chavez travelled to state and federal prisons to convey messages to Mexican Mafia members, including those incarcerated at ADX Florence; conveyed information, including the names of people potentially cooperating with law enforcement, to members of the LACJ racketeering enterprise; and facilitated a plot to extort $100,000 from the Mongols outlaw motorcycle gang.
Inside the jails, drug trafficking generated revenues for leaders of the criminal enterprise in two ways, according to the indictment. Once narcotics were smuggled into jail facilities at the direction of the Mexican Mafia members and their shot-callers, the narcotics were sold to inmates – and those who possessed other narcotics were not allowed to sell their drugs until the Mexican Mafia member’s drugs were sold. Second, the Mexican Mafia collected a “thirds” tax on all other drugs smuggled into LACJ. This meant that one-third of all narcotics smuggled into LACJ had to be “broken-off” and given to the Mexican Mafia member or his shot-caller in control of the facility. If the Mexican Mafia member decided to sell the “thirds-tax” portion of the drugs, others in the facility were prohibited from selling drugs until the Mexican Mafia member had sold his “thirds.” This rule led to the name of the investigation: Operation “Dirty Thirds.”
“The Mexican Mafia prison gang is a key component of the illicit drug supply chain, largely controlling narcotics distribution perpetrated by violent street gangs,” said DEA Special Agent in Charge David J. Downing. “Extinguishing La eMe’s ability to facilitate organized rackets, drug crimes, and associated violence is a top priority for DEA, and we’re embedded with countless law enforcement partners in this ongoing effort.”
“CDCR and the Office of Correctional Safety would like to thank our partners in the San Gabriel Valley Safe Streets Gang Task Force,” said John Prelip, CDCR Special Service Unit Special Agent-In-Charge. “We know the Mexican Mafia operates within state prisons to conduct criminal activities on the outside through very sophisticated networks. Our hope is that investigations such as these send a message to these gangs that law enforcement – both inside and outside prisons or jails – will continue to work together to dismantle their operations, and protect the community.”
The second RICO indictment unsealed today focuses on a second criminal enterprise that allegedly was run by another incarcerated member of the Mexican Mafia, Michael Lerma, 61, also known as “Pomona Mike.” Lerma exercised control over, and extorted drug proceeds from, Latino street gangs in and around Pomona, as well as from incarcerated Latinos in Calipatria State Prison in Imperial County. Members of Lerma’s criminal enterprise also allegedly engaged in robberies, identity theft and fraud, drug trafficking, kidnapping, and other acts of violence. Lerma profited from these criminal activities when top-level female associates known as “señoras” deposited proceeds into his prison account, according to the indictment.
In one incident alleged in the indictment, members of Lerna’s criminal enterprise attempted to steal a Mercedes-Benz automobile that was owned by a LACJ inmate. When the caretaker of the car refused to turn over the vehicle, one of the defendants named in the indictment shot him. In another incident allegedly involving members of Lerma’s organization, a woman was kidnapped, held for several days while being extorted for money, and was going to be murdered before the plot was disrupted by law enforcement.
“The Pomona community certainly suffered from the criminal acts of those indicted,” said Pomona Police Chief Michael Olivieri. “I am very pleased with the success of this long-term investigation, and I am looking forward to more collaboration with our law enforcement partners in future investigations.”
The two indictments unsealed today charge a host of criminal offenses, including conspiracy to engage in racketeering activity; violent crimes in aid of racketeering activity; carjacking; conspiracy to distribute and possess with intent to distribute methamphetamine, heroin, cocaine, and marijuana; distribution of and possession with intent to distribute controlled substances; money laundering; possession of at least 15 access devices (credit card numbers); aggravated identity theft; and use, possession or discharge of a firearm in furtherance of a crime of violence or drug trafficking crime. If convicted, most of the defendants could be sentenced to decades in federal prison, and some could face life without parole.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Most of the defendants arrested this morning are expected to be arraigned on the indictments this afternoon in United States District Court in downtown Los Angeles.
Operation Dirty Thirds was conducted by the FBI’s San Gabriel Valley Safe Streets Task Force. The Pomona Police Department is the sponsoring agency of the Task Force and has been the headquarters for the task force since its inception in 2008.
A number of law enforcement agencies provided substantial assistance during this morning’s takedown, including U.S. Immigration and Customs Enforcement’s Homeland Security Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Ontario Police Department; IRS Criminal Investigation and other agencies.
The RICO cases are being prosecuted by Assistant United States Attorneys Max B. Shiner and Shawn J. Nelson.
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Orange County Man Sentenced to Federal Prison for Second Conviction of Illegally Importing Protected Asian SongbirdsRead the Press Release
LOS ANGELES – A local man has been sentenced to 18 months in federal prison for conspiring to unlawfully import Asian songbirds from Vietnam to the United States.
Sony Dong, 56, of Westminster, was sentenced Monday morning by United States District Judge S. James Otero, who immediately remanded Dong into custody.
In handing down the sentence, Judge Otero noted the “deplorable” conditions under which the birds were smuggled, and further noted that if birds died while in route that was something looked upon as a cost of doing business.
Dong admitted in a plea agreement that he recruited a courier who travelled to Vietnam on several occasions and brought back Asian songbirds that were packed into one or more suitcases in a manner designed to escape detection by U.S. authorities. At the conclusion of one trip in December 2016, the courier arrived at Los Angeles International Airport, where authorities discovered 30 Asian songbirds concealed in two suitcases.
Each of the 30 birds found in the suitcases was a Chinese Hwamei, Garrulax canorus, a species of Asian songbirds protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Each of the birds was packed in a tiny wooden box that was placed under a layer of foil within each suitcase. At the time the birds were discovered at LAX, Dong was waiting at the airport to pick up the courier and receive the Asian songbirds.
Judge Otero noted that Dong previously was convicted of wildlife trafficking charges. In June 2010, Dong was sentenced to four months imprisonment after pleading guilty to causing the unlawful importation of Asian songbirds into the United States. In that case, Dong smuggled Asian songbirds into the United States by having the birds strapped to both of his legs. During Monday’s sentencing hearing, Judge Otero noted that the prior prison term apparently was insufficient to deter Dong from criminal conduct.
The sentence imposed on Dong also recognized the fact that the unlawful importation of the Asian songbirds caused a substantial risk of disease transmission. The United States Animal Plant Health Inspection Service has identified Vietnam as a region with highly pathogenic avian influenza.
This case was investigated by the U.S. Fish and Wildlife Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigation, and U.S. Customs and Border Protection. The U.S. Department of Agriculture, Sea World and the San Diego Zoo provided assistance.
This case was prosecuted by Assistant United States Attorney Dennis Mitchell of the Environmental and Community Safety Crimes Section.
Five Individuals, Including One-Time Fraud Investigator, Arrested in Health Care Fraud Scheme that Allegedly Sought $20 MillionRead the Press Release
LOS ANGELES – Five people linked to two San Fernando Valley clinics were arrested this morning on federal health care fraud charges for allegedly participating in a scheme that submitted fraudulent claims to health insurance companies and used some of the fraud proceeds to provide patients with “free” cosmetic procedures.
A federal grand jury indictment unsealed this morning alleges that the five defendants – including a former fraud investigator at Anthem Blue Cross – engaged in a multi-year conspiracy to commit health care fraud against at least eight health insurance companies.
Those arrested this morning include the owner and operator of the clinics, Roshanak Khadem, also known as “Roxanne” and “Roxy” Khadem, 50, of Sherman Oaks. Khadem owned and operated the two clinics at the center of the alleged scheme – R&R Med Spa, which was located in Valley Village until early 2016, and its successor company, Nu-Me Aesthetic and Anti-Aging Center, which operated in Woodland Hills.
The indictment alleges that Khadem and others induced patients to visit the clinics to receive free cosmetic procedures – including facials, laser hair removal and Botox injections – which were not covered by insurance. The conspirators obtained the insurance information from the patients and fraudulently billed insurance companies for unnecessary medical services or for services that were never provided. Using the fraudulent proceeds from the insurance companies, Khadem and other conspirators calculated a “credit” that patients could use to receive “free” or discounted cosmetic procedures.
During the course of the conspiracy, Khadem and her conspirators submitted at least $20 million in claims to the insurance companies, which paid approximately $8 million on those claims, according to the indictment.
The other four defendants arrested this morning are:
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Dr. Roberto Mariano, 59, of Rancho Cucamonga, a physician who helped operate the clinics;
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Marina Sarkisyan, 49, of Panorama City, who was the office manager at the clinics;
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Lucine Ilangezyan, 38, of North Hills, an employee and insurance biller for the clinics; and
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Gary Jizmejian, 44, of Santa Clarita, a former senior investigator at the Anthem Special Investigations Unit, the anti-fraud unit within Anthem that is responsible for investigating health care fraud committed against the insurance company.
All five defendants are expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.
The indictment alleges that, in return for cash payments, Jizmejian assisted Khadem and others by providing them with confidential Anthem information that helped them submit fraudulent bills to Anthem. In September 2012, Jizmejian gave Khadem insurance billing codes – CPT Codes – that Jizmejian knew could be used to submit fraudulent claims to Anthem without Anthem detecting the fraudulent claims. Jizmejian gave Khadem the billing code for an allergy-related lab test and instructed her to submit to Anthem large numbers of bills with this CPT code. Khadem and other members of the conspiracy used this billing code to submit approximately $1 million in fraudulent claims to Anthem, according to the indictment.
The indictment further alleges that Jizmejian worked to prevent the insurance companies from detecting the fraud at the clinics, which included helping Khadem to avoid responding to inquiries from fraud investigators, diverting attention of other Anthem SIU investigators away from the clinics, and closing Anthem investigations into fraud that was being committed at the clinics.
In September 2015, based on confidential information obtained from Anthem, Jizmejian tipped Khadem off about a federal criminal investigation into the clinics, according to the indictment.
The scheme involving the two clinics allegedly defrauded the International Longshore and Warehouse Union, Pacific Maritime Association Benefit Plan, which is the health benefit plan that covers longshore workers in Southern California and their dependents, according to the indictment. Another victim was the Federal Employees Health Benefits Program, which provides health insurance for federal employees.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
All five defendants are charged with one count of conspiracy to commit health care fraud and 13 counts of health care fraud. The indictment contains criminal forfeiture allegations that seek forfeiture of the ill-gotten gains derived from the offense.
Each count charged in the indictment carries a statutory maximum sentence of 10 years in prison.
This case was investigated by the United States Department of Labor, Office of Inspector General; the United States Department of Labor, Employee Benefits Security Administration; and the Office of Personnel Management, Office of Inspector General. The United States Marshals Service is providing assistance relating to the asset forfeiture investigation. Anthem Blue Cross has been cooperating with the investigation involving its former employee.
The case is being prosecuted by Assistant United States Attorney Alexander F. Porter of the Major Frauds Section.
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Los Angeles Man Sentenced to over 26 Years in Prison for Role in Federal Narcotics Conspiracy Involving Counterfeit OpioidsRead the Press Release
LOS ANGELES – A downtown Los Angeles resident was sentenced today to 320 months in federal prison for participating in a federal drug trafficking conspiracy that imported acetylfentanyl, a drug very similar to the powerful and highly addictive opioid fentanyl. Acetylfentanyl, which is five times more potent that heroin, is not approved for any use in the United States.
Christopher Bowen, 32, was sentenced for his role in a conspiracy to manufacture, possess and distribute four narcotics, specifically: acetylfentanyl; a-pyrrolidinovalerophenone, a so-called designer drug also known as “PVP” that is sometimes used in “bath salts”; ecstasy; and alprazolam, which is commonly sold under the brand name Xanax.
United States District Judge S. James Otero imposed the prison sentence, remarking that the sentence of 26⅔ years reflected the quantities of drugs seized by investigators. During the investigation, DEA agents seized more than 11 kilograms of acetylfentanyl from the organization. The drug organization obtained pill presses from China that were used illegally to make tablets in labs in a storage unit in Long Beach and a house in Baldwin Park.
“The opioid crisis in our country has risen to epidemic proportions in large part due to drug trafficking conspiracies such as this one,” said United States Attorney Nicola T. Hanna. “These dangerous drugs end up in our neighborhoods and pose a significant public health emergency.”
Bowen was sentenced after being convicted on two counts following a jury trial in October 2017. The evidence presented during a trial in United States District Court showed that Bowen and other members of the drug organization imported acetylfentanyl from China, which they then used to produce homemade pills designed to look like legitimate pharmaceuticals. Bowen and his co-conspirators then distributed the pills in bulk across the nation.
The leader of the organization – Gary Resnik, 33, of Long Beach – pleaded guilty in August 2017 and is scheduled to be sentenced by Judge Otero on July 9.
This case was investigated by the special agents with the Drug Enforcement Administration.
This case is being 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.
Leader of Street Gang Who Described Three-Gang Coalition as a ‘New World Order’ Sentenced to 25 Years in PrisonRead the Press Release
LOS ANGELES – A gang member who helped manage a coalition of three rival street gangs in Northeast Los Angeles that were brought together by orders issued by a member of the Mexican Mafia was sentenced today to 25 years in federal prison.
Manuel Vallejo, also known as “Boxer,” 36, of Los Angeles, a leader and “shot caller” of the Toonerville gang, was sentenced this morning by United States District Judge Philip S. Gutierrez for conspiring to violate the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, committing a Violent Crime in Aid of Racketeering (VICAR), conspiring to traffic methamphetamine, and carrying a firearm during and in relation to the commission of a VICAR.
During the sentencing this morning, Vallejo told the court, “Even if I stole God’s calculator, I couldn’t add up all the mistakes I’ve made.”
Vallejo was among 22 defendants charged nearly three years ago in a federal racketeering indictment relating to the unification of three rival street gangs under Mexican Mafia member Arnold “Arnie” Gonzales. The “peace treaty” imposed by Gonzales in 2010 brought together the Frogtown, Toonerville, and Rascals gangs to control the narcotics trade and other illegal activities in an area that ran along the Los Angeles River from Elysian Park to Burbank for the benefit and profit of Gonzales and the criminal enterprise.
As alleged in the indictment, while Gonzales was incarcerated in Pelican Bay State Prison after being convicted of murder, he appointed Frogtown gang member Jorge Grey to be his emissary on the streets. The indictment accused the 22 defendants of conspiring to operate a criminal enterprise involving various criminal offenses, including narcotics trafficking, extortion, and money laundering.
According to court records, less than two years after Arnold Gonzales imposed the truce on the gangs, Vallejo was recorded describing the criminal enterprise as a “New World Order” or “United Neighborhoods,” and akin to the “United Nations.”
As part of his plea agreement, Vallejo admitted that he was one of the principal members of the conspiracy and, in that capacity, collected “taxes” from both members and associates of the enterprise and individuals engaging in narcotics trafficking or other illicit activities within the territory controlled by the enterprise. He also personally participated in selling and helping arrange the sale of narcotics within enterprise territory, thereby generating revenue for Gonzales and the enterprise.
“The defendant in this case has been held accountable for the violent and egregious acts he perpetrated upon our community,” said United States Attorney Nicola T. Hanna. “This case should put violent gang members on notice that our federal agents and prosecutors are coming for them.”
In pleading guilty to the VICAR charge, Vallejo further admitted that in December 2011 he shot victim another gang member multiple times in response to victim’s efforts to advance his own authority within Toonerville, and in order to enforce compliance with the dictates of the “peace treaty.” Vallejo was subsequently recorded on multiple occasions bragging about having shot the man, whose gang moniker was “Grinch.” In September 2012, for example, Vallejo threatened to “reenact the one who stole Christmas” against fellow gang members who were operating behind his back. Vallejo was also recorded in April 2013 stating that he did not care if people knew he had shot Grinch because “ain’t nobody gonna go testify.”
“The career criminal in this case spent his life committing violent acts and intimidating others into coercion as part of his gang activity,” said the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Los Angeles Field Division Special Agent in Charge Bill McMullan. “As justified, he is one of many from this case going to prison for a very long time. ATF is committed and dedicated to removing violent criminals like these from our society. Justice has been served.”
The RICO case is the result of Operation “Gig ‘em,” an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Violent Crime Impact Team; the California Department of Corrections and Rehabilitation, Office of Correctional Safety, Special Service Unit; the Glendale Police Department; and the Los Angeles Police Department.
Out of the 22 defendants named in the indictment, all but three have pleaded guilty, with most of those who have been sentenced receiving substantial prison sentences, including a 20-year sentence for Jonathan Zepeda and a 15½-year sentence for Giovanni Olvera. The three remaining in the case face trial this summer.
This case is being prosecuted by Assistant United States Attorneys Carol Alexis Chen and Alexander B. Schwab of the Organized Crime Drug Enforcement Task Force.
Inland Empire Man who Impersonated ICE Agent and Possessed Destructive Devices Sentenced to Two Years in Federal PrisonRead the Press Release
LOS ANGELES – An Inland Empire man who impersonated an Immigration and Customs Enforcement (ICE) agent and who possessed multiple destructive devices was sentenced today to 24 months in federal prison.
Matthew Ryan Johnston, 26 of Fontana, was sentenced by United States District Judge Percy Anderson for possession of an unregistered destructive device.
Throughout 2017, Johnston used fake ICE badges and uniforms to falsely represent himself as an ICE agent to unsuspecting members of the public. On one occasion, Johnston used unauthorized red and blue police lights to chase another car, causing a traffic collision. In another incident, Johnston’s ex-girlfriend accidentally activated the red and blue police lights in Johnston’s car. When she was pulled over by a San Bernardino County Sheriff’s Department (SBSD) detective, Johnston spoke on the phone to the SBSD detective at the scene and pretended to be an ICE agent. Johnston further impersonated an ICE agent when he took a report from an individual about a potential undocumented person. Johnston also falsely identified himself as an ICE agent during several visits to the Déjà Vu Showgirls club in the City of Industry.
In October 2017, law enforcement agents executed a search warrant at Johnston’s residence, where they recovered a cache of weapons, illegal destructive devices, approximately 10,000 rounds of ammunition, a fake ICE identification card, body armor carriers with “ICE” and “Federal Agent” patches affixed to them, and red and blue police emergency lights.
Among the destructive devices recovered was a home-made, “slam-fire” device designed to shoot 12-gauge shotgun shells, as well as an AR-15-style .223-caliber rifle equipped with a 37-mm flare launcher. Using geo-coordinates from Johnston’s cell phone, federal agents subsequently searched open desert land, and discovered five unexploded or partially exploded improvised explosive devices (IEDs), an expended smoke grenade, an exploded container of a binary explosive, and the remnants of an exploded pipe bomb.
This case was investigated by ICE’s Office of Professional Responsibility; ICE’s Homeland Security Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the San Bernardino County Sheriff’s Department; U.S. Customs and Border Protection; and the Bureau of Land Management.
The case is being prosecuted by Assistant United States Attorneys Roger Hsieh and Julia Choe of the General Crimes Section.
Authorities Arrest Longtime Fugitive Charged with Attempted Murder of Undercover Officer in Federal Racketeering CaseRead the Press Release
LOS ANGELES – Early Thursday morning, law enforcement authorities arrested an alleged gang member who had been a fugitive for nearly two years after the unsealing of a federal racketeering indictment that charges him in the attempted murder of an undercover Whittier Police Officer.
Frankie Vasquez, 39, of Carson, was arrested in connection with an indictment that charges him and 50 other members and associates of the Canta Ranas organization, a wide-ranging criminal enterprise which operates primarily in Santa Fe Springs and Whittier under the control of a member of the Mexican Mafia.
The arrest of Vasquez was the result of efforts by agents and officers with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the United States Marshals Service, the Whittier Police Department, the Montebello Police Department, and the Los Angeles County Sheriff’s Department. HSI’s Special Response Team and the Bureau of Alcohol, Tobacco, Firearms and Explosives provided assistance.
The racketeering indictment, which was unsealed in June 2016 and superseded in October 2017 to add additional charges, alleges that an incarcerated member of the Mexican Mafia prison gang exerts control over the Canta Ranas street gang and other gangs, and that he received compensation in the form of “rent” or “taxes” generated by drug trafficking and other offenses committed in gang territory.
The first superseding indictment also alleges that Vasquez, a member of the Varrio Keystone street gang and a key supplier of narcotics to the Canta Ranas organization, along with another defendant who was part of the Canta Ranas organization, attempted to murder a detective with the Whittier Police Department when they shot at him in his unmarked vehicle while he was conducting undercover surveillance as part of a narcotics investigation.
For his role in the criminal enterprise, Vasquez is charged with conspiring to violate the federal Racketeer Influenced and Corrupt Organizations Act (RICO), conspiring to commit a violent crime in aid of racketeering (VICAR), possessing a firearm in furtherance of a crime of violence and drug trafficking, as well as conspiring to distribute narcotics and commit money laundering. When law enforcement apprehended Vasquez on Thursday, they found in his possession a copy of the indictment, with certain sections highlighted.
“We will be relentless in tracking down dangerous fugitives and bringing them to justice,” said United States Attorney Nicola T. Hanna. “The criminal organization charged in this indictment is responsible for myriad crimes of violence and drug trafficking. Apprehending fugitives linked to dangerous organizations is part of our overall commitment to making our communities safer.”
At his arraignment Thursday afternoon, Vazquez was ordered held without bond.
The first superseding indictment specifically charges a conspiracy to violate RICO and a second conspiracy to distribute narcotics, which includes allegations of smuggling controlled substances, including heroin, into county jails. All 51 defendants were charged in both of these conspiracy counts.
The first superseding indictment includes nine VICAR counts, including one count alleging the alleged attack on the Whittier Police officer. Various defendants are additionally charged in 11 drug trafficking charges, 18 firearms offenses and a conspiracy to commit money laundering.
Most of the 51 defendants charged in the RICO indictment have been broken into five groups for purposes of trial. The first trial is scheduled to begin on August 7.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The RICO conspiracy count carries a statutory maximum penalty of life in federal prison. The VICAR charges carry varying penalties, with Vasquez facing a statutory maximum penalty of 10 years for his specific VICAR charge, and the narcotics charges all carry mandatory minimum sentences of either five or 10 years in prison.
The three-year investigation into the Canta Ranas organization was called Operation “Frog Legs” and resulted in the seizure of narcotics and 51 firearms. Operation Frog Legs was conducted by the Southern California Drug Task Force, which is led by the Drug Enforcement Administration as part of the High Intensity Drug Trafficking Area (HIDTA) initiative. Participants on the Task Force include personnel from HSI, the Whittier Police Department, the Los Angeles County Sheriff’s Department, IRS Criminal Investigation and the California Department of Corrections and Rehabilitation, Office of Correctional Safety, Special Service Unit.
The RICO case resulting from Operation Frog Legs is being prosecuted by Assistant United States Attorneys Carol Alexis Chen, Victoria A. Degtyareva and Jamie A. Lang of the Organized Crime Drug Enforcement Task Force.
Three Indicted in Immigration Fraud Scheme that Exploited Immigrant Farmworkers by Charging Prohibited Fees for Visas, Living ExpensesRead the Press Release
LOS ANGELES – Three Southern California men were arrested today pursuant to a federal grand jury indictment alleging they participated in an immigration fraud scheme that, among other things, illegally charged Mexican nationals thousands of dollars to obtain H-2A work visas and additional money for expenses once they arrived in the United States.
The indictment alleges that Mexican farmworkers were charged illegal fees for transportation, room and board after the company arranging for the workers’ visas promised the United States Department of Labor and U.S. Citizenship and Immigration Services that the workers had not paid and would not have to pay for these expenses. In addition, the indictment alleges that the farmworkers were made to pay fees to obtain their visas, which is prohibited under the H-2A visa program.
The defendants arrested this morning are:
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Jorge Vasquez, 58, of Fontana, the owner of H-2A Placement Services, a farm labor recruiting company based in Rancho Cucamonga;
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Melquiades Jacinto Lara, 62, of Santa Paula, the owner of J&D Harvesting, which contracted workers to farms in Ventura County; and
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Ricardo Mendoza Oseguera, 39, of Santa Paula, the owner of Discoteca Mi Pueblito, a music and convenience store in Santa Paula, which redeemed vouchers given to workers for J&D Harvesting after deducting fees from the workers’ pay.
The H-2A visa program allows employers to hire foreign, short-term agricultural workers when the employer cannot find suitable workers in the United States. H-2A labor contractors provide foreign workers to farms and generally are responsible for recruiting, transporting and housing the foreign workers. Before the foreign workers can receive visas, several government agencies must certify the need for foreign workers and determine that foreign workers would not adversely impact workers already in the United States.
In addition to provisions designed to protect domestic workers, the H-2A program has rules designed to protect foreign workers from exploitation, including prohibitions from charging the foreign workers for government approvals, equipment needed to perform their jobs, transportation to and from the fields, and costs associated with housing.
As part of the scheme alleged in the indictment, Vasquez travelled to Mexico to recruit farmworkers, who were charged as much as $3,000 to obtain their H-2A visas.
In addition to illegally charging the foreign workers, Vasquez also allegedly made false promises to the workers about how long the visas would be valid and failed to tell the workers that they would be charged for housing, food and transportation. Vasquez is also alleged to have promised an H-2A visa to an undercover agent with the Labor Department’s Office of Inspector General who Vasquez believed was an undocumented individual working in the construction industry in Las Vegas and had no interest in working in the agricultural industry, in exchange for $3,500 to $4,000.
In relation to the costs being borne by the foreign workers, Vasquez and Jacinto allegedly filed documents with federal authorities that contained false statements in connection with their application for visas for 75 workers to harvest lemons, avocados and oranges. Investigators have reviewed USCIS records that indicate that Vasquez and Jacinto have filed petitions for more than 350 farmworkers since 2012.
The indictment charges Vasquez and Jacinto with conspiracy, three counts of mail fraud, one count of visa fraud, and one count of fraud in foreign labor contracting for allegedly telling foreign workers in 2013 that the H-2A visas would be valid for three years, when they knew the visas would expire later that year.
Jacinto and Mendoza are charged with one count of operating an unlicensed money transmitting business. Mendoza’s business served as a check-cashing and wire transfer service where the farmworkers would redeem vouchers or checks paid to them by Jacinto and send money internationally.
The three defendants named in the indictment are 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.
The mail fraud charges carry a statutory maximum sentence of 20 years in federal prison. The visa fraud count has a maximum sentence of 10 years in prison. The charges of conspiracy, fraud in foreign labor contracting and operating an unlicensed money transmitting business each carry maximum sentences of five years in prison.
The investigation into this immigration fraud scheme is being conducted by the United States Department of Labor - Office of Inspector General, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and the Diplomatic Security Services.
The case is being prosecuted by Special Assistant United States Attorney Stacey R. Fernandez of the Violent and Organized Crime Section.
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Real Estate Developer Arrested in Federal Bribery CaseRead the Press Release
LOS ANGELES – A well-known commercial real estate developer was arrested this morning on federal bribery charges alleging that he paid monthly bribes to a Los Angeles County employee for six years and submitted offers to purchase the employee a Santa Rosa residence for nearly $1.1 million in exchange for the developer obtaining a $45 million county lease.
Arman Gabaee, known professionally as Arman Gabay, 57, of Beverly Hills, was arrested at his home without incident this morning by special agents with the Federal Bureau of Investigation. Gabaee, who is charged in a federal criminal complaint with one count of bribery, is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles.
Gabaee, a co‑founder and co‑managing partner of the Charles Company, a Hollywood-based real estate development firm, allegedly paid cash bribes to the county employee for more than six years. According to the complaint, the employee, who is not named and is cooperating with the FBI, negotiated leases for the county to rent office space from private parties and had “significant autonomy to contractually bind the county.”
The complaint alleges that Gabaee paid the employee cash bribes of $1,000 or more every month for six years “in exchange for county leases, non-public information, and other benefits.” According to the complaint, Gabaee paid the employee thousands of dollars during covertly recorded meetings in late 2016 and early 2017.
Further, in 2017, Gabaee allegedly offered to purchase a Northern California residence for the county employee in exchange for the employee’s assistance securing a county lease in the Hawthorne Mall, which Gabaee was redeveloping. According to the complaint, Gabaee wanted the county to enter into a 10-year, $45 million lease to rent space in the Hawthorne Mall for the Department of Public Social Services and other county departments.
“Business leaders who use their wealth and influence to corrupt our government are a scourge on our community,” United States Attorney Nicola T. Hanna said. “No one, no matter how prominent or wealthy, is above the law.”
During recorded meetings between Gabaee and the county employee, as well as phone conversations intercepted pursuant to federal wiretap orders, Gabaee allegedly offered to buy a million-dollar home for the county employee, in exchange for the employee’s assistance securing the $45 million county lease. According to the complaint, when Gabaee offered to buy the residence, Gabaee promised the employee even bigger bribes in the future, saying that things would only get “better” if the employee continued to assist Gabaee with securing other county contracts.
The FBI’s investigation and intercepted communications showed Gabaee taking numerous steps in 2017 to locate a property in Northern California to use as leverage to get the employee’s assistance obtaining the $45 million county lease, according to the complaint. Gabaee ultimately settled on a home on eight acres of land in Santa Rosa wine country that was listed for $1,095,000. Without ever seeing the property, Gabaee allegedly told an associate to “make the offer” on the home “ASAP” as a bribe for the employee. Intercepted communications allegedly showed Gabaee taking steps to try to disguise his ownership interest in the property, telling the associate that the offer on the property could not be in Gabaee’s name and that he wanted to conceal his ownership interest in the property through some type of entity.
In April 2017, Gabaee allegedly placed two offers on the Santa Rosa residence, first for $1,035,000 and later for $1,065,000. According to the complaint, immediately after FBI agents approached Gabaee and told him they were aware of the bribe arrangement, Gabaee’s latest offer on the property was withdrawn within hours.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If convicted of the bribery charge alleged in the complaint, Gabaee would face a statutory maximum sentence of 10 years in federal prison.
The ongoing investigation in this matter is being conducted by the Federal Bureau of Investigation.
This case is being prosecuted by Assistant United States Attorneys Ruth C. Pinkel and Lindsey Greer Dotson of the Public Corruption and Civil Rights Section.
United States Intervenes in False Claims Act Lawsuits Accusing Insys Therapeutics of Paying Kickbacks and Engaging in Other Unlawful Practices to Promote Subsys, A Powerful Opioid PainkillerRead the Press Release
On April 13, 2018, the United States intervened in five lawsuits accusing Insys Therapeutics Inc., of violating the False Claims Act in connection with the marketing of Subsys, an opioid painkiller manufactured and sold by Insys, the Department of Justice announced today. Subsys is a sublingual spray form of fentanyl, a powerful, but highly addictive, opioid painkiller. In 2012, Subsys was approved by the Food and Drug Administration for the treatment of persistent breakthrough pain in adult cancer patients who are already receiving, and tolerant to, around-the-clock opioid therapy.
As stated in the complaint, which was unsealed today, the United States alleges that Insys, headquartered in Arizona, paid kickbacks to induce physicians and nurse practitioners to prescribe Subsys for their patients. Many of these kickbacks took the form of speaker program payments for speeches to physicians that were, in fact, shams; jobs for the prescribers’ relatives and friends; and lavish meals and entertainment. The United States also alleges that Insys improperly encouraged physicians to prescribe Subsys for patients who did not have cancer, and that Insys employees lied to insurers about patients’ diagnoses in order to obtain reimbursement for Subsys prescriptions that had been written for Medicare and TRICARE beneficiaries.
“Improper financial relationships between physicians and drug companies can distort a physicians’ best judgment for their patients, in addition to undermining patient health and trust. This is especially troubling when the drugs are opioids,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Lying to federal health programs about patients’ medical diagnoses is also completely unacceptable. The Justice Department will pursue these illegal actions and continue to hold drug companies and doctors accountable for their roles in contributing to this deadly epidemic.”
"Insys allegedly bribed doctors who are more concerned with profits than patients," said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. "Encouraging the inappropriate use of this too-often deadly opioid is intolerable enough, but the abuse is compounded when taxpayers are forced to pick up the bill."
"I applaud the Civil Division and the U.S. Attorney for their untiring efforts to hold health care providers accountable to the American taxpayer," said Vice Adm. Raquel Bono, director of the Defense Health Agency. "The Department of Justice's efforts safeguard the health care benefit for American service members, veterans and their families. The Defense Health Agency continues to work closely with the Justice Department, and other state and federal agencies to investigate those who participate in fraudulent practices."
“Our intervention in these cases is just one part of the Justice Department’s multi-pronged efforts to combat the opioid crisis,” said United States Attorney Nicola T. Hanna. “The illegal marketing activities alleged in the government’s case helped fuel the crisis by improperly introducing opioids into the market. We are committed to hold accountable corporations and individuals who use kickbacks, off-label promotions and other illegal activities to sell lethal and highly addictive narcotics. Our goal is bring about an end to the tragic epidemic that is harming untold numbers of people across the United States.”
The qui tam provisions of the False Claims Act allow whistleblowers to file lawsuits on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery. The United States has the right to intervene and take over responsibility for litigating these cases. Here, the United States has intervened in five separate lawsuits that have been consolidated together in the Central District of California. They are: United States, et al., ex rel. Guzman v. Insys Therapeutics, Inc., et al., 13-cv-5861; United States ex rel. Andersson v. Insys Therapeutics, Inc., 14-cv-9179; United States ex rel. John Doe and ABC, LLC v. Insys Therapeutics, Inc., et al., 14-cv-3488; United States ex rel. Erickson and Lueken v. Insys Therapeutics, Inc., 16-cv-2956; and United States ex rel. Jane Doe, et al. v. Insys Therapeutics, et al., 16-cv-7937.
The United States has separately pursued a number of criminal cases against Insys employees and Subsys prescribers. Some of these cases have resulted in criminal convictions or guilty pleas, while others are currently pending.
These cases are being handled by the Justice Department’s Civil Division, the United States Attorney’s Office for the Central District of California, the Office of Inspector General of the Department of Health and Human Services, and the Defense Health Agency. The claims asserted against Insys are allegations only, and there has been no determination of liability.
U.S. Intervenes in ‘Whistleblower’ Lawsuits Alleging Insys Therapeutics Paid Illegal Kickbacks to Promote SubsysRead the Press Release
LOS ANGELES – The United States has intervened in five “whistleblower” lawsuits that accuse Insys Therapeutics, Inc. of paying illegal kickbacks and defrauding federal health programs in connection with the marketing of Subsys, an opioid painkiller manufactured and sold by the Arizona-based company, the Department of Justice announced today.
The five cases brought pursuant to the False Claims Act were ordered unsealed late last week, as was the government’s complaint in intervention. The government learned the cases had been unsealed Monday afternoon.
The cases allege illegal marketing tactics related to Subsys, a sublingual spray form of fentanyl, a highly addictive opioid painkiller. In 2012, Subsys was approved by the Food and Drug Administration for the treatment of persistent breakthrough pain in adult cancer patients who are already receiving, and tolerant to, around-the-clock opioid therapy.
The government’s complaint alleges that Insys paid kickbacks to induce physicians and nurse practitioners to prescribe Subsys for their patients. Many of these kickbacks allegedly took the form of sham speaker fees to physicians, jobs for the prescribers’ relatives and friends, and lavish meals and entertainment.
The United States also alleges that Insys improperly encouraged physicians to prescribe Subsys for patients who did not have cancer, and that Insys employees lied to insurers about patients’ diagnoses in order to obtain reimbursement for Subsys prescriptions that had been written for Medicare and TRICARE beneficiaries.
“Our intervention in these cases is just one part of the Justice Department’s multi-pronged efforts to combat the opioid crisis,” said United States Attorney Nicola T. Hanna. “The illegal marketing activities alleged in the government’s case helped fuel the crisis by improperly introducing opioids into the market. We are committed to hold accountable opioid manufacturers who use kickbacks, off-label promotions and other illegal activities to sell lethal and highly addictive narcotics. Our goal is to bring about an end to the tragic epidemic that is harming untold numbers of people across the United States.”
“Improper financial relationships between physicians and drug companies can distort a physicians’ best judgment for their patients, in addition to undermining patient health and trust. This is especially troubling when the drugs are opioids,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Lying to federal health programs about patients’ medical diagnoses is also completely unacceptable. The Justice Department will pursue these illegal actions and continue to hold drug companies and doctors accountable for their roles in contributing to this deadly epidemic.”
“Insys allegedly bribed doctors who are more concerned with profits than patients,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Encouraging the inappropriate use of this too-often deadly opioid is intolerable enough, but the abuse is compounded when taxpayers are forced to pick up the bill.”
“I applaud the Civil Division and the U.S. Attorney for their untiring efforts to hold health care providers accountable to the American taxpayer,” said Vice Adm. Raquel Bono, director of the Defense Health Agency. “The Department of Justice's efforts safeguard the health care benefit for American service members, veterans and their families. The Defense Health Agency continues to work closely with the Justice Department, and other state and federal agencies to investigate those who participate in fraudulent practices.”
The qui tam provisions of the False Claims Act allow whistleblowers to file lawsuits on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.
The United States has the right to intervene and take over responsibility for litigating these cases. Here, the United States has intervened in five separate lawsuits that have been consolidated in United States District Court in Los Angeles.
The civil claims asserted against Insys are allegations only, and there has been no determination of liability.
The United States has separately pursued a number of criminal cases against Insys employees and Subsys prescribers.
The cases announced today are being handled by the United States Attorney’s Office for the Central District of California, the Justice Department’s Civil Division, the Office of Inspector General of the Department of Health and Human Services, and the Defense Health Agency.
Missouri Man Pleads Guilty in $3.4 Million Real Estate Investment Scheme that Targeted Orange County InvestorsRead the Press Release
SANTA ANA, California – A Missouri man who formerly served as a law enforcement reservist has pleaded guilty to a federal fraud offense and admitted operating a real estate scheme in Orange County that bilked dozens of Southern California investors who collectively suffered approximately $3.4 million in losses.
Shawn Patrick Watkins, 48 – who resided in Layton, Utah during the course of the fraud, but has since relocated to Branson, Missouri – pleaded guilty on Monday to one count of mail fraud.
Watkins pleaded guilty before United States District Judge Cormac J. Carney, who scheduled a sentencing hearing for November 19.
A second person involved in the scheme – Angel Bronsgeest, 55, of Lake Forest – previously pleaded guilty to one count of wire fraud and is also scheduled to be sentenced by Judge Carney on November 19.
According to court documents, Watkins promoted himself as a real estate expert with a background in law enforcement and engineered a scheme that defrauded more than 50 victims. Watkins admitted in his plea agreement that he conducted monthly seminars in which he offered investments in his company, The Equity Growth Group (TEGG) from at least 2007 to at least October 2013. Victims were told their money would be used to acquire or to repair properties. Some investors were asked to provide “bridge loans” to allow TEGG to acquire certain properties when money from another investor had not been received.
Watkins made a number of false promises to investors. For example, investors were falsely advised that TEGG controlled hundreds of properties that generated rental income and that TEGG would continue its growth by acquiring new properties. Investors were led to believe that they would receive substantial interest payments and that their money would be secured by collateral through the filing of deeds of trust on properties.
In reality, over the course of several years leading up to the collapse of TEGG, the company was not acquiring new properties and had a negative cash flow. Investor money was not used to acquire new properties, nor were investments secured by collateral, and many victims did not receive interest payments. In fact, money that was paid to some victims as purported interest or a return on their investment came from investments made by other victims. Investor funds also were used to pay salaries and other expenses, including mortgages on three homes Watkins purchased and were being occupied by Watkins, his parents and his estranged wife and children.
As a result of his guilty plea, Watkins faces a statutory maximum penalty of 20 years in federal prison.
The cases against Watkins and Bronsgeest are the result of an investigation by the Federal Bureau of Investigation.
The prosecution of these cases is being handled by Assistant United States Attorney Greg Staples of the Santa Ana Branch Office.
Glendale Police Officer Arrested on Federal Charges of Lying to Federal Agents Investigating His Ties to Organized CrimeRead the Press Release
LOS ANGELES – Agents and officers associated with an FBI-led task force late this afternoon arrested a Glendale Police officer on federal charges of making false statements during interviews with investigators who were probing his connections to the Mexican Mafia and Armenian organized crime.
Detective John Saro Balian, 45, of Seal Beach, was taken into custody without incident at his residence.
Balian, who is charged in a criminal complaint with making false statements to investigators during an interview last year, is expected to make his initial appearance Wednesday afternoon in United States District Court in Los Angeles.
According to the complaint, which was filed Monday and unsealed after his arrest, Balian was interviewed by several law enforcement agencies over a six-month period in 2017 and repeatedly made false statements and misrepresentations about his links to criminal figures.
For example, Balian lied during an April 2017 interview with an FBI agent and Los Angeles Police Detectives “in an effort to hide his associations and criminal collaborations with gang members, the Mexican Mafia and Armenian organized crime,” according to an affidavit signed by a special agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).
The complaint alleges that Balian lied to mislead investigators about his relationship with a gang member – Jose Loza, a Mexican Mafia member and the “shotcaller” of the Canta Ranas street gang, who is currently facing federal racketeering charges – even though at the time “Balian was communicating with Loza via a burner cell phone to discuss jointly undertaken criminal activities.”
During a second interview in June 2017 with the FBI and the Department of Homeland Security, Office of the Inspector General, Balian allegedly lied about accepting money to locate individuals who may have been associated with a burglary at the offices of a convicted felon who later became an informant. According to the affidavit, not only did the informant report paying Balian to locate two men who may have stolen property from the informant’s office, Balian sought to obtain information about one of the men from a deputy United States marshal, and text messages between the informant and Balian documented the arrangement.
The complaint also accuses Balian of lying during an August 2017 interview with authorities who asked about his receipt of money from the informant and Balian’s relationships with several Hispanic gang members. Balian not only knew Hispanic gang members, including Loza, he also “texted them, provided them pre-paid cellular phones, and met with them in person,” the affidavit states.
During a fourth interview in October 2017 with an HSI agent and an FBI task force officer, Balian allegedly lied, among other things, about previously having met Loza, the complaint alleges. This conduct forms the basis for the false statements charge alleged in the complaint.
“Cases involving corrupt public officials – and particularly those involving crimes allegedly committed by police officers – are among the most difficult and troubling matters we see,” said United States Attorney Nicola T. Hanna. “We rely on law enforcement officers to uphold their oaths to faithfully serve their communities. If the allegations in this case are proven, this police officer provided meaningful support to criminal enterprises, and his attempts to cover up his associations served to obstruct justice.”
“The defendant swore to uphold an oath to enforce the law, but instead chose to break the law,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Mr. Balian moved in criminal circles and operated as though he was above the law by repeatedly lying to hide his criminal activity and that of others. His alleged actions impeded legitimate investigations into organized violent crime and consequently presented a threat to public safety.”
“Enforcing the laws of our nation and our communities is a calling like no other. All law enforcement professionals are held to a higher standard,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations in Los Angeles. “HSI stands with all of our partners in our commitment to ensuring that corrupt law enforcement officers who break our laws, violate public trust and compromise safety are prosecuted to the fullest extent. The public deserves no less.”
In addition to the false statements Balian allegedly made over the course of several months last year, the affidavit contains allegations that the police officer worked with a local street gang member and Mexican Mafia associate after Loza was taken into federal custody. This gangster provided information to authorities indicating that Balian disclosed information about another federal racketeering case that allowed the lead defendant to avoid arrest during the takedown and remain a fugitive for a month, according to the affidavit. Balian regularly communicated with the gangster-turned-informant though pre-paid “burner” cell phones, with Balian relaying law enforcement information about planned searches at marijuana grows and instructing the gangster to “hit them” before law enforcement executed the search warrants, the affidavit states. The gangster also reported that Balian was involved in disposing of a firearm used in a shooting, extortion plots, and the gangster said he acted as the bagman on at least two extortions.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If Balian were to be convicted of the charge of making false statements to federal investigators, he would face a statutory maximum sentence of five years in federal prison.
The case against Balian is the result of an ongoing investigation by the Eurasian Organized Crime Task Force, which is made up of special agents with the FBI, HSI, IRS Criminal Investigation and the Department of Health and Human Services’ Office of Inspector General, as well as officers with the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the Glendale Police Department, the Burbank Police Department and the California Department of Health Care Services.
This matter is being prosecuted by Assistant United States Attorney Jeff Mitchell of the Violent and Organized Crime Section.
United States Attorney Nick Hanna Marks National Police Week by Recognizing the Service and Sacrifice of Law Enforcement OfficersRead the Press Release
LOS ANGELES – To mark National Police Week, United States Attorney Nicola T. Hanna and Attorney General Jeff Sessions are honoring the service and sacrifice of federal, state and local police officers who put their lives on the line every day they put on their uniforms.
The United States Attorney’s Office for the Central District of California is actively engaged this month in a host of activities to support and honor our law enforcement partners, especially during Police Week.
In October 1962, Congress passed, and President Kennedy signed, a joint resolution declaring May 15 as National Peace Officers Memorial Day to honor law enforcement officers killed or disabled in the line of duty. The resolution also created National Police Week as an annual tribute to law enforcement service and sacrifice.
During Police Week, which is being observed this year from May 13 through May 19, our nation celebrates the contributions of police officers from around the country, recognizing their hard work, dedication, loyalty and commitment in keeping our communities safe.
“The partnership we maintain with our local law enforcement partners is an integral component of our violent crime strategy,” said United States Attorney Hanna. “Whether working alongside them in an investigation or honoring their sacrifice, we are proud of their service to the residents of this district.”
Members of the United States Attorney’s Office participated in the annual Los Angeles Police Department Memorial Service last week to honor fallen officers killed in the line of duty. United States Attorney Hanna was an honored guest at this event.
Last week, United States Attorney Hanna attended the Federal Bureau of Investigation’s annual memorial honoring fallen FBI agents.
The office hosted a two-day VALOR Survive & Thrive training for nearly 100 law enforcement officers from across the region last week. The training, which was sponsored by the Bureau of Justice Assistance, was co-hosted by the Glendora Police Department and the Western States Information Network.
United States Attorney Hanna and members of the office participated earlier this month in tactical entry, shoot/no-shoot scenario training that was organized by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the United States Marshals Service. The training enabled office personnel to become more aware of the types of scenarios law enforcement officers and agents face every day, especially when they are serving warrants. The training allowed an opportunity for senior leadership to further understand and enhance the training needs of law enforcement within our district.
United States Attorney Hanna highlighted his office’s violent crime strategy and opportunities for increased collaboration with local law enforcement Thursday at the International Latino Gang Investigators Conference, which took place last week in Ontario.
Thursday night, Mr. Hanna attended and provided welcome remarks at the California Narcotics Officers Association annual awards dinner that honors law enforcement officers working narcotics cases.
The United States Attorney and members of his staff attended the Los Angeles Police Department Recruit Graduation Friday, and will attend the Los Angeles County Sheriff’s Department Fallen Deputy memorial to honor deputies killed in the line of duty this week.
“One officer death is too many,” Attorney General Sessions said. “While we are inexpressibly grateful to have had a decrease in the number of officers killed in the line-of-duty last year, the number is still far too high. At the Department of Justice, we honor the memories of the fallen and we pray for their families. We are also following President Trump's Executive Orders to back the women and men in blue, to enhance law enforcement safety, and to reduce violent crime in America. Those priorities will help keep every American safe, including those who risk their lives for us. As always, we have their backs and they have our thanks.”
According to statistics collected by the FBI, 93 law enforcement officers were killed in line-of-duty incidents in 2017 – a 21 percent decrease from 2016 when 118 law enforcement officers were killed in line-of-duty incidents.
Additionally, in 2017 there were 46 law enforcement officers killed in line-of-duty incidents because of felonious acts – this is a 30 percent decrease from 2016, when 66 law enforcement officers were killed in line-of-duty incidents as a result of felonious acts.
To access the FBI's 2017 Law Enforcement Officers Killed and Assaulted report, please visit www.fbi.gov.
For more information about other National Police Week events, please visit www.policeweek.org.
Parking Lot Operator Agrees to Plead Guilty in Scheme to Pay Bribes and Defraud the Department of Veteran’s Affairs out of $13+ MillionRead the Press Release
LOS ANGELES – The owner of a business that operated parking lots has agreed to plead guilty in a 15-year bribery scheme that allowed him to defraud the U.S. Department of Veteran’s 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.
In a plea agreement filed today in United States District Court, David Richard Scott, 58, the owner of Westside Services LLC (WSS), agreed to plead guilty to conspiracy and wire fraud.
Scott, who has been in custody since his arrest in November, is expected to appear in court on Thursday to formally enter his guilty pleas.
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.
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.
Scott maintained at least two sets of financial books, according to the plea agreement filed today. 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 “intentionally failed to satisfy obligations and services placed upon him by the contract, and intentionally underreported revenue and inflated expenses so that it would appear that the VA owed WSS significant payment,” according to the plea agreement. Scott’s “goal was to pay the VA as little as possible.”
As part of the scheme to defraud the VA, 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.
“This bribery and fraud scheme directly harmed our nation’s veterans by depriving them of revenues that could have been used to provide important services and medical care to the brave men and women who served in our armed forces,” said United States Attorney Nicola T. Hanna. “The bribery payments to a public official are disturbing because they compromised our trust in government, allowed the scheme to operate for years and led to this defendant pocketing millions of dollars that should have gone to the Department of Veteran’s Affairs.”
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. For example, Scott told the VA he spent nearly $5.97 million on repairs and maintenance, while his bookkeeper’s records showed he spent only $1.4 million for paving, fencing and other services associated with the parking lots.
“Between 2003 and 2016, defendant Scott utilized WSS business bank accounts to pay for approximately $740,000 in travel, $413,000 in meals and entertainment, defendant Scott’s salary of $3.1 million, and countless personal expenses and owner’s draws totaling at least $13.9 million,” according to the plea agreement. While Scott installed signs at one parking lot claiming that “proceeds go toward helping veterans in need,” Scott admitted in the plea agreement that the money generated at this lot funded his lavish lifestyle and the bribe payments.
As a result of the long-running scheme to defraud the VA, Scott amassed considerable wealth, including 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 contained more than $1 million. When he was arrested, authorities seized more than $213,000 from Scott’s residence – cash that had been skimmed from the VA parking lots.
As part of his plea agreement, Scott and his wife have agreed to forfeit all of these assets. Scott has agreed to pay approximately $12,619,693 in restitution, a figure that takes into account some money already repaid to the VA.
The plea agreement calls for Scott to serve a sentence of 70 months in federal prison. The final decision on the appropriate sentence will rest with United States District Judge R. Gary Klausner. If Judge Klausner decides to impose another sentence, either party has the option of withdrawing from the plea agreement.
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.
Department of Justice Files Complaints Against Florida and California Companies to Stop Use of Experimental Stem Cell Drugs on PatientsRead the Press Release
WASHINGTON – The United States filed civil complaints in Florida and California to enjoin two companies that purport to offer stem cell treatments, the Justice Department announced today.
The first complaint, filed May 9, 2018, in the Southern District of Florida, is against US Stem Cell Clinic LLC, of Sunrise, Florida, US Stem Cell, Inc., and company officers Kristin Comella and Theodore Gradel. A separate complaint was filed the same day in the Central District of California against California Stem Cell Treatment Center Inc., of Rancho Mirage and Beverly Hills, California, Cell Surgical Network Corporation, and company owners Elliot Lander, M.D. and Mark Berman, M.D.
Both complaints allege that the respective defendants manufacture “stromal vascular fraction” (SVF) products from patient adipose (fat) tissue, which the companies then market as stem cell-based treatments for a host of serious conditions and diseases, including cancer, pulmonary disease, arthritis, stroke, ALS, and multiple sclerosis, in the case of the California defendants; and Parkinson’s disease, spinal cord injuries, stroke, pulmonary disease, and traumatic brain injury, in the case of the Florida defendants. According to the complaints, both sets of defendants manufacture their products for these conditions without FDA approval and without proof of safety and efficacy. The Justice Department filed the complaints at the request of the U.S. Food and Drug Administration (FDA).
“Marketing unproven and potentially unsafe treatments puts consumers at risk,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice will continue to work with the FDA to make sure manufacturers of experimental therapies conduct their research within the safe and legal bounds for drug innovation.”
According to the complaints, the defendants and their affiliates have used their products on thousands of patients without first obtaining necessary FDA approvals. The complaints allege that that in some cases, adverse events that harmed patients occurred after treatment with the SVF products. In addition, the complaints allege that the defendants’ misbranded products fail to include adequate directions for use, such as dosages, warnings, and side effects. According to the complaints, recent FDA inspections showed that the defendants’ products are not manufactured, processed, packed, or held in conformance with current good manufacturing practice (CGMP), and they are adulterated as a matter of law.
The Florida matter is being handled by Trial Attorney Roger J. Gural of the Civil Division’s Consumer Protection Branch, with the assistance of Assistant U.S. Attorney James A. Weinkle of the U.S. Attorney’s Office for the Southern District of Florida and Associate Chief Counsel for Enforcement Michael Helbing of the U.S. Department of Health and Human Services’ Office of General Counsel.
The California matter is being handled by Trial Attorney Natalie N. Sanders of the Civil Division’s Consumer Protection Branch, with the assistance of the U.S. Attorney’s Office for the Central District of California and Associate Chief Counsel for Enforcement Michael Shane of the U.S. Department of Health and Human Services’ Office of General Counsel.
A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Southern District of Florida, visit its website at https://www.justice.gov/usao-sdfl. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca
Korean National Sentenced to Nearly 4 Years in Prison for Role in Scheme that Avoided Paying Excise Taxes on Millions of CigarettesRead the Press Release
LOS ANGELES – A Korean national who was living in the United States as an illegal alien has been sentenced to 46 months in federal prison for participating in a scheme to defraud the United States by evading millions of dollars in federal excise taxes due on 143 million cigarettes.
Un Hag Baeg, 58, of Marina del Rey, was sentenced Monday for his role in a conspiracy that sold cigarettes domestically, but did not pay excise taxes after falsely claiming the cigarettes were leaving the United States on cargo ships sailing out of the ports of Los Angeles and Long Beach. At the time of the offense, Baeg operated Far East Marine Ship Supply Company, a ship chandler that provided supplies to cargo vessels.
United States District Judge S. James Otero imposed the prison sentence and additionally ordered Baeg to pay $7.26 million in restitution to the U.S. Alcohol and Tobacco Tax and Trade Bureau.
Baeg was sentenced after pleading guilty in October to conspiracy to defraud the Unites States.
Cigarettes sold in the United States are subject to a federal excise tax of $50.33 per one thousand cigarettes. This tax is generally paid by the manufacturer, but it may be avoided if the cigarettes are properly transferred to a bonded warehouse to be exported or consumed outside of the United States. Untaxed cigarettes sold for this purpose are known as “export-only” cigarettes. When export-only cigarettes are diverted and sold in the United States, federal and state taxing authorities suffer lost excise taxes.
According to court documents, between 2012 and 2015, Baeg and others conspired to divert approximately 143 million export-only cigarettes from an export warehouse near the Port of Los Angeles. Baeg purchased the cigarettes under the pretext that the cigarettes would be provided to various ships sailing out of the United States. In fact, the cigarettes were sold in the United States, which resulted in millions of dollars in lost federal and state excise taxes.
Baeg and his co-conspirators subsequently hid their fraud by preparing false paperwork indicating that the cigarettes had been delivered to the various ships. To make these bogus documents appear to be legitimate, the conspirators stamped the paperwork with fabricated rubber stamps bearing the names of cargo vessels.
Baeg’s “criminal conduct was neither passive nor passing,” according to a sentencing memorandum filed by prosecutors. “Rather, he played an active and crucial role in a long-operating criminal enterprise.”
The conspiracy resulted in the evasion of $7,260,203 in federal excise taxes and $5,986,458 in California excise taxes.
A man who assisted Baeg by picking up the duty-free cigarettes Baeg ordered several times a week, paying for them with money provided by Baeg, and transporting the cigarettes to distribution points has also pleaded guilty to a charge of conspiracy to defraud the United States. Isaac Rojas, 45, of El Monte, pleaded guilty last year to conspiring with Baeg and is scheduled to be sentenced by Judge Otero on May 29, at which time Rojas will face a statutory maximum sentence of five years in federal prison.
This case was investigated by the U.S. Alcohol and Tobacco Tax and Trade Bureau; IRS Criminal Investigation; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The case was prosecuted by Assistant United States Attorney James Hughes of the Tax Division and Trial Attorney Christopher Strauss of the Justice Department’s Tax Division.
Romanian Computer Hacker Sentenced to One Year in Federal Prison for Staging Denial of Service Attacks on ‘World of Warcraft’ ServersRead the Press Release
LOS ANGELES – A Romanian computer hacker who orchestrated a series of distributed denial of service (DDoS) attacks on the European servers of the massively multiplayer online role-playing game World of Warcraft was sentenced today to one year in federal prison.
Calin Mateias, 38, of Romania, was sentenced by United States District Judge Otis D. Wright II.
Mateias, who has been in custody since November 20 after being extradited from Romania, was also ordered to pay $29,987 in restitution to Blizzard Entertainment, the Irvine-based owner and operator of World of Warcraft, to compensate the company for labor costs associated with countering the computer attacks.
World of Warcraft is an online virtual world where players participate in a game using avatars. Mateias, using his in-game avatar, often participated in collaborative events, such as “raids,” where players joined forces to meet game objectives and were rewarded with virtual proceeds or in-game advantages. Mateias became involved in disputes with other players for a variety of reasons, including the division of loot and membership in raid teams.
Between February and September 2010, typically in connection with in-game disputes with other players, Mateias launched DDoS attacks on World of Warcraft servers in Europe. A DDoS attack is an attack on a computer network in which multiple computers are used to transmit a flood of superfluous requests to the target network, thereby overloading it, and making it unavailable to other users. Mateias’ DDoS attacks caused World of Warcraft servers to crash and prevented some paying customers from accessing the game.
After being indicted in this case in 2011 and extradited from Romania last year, Mateias pleaded guilty in February to one count of intentional damage to a protected computer.
This case is the result of an investigation by the Federal Bureau of Investigation.
The case was prosecuted by Assistant United States Attorney Khaldoun Shobaki of the Cyber & Intellectual Property Crimes Section.
Debt Collection Outfit Fined $350,000 and Ordered to Forfeit $946,770 for Paying Bribes to Arizona Official in Exchange for Non-Public InfoRead the Press Release
LOS ANGELES – A now-defunct debt collection company that was based in Culver City was sentenced today for its role in a scheme that paid bribes to a public official in Arizona in exchange for confidential information that helped the company collect nearly $1 million in outstanding debts.
Professional Collection Consultants (PCC) was ordered to pay a $350,000 fine and to forfeit $946,770, which represent the amount of money PCC was able to collect in eight months as a result of the information obtained through bribes.
PCC was sentenced by United States District Judge S. James Otero, who is scheduled to sentence a PCC employee later this month for his role in the scheme.
According to court documents, PCC paid bribes to an employee of the Arizona Department of Economic Security, the state agency that provided unemployment insurance benefits, from approximately September 2010 through August 2013. In exchange for the bribes, the public official disclosed to PCC wage and earnings information for specific Social Security numbers that had been provided by a PCC employee. The state agency maintained employment-related data in its computer systems that were linked with federal and state databases containing confidential information for people across the nation.
The PCC employee who was charged in this case – Michael S. Flowers, 56, of Mid-City Los Angeles – provided the Arizona official with the names and social security numbers of thousands of people who owed money on accounts being serviced by PCC, and the official sent confidential information found on each individual or advise that no wages existed for a specific Social Security number. PCC used the confidential information to analyze the collectability of each debtor’s debt and to determine whether it made financial sense for PCC to sue a debtor in an effort to obtain a judgment that would allow PCC to garnish wages.
Flowers deposited the bribe payments into a local bank where the Arizona official maintained an account.
During the first eight months of 2013, the confidential information assisted PCC’s efforts in collecting $946,770 in debts owed, and Flowers received a 10 percent commission on these recoveries.
PCC and Flowers each pleaded guilty to one count of conspiracy to commit bribery concerning a program receiving federal funds. Flowers is scheduled to be sentenced on May 29.
This matter was investigated by the United States Department of Labor, Office of the Inspector General, which received assistance from the Federal Bureau of Investigation.
The case is being prosecuted by Assistant United States Attorney Elisa Fernandez of the Public Corruption and Civil Rights Section.
Founder of Irvine-based Financial Services Firm Arrested in Scheme that Allegedly Stole more than $4 Million from InvestorsRead the Press Release
SANTA ANA, California – The CEO of an Irvine-based financial services and insurance company was arrested this morning on federal charges of defrauding about a dozen victims who thought their money was being invested in a certificate of deposit at a major bank.
The scam allegedly run out of Five Star Financial Services of America, LLC targeted the retirement accounts and savings of elderly investors and other vulnerable victims, according to a federal criminal complaint that notes one 70-year-old victim lost nearly all of his $1.6 million investment with Five Star.
This morning, FBI and IRS special agents arrested Memet Fatih Biyikoglu, 50, of Palm Desert, who was Five Star’s chief executive officer and was known to some victims as “John B.” Biyikoglu is expected to make his initial court appearance this afternoon in United States District Court in Santa Ana.
Anna Marie Holt, 58, of Fountain Valley, who was the president and chief operating officer of Five Star, is expected to self-surrender to authorities this afternoon. Holt also is expected to make her first court appearance this afternoon in federal court in Santa Ana.
A third defendant named in the criminal complaint – Ida Shaghoian, 38, of Palm Desert, a sales agent with Five Star and Biyikoglu’s ex-wife – is currently being sought by federal agents.
According to the affidavit in support of the criminal complaint, Biyikoglu, Shaghoian and Holt solicited investors to put retirement funds, savings, and other assets in a certificate of deposit held at JP Morgan Chase Bank with promises that the investments were safe and would generate large returns.
In reality, the Chase bank CD did not exist, and the defendants used the victims’ money for their own personal use, which included paying for real estate, jewelry and a Ferrari, the complaint alleges. As part of the scheme, victims were given bogus Chase Bank statements to make it appear their money had been legitimately invested.
To date, the investigation has identified 11 victims who transferred at least $4,088,338 to Five Star in 2014 and 2015, according to the complaint. Several of the victims lost their entire retirement savings.
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.
The charge of conspiracy to commit wire fraud carries a statutory maximum sentence of 20 years in federal prison.
The investigation into Five Star Financial Services is being conducted by the Federal Bureau of Investigation and IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorney Scott D. Tenley of the Santa Ana Branch Office.
Orange County Electronics Distributor Charged with Selling Counterfeit Integrated Circuits with Military and Commercial UsesRead the Press Release
LOS ANGELES – The owner of PRB Logics Corporation, an Orange County-based seller of electronic components, was arrested this morning on federal charges alleging he sold counterfeit integrated circuits, some of which could have been used in military applications.
Rogelio Vasquez is charged in a 30-count indictment that alleges he acquired old, used and/or discarded integrated circuits from Chinese suppliers that had been repainted and remarked with counterfeit logos. The devices were further remarked with altered date codes, lot codes or countries of origin to deceive customers and end users into thinking the integrated circuits were new, according to the indictment. Vasquez then sold the counterfeit electronics as new parts made by manufacturers such as Xilinx, Analog Devices and Intel.
Vasquez, who is also known as “James Harrison,” 43, a resident of Orange, was arrested without incident at his residence this morning by federal authorities. Vasquez is expected to be arraigned on the indictment this afternoon in United States District Court in Santa Ana.
The indictment charges Vasquez with nine counts of wire fraud, 20 counts of trafficking in counterfeit goods, and one count of trafficking in counterfeit military goods. The charge related to counterfeit military goods alleges that Vasquez sold eight integrated circuits that appeared to be manufactured by Xilinx, knowing that such goods were counterfeit military goods, “the use, malfunction, and failure of which were likely to cause serious bodily injury and death, the disclosure of classified information, impairment of combat operations, and other significant harm to a combat operation, a member of the Armed Forces, and to national security.”
The wire fraud charges allege that Vasquez instructed his Chinese suppliers to remark ICs and also instructed a testing laboratory in China to provide two versions of its report – one of which accurately showed integrated circuit test results and the second of which was a “sanitized version” that did not contain results of “any visual inspection and permanency or other marking tests, which would have revealed that the ICs were used, remarked and/or in poor condition.”
A federal grand jury returned the indictment on April 27. Federal prosecutors on April 23 filed an asset forfeiture complaint against $97,362 in cash seized from Vasquez’s residence in 2016. The asset forfeiture complaint outlines the investigation into counterfeit integrated circuits and notes, “The sale of counterfeit [integrated circuits] into the stream of commerce is a significant problem for the U.S. military, due to the increased risk of equipment failure from using salvaged, sub-standard, or wrong components.”
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 charges of wire fraud and trafficking in counterfeit military goods each carry a statutory maximum sentence of 20 years in federal prison. Each count of trafficking of counterfeit goods carries a maximum possible penalty of 10 years in prison.
The investigation into Vasquez and PRB Logics is being conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the Defense Criminal Investigative Service; and the National Reconnaissance Office, Office of Inspector General.
The criminal case is being prosecuted by Assistant United States Attorney Lisa E. Feldman of the Cyber & Intellectual Property Crimes Section. The complaint seeking the forfeiture of the seized funds was filed by Assistant United States Attorney Steven R. Welk, Chief of the Asset Forfeiture Section.
Panasonic Avionics Corporation Agrees to Pay $137 Million to Resolve Foreign Corrupt Practices Act ChargesRead the Press Release
WASHINGTON – Panasonic Avionics Corporation (PAC), a subsidiary of multinational electronics company Panasonic Corporation (Panasonic), has agreed to pay a $137.4 million criminal penalty to resolve charges arising out of a scheme to retain consultants for improper purposes and conceal payments to third-party sales agents, in violation of the accounting provisions of the Foreign Corrupt Practices Act (FCPA).
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and Acting Assistant Director Christopher Hacker of the FBI’s Criminal Investigative Division made the announcement.
“When Panasonic Avionics Corporation caused its publicly-traded parent company to falsify its books and records, it distorted the information available to legitimate investors,” said Acting Assistant Attorney General Cronan. “The Criminal Division will take all appropriate action to ensure that the investing public is able to trust the accuracy of the financial statements of companies that avail themselves of American securities exchanges.”
PAC, based in Lake Forest, California, designs and distributes in-flight entertainment systems and global communications services for airlines and airplane manufacturers. According to admissions and court documents, PAC knowingly and willfully caused Panasonic to falsify its books and records with respect to PAC’s retention of consultants for improper purposes. The consultants, which did little or no actual consulting work for PAC, were retained through a third-party service provider and were paid for out of a budget over which a senior PAC executive had complete control and discretion, without meaningful oversight by anyone at PAC or Panasonic. One such individual was offered the consulting position by PAC at the time that he was employed by a state-owned airline and involved in negotiating a lucrative contract amendment on behalf of the airline with PAC. According to court documents, that consultant was subsequently paid $875,000 by PAC over a six-year period and PAC earned over $92 million in profits from portions of the contract over which the consultant had some involvement or influence while employed with the airline. PAC admitted that it mischaracterized these payments as “consultant payments” on its general ledger, which it knew caused Panasonic to incorrectly designate those payments as “selling and general administrative expenses” on Panasonic’s books, records, and accounts.
PAC also admitted that employees in its Asia region concealed PAC’s use of certain sales agents, which did not pass the Company’s internal diligence requirements. According to admissions and court documents, PAC formally terminated its relationship with these sales agents, as required by its compliance policies, but PAC employees then secretly continued to use the agents by having them rehired as sub-agents of another company, which had passed PAC’s due diligence checks. Through this process, PAC employees hid more than $7 million in payments to at least 13 sub-agents.
By mischaracterizing the payments made to consultants and sales agents and providing false or incomplete representations and Sarbanes-Oxley subcertifications to Panasonic about PAC’s financials and financial controls, PAC caused Panasonic to falsify its books, records, and accounts in violation of the FCPA.
PAC entered into a deferred prosecution agreement (DPA) in connection with a criminal information, filed today in the U.S. District Court for the District of Columbia, charging the company with one count of knowingly and willfully causing the falsification of the books, records, and accounts of its parent company Panasonic. As part of the DPA, PAC will pay a total criminal penalty of $137,403,812. PAC also agreed to continue to cooperate with the department’s investigation, enhance its compliance program, implement rigorous internal controls and retain an independent corporate compliance monitor for at least two years.
In a related proceeding, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Panasonic, whereby the company agreed to pay approximately $143 million in disgorgement to the SEC, including prejudgment interest. Thus, the combined total amount of U.S. criminal and regulatory penalties to be paid by Panasonic and PAC is over $280 million.
The Criminal Division’s Fraud Section reached this resolution based on a number of factors, including the fact that PAC did not timely voluntarily self-disclose the conduct, but did cooperate with the department’s investigation after receiving a request for documents from the SEC. PAC received a 20 percent discount off the low end of the U.S. Sentencing Guidelines fine range because of its cooperation and remediation, which, although untimely in certain respects, did include causing several senior executives who were either involved in or aware of the misconduct to be separated from PAC or Panasonic. Because many of the company’s compliance enhancements were more recent, and therefore have not been tested, the DPA imposes an independent compliance monitor for a term of two years, followed by an additional year of self-reporting to the department.
The case is being investigated by the FBI’s International Corruption Squad in Los Angeles. Fraud Section Trial Attorneys Dennis R. Kihm and Jeremy R. Sanders prosecuted the case. The Fraud Section appreciates the significant cooperation and assistance provided by the SEC in this matter. The Criminal Division’s Office of International Affairs also provided assistance during the investigation.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Owner, 2 Employees of Trucking Companies Charged in Illegal Repair of Gasoline Cargo Tanks, One of Which Exploded and Killed WelderRead the Press Release
LOS ANGELES – A federal grand jury has returned an indictment that charges three individuals and two Inland Empire trucking companies in a scheme to defeat federal transportation laws that included an illegal repair of a gasoline tanker that resulted in a fatal explosion.
The four-count indictment filed late Wednesday afternoon outlines two years of illegal and unauthorized tanker repairs, culminating with a May 6, 2014 explosion that killed a company welder and severely injured a second worker. Members of the conspiracy also allegedly helped rename the company after federal regulators ordered it to take its cargo tanks off the road.
The indictment charges three individuals:
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Carl Bradley Johansson, who also used variations on his name, such as “Brad Johnson,” 59, of Corona, the owner of the trucking companies;
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Enrique “Henry” Garcia, 43, of Pomona, Johansson’s shop manager, who supervised the welders who illegally repaired cargo tankers; and
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Donald Cameron Spicer, 66, of Fullerton, who was the safety manager at Johansson’s companies.
The indictment also charges Johansson’s Corona-based trucking companies, National Distribution Services, Inc. (NDSI), which operated from about 2009 through 2015, and NDSI’s successor company, Wholesale Distribution, Inc. (WDI), which does business as Quality Services. Johansson allegedly created WDI to take over NDSI’s operations so he could continue to operate the cargo tanks that had been ordered out of service.
All five defendants are charged with participating in a scheme to conduct illegal repairs on cargo tanks used to transport gasoline and to obstruct the United States Department of Transportation (USDOT), which enforces federal laws related to the trucking industry, including the repair of cargo tanks.
After doing in-house repairs on at least a half-dozen cargo tanks – even though NDSI was not certified to conduct such repairs – Johansson and Garcia on May 5, 2014 discussed directing two NDSI workers to conduct welding on a cargo tank. The following day, Garcia issued the orders to the employees, even after one of the welders told Garcia that it was not safe, according to the indictment. The two workers began a welding project on the cargo tank, which caused an explosion that killed one worker and seriously injured the man who had warned Garcia.
Later that day, when investigators arrived at NDSI, Johansson identified himself as being a customer service representative with another company and said the welders were employed by an outside tank-repair company, the indictment alleges.
In August 2014, the Federal Motor Carrier Safety Administration (FMCSA) issued an imminent hazard order – commonly called an “Out-of-Service Order” – to NDSI, which prohibited the company from operating approximately 37 cargo tanks to haul gasoline or ethanol because the FMCSA determined that those cargo tanks presented safety risks, according to the indictment. Nevertheless, Johansson continued to use them to transport gasoline and ethanol. Furthermore, Johansson and NDSI allegedly submitted false statements to the FMCSA in an attempt to have the Out-of-Service Order rescinded by the agency. The indictment alleges that Johansson signed, under oath, an affidavit that falsely claimed NDSI had never engaged in tank repairs and that Garcia worked for an outside tank-repair company.
In an attempt to circumvent the FMCSA’s Out-of-Service Order, Johansson, at the end of 2014, began a process to convert NDSI to operate under the WDI name, the indictment alleges.
Once Johansson converted the trucking company to WDI, Spicer allegedly filed documents to conceal that fact that WDI was simply a new name for NDSI, and that WDI was continuing to transport gasoline and ethanol in violation of the FMCSA’s Out-of-Service Order.
All five defendants are charged with conspiring to violate federal law by causing illegal repairs to be conducted on the cargo tanks and defrauding the United States Department of Transportation. The indictment further charges Johansson, Garcia and NDSI with one count of welding without required certifications, in violation of the Hazardous Materials Transportation Statute. Johansson is charged with one count of making a false statement to the Department of Transportation for allegedly falsely telling investigators that he did not discuss with Garcia the repair of the cargo tank prior to the explosion. Spicer also faces a charge of making a false statement to the FMCSA by failing to disclose that WDI was directly linked to NDSI.
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 illegal welding count carries a statutory maximum penalty of 10 years in federal prison. The other counts carry a statutory maximum penalty of five years in prison.
The indictment in this case follows the filing of two criminal complaints earlier this month. Garcia was arrested on the night of April 9 as he crossed the international border into San Diego County, and Johansson was arrested on April 10 at his business. Spicer, who was named in a second complaint, was taken into custody on April 11.
Spicer is scheduled to be arraigned on the indictment on May 9 in United States District Court in Riverside, and Johansson’s arraignment is scheduled for May 16. Garcia’s arraignment has not yet been scheduled.
The case has been assigned to United States District Judge Virginia A. Phillips, who sits in Los Angeles.
The affidavit in support of the criminal complaint that names Johansson notes that he was aware of regulations that prevented unauthorized repair work on cargo tanks because he was previously prosecuted by the United States Attorney’s Office for conducting illegal repairs at a company where he was president. In 2000, Johansson was sentenced to 15 months in federal prison after pleading guilty in a scheme in which another welder was killed in an explosion while he was working on a cargo tank.
The investigation in this matter is being conducted by the United States Department of Transportation’s Office of Inspector General and IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorney Matthew W. O’Brien of the Environmental and Community Safety Crimes Section.
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Colorado Man Faces Federal Charges after Allegedly Driving 15-Year-Old Girl Through Multiple States and Producing Child PornographyRead the Press Release
SANTA ANA, California – A previously convicted sex offender from Colorado has been indicted by a federal grand jury on a series of child exploitation charges after allegedly meeting a 15-year-old girl in Colorado, taking her on a 3½-month road trip that ended in Southern California, and producing child pornography that depicted sexual acts with the victim.
Kenneth Wayne Fisher, 42, of Colorado Springs, Colorado, was named in an eight-count indictment filed late Wednesday.
Fisher allegedly took the victim through multiple states on a trip that ended on November 16, 2015 after a high-speed police chase that concluded when Fisher ran out of gas on the 405 freeway near Seal Beach.
The indictment charges Fisher with:
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enticement to travel in interstate commerce to engage in criminal sexual activity;
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transportation of a minor to engage in criminal sexual activity;
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production of child pornography;
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transportation of child pornography;
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possession of child pornography; and
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three counts of commission of a felony offense involving a minor while required to register as a sex offender.
The indictment alleges that Fisher was convicted in an Alabama state court in 2000 of sexual abuse in the second degree, which is why he was required to register as a sex offender.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If he is convicted of the offenses alleged in the indictment, Fisher faces a potential sentence of life without parole in federal prison. In Fisher’s case, because of his prior conviction and requirement to register as a sex offender, the charge of producing child pornography carries a mandatory minimum sentence of 35 years in prison.
Fisher is currently in federal custody in Kansas where he faces sentencing for robbing a bank during his trip with the victim.
This case is the result of an investigation by the Federal Bureau of Investigation and the Fountain Valley Police Department. The Colorado Springs Police Department conducted the missing persons investigation, and the California Highway Patrol assisted the Fountain Valley Police Department during the chase that culminated with Fisher’s arrest.
This case is being prosecuted by Assistant United States Attorney Gregory S. Scally of the Santa Ana Branch Office.
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Federal Law Enforcement Agent Convicted of Criminal Charges Related to Helping Mexican National Enter the United StatesRead the Press Release
LOS ANGELES – A special agent with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) has been found guilty of four federal offenses related to assistance he provided to a Mexican national with a criminal record to re-enter the United States.
Felix Cisneros Jr., 44, of Murrieta, an 11-year veteran of ICE who is now on indefinite suspension from the agency, was found guilty late Monday afternoon following a four-day trial in United States District Court.
The jury found Cisneros guilty of four felony counts: conspiracy to aid and assist the entry of an alien convicted of an aggravated felony into the United States, acting as agent of another person in a matter affecting the government, falsification of records in a federal investigation, and making false statements.
According to court documents and the evidence presented to the jury, Cisneros agreed to help a friend’s business associate re-enter the United States after traveling to Mexico City in September 2013. The business associate, Santiago Garcia-Gutierrez, was a lawful permanent resident of the United States, but because of prior criminal convictions and an outstanding warrant for his arrest, he was barred from being legally admitted into the United States upon his return. United States Customs and Border Protection (CBP) had seized Garcia’s Mexican passport and his “Green Card” when he attempted to enter the United States two months earlier, but he was paroled in –meaning he was temporarily allowed into the United States – pending the resolution of his criminal case.
As part of the conspiracy, Cisneros persuaded CBP officers to return Garcia’s passport, ensured that Garcia would be allowed to re-enter the United States after the September 2013 trip, and urged CBP to extend Garcia’s parole that allowed him to remain in the United States pending resolution of his immigration status. Cisneros provided assistance to Garcia knowing about his prior convictions.
As part of the conspiracy, Cisneros had queried a law enforcement database, which provided him information about Garcia’s prior convictions, as well as information that Garcia was suspected of participating in criminal activities.
The falsification of records and the false statements charges relate to Cisneros failing to disclose that he had a longstanding relationship with Garcia during a regular background investigation being conducted as part of his employment as an ICE agent.
Cisneros is scheduled to be sentenced by United States District Judge Christina A. Snyder on July 30, at which time he will face a statutory maximum sentence of 20 years in federal prison.
The jury that convicted Cisneros also acquitted him of two counts of obstruction of justice.
The case against Cisneros is the product of an investigation by the Federal Bureau of Investigation; the Department of Homeland Security, Office of Inspector General; and the ICE Office of Professional Responsibility.
This case is being prosecuted by Assistant United States Attorneys Patricia A. Donahue and Sheila Nagaraj of the Public Corruption and Civil Rights Section.
Promoter Who Defrauded Investors in Concerts and WWE Events that Never Took Place Sentenced to Nearly Five Years in Federal PrisonRead the Press Release
LOS ANGELES – A promoter who bilked investors, promoters and performers who invested in concerts and World Wrestling Entertainment events – stealing at least $1.7 million from the victims – was sentenced today to 57 months in federal prison.
Gabriel Martin Reed, 47 – a former Malibu resident who currently lives in McKinney, Texas – was sentenced by United States District Judge Philip S. Gutierrez.
Reed pleaded guilty in November to one count of wire fraud and admitted that he defrauded his victims by making false promises and then using their money for personal expenses.
Reed, who conducted business under the name Gabe Reed Productions, took money from victims after falsely telling them that events would take place, certain performers had agreed to participate in those events, and their funds would be used to organize and promote the events. Instead of using the money for concerts and other events as promised, Reed used investor funds to pay his rent, utility bills and travel expenses.
According to court documents, for almost nine years, Reed represented himself as a promoter and organizer of hard rock and wrestling events. Reed solicited investors by touting what he claimed were longstanding relationships with well-known musicians, showing props from alleged previous tours, and fabricating records related to music events. According to a sentencing memorandum filed by prosecutors, Reed operated a sophisticated scheme, which included creating bogus email addresses and distributing fabricated artist contracts, bank statements, and correspondence to convince his victims that their funds were being legitimately invested.
When he pleaded guilty, Reed specifically admitted defrauding one Los Angeles investor, who agreed to put $100,000 into a 2016 concert tour Reed was calling “Titans of Rock.” However, many of the promised artists had not agreed to participate in the purported tour.
Prosecutors have asked Judge Gutierrez to order Reed to pay restitution to his victims. The court will schedule a hearing, likely early this summer, to determine the amount of restitution.
The case against Reed was investigated by the Federal Bureau of Investigation.
This case was prosecuted by Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.
Medical Doctor Who Illegally Wrote Prescriptions – including for Highly Addictive Opioids – Sentenced to Five Years in PrisonRead the Press Release
LOS ANGELES – A doctor who operated a medical clinic in Lynwood was sentenced today to 60 months in federal prison for illegally issuing prescriptions for powerful narcotics and sedatives without a medical purpose, mostly for young “patients” who paid cash.
Dr. Edward Ridgill, 65, a resident of Indio, California, was sentenced by United States District Judge S. James Otero.
During today’s hearing, Judge Otero said, “With all due respect to Dr. Ridgill, he is not a doctor. He has a license to practice, [but] he is not practicing medicine.” The judge also noted Ridgill’s prior history of improperly writing prescriptions, which “reveals he has not learned his lesson from the past.”
Today’s sentencing follows a one-week trial late last year in which a federal jury found Ridgill guilty of 26 felony counts of illegally distributing controlled substances. Prosecutors presented evidence that Ridgill illegally prescribed the opioid painkiller hydrocodone, which is often sold under the brand name Norco; alprazolam, best known by the brand name Xanax; and carisoprodol, a muscle relaxer often sold under the brand name Soma. Young “patients” traveled from places as far away as Victorville, Palmdale and Desert Hot Springs to Ridgill’s clinic in order to obtain prescriptions from Ridgill, where his “illegal drug business enabled him to work a mere three hours a day at his Lynwood office in exchange for significant amounts of cash,” according to a sentencing memorandum filed by prosecutors.
During the trial, the jury heard that, in 2014 alone, Ridgill wrote nearly 9,000 prescriptions, and the vast majority of those prescriptions were for hydrocodone, alprazolam and carisoprodol, typically for the maximum strength. Jurors also heard testimony about undercover DEA operatives who received prescriptions from Ridgill in exchange for cash. In 2014 alone, Ridgill physically deposited more than $175,000 in cash. According to court documents, the testimony showed that Ridgill’s “initial physical exams were cursory, and far from the fulsome type of exam required to justify prescribing high doses of controlled substances.”
A medical expert who reviewed a host of records related to this case determined that Ridgill “prescribed massive amounts of the same three controlled substances charged in this case – hydrocodone, alprazolam, and carisoprodol – to individuals who sometimes traveled long distances to obtain repeated prescriptions from defendant, at relatively young ages to be validly seeking such high dosages of pain medication, in large volumes over short periods of time.”
Law enforcement authorities executed federal search warrants on Ridgill’s residences and medical office in March 2015. At that time, authorities recovered multiple pre-written prescriptions for controlled substances, as well as cash lining patient files and stuffed in the drawers containing those files, which prosecutors argued demonstrated that Ridgill operated a cash-for-drugs business.
The jury deliberated for approximately 30 minutes in December 2017 before finding Ridgill guilty of 26 counts of distributing controlled substances outside the course of professional practice and without a legitimate medical purpose. Specifically, Ridgill was convicted of 13 counts of distributing hydrocodone, nine counts of distributing alprazolam, and four counts of distributing carisoprodol.
The investigation into Ridgill was conducted by the Drug Enforcement Administration’s Tactical Diversion Squad, HIDTA (the Los Angeles High Intensity Drug Trafficking Area), the Los Angeles Police Department, the Torrance Police Department and IRS Criminal Investigation.
The prosecution of Ridgill was handled by Assistant United States Attorneys Catherine S. Ahn and Catharine A. Richmond of the General Crimes Section.
Leader of MS-13’s Hollywood Clique Pleads Guilty to Federal Narcotics and Weapons ChargesRead the Press Release
LOS ANGELES – A longtime member of the MS-13 transnational street gang, who is described in court papers as the “shot-caller” of the gang’s Hollywood clique, pleaded guilty today to federal narcotics and weapons violations.
Jose Ricardo Alfaro, aka “Shyboy,” 40, of Hollywood, pleaded guilty today to conspiracy to distribute cocaine and being a felon in possession of ammunition.
Alfaro was arrested in May 2017 during a major operation that targeted MS-13 following the filing of a racketeering indictment that charged nearly three dozen gang members and associates, including a dozen other “shot-callers” who led a majority of the gang’s cliques in the Los Angeles region. Alfaro was not charged in the racketeering indictment, but he was arrested after authorities executed a search warrant and discovered ammunition in his vehicle. Subsequent investigation revealed Alfaro’s role in orchestrating drug trafficking and firearms activities.
In a plea agreement filed in federal court, Alfaro admitted that he and other co-conspirators acquired methamphetamine, cocaine and heroin, and they “communicate[d] using multiple cellular telephones and coded language to organize and discuss their drug-dealing business.”
Alfaro admitted that he was involved in the distribution of at least 3.5 kilograms of cocaine, and that he and his co-conspirators used firearms as part of the narcotics conspiracy. “For example, on or about April 9, 2017, [Alfaro] and a co-conspirator discussed acquisition of AK-47 and AR-15 assault rifles,” according to the plea agreement.
Alfaro pleaded guilty before United States District Judge Dale S. Fischer, who scheduled a sentencing hearing for August 20.
As a result of today’s guilty pleas, Alfaro faces a mandatory minimum sentence of five years in federal prison and a statutory maximum sentence of 50 years.
Alfaro committed the drug and weapon offenses while on supervised released in relation to a prior RICO case that targeted MS-13.
In relation to last year’s racketeering indictment, a trial is scheduled for March 26, 2019.
The investigation into MS-13 is a multi-agency effort being conducted by the Los Angeles Metropolitan Task Force on Violent Gangs, which is led by the Federal Bureau of Investigation and the Los Angeles Police Department.
This case against Alfaro is being prosecuted by Assistant United States Attorney Joshua O. Mausner of the Violent and Organized Crime Section.
Woman Who Impersonated Attorney to Defrauded Clients Seeking Immigration Services Sentenced to Federal PrisonRead the Press Release
LOS ANGELES – A Lynwood woman who stole the identity of a New York attorney and filed immigration petitions on behalf of foreign nationals who believed she was a legitimate lawyer has been sentenced to 15 months in federal prison.
Jessica Godoy Ramos, 37, was sentenced Wednesday afternoon by United States District Judge Dolly M. Gee. After she completes the 15-month prison term, Ramos will spend six months in home detention.
Calling the crimes “despicable,” Judge Gee additionally ordered Ramos to pay $29,693 in restitution to 16 identified victims.
Ramos pleaded guilty in November to one count of mail fraud.
Ramos accepted tens of thousands of dollars from dozens of aliens who sought her services in an attempt to obtain legal status in the United States. Using the name of the genuine attorney, Ramos filed immigration petitions on the behalf of some aliens, but in other cases she never performed any services for her clients. Ramos also created counterfeit immigration parole documents to make it appear that she had successfully represented the aliens.
According to court documents, Ramos’ clients initially believed she was a legitimate immigration attorney, but several became suspicious when Ramos directed them to appear at U.S. Citizenship and Immigration Services (USCIS) offices for interviews – but they did not have any scheduled appointments.
“[Ramos] bilked scores of the most vulnerable members of our society out of their hard-earned money by falsely claiming that she was a lawyer and could help them with their immigration issues,” prosecutors wrote in sentencing documents filed with the court.
During the investigation into Ramos, HSI received substantial assistance from USCIS’ Fraud Detection and National Security Directorate and the San Gabriel Police Department.
This case was prosecuted by Assistant United States Attorney Andrew Brown of the Major Frauds Section.
Owner of Schools that Illegally Allowed Foreign Nationals to Remain in U.S. as ‘Students’ Sentenced to 15 Months in Federal PrisonRead the Press Release
LOS ANGELES – The owner of four schools that enrolled hundreds of foreign nationals who fraudulently obtained immigration documents allowing them to remain in the United States as “students” – even though they rarely, if ever, attended classes – was sentenced today to 15 months in federal prison and ordered to forfeit more than $450,000.
Hee Sun Shim (also known as Leonard Shim and Leo Shim), 54, of Hancock Park, was sentenced by United States District Judge George H. Wu. Shim, who was ordered to begin serving his sentence in 60 days, was further ordered to forfeit to the government $431,508 seized from bank accounts and $34,860 in cash seized during the execution of a federal search warrant at his former residence in Beverly Hills in March 2015.
Shim pleaded guilty last year to one count of conspiracy to commit immigration fraud and one count of immigration document fraud in relation to what prosecutors called “a sophisticated, extensive, and lucrative fraud scheme that operated for many years in the Koreatown area of Los Angeles.”
Shim, along with two co-defendants – ran a “pay-to-stay” scheme through three schools in Koreatown – Prodee University/Neo-America Language School; Walter Jay M.D. Institute, an Educational Center (WJMD); and the American College of Forensic Studies (ACFS). A fourth school in Alhambra – Likie Fashion and Technology College – was also involved in the scheme, which ran for at least five years.
Prodee and the other schools issued immigration documents to foreign nationals who were not bona fide students, had no intention of attending the schools, and sometimes lived outside of California – including in the states of Washington and New York. As part of the conspiracy, Shim created bogus student records, including transcripts, for some of the students for the purpose of deceiving immigration authorities. In exchange for the immigration documents that allowed them to remain in the United States, the purported “students” made “tuition” payments to Shim and his co-conspirators to “enroll” and remain enrolled at the schools.
The investigation in this case began in 2011 after a compliance team with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), Student and Exchange Visitor Program, made an unannounced site visit to Prodee University’s main campus on Wilshire Boulevard. During the visit, the team observed only one English language class with three students in attendance, even though records indicated nearly 1,000 foreign students were enrolled at Prodee’s two campuses. That same day, an unannounced visit to ACFS found only one religion class in session with a single student present, even though the school had more than 300 foreign students in active status.
As detailed in court papers, Prodee and its affiliated schools were authorized to issue a document that certified a foreign national had been accepted to a school and would be a full-time student. The document – “Certificate of Eligibility for Nonimmigrant (F-1) Student Status - for Academic and Language Students,” which is commonly called a Form I-20 – made a student eligible to obtain an F-1 student visa that would allow the student to enter and remain in the United States while the student was making normal progress toward completing a full course of study.
“As [Shim] and his co-conspirators knew, these Form I-20s were based on false claims, false statements, and fraud since the purported foreign students had no intention of attending school and were not bona fide students,” Shim admitted in his plea agreement.
Two other defendants charged in this case – Hyung Chan Moon and Eun Young Choi – previously pleaded guilty to conspiracy and immigration document fraud. Moon is scheduled to be sentenced by Judge Wu on May 17, and Choi is scheduled to be sentenced on June 7.
The investigation into the Prodee schools was conducted by HSI, which received substantial assistance from U.S. Citizenship and Immigration Services’ Fraud Detection and National Security Division.
This case is being prosecuted by Assistant United States Attorneys Wilson Park of the Violent and Organized Crime Section, Lindsey Dotson of the Public Corruption and Civil Rights Section, and Katie Schonbachler of the Asset Forfeiture Section.
Hells Angels Gang Member Sentenced to 15 Years in Prison for Distributing Methamphetamine in Exchange for Stolen FirearmsRead the Press Release
RIVERSIDE, California - A member of the Hells Angels outlaw motorcycle gang has been sentenced to 180 months in federal prison for distributing methamphetamine that he provided in exchange for stolen firearms.
Brian Shane Henson, 40, of Merced, was sentenced on Monday by United States District Judge Jesus G. Bernal.
In early 2017, while he was a prospective member of the Merced Chapter of the Hells Angels motorcycle club, Henson negotiated a deal to sell one pound of methamphetamine and four ounces of marijuana in exchange for 20 stolen firearms, according to court documents. Unbeknownst to Henson, he negotiated the deal with an undercover agent from the Bureau of Alcohol, Tobacco, Firearms and Explosives.
On January 25, 2017, after negotiating the deal for about one week, Henson and co-defendant Hussein Fawas Eltareb, a full-patch member of the Hells Angels, drove approximately seven hours from Merced to Needles, California to meet the undercover agent. After arriving in Needles, according to prosecutors, Henson gave the undercover agent one pound of methamphetamine and one-quarter pound of marijuana, and Henson took possession of the 20 firearms, which he placed in the trunk of Eltareb’s car.
Immediately after the exchange, law enforcement officers arrested Henson and Eltareb. At this time, authorities recovered a loaded .38-caliber revolver, which was hidden next to the driver’s seat in Eltareb’s vehicle.
Henson pled guilty in October to distribution of methamphetamine and possessing firearms in furtherance of a drug trafficking crime and was sentenced to the mandatory minimum sentence of 180 months in federal custody.
After a bench trial in December, Judge Bernal found Eltareb, 27, of Merced, guilty of conspiracy to distribute methamphetamine, distribution of methamphetamine, and possession of a firearm in furtherance of a drug trafficking crime. Judge Bernal is scheduled to sentence Eltareb on May 21, at which time he too will face a mandatory minimum sentence of 180 months in federal prison.
This case was investigated by the ATF’s Flagstaff, Arizona Field Office. The ATF received assistance from the Coconino County Narcotics Task Force, the Mohave County General Narcotics Task Force, and the California Highway Patrol.
The case is being prosecuted by Assistant United States Attorney Lindsay Bailey of the Organized Crime and Drug Enforcement Task Force and Assistant United States Attorney Roger Hsieh of the General Crimes section.
Financial Advisor Faces Federal Fraud and Money Laundering Charges Alleging Thefts from Ameriprise Clients and Other VictimsRead the Press Release
LOS ANGELES – A former Ameriprise financial advisor faces federal fraud and money laundering charges for allegedly defrauding clients by embezzling funds that she promised would be invested, United States Attorney Nicola T. Hanna announced today.
Li Lin Hsu, 40, of Diamond Bar, was arrested Wednesday morning by special agents with the FBI.
Hsu was taken into custody pursuant to an eight-count indictment returned by a federal grand jury the day before. The indictment charges Hsu with three counts of mail fraud, three counts of wire fraud, one count of money laundering, and one count of obstruction of justice.
Over a five-year period, while she was employed by Ameriprise and after her termination from Ameriprise in 2015, Hsu solicited investments from clients through, among other ways, advertisements in local Chinese-language newspapers. According to the indictment, Hsu failed to invest her clients’ funds, and instead spent the money on personal expenses, such as credit card bills, personal loans, luxury items and real estate. The money laundering charge in the indictment alleges that Hsu used nearly $1 million stolen from one victim to purchase a condominium in Diamond Bar.
The indictment alleges that Hsu attempted to conceal her scheme by using some of the money stolen from victims to pay back other victims, and that she sent her clients fabricated account statements and investment purchase confirmations.
The indictment alleges that there are at least 11 victims of Hsu, and investigators believe those victims sustained losses of at least $2 million.
Following her arrest, Hsu was arraigned on the indictment in United States District Court, where she pleaded not guilty. Hsu was ordered released on a $50,000 bond, and she was ordered to stand trial on June 12 before United States District Judge Andrew J. Guilford in Santa Ana.
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 of the charges in the indictment, Hsu would face a statutory maximum sentence of 20 years in federal prison on each of the fraud counts, 10 years on the money laundering count, and 5 years on the obstruction of justice charge.
Investors who provided money to Hsu and believe they were defrauded through her actions at Ameriprise or her own companies – American Capital Trading Group LLC and American Capital Republic, Inc. – should contact the FBI’s Los Angeles Field Office at (310) 477-6565.
This matter is being investigated by the Federal Bureau of Investigation.
This case is being prosecuted by Assistant United States Attorney Poonam Kumar of the Major Frauds Section.
San Pedro Man Pleads Guilty in Federal Court to Making Death Threat Against United States Congresswoman Maxine WatersRead the Press Release
LOS ANGELES – A San Pedro man who called the Washington, D.C. office of United States Representative Maxine Waters and threatened to kill the congresswoman pleaded guilty today to a federal felony offense stemming from the threat.
Anthony Scott Lloyd, 45, pleaded guilty to one count of threatening a United States official.
Lloyd entered the guilty before United States District Judge Stephen V. Wilson, who scheduled a sentencing hearing for July 16. At the time of sentencing, Lloyd will face a statutory maximum sentence of 10 years in federal prison.
According to a plea agreement filed in this case, Lloyd called Rep. Waters’ office on October 22, 2017 and left a voicemail laced with expletives and epithets. The message used the words “dead” and “kill” a total of four times.
Lloyd admitted in the plea agreement that he “left this recorded message with the intent to impede, intimidate, interfere with, and retaliate against Congresswoman Waters, while she was engaged in and on account of the performance of her official duties.”
This case is being investigated by the Federal Bureau of Investigation, which received assistance from the United States Capitol Police, Threat Assessment Section.
This case is being prosecuted by Assistant United States Attorney Jake Nare of the General Crimes Section.
Former Employee of Southern California Ambulance Company Sentenced to Prison for Role in Medicare Fraud SchemeRead the Press Release
A former employee of a Southern California ambulance company was sentenced today to 36 months in prison for his role in a scheme that resulted in more than $1.1 million in fraudulent claims to Medicare.
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services Office of the Inspector General’s (HHS-OIG) Los Angeles Region, and Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division made the announcement.
Aharon Aron Krkasharyan, 54, of Los Angeles, California, was sentenced by U.S. District Judge George H. Wu of the Central District of California, who also ordered Krkasharyan to pay $484,556 in restitution to Medicare, jointly and severally with his co-conspirators, who await sentencing. On Nov. 27, 2017, Krkasharyan pleaded guilty to one count of conspiracy to commit health care fraud.
Krkasharyan was employed as the Quality Improvement Coordinator for Mauran Ambulance Inc. (Mauran) of San Fernando, California, an ambulance transportation company operating in the greater Los Angeles area that provided non-emergency services to Medicare beneficiaries, many of whom were dialysis patients. As part of his plea, Krkasharyan admitted that between June 2011 and April 2012, he conspired with other Mauran employees to submit claims to Medicare for ambulance transportation services for individuals who did not need such services. Krkasharyan also admitted that he and his co-conspirators instructed Mauran emergency medical technicians to conceal the patients’ true medical conditions by altering paperwork and creating fraudulent reasons to justify the ambulance services.
Krkasharyan was charged along with Toros Onik Yeranosian, 55, the former owner of Mauran; Oxana Loutseiko, 57, the former general manager of Mauran; and Maria Espinoza, 47, a former employee of a Los Angeles dialysis treatment center. Yeranosian, Loutseiko and Espinoza each pleaded guilty and are pending sentencing. The former dispatch supervisor at Mauran, Christian Hernandez, 37, who was previously charged in the case, has also pleaded guilty and awaits sentencing.
According to court documents, during the course of the conspiracy, Mauran submitted over $28 million in claims to Medicare. Krkasharyan’s co-defendants admitted that at least $6.6 million of those claims were false and fraudulent claims for medically unnecessary transportation services. Medicare paid at least $3.1 million on those false and fraudulent claims.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI and HHS-OIG. Trial Attorneys Alexis D. Gregorian and Jeremy R. Sanders of the Fraud Section prosecuted the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Former Employee of Southern California Ambulance Company Sentenced to Prison for Role in Medicare Fraud SchemeRead the Press Release
LOS ANGELES – A former employee of a Southern California ambulance company was sentenced today to 36 months in prison for his role in a scheme that resulted in more than $1.1 million in fraudulent claims to Medicare.
Aharon Aron Krkasharyan, 54, of Los Angeles, was sentenced by U.S. District Judge George H. Wu, who also ordered Krkasharyan to pay $484,556 in restitution to Medicare, jointly and severally with his co-conspirators, who await sentencing. On Nov. 27, 2017, Krkasharyan pleaded guilty to one count of conspiracy to commit health care fraud.
Today’s sentencing was announced by Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, United States Attorney Nicola T. Hanna, Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services Office of the Inspector General’s (HHS-OIG) Los Angeles Region, and Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division.
Krkasharyan was employed as the Quality Improvement Coordinator for Mauran Ambulance Inc. (Mauran) of San Fernando, an ambulance transportation company operating in the greater Los Angeles area that provided non-emergency services to Medicare beneficiaries, many of whom were dialysis patients. As part of his plea, Krkasharyan admitted that between June 2011 and April 2012, he conspired with other Mauran employees to submit claims to Medicare for ambulance transportation services for individuals who did not need such services. Krkasharyan also admitted that he and his co-conspirators instructed Mauran emergency medical technicians to conceal the patients’ true medical conditions by altering paperwork and creating fraudulent reasons to justify the ambulance services.
Krkasharyan was charged along with Toros Onik Yeranosian, 55, the former owner of Mauran; Oxana Loutseiko, 57, the former general manager of Mauran; and Maria Espinoza, 47, a former employee of a Los Angeles dialysis treatment center. Yeranosian, Loutseiko and Espinoza each pleaded guilty and are pending sentencing. The former dispatch supervisor at Mauran, Christian Hernandez, 37, who was previously charged in the case, has also pleaded guilty and awaits sentencing.
According to court documents, during the course of the conspiracy, Mauran submitted over $28 million in claims to Medicare. Krkasharyan’s co-defendants admitted that at least $6.6 million of those claims were false and fraudulent claims for medically unnecessary transportation services. Medicare paid at least $3.1 million on those false and fraudulent claims.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the United States Attorney’s Office for the Central District of California. The case was investigated by the FBI and HHS-OIG. Trial Attorneys Alexis D. Gregorian and Jeremy R. Sanders of the Fraud Section prosecuted the case.
2 South L.A. Men Indicted on Federal Charges of Robbing Undercover Secret Service Agent during Counterfeit Money InvestigationRead the Press Release
LOS ANGELES – A federal grand jury this afternoon returned an indictment that charges two men in a scheme to rob an undercover agent with the United States Secret Service at gunpoint under the pretense of selling the law enforcement officer counterfeit money.
Richard Taron Henderson, aka “Profit,” 22, and Tyre Jordan Simmons, aka “Reckless,” also 22, were named today in a six-count indictment that alleges one transaction involving counterfeit United States currency and an armed robbery of the undercover agent.
Both men are charged with conspiracy, robbery, assaulting a federal officer with a deadly weapon, and using a firearm during a crime of violence. Henderson is further charged with dealing counterfeit money, and Simmons is accused of being a felon in possession of a firearm.
The indictment alleges an October 18, 2017 incident in which Henderson allegedly sold 250 counterfeit $20 Federal Reserve Notes as part of a Secret Service investigation into the trafficking of counterfeit money.
As the investigation continued, Henderson allegedly negotiated a deal to sell $40,000 in counterfeit money. However, according to the indictment, the deal was a pretense to rob the undercover agent who was attempting to purchase the counterfeit money.
On March 26, Henderson arranged the meeting in South Los Angeles and prepared for it by stuffing clothes into a duffel bag to make it appear that the bag was filled with counterfeit money, according to the indictment. Henderson dispatched Simmons to meet with the undercover agent. During the meeting, Simmons allegedly produced a Taurus 9mm handgun, pointed it in the face of the undercover agent and robbed him of $4,500 in genuine United States currency and the keys to the undercover USSS vehicle. In committing the robbery, Henderson and Simmons put the life of the undercover agent in jeopardy by using a dangerous weapon.
Simmons, who was convicted of robbery in the Los Angeles County Superior Court in 2016, allegedly was a felon in possession of a firearm during the robbery.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
Simmons is scheduled to be arraigned on the indictment on April 19, and Henderson’s arraignment is set for the following day. Henderson and Simmons were previously arrested in this case pursuant to a criminal complaint, and Simmons remains in custody without bond.
If they were to be convicted, Henderson would face a statutory maximum sentence of 20 years for the counterfeit money charge. Both defendants would face up to 50 years for the charges related to the alleged robbery, plus a mandatory seven-year sentence related to the use of the firearm. And, Simmons would face up to 10 years in prison for being a felon in possession of a firearm.
This investigation is being conducted by the United States Secret Service.
The case is being prosecuted by Assistant United States Attorney Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section.
U.S. Attorney’s Office Observes National Crime Victims’ Rights Week with Events, including Resource Fair to Honor Victims & SurvivorsRead the Press Release
LOS ANGELES – In observance of National Crime Victims’ Rights Week, the United States Attorney’s Office has hosted a presentation and resource fair to honor victims and survivors. The office also conducted a Victim Service Awards ceremony to honor law enforcement personnel who have provided the highest level of assistance to victims and survivors of crime.
Each year in April, the Department of Justice observes National Crime Victims’ Rights Week to honor victims of crime and those who advocate on their behalf. The theme this year is “Expand the Circle: Reach All Victims.” President Trump proclaimed April 8 through 14, 2018, as National Crime Victims’ Rights Week.
The United States Attorney’s office, in partnership with Mount Saint Mary’s University, on Tuesday evening hosted a victim rights presentation and a resource fair with the goal of ensuring that every crime victim has access to services and support. The event honored victims and their advocates, and highlighted services available to victims of crime.
United States Attorney Nicola T. Hanna was joined at Tuesday’s event by representatives from the Federal Bureau of Investigation, the Los Angeles District Attorney’s Office, the Los Angeles City Attorney’s Office, the Los Angeles Police Department, and non-profit victim support service organizations. The Pet Prescription Team made a presentation on how therapy dogs can provide vital support to crime victims. The speakers emphasized how law enforcement, mental health professionals, community-based organizations and local residents can work in tandem to support crime victims.
“The United States Attorney’s Office is committed to serving and protecting victims – no matter the type of crime that has affected them,” said United States Attorney Nicola T. Hanna. “Whether the victim has suffered physical, financial or emotional trauma, our staff practices a victim-centered approach that assures victims’ rights are protected and all available services are provided.”
Tuesday night’s event at Mount Saint Mary’s University’s Doheny campus also included representatives from the Coalition to Abolish Slavery & Trafficking; the National Center for Missing and Exploited Children; the Los Angeles Mayor’s Office, Crisis Response Team (CRT); Strength United; the YWCA of Los Angeles; and the Los Angeles LGBTQ Center.
In another event this week, the United States Attorney’s Office held its annual Victim Service Awards ceremony on Wednesday to honor local and federal law enforcement agents and prosecutors who consistently strive to provide a focused, victim-centered approach to supporting victims of crime and next of kin on cases handled by the office.
The Department of Justice’s Office for Victims of Crime, within the Office of Justice Programs, leads communities across the country in observing National Crime Victims’ Rights Week each year. President Ronald Reagan proclaimed the first National Crime Victims’ Rights Week in 1981 to bring greater sensitivity to the needs and rights of victims of crime.
The Victim Witness Assistance Program of the United States Attorney’s Office provides a variety of services and assistance to victims and witnesses. Further information about the local program can be found on its website or by calling (888) 228-0315.
Justice Department Announces Nationwide Initiative to Combat Sexual Harassment in HousingRead the Press Release
WASHINGTON — Today, as the Department of Justice recognizes the 50th Anniversary of the Fair Housing Act, Attorney General Jeff Sessions announced the nationwide rollout of an initiative aimed at increasing awareness and reporting of sexual harassment in housing. The announcement includes an interagency task force between the Department of Housing and Urban Development (HUD) and the Justice Department to combat sexual harassment in housing, an outreach toolkit, and a public awareness campaign. This three-pronged approach will strengthen the Department’s efforts to combat sexual harassment in housing.
“Sexual harassment in housing is illegal, immoral, and unacceptable," said Attorney General Sessions. “It is all too common today, as too many landlords, managers, and their employees attempt to prey on vulnerable women. We will not hesitate to pursue these predators and enforce the law. In October, I ordered a new initiative to bring more of these cases, and we have already won relief for 15 victims. Today we announce three new steps to make the initiative more effective and to win more cases. I want to thank the dedicated and committed professionals in our Civil Rights Division and our partners in the Department of Housing and Urban Development for their hard work in this effort. We will continue to aggressively pursue harassers, because everyone has a right to be safe in their home.”
“All discrimination stains the very fabric of our nation, but HUD is especially focused on protecting the right of everyone to feel safe and secure in their homes, free from unwanted sexual harassment,” said Secretary Ben Carson. “No person should have to tolerate unwanted sexual advances in order to keep a roof over his or her head. Part of our mission at HUD is to provide safe housing and we will remain diligent in this mission to protect those we serve. I look forward to working with Attorney General Sessions and the Department of Justice as part of this task force to bring an end to this type of discrimination.”
In October 2017, the Justice Department announced an initiative to combat sexual harassment in housing and launched pilot programs in Washington, D.C. and the Western District of Virginia. The initiative sought to increase the Department’s efforts to protect women from harassment by landlords, property managers, maintenance workers, security guards, and other employees and representatives of rental property owners. During the pilots, the Department developed and tested ways to better connect both with victims of sexual harassment in housing and with those organizations that victims may turn to first for help – including law enforcement, legal services providers, public housing authorities, sexual assault services providers, and shelters. The Department also tested certain aspects of the initiative in other jurisdictions, including New Jersey, the Central District of California, Massachusetts, Vermont, and Michigan.
The two pilot programs generated an upswing in harassment reporting to the Department from both D.C. and the Western District of Virginia. In D.C., the Department generated six leads since the October 2017 launch. In Virginia, the Department generated three leads. While the Justice Department recognizes that leads and investigations do not always lead to enforcement actions, the pilot program’s results—when extrapolated across all the U.S. Attorney’s Offices across the country—could lead to hundreds of new reports of sexual harassment in housing across the country.
Because of these promising results, the Department is rolling out three major components to the Initiative.
First, the new HUD-DOJ Task Force to Combat Sexual Harassment in Housing will drive a shared strategy between the Department and HUD for combatting sexual harassment in housing across the country. It will focus on five key areas: continued data sharing and analysis, joint development of training, evaluation of public housing complaint mechanisms, coordination of public outreach and press strategy, and review of federal policies.
Second, the outreach toolkit is designed to leverage the Justice Department’s nationwide network of U.S. Attorney’s Offices. The toolkit provides templates, guidance, and checklists based on pilot program feedback. It ultimately will amplify available enforcement resources and help victims of sexual harassment connect with the Department.
Third, the public awareness campaign has three major components: a partnership package with relevant stakeholders, launch of a social media campaign, and Public Service Announcements. The campaign is specifically designed to raise awareness, and make it easier for victims all over the country to find resources and report harassment.
More information about the Civil Rights Division and the civil rights laws it enforces is available at www.usdoj.gov/crt. Individuals who believe that they may have been victims of sexual harassment in housing should call the Department at 1-844-380-6178, send an e-mail to [email protected], or contact HUD at 1-800-669-9777. If you have information or questions about any other housing discrimination, you can contact the Department at 1-800-896-7743.
Federal Authorities Move Against Fraudulent Tax Return Preparers and Remind All Taxpayers of their Tax Season ResponsibilitiesRead the Press Release
LOS ANGELES – As the tax filing season comes to an end, federal authorities are reminding members of the public of their obligation to timely file accurate tax documents – and that evading taxes or defrauding the Internal Revenue Service can led to substantial fines, penalties and prison sentences.
Taxpayers are also reminded to be on the lookout for unscrupulous tax return preparers who may seek to inflate refunds by falsifying deductions and other fraudulent means. Even if a tax return preparer makes an error on an individual’s tax return, it is still the taxpayer’s responsibility to pay the correct taxes.
As part of their year-round efforts to combat tax fraud, federal prosecutors with the United States Attorney’s Office have worked tirelessly with special agents at the Los Angeles Field Office of IRS Criminal Investigation to investigate and prosecute those who illegally evade their taxes. Today, they are announcing a series of cases targeting tax return preparers who allegedly defrauded the IRS by filing fraudulent returns.
“Corrupt tax return preparers compromise the tax system, harming their clients, other taxpayers and the United States government,” said United States Attorney Nicola T. Hanna. “The defendants recently charged by my office are accused of breaking a fundamental trust with their clients, and their actions place themselves and their clients into legal jeopardy.”
“Income tax return preparers are a vital part of the U.S. tax system. About 56 percent of taxpayers use tax professionals to prepare their returns,” stated IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “Selecting the right tax professional is critically important because taxpayers are ultimately responsible for what they submit on their tax return.”
Today, the United States Attorney’s Office and IRS Criminal Investigation announced three criminal cases targeting income tax return preparers.
L.A. County Social Services Employee Pleads Guilty to Tax Refund Fraud Scheme
A Los Angeles County employee pleaded guilty on Wednesday to engaging in a scheme to defraud the Internal Revenue Service through the submission of fraudulent federal income tax returns.
Roberta Josephine Yashu, who also goes by Roberta Josephine Beltran, 36, who was an employee of the Los Angeles County Department of Public Social Services (DPSS), pleaded guilty before United States District Judge Dolly M. Gee to one count of conspiracy to commit wire fraud through the preparation and filing of false income tax returns.
According to a plea agreement filed in this case, Yashu filed income tax returns on behalf of family members and friends that contained false information on dependent children, as well as altered or fictitious earned income. The fraudulent tax returns, filed for a number of years through the beginning of 2016, sought inflated tax refunds.
Yashu obtained the names and Social Security numbers of the children she falsely listed as dependents on the tax returns she prepared through a database she had access to during her employment at DPSS.
Yashu often kept the fraudulent refunds for herself. As a result of the fraudulent tax returns she filed, Yashu defrauded IRS out of at least $175,305.
Yashu faces a statutory maximum sentence of 20 years in federal prison and a $1 million fine when she sentenced by Judge Gee on August 15.
This case is the product of an investigation by IRS Criminal Investigation, which received assistance from the Los Angeles County Office of County Investigations.
The case is being prosecuted by Assistant United States Attorney Andrew Brown of the Major Frauds Section.
Inglewood Return Preparer Arrested on Tax Fraud Charges
The operator of a tax preparation business, the Inglewood-based Ultimate Professional Services, was arrested Wednesday morning on charges that she prepared and filed fraudulent income tax returns for her clients.
Karen McCoy, 69, of Compton, was charged in an indictment returned Tuesday by a federal grand jury. The indictment charges McCoy with 31 counts of aiding and assisting in the preparation of false tax returns.
The indictment alleges that McCoy prepared and filed 31 tax returns on behalf of 18 different clients which claimed false deductions. McCoy allegedly prepared tax returns containing inflated deductions that the taxpayers were not entitled to take.
For the 31 tax returns in question, which were filed for the 2011 through 2015 tax years, the fraudulently claimed deductions totaled $352,931, according to the indictment.
At her arraignment Wednesday afternoon, McCoy entered a not guilty plea and was ordered to stand trial before United States District Judge Christina A. Snyder on June 5.
If convicted of the charges contained in the indictment, McCoy would face a statutory maximum sentence of three years in federal prison and a fine of $100,000 for each of the 31 counts in the indictment.
This case is the product of an investigation by IRS Criminal Investigation and is being prosecuted by Assistant United States Attorney Valerie Makarewicz of the Tax Division.
Previously Convicted Return Preparer Arrested on Theft and Identity Theft Charges
A former income tax return preparer who was convicted in 2002 of preparing false tax returns was arrested this morning on new charges of fraudulently using the identities and Social Security numbers of two individuals to steal federal income tax refund checks.
Elton Leander Barnes, Jr., 55, previously of Irvine and now of South Los Angeles, allegedly negotiated federal income tax refund checks issued in the names of the identity theft victims.
Barnes was named in a four-count indictment returned last month by a federal grand jury. The indictment specifically charges Barnes with two counts of theft of government property and two counts of aggravated identity theft.
The indictment alleges that Barnes fraudulent converted to his own use two income tax refund checks in the amounts of $3,028 and $7,189.
If convicted of theft of government property, Barnes will face a statutory maximum sentence of 10 years in federal prison for each of the two counts. In addition, each count of aggravated identity theft carries a mandatory, consecutive sentence of two years in federal prison.
Barnes is expected to be arraigned on the indictment this afternoon in United States District Court in Los Angeles.
This case is the product of an investigation by IRS Criminal Investigation. The case is being prosecuted by Assistant United States Attorneys James Hughes and Valerie Makarewicz of the Tax Division.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
Return preparer fraud, identity theft, and inflated refund schemes are three of the Internal Revenue Service’s Dirty Dozen List of Tax Scams for 2018. The IRS has some information on its website about selecting a return preparer and has launched a free directory of federal tax preparers. Also, the IRS has a list of steps on its website that you can take now in anticipation of filing your 2017 federal income tax return and ten tips for choosing a tax preparer.
Justice Department Leads Effort to Seize Backpage.com, the Internet’s Leading Forum for Prostitution Ads, and Obtains 93-Count Federal IndictmentRead the Press Release
WASHINGTON - The Justice Department today announced the seizure of Backpage.com, the Internet’s leading forum for prostitution ads, including ads depicting the prostitution of children. Additionally, seven individuals have been charged in a 93-count federal indictment with the crimes of conspiracy to facilitate prostitution using a facility in interstate or foreign commerce, facilitating prostitution using a facility in interstate or foreign commerce, conspiracy to commit money laundering, concealment money laundering, international promotional money laundering, and transactional money laundering.
The seven defendants charged in the indictment are Michael Lacey, 69, of Paradise Valley, Arizona; James Larkin, 68, of Paradise Valley, Arizona; Scott Spear, 67, of Scottsdale, Arizona; John E. “Jed” Brunst, 66, of Phoenix, Arizona; Daniel Hyer, 49, of Dallas, Texas; Andrew Padilla, 45, of Plano, Texas and Jaala Joye Vaught, 37, of Addison, Texas.
Attorney General Jeff Sessions, Deputy Attorney General Rod Rosenstein, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Elizabeth A. Strange for the District of Arizona, U.S. Attorney Nicola T. Hanna of the Central District of California, FBI Director Christopher A. Wray, U.S. Postal Inspection Service Chief Postal Inspector Guy Cottrell and Chief Don Fort of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.
“For far too long, Backpage.com existed as the dominant marketplace for illicit commercial sex, a place where sex traffickers frequently advertised children and adults alike,” said Attorney General Sessions. “But this illegality stops right now. Last Friday, the Department of Justice seized Backpage, and it can no longer be used by criminals to promote and facilitate human trafficking. I want to thank everyone who made this important seizure possible: all of our dedicated and committed professionals in the Child Exploitation and Obscenity Section and our U.S. Attorney’s Office in the District of Arizona, the FBI, our partners with the IRS Criminal Investigation, our Postal Inspectors, and the Texas and California Attorney Generals’ offices. With their help, we have put an end to the violence, abuse, and heartache that has been perpetrated using this site, and we have taken a major step toward keeping women and children across America safe.”
“Backpage has earned hundreds of millions of dollars from facilitating prostitution and sex trafficking, placing profits over the well-being and safety of the many thousands of women and children who were victimized by its practices,” said First Assistant U.S. Attorney Elizabeth A. Strange. “It is appropriate that Backpage is now facing criminal charges in Arizona, where the company was founded, and I applaud the tremendous efforts of the agents who contributed to last Friday’s enforcement action and who assisted in obtaining the indictment in this case. Some of the internal emails and company documents described in the indictment are shocking in their callousness.”
“This website will no longer serve as a platform for human traffickers to thrive, and those who were complicit in its use to exploit human beings for monetary gain will be held accountable for their heinous actions,” said FBI Director Wray. “Whether on the street or on the Internet, sex trafficking will not be tolerated. Together with our law enforcement partners, the FBI will continue to vigorously combat this activity and protect those who are victimized.”
“The events of last Friday and today are a big win, not only for the agents who investigated these crimes, but more importantly for the victims, including children, who were harmed as a consequence of the alleged actions of Backpage.com,” said Chief Postal Inspector Cottrell. “By laundering the illegal gains of an enterprise, Backpage perpetuated the exploitation of victims and continued to finance their business. The U.S. Postal Inspection Service is committed to protecting our customers by stopping the money laundering to ensure the cycle of victimization ends.”
“An indictment of this magnitude is particularly troubling when you look at the various layers of corruption and exploitation that are alleged to have occurred,” said IRS-CI Chief Fort. “The masterminds behind Backpage are not only alleged to have committed egregious amounts of financial crimes such as money laundering, they did so at the expense of innocent women and children. While these types of investigations can be made more challenging with the use of virtual currency, offshore banking, and the anonymity of the Internet, it should serve as an example to all criminals that there is not a place they can hide where we will not find them.”
The charges and allegations contained in an indictment are merely accusations. The defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The effort to seize Backpage was led by the Justice Department’s Child Exploitation and Obscenity Section and the U.S. Attorney’s Office for the District of Arizona, with significant support from the U.S. Attorney’s Office for the Central District of California, the office of the California Attorney General, and the office of the Texas Attorney General. The law enforcement agencies conducting the investigation and seizure include the FBI Phoenix Field Office, the U.S. Postal Inspection Service and IRS-CI. The criminal case is being prosecuted by Assistant U.S. Attorneys Kevin Rapp, Dominic Lanza, and Margaret Perlmeter of the District of Arizona and Senior Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section. Assistant U.S. Attorney John Kucera of the Central District of California is handling the asset forfeiture aspects of the case