Central District of California

          LOS ANGELES – A Riverside woman who worked at Fannie Mae offices in Irvine faces fraud charges alleging that she earned more than $1 million from a scheme in which she took bribes and approved discounted sales of Fannie Mae-owned properties to herself and to brokers in exchange for cash kickbacks.

          Shirene Hernandez, 45, of Corona, was arraigned Friday afternoon on two counts of wire fraud.  After entering a plea of not guilty and being released on a $65,000 bond, Hernandez was ordered to stand trial on March 20, 2018.

          As alleged in the indictment, at all relevant times Hernandez was a real estate owned (REO) foreclosure specialist at the Federal National Mortgage Association (Fannie Mae). Fannie Mae is a government-sponsored entity under conservatorship of the Federal Housing Finance Agency (FHFA). As part of its operations, Fannie Mae acquires properties – sometimes called REO properties – through foreclosure and otherwise, and it then manages and sells those properties for Fannie Mae’s benefit. Under FHFA’s conservatorship, since at least 2012 Fannie Mae’s profits have gone to the United States Treasury Department, for the benefit of the American taxpayer.

          As an REO foreclosure specialist, Hernandez’s duties included assigning Fannie-Mae owned properties to listing brokers and approving sales of those properties based on offers submitted by those brokers. During the scheme, which is alleged to have begun no later than April 2011 and continued through at least July 2016, Hernandez allegedly approved sales of Fannie Mae-owned properties at discounted prices to herself and to brokers who paid her cash kickbacks, and she allegedly received bribes, in the form of cash payments, gifts, and other things of value, from brokers in exchange for listing opportunities and the resulting commissions that brokers earned on sales.

          According to the indictment, one of the Fannie-Mae owned properties that Hernandez purchased was purchased through intermediaries and alter egos who rented out the property and provided rent proceeds to Hernandez.

          The indictment alleges that Hernandez’s profits from the fraud exceeded $1 million.

          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 Hernandez were to be convicted of the two charges in the indictment, she would face a statutory maximum sentence of 20 years in federal prison on each count.

          The case is being investigated by the Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG).  Agents continue to investigate this case and other allegations of bribes accepted by other Fannie Mae employees.  If you believe you have information relevant to this investigation, please contact FHFA-OIG Senior Special Agent James Shields at 202-730-4013.

          The prosecution of Hernandez is being handled by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.

          SANTA ANA, California – A former member of the Planning Commission for the City of Westminster was sentenced today to 18 months in federal prison for taking a $15,000 bribe to help a person obtain a liquor license.

          Dave Vo, 43, of Westminster, was sentenced by United States District Judge James V. Selna.

          Following a three-day jury trial, Vo was convicted in September of one count of bribery.

          Vo, who is an attorney, served as a Planning Commissioner in the Orange County city from early 2009 through early 2013. By virtue of his position, he had influence over the issuance of conditional use permits.

          In 2011, Vo solicited a $15,000 bribe from a confidential informant. The informant reported to the FBI that Vo had solicited a bribe in relation to the issuance of a liquor license. During August 2011, over the course of four meetings, Vo received cash payments that totaled $15,000 in exchange for pushing the liquor license permit through the city’s approval process.

          During the trial, the jury heard audio recordings of Vo soliciting the bribe – at one point telling the informant to “stay quiet” and “don’t even mention what’s going on” – and then saw video recordings of the payments being made.

          “To line his pockets, [Vo] made a calculated decision to help a bribe payer at the expense of law-abiding members of the community who sought conditional use permits and liquor licenses through legitimate channels,” prosecutors wrote in a sentencing memorandum filed with the court. “In so doing, [Vo] sold his influence on the Planning Commission, giving (as he called it) ‘inside’ access for ‘under the table’ money. That conduct reflects a profound breach of the public’s trust.”

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

          The case is being prosecuted by Assistant United States Attorney Daniel H. Ahn of the Santa Ana Branch Office.

          LOS ANGELES – A Riverside woman who was the controller at a Fontana-based metal forging company was sentenced this morning to one year and one day in federal prison for embezzling more than $1.5 million from her employer.

          Jacquelin Dyer, 68, who was the controller and co-general manager at Pacific Forge, Inc., was sentenced by United States District Judge George H. Wu. In addition to the prison term, which Dyer will begin serving next week, Judge Wu ordered her to pay $1,365,556 in restitution to the victim company.

          As the controller of Pacific Forge, Dyer was responsible for all aspects of accounting at the company, and she was authorized to sign corporate checks for amounts up to $5,000. According to court documents, Dyer used Pacific Forge corporate checks to pay her personal bills for about 10 years. Dyer printed and signed corporate checks that she made appear would be used to pay Pacific Forge vendors, but in reality were mailed to pay her personal expenses.

          Dyer pleaded guilty in September to a mail fraud charge specifically related to a $4,752 check that she mailed to American Express on January 11, 2013 to pay her personal credit card bill. Dyer made false entries in the Pacific Forge books to make this check appear to be a payment to a vendor.

          “[F]or about a decade, [Dyer] embezzled and stole over $1.5 million of funds that had been entrusted to her by her employer,” prosecutors wrote in papers filed with the court. “[Dyer] used this money to pay her credit card expenses, her mortgage, her car repairs, and other personal expenditures.”

          In total, Dyer embezzled approximately $1,525,556 of Pacific Forge funds to pay for her mortgage, personal tax payments, and vehicle repair expenses.

          Dyer has already paid $160,000 in restitution.

          This case was investigated by the Federal Bureau of Investigation, which received substantial assistance from the Fontana Police Department.

          The case against Dyer was prosecuted by Assistant United States Attorney Bilal A. Essayli of the Riverside Branch Office.

          LOS ANGELES – A Monterey Park man has been sentenced to five months in federal prison after pleading guilty to a smuggling charge stemming from the seizure of three king cobras hidden in potato chip canisters.

          Rodrigo Franco, 35, was sentenced Monday morning by United States District Judge George H. Wu. In addition to the prison term, Judge Wu ordered Franco to pay a $4,500 fine and to serve two years of supervised release after he is released from prison.

          Franco was sentenced after pleading guilty in September to one count of wildlife smuggling. In a plea agreement filed in United States District Court, Franco admitted that he was responsible for three illegal shipments of king cobras that contained approximately 23 snakes.

          In a sentencing memorandum filed earlier this month, prosecutors pointed out two key issues with the illegal smuggling: “King Cobras are venomous snakes that are: (1) legally protected because they are a vulnerable species at risk for extinction; and (2) deadly because they possess lethal venom that can kill an adult within 30 minutes if the person is bitten and anti-venom is not available (and, at the time of the offense, there was no known King Cobra anti-venom in Los Angeles).”

          According to court documents, United States Customs and Border Protection in March 2017 intercepted a package sent from Hong Kong and discovered three live king cobra snakes, each of which was approximately two-feet long. In addition to the three snakes, the parcel contained three albino Chinese soft-shelled turtles.

          On the same date, March 2, Franco mailed six protected turtles from the United States to Hong Kong, but that shipment also was intercepted by the United States Fish and Wildlife Service.

          Because of the danger associated with the cobras, the snakes were seized from the package that had come from Hong Kong. The United States Postal Inspection Service made a controlled delivery of the soft-shelled turtles to Franco’s residence. During a subsequent interview with authorities, Franco admitted that he had previously received 20 king cobras in two prior shipments – but he said all of those snakes had died in transit.

          The investigation in this case was conducted by the United States Fish and Wildlife Service (USFWS), Office of Law Enforcement; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the United States Postal Inspection Service.

          The case against Franco was prosecuted by Assistant United States Attorney Erik M. Silber of the Environmental and Community Safety Crimes Section.

          LOS ANGELES – A federal jury has convicted a Monrovia man for his role in an international money laundering organization that conspired to move millions of dollars in proceeds for narcotics traffickers that included the Sinaloa Cartel.

          Harinder Singh, 32, who also goes by “Sonu,” was found guilty late Friday of conspiracy to commit money laundering, conspiracy to operate an unlicensed money transmitting business, and operating an unlicensed money transmitting business.

          The jury deliberated for less than two hours on January 19 before finding Singh guilty of all three charges. With the verdicts against Singh, prosecutors have convicted 18 defendants who were named in a 2015 grand jury indictment that was the first major case in the United States involving “hawala” transfers of drug money.

          The evidence presented during the two-week trial in United States District Court – which included Punjabi language wiretap calls, Punjabi-speaking witnesses and a money laundering expert – showed that Singh participated in a “hawala” conspiracy that was moving money generated from drug sales in Canada to the United States to pay for multi-kilogram drug shipments that were purchased in Los Angeles and then routed back to Canada for distribution.

          According to the indictment, a hawala is an alternative form of money remittance which operates outside of traditional banking or financial systems. The transfer of monetary value occurs between the brokers – who are typically located in different countries, but sometimes in different cities in one nation – based solely upon the trust that exists between the brokers. The hawala system, which originated on the Indian subcontinent, does not rely on promissory instruments; rather, it relies on trust and long-established connections between brokers that are typically based on familial, ethnic, religious, regional and/or cultural grounds. Through hawala transactions, only the value of the money is transferred, not the money itself.

          Singh was stopped by the California Highway Patrol in October 2012, which led to the discovery of $274,980 in United States currency in rubber-banded stacks wrapped in black plastic. While the traffic stop was being conducted, special agents with the Drug Enforcement Administration were conducting surveillance and observed Singh’s wife exiting the couple’s apartment complex carrying a bag – which later revealed $388,100 in United States currency, again rubber-banded in stacks and similarly wrapped in black plastic.

          Prior to the traffic stop and the seizure at Singh’s apartment complex, a federal wiretap intercepted Punjabi language calls indicating that Singh and co-conspirators communicated over multiple telephones to arrange for the pick-up, transport and delivery of large amounts of United States currency – in amounts of up to $800,000 – across the Los Angeles area.

          In this case, drug traffickers used a traditional hawala network of brokers spanning the United States, Canada and India to secretly transfer millions of dollars of drug proceeds to the United States, where brokers such as Singh delivered money to couriers acting on behalf of the Canadian drug traffickers and Mexican drug cartels.

          During the course of a four-year investigation by the DEA’s LA Strike Force and IRS Criminal Investigation, authorities seized nearly $15.5 million in bulk United States currency, 321 kilograms of cocaine, 98 pounds of methamphetamine, 11 kilograms of MDMA (“ecstasy”) and nine kilograms of heroin.

          Previously in this case, 17 defendants have pleaded guilty, and several have already been sentenced, receiving prison terms as high as 70 months. The indictment also charges four other defendants who are currently fugitives.

          Singh is scheduled to be sentenced by United States District Judge Christina A. Snyder on April 30. At the time of sentencing, Singh will face a statutory maximum penalty of 20 years in federal prison for the conspiracy count, and five years for each of the other two charges.

          The investigation in this case was conducted by the Drug Enforcement Administration and IRS Criminal Investigation. These agencies received assistance and support from the Santa Ana Police Department, the Beverly Hills Police Department and the Pomona Police Department.

          This case is being prosecuted by Assistant United States Attorneys Carol Alexis Chen of the Organized Crime Drug Enforcement Task Force and Ellen E. Lansden of Cyber and Intellectual Property Crimes Section.

          LOS ANGELES – A former employee of the Glendale City Attorney’s Office has been sentenced to 15 months in federal prison after she admitted embezzling nearly $700,000 in a scheme that used false documents to make it appear the money was being used to pay civil claims against the city.

          Cassandra Alexander, 53, who resides in the Winnetka district of Los Angeles, was sentenced Monday by United States District Judge George H. Wu.

          Alexander pleaded guilty in October to one count of theft from an organization receiving federal funds and admitted that she embezzled money for more than 15 years.

          Alexander was a claims and litigation support supervisor at the Glendale City Attorney’s Office, where she was responsible for assembling “Settlement Packets” that were used to resolve claims against Glendale for personal injury or property damage. Each Settlement Packet contained approval of the settlement by a member of the City Attorney’s Office and the City Council, as well as authorization for the city’s Finance Department to issue a check to the claimant. Alexander, who had unlimited authority to sign documents directing the Finance Department to issue checks, was responsible for picking up the checks and providing them to claimants’ attorneys.

          Beginning in July 2001, and continuing through March 2017, Alexander created and submitted fraudulent Settlement Packets that caused the Finance Department to issue 30 checks to her family members and acquaintances, according to a plea agreement filed in this case. Alexander also created bogus settlement agreements and fake minutes of City Council meetings.

          After the Finance Department prepared the checks, Alexander took possession of the checks and provided them to the payees, who cashed them and transferred the money to Alexander.

          “For over 15 years, Alexander forged City documents, lied to her coworkers, and stole over $600,000 from the City, all while pretending to be a dedicated employee who earned the trust of her supervisors and rose through the ranks to a position of trust,” prosecutors wrote in a sentencing memorandum filed with the court. “She continuously exploited the trust that her supervisors and two successive City Attorneys placed in her.”

          Alexander embezzled just over $692,000 from the city, which includes an uncashed check for $82,500 that was recovered from her residence. In addition to the prison term, which she will begin serving next month, Alexander was ordered to pay the city $609,764.84 in restitution.

          This case was investigated by the Federal Bureau of Investigation, which received substantial assistance from the Glendale Police Department and the full cooperation of other city departments.

          This case was prosecuted by Assistant United States Attorney Patricia A. Donahue of the Public Corruption and Civil Rights Section.

Federal authorities arrested Yi-Chi Shih, 62, and Kiet Ahn Mai, 63, on Jan. 19, on federal charges that allege a scheme to illegally obtain technology and integrated circuits with military applications that were exported to a Chinese company without the required export license.

 

The announcement was made by Acting Assistant Attorney General for National Security Dana J. Boente; U.S. Attorney Nicola T. Hanna for the Central District of California; Assistant Director in Charge Paul Delacourt of the FBI’s Los Angeles Field Office; Special Agent in Charge R. Damon Rowe of IRS Criminal Investigation; Special Agent in Charge Richard Weir of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Los Angeles Field Office.

 

“According to the complaint, the defendants allegedly schemed to illegally export semiconductors having military and civilian applications to a Chinese company,” said Acting Assistant Attorney General Boente.  “Protecting this type of technology and preventing its illegal acquisition by our adversaries remains a key priority in preserving our national security.”

 

“This case outlines a scheme to secure proprietary technology, some of which was allegedly sent to China, where it could be used to provide companies there with significant advantages that would compromise U.S. business interests,” said U.S. Attorney Hanna.  “The very sensitive information would also benefit foreign adversaries who could use the technology to further or develop military applications that would be detrimental to our national security.”

 

“The FBI, working jointly with our law enforcement partners, remains committed to bringing to justice those who seek to illegally export some of our nation’s most sensitive technologies to the detriment of our national security and hard-working United States companies,” said Assistant Director in Charge Delacourt.  “Rest assured, the FBI will continue to diligently pursue any and all leads that involve the illegal exportation of U.S. technology which will cause harm to our long-term national security interests.”

 

“Today’s actions serve as a reminder that the government will hold individuals accountable who fraudulently procure and export unlawfully protected United States technology and attempt to conceal their criminal activity through international money laundering,” said Special Agent in Charge Rowe.  “The IRS plays an important role in tracing illicit funds through both domestic and international financial intuitions. The IRS is proud to partner with the FBI and Department of Commerce and share its world-renowned financial investigative expertise in this investigation.”

 

“Today’s arrests demonstrate the Office of Export Enforcement’s strong commitment to enforcing our nation’s export control and public safety laws,” said Special Agent in Charge Weir.  “We will continue to work with our law enforcement partners to identify, deter, and keep the most sensitive U.S. origin goods and technology out of the most dangerous hands.”

 

Shih, an electrical engineer who is a part-time Los Angeles resident and a naturalized U.S. citizen originally from Taiwan, and Mai who resides in Pasadena, California and is a naturalized U.S. citizen originally from Vietnam, were arrested on Jan. 19, without incident by federal agents.

 

Shih and Mai, who previously worked together at two different companies, are named in a criminal complaint unsealed on Jan. 19, that charges them with conspiracy.  Shih is also charged with violating the International Emergency Economic Powers Act (IEEPA), a federal law that makes illegal, among other things, certain unauthorized exports.

 

The complaint alleges that Shih and Mai conspired to illegally provide Shih with unauthorized access to a protected computer of a U.S. company that manufactured specialized, high-speed computer chips known as monolithic microwave integrated circuits (MMICs).  The conspiracy count also alleges that the two men engaged in mail fraud, wire fraud and international money laundering to further the scheme.

           

According to the affidavit in support of the criminal complaint, Shih and Mai executed a scheme to defraud the U.S. company out of its proprietary, export-controlled items, including technology associated with its design services for MMICs.  As part of the scheme, Shih and Mai accessed the victim company’s computer systems via its web portal after Mai obtained that access by posing as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the United States.  Shih and Mail allegedly concealed Shih’s true intent to transfer the U.S. company’s technology and products to the People’s Republic of China.

 

The victim company’s proprietary semiconductor technology has a number of commercial and military applications, and its customers include the Air Force, Navy and the Defense Advanced Research Projects Agency.  MMICs are used in electronic warfare, electronic warfare countermeasures and radar applications.

 

The computer chips at the heart of this case allegedly were shipped to Chengdu GaStone Technology Company (CGTC), a Chinese company that established a MMIC manufacturing facility in Chengdu.  Shih was the president of CGTC, which in 2014 was placed on the Commerce Department’s Entity List, according to the affidavit, “due to its involvement in activities contrary to the national security and foreign policy interest of the United States – specifically, that it had been involved in the illicit procurement of commodities and technologies for unauthorized military end use in China.”  Because it was on the Entity List, a license from the Commerce Department was required to export U.S.-origin MMICs to CGTC, and there was a “presumption of denial” of a license.

 

The complaint outlines a scheme in which Shih used a Los Angeles-based company he controlled – Pullman Lane Productions, LLC – to funnel funds provided by Chinese entities to finance the manufacturing of MMICs by the victim company.  The complaint affidavit alleges that Pullman Lane received financing from a Beijing-based company that was placed on the Entity List the same day as CGTC “on the basis of its involvement in activities contrary to the national security and foreign policy interests of the United States.”

 

Mai acted as the middleman by using his Los Angeles company – MicroEx Engineering – to pose as a legitimate domestic customer that ordered and paid for the manufacturing of MMICs that Shih illegally exported to CGTC in China, according to the complaint.  It is the export of the MMICs that forms the basis of the IEEPA violation alleged against Shih.  The specific exported MMICs also required a license from the Commerce Department before being exported to China, and a license was never sought or obtained for this export.

           

Shih and Mai are expected to made their first court appearances on Jan. 19, in U.S. District Court in downtown Los Angeles.

 

The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, Mai faces a maximum sentence of five years in prison, and Shih faces a maximum sentence of 25 years in prison.  The maximum statutory sentences are prescribed by Congress and are provided here for informational purposes. If convicted of any offense, the sentencing of the defendants will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

 

This case is being investigated by the FBI; the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and IRS Criminal Investigation.

 

This case is being prosecuted by Assistant U.S. Attorneys Judith A. Heinz, Melanie Sartoris and Khaldoun Shobaki of the Central District of California, and Trial Attorney Matthew Walczewski of the National Security Division Counterintelligence and Export Control Section.

          LOS ANGELES – Federal authorities this morning arrested two local men on federal charges that allege a scheme to illegally obtain technology and integrated circuits with military applications that were exported to a Chinese company without the required export license.

          Yi-Chi Shih, 62, an electrical engineer who is a part-time Los Angeles resident, and Kiet Ahn Mai, 63, of Pasadena, were arrested this morning without incident by federal agents.

          Shih and Mai, who previously worked together at two different companies, are named in a criminal complaint unsealed this morning that charges them with conspiracy. Shih is also charged with violating the International Emergency Economic Powers Act (IEEPA), a federal law that makes illegal, among other things, certain unauthorized exports.

          The complaint alleges that Shih and Mai conspired to illegally provide Shih with unauthorized access to a protected computer of a United States company that manufactured specialized, high-speed computer chips known as monolithic microwave integrated circuits (MMICs). The conspiracy count also alleges that the two men engaged in mail fraud, wire fraud and international money laundering to further the scheme.

          According to the affidavit in support of the criminal complaint, Shih and Mai executed a scheme to defraud the U.S. company out of its proprietary, export-controlled items, including technology associated with its design services for MMICs. As part of the scheme, Shih and Mai accessed the victim company’s computer systems via its web portal after Mai obtained that access by posing as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the United States. Shih and Mail allegedly concealed Shih’s true intent to transfer the U.S. company’s technology and products to the People’s Republic of China.

          “This case outlines a scheme to secure proprietary technology, some of which was allegedly sent to China, where it could be used to provide companies there with significant advantages that would compromise U.S. business interests,” said United States Attorney Nicola T. Hanna. “The very sensitive information would also benefit foreign adversaries who could use the technology to further or develop military applications that would be detrimental to our national security.”

          “According to the complaint, the defendants allegedly schemed to illegally export semiconductors having military and civilian applications to a Chinese company,” said Acting Assistant Attorney General Boente. “Protecting this type of technology and preventing its illegal acquisition by our adversaries remains a key priority in preserving our national security.”

          The victim company’s proprietary semiconductor technology has a number of commercial and military applications, and its customers include the Air Force, Navy and the Defense Advanced Research Projects Agency. MMICs are used in electronic warfare, electronic warfare countermeasures and radar applications.

          “The FBI, working jointly with our law enforcement partners, remains committed to bringing to justice those who seek to illegally export some of our nation’s most sensitive technologies to the detriment of our national security and hard-working United States companies,” said Paul Delacourt, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Rest assured, the FBI will continue to diligently pursue any and all leads that involve the illegal exportation of U.S. technology which will cause harm to our long-term national security interests.”

          The computer chips at the heart of this case allegedly were shipped to Chengdu GaStone Technology Company (CGTC), a Chinese company that established a MMIC manufacturing facility in Chengdu. Shih was the president of CGTC, which in 2014 was placed on the Commerce Department’s Entity List, according to the affidavit, “due to its involvement in activities contrary to the national security and foreign policy interest of the United States – specifically, that it had been involved in the illicit procurement of commodities and technologies for unauthorized military end use in China.” Because it was on the Entity List, a license from the Commerce Department was required to export U.S.-origin MMICs to CGTC, and there was a “presumption of denial” of a license.

          The complaint outlines a scheme in which Shih used a Los Angeles-based company he controlled – Pullman Lane Productions, LLC – to funnel funds provided by Chinese entities to finance the manufacturing of MMICs by the victim company. The complaint affidavit alleges that Pullman Lane received financing from a Beijing-based company that was placed on the Entity List the same day as CGTC “on the basis of its involvement in activities contrary to the national security and foreign policy interests of the United States.”

          Mai acted as the middleman by using his Los Angeles company – MicroEx Engineering – to pose as a legitimate domestic customer that ordered and paid for the manufacturing of MMICs that Shih illegally exported to CGTC in China, according to the complaint. It is the export of the MMICs that forms the basis of the IEEPA violation alleged against Shih. The specific exported MMICs also required a license from the Commerce Department before being exported to China, and a license was never sought or obtained for this export.

          “Today’s actions serve as a reminder that the government will hold individuals accountable who fraudulently procure and export unlawfully protected United States technology and attempt to conceal their criminal activity through international money laundering,” stated Special Agent in Charge R. Damon Rowe with IRS Criminal Investigation. “The IRS plays an important role in tracing illicit funds through both domestic and international financial intuitions. The IRS is proud to partner with the FBI and Department of Commerce and share its world-renowned financial investigative expertise in this investigation.”

          “Today’s arrests demonstrate the Office of Export Enforcement’s strong commitment to enforcing our nation’s export control and public safety laws,” said Richard Weir, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Los Angeles Field Office. “We will continue to work with our law enforcement partners to identify, deter, and keep the most sensitive U.S. origin goods and technology out of the most dangerous hands.”

          Shih and Mai are expected to make their first court appearances this afternoon in United States District Court in downtown Los Angeles.

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

          If they were to be convicted of the charges in the criminal complaint, Mai would face a statutory maximum sentence of five years in federal prison, and Shih could be sentenced to as much as 25 years in prison.

          This case is being investigated by the Federal Bureau of Investigation; the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and IRS Criminal Investigation.

          The case against Shih and Mai is being prosecuted by Assistant United States Attorneys Judith A. Heinz, Melanie Sartoris and Khaldoun Shobaki of the National Security Division, and Trial Attorney Matthew Walczewski of the Department of Justice’s National Security Division.

          LOS ANGELES – A Los Angeles County deputy sheriff who allegedly agreed on two occasions to oversee the delivery of narcotics and other contraband in exchange for cash payments was arrested this morning, along with three other men, on federal narcotics charges.

          Special agents with the Federal Bureau Investigation this morning arrested Deputy Sheriff Kenneth Collins and the other three after they arrived in Pasadena, allegedly to provide “security” for the transport of nearly 45 pounds of cocaine and more than 13 pounds of methamphetamine. During the FBI’s undercover investigation, Collins allegedly agreed that he and his team would accompany the narcotics and take calculated steps to prevent legitimate law enforcement from intercepting the drugs – in exchange for cash payments as high as $250,000.

          Collins and two other men were charged in a federal criminal complaint filed last week. Collins and these two co-defendants allegedly provided security in November for the transport of what they thought was six kilograms of methamphetamine, as well as marijuana and counterfeit cigarettes.

          In justifying the high fees for his services, Collins allegedly told an undercover FBI agent “we’re cops” and “all of our transports make it through.”

          Those named in the complaint are:

• Deputy Sheriff Collins, 50, of Chino;

• David Easter, 51, of the Hyde Park District of Los Angeles; and

• Grant Valencia, 34, of Pomona.

          The fourth man arrested this morning – Maurice Desi Font, 56, of South Los Angeles – is expected to be charged by federal prosecutors in a second criminal complaint later today.

          The four defendants – who are charged with conspiracy to distribute controlled substances – are expected to make their first court appearances this afternoon in United States District Court in downtown Los Angeles.

          “Deputy Collins sold his badge to assist an individual he thought was a drug trafficker,” said United States Attorney Nicola T. Hanna. “The deputy allegedly used his status as a law enforcement officer as a guarantee when he promised safe travels for large quantities of illegal narcotics. This case is part of our long-standing and ongoing commitment to root out corruption, particularly when it involves sworn law enforcement officers.”

          “Deputy Collins used his position of trust and appropriated his authority to conduct lucrative criminal activity with others at the expense of Los Angeles County residents,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI and the Los Angeles County Sheriff’s Department address many crime areas jointly and share the goal of identifying and addressing internal problems when they arise. Sheriff McDonnell, who continues to reform the Los Angeles County Sheriff’s Department, cooperated fully with the investigation. While our investigation continues to determine whether others may have been involved, this should not be viewed as an indictment of the many dedicated servants at the Los Angeles County Sheriff's Department, some of whom brought this unlawful activity to our attention. Today’s arrest exemplifies the FBI’s commitment to weeding out corruption by public officials and restoring trust in our law enforcement professionals.”

          The affidavit in support of the complaint filed last week outlines a scheme in which Collins agreed to accept tens of thousands of dollars in cash in exchange for his “team” providing security during the transportation of large quantities of drugs from the Los Angeles area to Las Vegas, Nevada.

          On November 14, after Collins negotiated a $25,000 payment in exchange for providing security during the transport of contraband, Collins, Easter and Valencia participated in a caravan that traveled to Las Vegas.

          The trio was arrested this morning after allegedly agreeing to provide security for the transport of 20 kilograms of cocaine, six kilograms of methamphetamine and cash from Pasadena to Las Vegas, in exchange for $250,000. During negotiations, Collins said he would bring a larger team than used during the November transport, and those additional members would include other law enforcement officers. When the team arrived this morning at the pre-determined location, Font was the fourth member of the team.

          According to the affidavit, the FBI had been investigating Collins in relation to a scheme to accept cash payments in exchange for providing security for illegal marijuana grow facilities, as well as assisting in the distribution of controlled substances.

          An undercover FBI agent – who was posing as a family member of a wealthy investor looking to finance an illegal marijuana grow house – first met with Collins in August 2017. Collins offered to provide security for an illegal marijuana grow house and claimed to have three “teams” that already provided security for drug operations across San Bernardino and Los Angeles counties.

          During one of the August meetings, Collins displayed his Sheriff’s Department badge and lifted his shirt to reveal a firearm hidden in his waistband, which investigators believe was to emphasize that he was a law enforcement officer and his services therefore were more valuable to a drug organization. According to the affidavit, this meeting concluded with the undercover agent paying Collins $5,000 in “good faith” money for future services.

          Over the course of several meetings, Collins also offered to “fix problems” for the undercover agent, including by physically assaulting people, in exchange for cash. According to the affidavit, Collins claimed to have a very “professional” “team” comprised of “cops” who “travel...with guns.” He described how he and two others recently “handled” a situation for a “client” in Boston by setting a luxury truck on fire.

          During a meeting in September, the undercover agent told Collins that he was having an “issue” with a person in Northern California, and, in exchange for $2,000, Collins performed and delivered a “work-up” on that person, which included obtaining that person’s home address and driver’s license number, according to the affidavit. When Collins delivered the “work-up” in early October, the deputy sheriff allegedly said that he could provide additional services in relation to the Northern California person: “We can definitely, you know, kind of impact him a little bit.”

          As part of negotiations with the undercover agent, Collins also facilitated the sale of two pounds of marijuana to the agent, which Easter delivered. If this smaller “test run” sale of marijuana went well, Collins offered to facilitate the sale of up to $4 million worth of marijuana every month to the agent, according to the affidavit.

          In relation to the November transport of what Collins and his co-conspirators understood to be methamphetamine and marijuana, Collins provided a team of three – one of whom drove ahead of the transport vehicle to scout for law enforcement, one of whom accompanied an undercover agent driving the drug transport vehicle, and Collins in a follow car. According to the affidavit, Collins and his team received a total of $25,000 for this transport.

          Following the success of the November transport, Collins discussed with the primary undercover agent another, larger shipment. During a meeting on January 5, Collins agreed to bring Easter and Valencia – as well as other team members – to oversee the transport of 20 kilograms of cocaine, six kilograms of methamphetamine and cash. Although the undercover agent initially offered $75,000 as payment to Collins and his team, according to the affidavit, Collins pushed for more, saying that his “guys” are used to providing security for “bigger loads.” Collins ultimately agreed to provide his team’s services in exchange for $250,000.

          When they arrived at the agreed-upon location this morning where the drug transport was to begin, FBI agents arrested Collins and the other three men without incident.

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

          If they were to be convicted of the drug trafficking conspiracy alleged in the criminal complaints, each defendant would face a sentence of up to life in prison.

          The case against Collins and his co-defendants is the result of an investigation by the Federal Bureau of Investigation.

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

          SANTA ANA, California – Three Southern California men have been indicted on federal mail fraud charges that allege they solicited homeowners on the verge of foreclosure with bogus promises of loan modifications with interest rates as low as 2 percent.

          The three men charged – Michael Paul Paquette, 34, of San Juan Capistrano; Allan Jessie Chance, 34, of Temecula; and Dennis Edward Lake, 59, of Costa Mesa –were arrested Thursday pursuant to an eight-count indictment returned by a federal grand jury on December 20.

          Paquette, Chance and Lake were arraigned on the indictment yesterday afternoon in United States District Court, where they all entered not guilty pleas and were ordered to stand trial on March 6. All three defendants were released on $15,000 bonds.

          According to the indictment, Paquette and Chance operated under aliases and told distressed homeowners that they worked for the Laguna Hills-based HAMP Services – which sounded similar to the Home Affordable Modification Program (HAMP), a legitimate government program which permanently reduced mortgage payments to affordable levels for qualifying buyers.

          Paquette and Chance told victims that they were approved for a government-affiliated loan modification, but they needed to make three “trial payments” before the loan would be modified, according to the indictment. They also falsely told the victims that their money would be held in a trust or escrow account. Chance falsely claimed that he had experience in getting home loans modified because he had worked at Bank of America.

          After victims began making “trial payments,” their files were referred to Lake, who ran a Newport Beach-based business called JD United. The indictment alleges that Lake and his employees told victims that they were working on loan modifications, furthering hope that the loan modifications promised by Paquette and Chance were coming and that there was no need to contact law enforcement about the “trial payments” that had been paid.

          When being pitched on the loan modification service, the victims were never told that $800 of the “trial payments” went to JD United, and that Paquette and Chance received commission payments taken directly from the accounts where the “trial payments” were deposited. The indictment further alleges that none of the victim money went to the lenders or a government agency for a loan modification.

          Investigators believe that over 500 victims nationwide paid at least $2.5 million dollars to the defendants and others in “trial payments.”

          The scheme allegedly ran from the beginning of 2014 through April 2015.  Paquette and others originally started soliciting victims claiming that they worked for Hope Services. After victims made many complaints about Hope Services, new victims were solicited using the name HAMP Services starting in late 2014. 

          Two other defendants involved in the scheme have pleaded guilty to federal charges and are pending sentencing.

          Paquette, Chance, and Lake are charged with conspiracy to commit mail fraud. Additionally, Paquette is charged in three substantive mail fraud counts, Chance in four mail fraud counts, and Lake in six mail fraud counts. If they were to be convicted, each defendant would face a statutory maximum sentence of 30 years in federal prison for each count.

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

          The case against Paquette, Chance and Lake is the result of an investigation by the Federal Bureau of Investigation and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). The Federal Trade Commission provided substantial assistance.

          This case is being prosecuted by Assistant United States Attorney Vibhav Mittal of the Santa Ana Branch Office.

          LOS ANGELES – A former contract officer with the United States Department of Veterans Affairs was charged today with filing a false federal tax return and lying to VA investigators when he denied taking bribes from the operator of parking lots at the VA’s Los Angeles medical campuses.

          Ralph Tillman, 58, of Whittier, who was a VA contract officer until he resigned in 2014 after being confronted by special agents with the VA’s Office of Inspector General, was named in a criminal information filed today that charges him with making false statements and subscribing to a false tax return.

          In a plea agreement also filed today, Tillman agreed to plead guilty to the two felony offenses and admitted that he took well over $250,000 in bribes from the parking lot operator, Richard Scott, the owner of Westside Services LLC (WSS), which for years had a contract to operate parking lots across the VA Greater Los Angeles Healthcare System (VA GLAHS).

          Scott, 58, faces charges – including conspiracy and major fraud against the United States – contained in a 15-count indictment returned by a federal grand jury last month. Scott allegedly paid bribes to Tillman to conceal a scheme in which he allegedly failed to pay the VA more than $11 million generated by his operation of parking facilities at VA GLAHS. The vast majority of the activity authorized under the WSS contract took place at the West Los Angeles VA Medical Center near Westwood.

          As part of his duties at the VA, Tillman was responsible for managing contracts with “sharing partners,” such as WSS, which were required to perform services for the VA and share revenues with the agency. In his plea agreement, Tillman admitted that he approached Scott in late 2003 and solicited a bribe to pay for a family matter. One to two years later, Scott began making monthly cash payments to Tillman, with Scott personally delivering the bribes in sealed FedEx envelopes, according to the plea agreement.

          In return for the cash bribes, Tillman admitted in the plea agreement that he failed to scrutinize annual statements from WSS that Tillman knew contained inaccurately reported revenues and expenses. Tillman also admitted that he knew Scott was defrauding the VA out of millions of dollars, and that he entered into a contract extension with WSS in 2011 to continue the fraud and bribery scheme.

          During an interview with special agents with VA’s Office of Inspector General in September 2014, Tillman denied accepting money or anything of value from Scott. This conduct forms the basis of the false statements charge.

          Tillman specifically admitted that he took $286,250 from Scott from 2003 through last year. According to the plea agreement, Tillman continue to receive money from Scott after his retirement and these payments constituted “hush money.”

          Tillman failed to report the bribe payments on his federal tax returns, and he agreed to plead guilty to subscribing to a false tax return for the 2014 tax year.

          Tillman has agreed to appear in United States District for an arraignment on January 31.

          Once he pleads guilty to the two offenses charged in the criminal information, Tillman will face a statutory maximum sentence of eight years in federal prison.

          The VA contract with WSS was terminated in early 2017 after the VA settled a lawsuit that challenged the VA’s use of its West Los Angeles campus for any purposes not specifically related to the care and housing of veterans. Pursuant to an agreement, WSS was allowed to continue to operate the parking lots until this month.

          During an arraignment last month, Scott pleaded not guilty to the charges contained in the indictment. He is currently scheduled to go on trial before United States District Judge R. Gary Klausner on February 6.

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

          These cases are being handled by Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section.

          SANTA ANA, California – A federal judge today sentenced the former owner of Pacific Hospital in Long Beach to 63 months in prison for overseeing a 15-year-long health care fraud scheme that involved more than $40 million in illegal kickbacks paid to doctors and other medical professionals in exchange for referring thousands of patients who received spinal surgeries.

          The scheme operated by Michael D. Drobot led to more than $500 million in fraudulent bills being submitted during last five years of the scheme – much of which was paid by the California worker’s compensation system.

          Drobot, 73, of Corona Del Mar, was sentencing this morning by United States District Judge Josephine L. Staton, who noted that Drobot “introduced greed into the doctor-patient relationship.”

          Drobot pleaded guilty in 2014 to charges of conspiracy and paying illegal kickbacks, admitting that he orchestrated a wide-ranging fraud scheme in which “[t]housands of patients received surgeries at Pacific Hospital not knowing that [Drobot] bribed their physician to perform their surgery at Pacific Hospital,” prosecutors wrote in a sentencing memorandum filed with the court. Drobot “was motivated by greed and ultimately profited millions of dollars through the scheme.”

          From at least 1997 through 2013, Drobot, who owned and/or operated Pacific Hospital during this time, ran a scheme in which he billed workers’ compensation insurers hundreds of millions of dollars for spinal surgeries performed on patients who had been referred by dozens of doctors, chiropractors and others who were paid illegal kickbacks.

          “The patients believed that they were receiving conflict-free medical advice when, in fact, [Drobot] illegally incentivized their physician to perform the surgery at Pacific Hospital,” prosecutors said in court documents.

          The kickbacks were financed largely by money generated from Drobot’s sale of medical devices implanted into state workers’ comp patients during spinal surgeries. Drobot set up a scheme that exploited a now-repealed California law known as the spinal “pass-through” legislation, which permitted hospitals to pass on to workers’ comp insurers the full cost of medical devices implanted in spinal surgery patients.

          Drobot generated the kickback money through his own medical hardware company – the Newport Beach-based International Implants (I2) – to sell hardware used in spinal surgeries performed at Pacific Hospital. I2 submitted bills to Drobot’s Hospital and tacked on an additional $250 per device knowing that the “pass-through” law required to state to pay the full amount of the invoices.

          “Through the operation of I2, [Drobot] generated substantial profits that he used to pay at least $40 million dollars in kickbacks,” prosecutors wrote in court papers. “According to the former CFO of Pacific Hospital, his income, bonuses, and other compensation at the hospital was in excess of $20,000,000.”

          As part of the health care fraud scheme, Drobot paid bribes to California State Senator Ronald Calderon in exchange for Calderon performing official acts to keep the spinal pass-through law on the books. Calderon is currently serving a 3½-year sentence in federal prison after admitting that he took bribes from Drobot and undercover FBI agents.

          Drobot typically paid a kickback of $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery. Some of the patients lived as much as hundreds of miles away from Pacific Hospital, and closer to other qualified medical facilities.

          Drobot and his co-conspirators concealed the kickback payments by entering into bogus contracts with the doctors, chiropractors, and others who received kickbacks. In reality, the contracts merely provided a cover story for the kickback payments.

          In addition to the prison term, which Drobot will begin serving on June 4, Judge Staton imposed a $500,000 criminal fine and issued an order directing Drobot to forfeit $10 million to the government. As part of the forfeiture judgment, which Judge Staton signed on Wednesday, Drobot was ordered to liquidate assets that include real estate and a 1965 Aston Martin, a 1958 Porsche, and a 1971 Mercedes Benz.

          Judge Staton has scheduled a restitution hearing for May 11.

          In addition to Drobot, prosecutors have charged seven other defendants in relation to the kickback scheme. The seven additional defendants – which include Drobot’s son, Michael R. Drobot – have pleaded guilty and are scheduled to be sentenced by Judge Staton over the next two months.

          The ongoing investigation into the spinal surgery kickback scheme is being conducted by the Federal Bureau of Investigation; IRS Criminal Investigation; the California Department of Insurance; and the United States Postal Service, Office of Inspector General.

          The case against Drobot was being handled by Assistant United States Attorneys Joseph T. McNally and Scott D. Tenley of the Santa Ana Branch Office, and Ashwin Janakiram of the Major Frauds Section.

          LOS ANGELES – A Connecticut man was charged today in federal court with a felony computer hacking offense related to a phishing scheme that gave him illegal access to over 250 Apple iCloud accounts, many of which belonged to members of the entertainment industry in Los Angeles.

          George Garofano, 26, of Northford, Connecticut, was named today in a criminal information that accuses him of violating the Computer Fraud and Abuse Act.

          In a plea agreement that was also lodged today in United States District Court in Los Angeles, Garofano agreed to plead guilty to one count of unauthorized access to a protected computer to obtain information.

          While the case was filed by federal prosecutors in Los Angeles, the parties have agreed to transfer the case to the District of Connecticut for the entry of Garofano’s guilty plea and sentencing. Once he enters the guilty plea, Garofano will face a statutory maximum sentence of five years in federal prison.

          According to the plea agreement, from April 2013 through October 2014, Garofano engaged in a phishing scheme to obtain usernames and passwords for iCloud accounts. Garofano admitted that he sent e-mails to victims that appeared to be from security accounts of Apple and encouraged the victims to send him their usernames and passwords, or to enter them on a third-party website, where he would later retrieve them.

          Garofano used the usernames and passwords to illegally access his victims’ iCloud accounts, which allowed him to steal personal information, including sensitive and private photographs and videos, according to his plea agreement. In some instances, Garofano traded the usernames and passwords, as well as the materials he stole from the victims, with other individuals.

          The charge against Garofano stems from an investigation into the leaks of photographs of numerous female celebrities in September 2014 known as “Celebgate.”  Although many of Garofano’s victims were members of the entertainment industry in Los Angeles, many non-celebrities who live in Connecticut were also victimized. By illegally accessing the iCloud accounts, Garofano gained access to at least 250 accounts.

          The case against Garofano is the fourth case stemming from the Celebgate investigation. Chicago resident Emilio Herrera has pleaded guilty and is scheduled to be sentenced next month in United States District Court in Chicago after federal prosecutors in Los Angeles charged Herrera in a phishing scheme that gave him illegal access to more than 550 Apple iCloud and Gmail accounts. Another Illinois man was sentenced last year to federal prison. In the third case, a Pennsylvania man was sentenced in 2016 to 18 months in prison.

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

          The case against Garofano was filed by Assistant United States Attorney Ryan White of the Cyber and Intellectual Property Crimes Section.

          LOS ANGELES – A La Crescenta man was sentenced today to nine years in federal prison after pleading guilty to federal fraud charges stemming from two schemes – one that bilked a string of payroll companies, and a second involving fraudulent bills sent to entities ranging from small businesses to local school districts that never received any services.

          David William Bell, 55, received the 108-month sentenced from United States District Judge Virginia A. Phillips, who additionally ordered Bell to pay just over $1 million in restitution to payroll companies, hundreds of small businesses and other entities.

          Bell was sentenced after he pleaded guilty in August to one count of wire fraud and one count of mail fraud.

          Bell ran a company called UST Development, Inc. – which operated in Ontario and Pomona under a string of names, including US Telecom – that he used to defraud a host of victims through two separate schemes. Bell used different titles while at UST, including president, director and CEO.

          In the first scheme, which ran from 2008 through 2010, Bell convinced a series of third-party payroll companies to fund UST’s payroll – and then failed to reimburse the companies for paying himself and his employees. In some cases, Bell sent checks to the payroll companies from accounts that did not have sufficient funds to cover the checks.

          Over the two-year period, Bell retained or attempted to retain companies that included Paychex, Ceridian and Automated Data Processing (ADP), according to a plea agreement filed in this case. Prosecutors said in court documents that, in a few instances, Bell repaid a fraction of what UST received from the payroll companies. “After filing for bankruptcy, and changing his company name, he started a new scheme,” according to a sentencing memorandum filed with the court.

          In the second scheme, which related to the mail fraud charge, Bell and his employees sent out mailers that fraudulently appeared to be bills to thousands of small businesses and other entities, most of which were located across Southern California. The mailers – which were sent through the end of 2011 and used words like “invoice,” “statement” and “past due” – told recipients that they owed UST $175 or $350 for “Telecom Maintenance/Service Call.” Many victims paid UST based on the fraudulent claims, when in reality they did not owe UST any money.

          Bell “is a fraudster, a trickster. He deceives people into giving him money or services. He has done this for a long time,” according to the sentencing memorandum.

          The case against Bell was investigated by the United States Postal Inspection Service and the Federal Bureau of Investigation.

          This case was prosecuted by Assistant United States Attorneys Sean D. Peterson and Abigail W. Evans of the Riverside Branch Office.

          LOS ANGELES – Attorney General Jeff Sessions today announced the appointment of Nicola T. Hanna as Interim United States Attorney.

          The appointment of Mr. Hanna, which will take effect on Friday, is being made pursuant to 28 U.S.C. § 546, which provides that “the Attorney General may appoint a United States Attorney for the district in which the office of United States Attorney is vacant.”

          “Nick Hanna has earned the respect of California’s legal community as both a defense attorney and as a prosecutor. He spent more than seven years as an Assistant U.S. Attorney in the Justice Department taking on drug traffickers and other criminals,” said Attorney General Sessions. “Now Nick will continue that great work as Interim United States Attorney for the Central District of California. With his expertise and his outstanding record, the people of California can be confident in his leadership.”

          Mr. Hanna is currently a partner at the Irvine office of Gibson, Dunn & Crutcher LLP. He previously served as an Assistant United States Attorney in Los Angeles from 1990 to 1994, where he prosecuted major drug trafficking and money laundering organizations, as well as violent and economic crimes. From 1995 to 1998, Mr. Hanna served as an Assistant United States Attorney in San Diego, where he focused on investigating and prosecuting international drug cartels.

          Mr. Hanna received his B.A. from the University of California, San Diego, and his J.D., magna cum laude, from Georgetown University.

          When Mr. Hanna becomes the Interim United States Attorney on Friday, Acting United States Attorney Sandra R. Brown will resume her role as the First Assistant United States Attorney.

          The Central District of California includes the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo.

          LOS ANGELES – The owner of a Studio City clinic and a driver for United Parcel Service have been indicted on health care fraud charges related to unnecessary – and sometimes never-performed – sleep studies that resulted in more than $11 million in bills being submitted to health care benefit programs, primarily for employees of UPS and Costco.

          Anna Vishnevsky, 49, of Valley Village, the owner of Atlas Diagnostic Services, Inc., and Eddie Hernandez, 43, of Torrance, who is the UPS driver, were arrested on Tuesday pursuant to an 11-count indictment returned by a federal grand jury on December 14.

          Vishnevsky and Hernandez were arraigned on the indictment Tuesday afternoon in United States District Court. After the two defendants entered not guilty pleas to the charges in the indictment, a trial was scheduled for January 30. Vishnevsky was released on a $200,000 bond, and Hernandez was freed on a $30,000 bond.

          The case was announced today after United States District Judge George H. Wu signed an order late yesterday unsealing the indictment.

          According to the indictment, Vishnevsky, Hernandez and others recruited “patients” by offering cash in exchange for participating in sleep study testing. They also allegedly offered additional cash to those who brought dependents and referred co-workers to participate in the scheme. Vishnevsky and Hernandez allegedly recruited patients knowing that no doctor had prescribed sleep study testing for them, and regardless of whether the testing was medically necessary.

          Vishnevsky failed to score or interpret the data from the testing, or provide it to anyone who could score or interpret it, which is necessary for diagnosis and treatment, according to the indictment. Vishnevsky is further alleged to have billed insurance providers for two sleep studies for many patients, even though they went to her clinic on one night only.

          Investigators believe that Vishnevsky and others submitted more than $11 million in fraudulent claims, most of which related to beneficiaries of the UPS and Costco health care benefit programs.

          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.

          Vishnevsky and Hernandez are each charged with 11 counts of health care fraud. If they were to be convicted, each would face a statutory maximum sentence of 10 years in federal prison for each count in the indictment.

          The case against Vishnevsky and Hernandez is the result of an investigation by the United States Department of Labor - Office of Inspector General, the Department of Labor - Employee Benefits Security Administration, the Federal Bureau of Investigation, and the Office of Personnel Management - Office of Inspector General.

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

          LOS ANGELES – In a case stemming from an investigation into Fashion District businesses using "Black Market Peso Exchange" schemes to launder narcotics proceeds for international drug cartels, an import-export textile business and two executives have pleaded guilty to federal money laundering and tax charges.

          Pacific Eurotex Corp. and its owners – Morad "Ben" Neman and Hersel Neman – pleaded guilty yesterday to federal charges in an indictment that accused them of using the business to receive bulk cash that they knew or believed to be the proceeds of narcotics trafficking.

          The defendants admitted in court documents that they failed to report to federal authorities the receipt of this bulk cash, and that they "structured" frequent deposits of the cash, in amounts less than $10,000, to avoid a bank reporting requirement that would have drawn the scrutiny of law enforcement.

          The Nemans also pleaded guilty to conspiring to defraud the United States by maintaining two sets of business records in order to conceal income for tax purposes.

          A Black Market Peso Exchange scheme is designed to assist drug traffickers who have United States currency that they want to send to a foreign country, such as Mexico, and convert into pesos. As part of the scheme, a broker finds business owners in the foreign country who buy goods from U.S. companies and who need dollars to pay for those goods. The broker arranges for the illegally obtained dollars to be delivered to the United States-based vendors, such as Pacific Eurotex, and these illegally obtained dollars are used to pay for the goods purchased by the foreign customers. Once the goods are shipped to the foreign country and sold by the foreign business, the pesos are turned over to the broker, who then pays the drug trafficker in the local currency of the foreign country, thus completing the laundering of the illegally obtained dollars.

          Pacific Eurotex received, laundered and structured approximately $370,000 in bulk cash delivered on four separate occasions over 2½ months in 2013 by an undercover agent posing as a money courier, according to court documents. The company laundered this money after being specifically advised by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations that bulk cash payments were frequently derived from illegal activity and that it was required to report cash transactions involving more than $10,000 in currency.

          The defendants who appeared yesterday in United States District Court are:

• Pacific Eurotex, which pleaded guilty to conspiring to launder money and conspiring to structure monetary transactions with a domestic financial institution;

• Morad "Ben" Neman, 57, of Westwood, the chief executive officer of Pacific Eurotex, who pleaded guilty to four counts – conspiring to structure monetary transactions with a domestic financial institution, conspiring to defraud the United States by obstructing the lawful functions of the Internal Revenue Service, subscribing to and filing a false 2013 tax return understating income he received from Pacific Eurotex, and aiding and assisting in the filing of another false 2013 tax return; and

• Hersel Neman, 58, of Beverly Hills, the chief financial officer of Pacific Eurotex and brother of Morad Neman, who pleaded guilty to three counts – conspiring to launder money, conspiring to defraud the United States by obstructing the lawful functions of the IRS, and subscribing to and filing a false tax return.

          All three defendants are scheduled to be sentenced by United States District Judge John A. Kronstadt on June 14.

          In court documents, the defendants admitted that, as part of the money laundering scheme, they instructed other individuals to deposit the cash into the personal Wells Fargo bank account of Hersel Neman’s wife. "These deposits, 384 in all, were divided into increments less than $10,000 each with the intent to prevent Wells Fargo, a domestic financial institution, from filing Currency Transaction Reports," according to the documents. The defendants have agreed to forfeit to the United States nearly $3.18 million, which includes the narcotics proceeds they received and deposited in structured cash transactions into the Wells Fargo account.

          When they are sentenced by Judge Kronstadt, Morad Neman will face a statutory maximum sentence of 21 years in federal prison, and Hersel Neman will face a sentence of up to 28 years. Pacific Eurotex faces a statutory maximum sentence of up to 10 years’ probation and almost $2 million in fines.

          The indictment in this case names two other defendants who are scheduled to go on trial on March 6. Mehran Khalili, 49, of Beverly Hills, who is a brother in law of Hersel Neman, is charged with conspiring to structure cash transactions; and Alma Villalobos, 55, of Arleta, the in-house accountant and bookkeeper for Pacific Eurotex, faces several charges, including conspiracy to launder money.

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

          The investigation into Pacific Eurotex was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and IRS - Criminal Investigation.

          This case is being prosecuted by Assistant United States Attorneys Julie J. Shemitz, Jamie A. Lang and Puneet V. Kakkar of the Organized Crime Drug Enforcement Task Force.

Kmart Corporation, a wholly owned subsidiary of Sears Holdings Corporation (SHC), has agreed to pay $32.3 million to the United States to settle allegations that in-store pharmacies in Kmart stores failed to report discounted prescription drug prices to Medicare Part D, Medicaid, and TRICARE, the health program for uniformed service members and their families, the Justice Department announced today.

 

The agreement resolves allegations arising from a lawsuit brought under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery.  The 2008 lawsuit, which was filed by James Garbe in the federal district in Los Angeles and later transferred to the Southern District of Illinois, alleged that Kmart pharmacies offered discounted generic drug prices to cash-paying customers through various club programs but knowingly failed to disclose those prices when reporting to federal health programs its usual and customary prices, which are typically used by those programs to establish reimbursement rates.

 

“Pharmacies that are not fully transparent about drug pricing can cause federal health programs to overpay for prescription drugs.” said Acting Assistant Attorney General Chad A. Readler for the Department’s Civil Division. “This settlement should put pharmacies on notice that there will be consequences if they attempt to improperly increase payments from taxpayer-funded health programs by masking the true prices that they charge the general public for the same drugs.”

 

 “Pharmacies and other providers who receive funds from taxpayers have a duty to follow the law,” said U.S. Attorney Donald S. Boyce for the Southern District of Illinois.  “If healthcare providers do not provide fair and transparent pricing as required under the law, the False Claims Act allows the government and whistleblowers to ensure that the Medicare, Medicaid, and TRICARE programs are made whole.”

 

The settlement agreement with the United States is a part of a global $59 million settlement that includes a resolution of state Medicaid and insurance claims against Kmart.  Garbe, who litigated the case after the government declined to intervene in the action, will receive $9.3 million.  

 

The case was handled by the Justice Department’s Civil Division and the U.S. Attorney’s Offices for the Southern District of Illinois and Central District of California.  Auditing assistance for the government’s investigation was provided by the U.S. Attorney’s Office for the Central District of California and the National Association of Medicaid Fraud Control Units.  Investigative assistance was provided by the U.S. Department of Health and Human Services, Office of Inspector General. 

 

The lawsuit is captioned U.S. ex rel. Garbe v. Kmart Corp., Case No. 12-CV-881-NJR-PMF (S.D. Ill.).  The claims settled by this agreement are allegations only, and there has been no determination of liability.

 

The government’s resolution of this matter illustrates the government’s emphasis on combating health care fraud.  One of the most powerful tools in this effort is the False Claims Act.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services at 900-HHS-TIPS (800-447-8477).

          WASHINGTON – Kmart Corporation, a wholly owned subsidiary of Sears Holdings Corporation (SHC), has agreed to pay $32.3 million to the United States to settle allegations that in-store pharmacies in Kmart stores failed to report discounted prescription drug prices to Medicare Part D, Medicaid, and TRICARE, the health program for uniformed service members and their families, the Justice Department announced today.

          The agreement resolves allegations arising from a lawsuit brought under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery. The 2008 lawsuit, which was filed by James Garbe in the federal district in Los Angeles and later transferred to the Southern District of Illinois, alleged that Kmart pharmacies offered discounted generic drug prices to cash-paying customers through various club programs but knowingly failed to disclose those prices when reporting to federal health programs its usual and customary prices, which are typically used by those programs to establish reimbursement rates.

          “Pharmacies that are not fully transparent about drug pricing can cause federal health programs to overpay for prescription drugs.” said Acting Assistant Attorney General Chad A. Readler for the Department’s Civil Division. “This settlement should put pharmacies on notice that there will be consequences if they attempt to improperly increase payments from taxpayer-funded health programs by masking the true prices that they charge the general public for the same drugs.”

          “Pharmacies and other providers who receive funds from taxpayers have a duty to follow the law,” said U.S. Attorney Donald S. Boyce for the Southern District of Illinois. “If healthcare providers do not provide fair and transparent pricing as required under the law, the False Claims Act allows the government and whistleblowers to ensure that the Medicare, Medicaid, and TRICARE programs are made whole.”

          The settlement agreement with the United States is a part of a global $59 million settlement that includes a resolution of state Medicaid and insurance claims against Kmart. Garbe, who litigated the case after the government declined to intervene in the action, will receive $9.3 million.

          The case was handled by the Justice Department’s Civil Division and the U.S. Attorney’s Offices for the Southern District of Illinois and Central District of California. Auditing assistance for the government’s investigation was provided by the U.S. Attorney’s Office for the Central District of California and the National Association of Medicaid Fraud Control Units. Investigative assistance was provided by the U.S. Department of Health and Human Services, Office of Inspector General.

          The lawsuit is captioned U.S. ex rel. Garbe v. Kmart Corp., Case No. 12-CV-881-NJR-PMF (S.D. Ill.). The claims settled by this agreement are allegations only, and there has been no determination of liability.

          The government’s resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services at 900-HHS-TIPS (800-447-8477).

          LAS VEGAS, Nev. – A jury convicted a former felon Thursday of unlawful possession of one Heckler & Koch machine pistol and one Sig Sauer automatic rifle after multiple prior felony convictions in California, announced Acting U.S. Attorney Steve W. Myhre for the District of Nevada.

          Following a three-day jury trial, Jack Benjamin Hessiani, 39, of Ventura, California, was found guilty of one count of a felon in possession of a firearm. United States District Judge Larry R. Hicks presided over the trial and scheduled sentencing for March 22, 2018. At the time of sentencing, Hessiani faces the statutory maximum penalty of 10 years in prison and a $250,000 fine.

          The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the U.S. Department of Labor Office of the Inspector General. Assistant U.S. Attorneys Phillip N. Smith Jr. and Alexandra Michael are prosecuting the case.

          This case was brought as part of Project Safe Neighborhoods, a nationwide commitment by the Department of Justice to reduce gun and gang crime in America by networking local programs that target gun and gun crime and providing these programs with additional tools necessary to be successful. For more information about Project Safe Neighborhoods, visit www.justice.gov/usao-nv.

          LOS ANGELES – The operator of two now-defunct medical supply companies in Hawthorne and Ventura, as well as two former employees, have been arrested on federal healthcare fraud charges for allegedly billing Medicare well over $24 million for medically unnecessary power wheelchairs (PWC) and the repair of medical equipment.

          The scheme is outlined in a 29-count indictment that was returned by a federal grand jury on December 14 and unsealed yesterday after the three defendants were arrested by special agents with the United States Department of Health and Human Services’ Office of Inspector General and the Federal Bureau of Investigation.

          According to the indictment, Tamara Yvonne Motley operated Action Medical Equipment and Supplies, which was based in Hawthorne until 2014, and Kaja Medical Equipment & Supply, which was based in Ventura until late 2016. Motley allegedly orchestrated a scheme in which corrupt physicians prescribed medically unnecessary durable medical equipment (DME), such as PWCs, and Motley oversaw the submission of fraudulent bills to Medicare.

          In January 2011, when Medicare changed the reimbursement rules for PWCs, Action largely stopped Medicare billing for PWCs and, instead, started billing Medicare for PWC repairs. Action and Kaja allegedly submitted bills for PWC repair or replacement services that were not medically necessary, were not needed to make the PWCs serviceable, and often simply were not performed. The majority of bills submitted in this case allegedly involve fraudulent repair work.

          The defendants taken into custody yesterday are:

• Tamara Yvonne Motley, also known as Tamara Ogembe, 49, of Redondo Beach;

• Cynthia Karina Marquez, 42, of Paramount, who worked as an office manager at both Action and Kaja; and

• Juan Roberto Murillo, 41, of Montebello, who worked at both medical supply companies as a repair technician.

          According to the indictment, over a nearly eight-year period, Action billed Medicare more than $18.2 million for DME – most for PWCs, but also for PWC accessories, knee braces and back braces – and the repair or replacement of PWCs. Medicare paid Action nearly $10.3 million.

          Between July 2013 and November 2016, Kaja billed Medicare $6.3 million for PWCs, PWC-related accessories, and the repair or replacement of PWCs. Medicare paid Kaja approximately $2.8 million for those claims, the indictment alleges.

          The indictment charges all three defendants with 20 counts of healthcare fraud and one count of conspiring to launder money.

          Motley and Marquez are further charged with two counts of aggravated identity theft in relation to the use of other persons’ names to operate the medical supply companies. Motley is additionally charged with six counts of structuring cash transactions to avoid federal reporting requirements for transactions of more than $10,000.

          If convicted, each of the three defendants would potentially face decades in federal prison. Each count of healthcare fraud carries a statutory maximum sentence of 10 years in federal prison.

          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.

          At an arraignment yesterday afternoon in United States District Court, all three defendants entered not guilty pleas to the charges in the indictment and a trial was scheduled for February 13. A United States Magistrate Judge set bond for Motley and Murillo, and Marquez was ordered detained.

          This case is the product of an investigation by the United States Department of Health and Human Services’ Office of Inspector General and the Federal Bureau of Investigation.

          This case is being prosecuted by Assistant United States Attorney Julian L. André of the Major Frauds Section.

UPDATE

Pursuant to a motion by the government, the case against defendant John Bauche described in the news release below was dismissed by the court on November 30, 2021.

  

          SANTA ANA, California – A Mission Viejo man who allegedly bilked his employer out of nearly $1 million by using his consulting company to submit bills for internet marketing services that were not performed has been indicted by a federal grand jury.

          John Bauche, 36, was named in a six-count indictment returned yesterday by the grand jury. The indictment specifically charges Bauche with five counts of mail fraud and one count of money laundering.

          Bauche was employed by Masimo, an Irvine medical technology company that developed patient monitoring equipment. While employed there, Bauche was assigned to enhance the internet profile of Masimo and the Patient Safety Movement Foundation (PSM) – a philanthropic organization established by the owner of Masimo – through search engine optimization (SEO).

          The indictment alleges that Bauche set up a company called Boundless Rise LLC in early 2014 to perform SEO work for Masimo. Bauche allegedly failed to disclose to Masimo that he controlled Boundless Rise and falsely claimed that Boundless Rise was the best qualified vendor to perform the SEO work.

          Bauche submitted false invoices through Boundless Rise to his employer between February 2014 and July 2016 for work that was not performed, according to the indictment, which further alleges that very little of the money paid to Boundless Rise went to anyone other than Bauche.

          As a result of the fraudulent scheme, Masimo and PSM paid Boundless Rise approximately $958,000, some of which was used to pay Bauche’s American Express bills after he made purchases from Amazon, airlines, Uber, domestic and foreign hotels, and concert venues, the indictment alleges. In November 2016, the FBI seized $642,643 of the allegedly stolen funds from the Boundless Rise bank account.

          Bauche is expected to be ordered to appear for an arraignment in United States District Court in early 2018.

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

          If he were to be convicted of all counts alleged in the indictment, Bauche would face a statutory maximum sentence of 120 years in federal prison.

          The investigation into Bauche’s alleged scheme is being conducted by the Federal Bureau of Investigation.

          This case against Bauche is being prosecuted by Assistant United States Attorney Gregory Staples of the Santa Ana Branch office.

          LOS ANGELES – Actor Mark Wayne Salling today pleaded guilty to a federal offense of possessing child pornography and specifically admitted that he possessed approximately 25,000 images of children engaged in sexual conduct.

          Salling, 35, of Shadow Hills, who is best known for his role as Noah Puckerman on the television show “Glee,” pleaded guilty to one count of possession of child pornography involving a prepubescent minor.

          In a plea agreement filed in October in United States District Court, Salling acknowledged that he downloaded the images from the internet in 2015 and used software designed to conceal his activity. The collection was discovered on a laptop computer, a hard drive, and a USB flash drive after Salling showed some of the images to a girlfriend, who reported the matter to local enforcement.

          Salling pleaded guilty this afternoon before United States District Judge Otis Wright II, who scheduled a sentencing hearing for March 7.

          The child pornography charge that Salling admitted today carries a statutory maximum sentence of 20 years in federal prison. The parties to the plea agreement have agreed that the appropriate sentence in this case is four years to seven years in federal prison, to be followed by a 20-year period of supervised release. If Judge Wright decides to impose a sentence outside of the agreed-upon range, either party will have the option of withdrawing from the agreement.

          Once Salling completes his prison sentence and begins serving a period of supervised release, he will be required to register as a sex offender.

          The case against Salling is the product of an investigation by the Los Angeles Internet Crimes Against Children (ICAC) Task Force, which includes officers with the Los Angeles Police Department and special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The Beverly Hills Police Department provided substantial assistance.

          This case is being prosecuted by Assistant United States Attorney Joey Blanch of the Violent and Organized Crime Section.

          LOS ANGELES – Federal authorities this week arrested a Bellflower woman on federal charges that she contracted with an FBI informant to kill her boyfriend in exchange for a portion of the proceeds she expected to collect from a life insurance policy.

          Rasheeda Johnson Turner, 37, was arrested Wednesday evening and was charged in a criminal complaint with use of interstate commerce facilities in the commission of murder for hire.

          Turner, who has used the online monikers “Fiesty” and “Mz. Fiesty,” made her first court appearance yesterday afternoon and was ordered detained pending trial.

          The criminal complaint filed in United States District Court alleges that Turner sought assistance in murdering her boyfriend – who is identified in court documents by the initials L.G. – so that she could collect the proceeds from his life insurance policy. Turner told the informant she was the beneficiary of a $150,000 life insurance policy and that she would pay the killer $50,000.

          During a series of conversations over the past two weeks that are outlined in the affidavit in support of the criminal complaint, Turner told the informant that she initially planned to kill the intended victim herself – and she had obtained “pure acid” as part of the scheme – but feared being discovered and did not follow through with the plan.

          In the days after their initial meeting and discussion of the plot on December 4, Turner called the informant and made statements – such as “that fly needs to be swatted” – which the informant interpreted as meaning Turner wanted the murder to occur soon. During a meeting in a Lakewood park on December 8, Turner told the informant that she wanted the boyfriend killed before he could take her off the life insurance policy and cut off her access to his bank accounts, according to the affidavit. Turner labeled the murder plot “Operation Dumbo,” and told the informant that she wanted the man killed this week.

          Turner had shown the informant an app on her mobile telephone which allowed her to track the location of the victim’s telephone. On Wednesday, the informant called Turner and asked where the victim was located at that moment. Turner provided the location of the intended victim and confirmed that the informant would be paid for the murder. The FBI then contacted the victim and arrested Turner.

          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.

          At yesterday’s court hearing, a United States Magistrate Judge scheduled a preliminary hearing for December 28 and ordered Turner to appear for an arraignment on January 4.

          If she were to be convicted of the murder-for-hire charge alleged in the complaint, Turner would face a statutory maximum sentence of 10 years in federal prison.

          The investigation into Turner’s alleged scheme is being conducted by the Federal Bureau of Investigation.

          The case against Turner is being prosecuted by Assistant United States Attorney Justin Rhoades, Chief of the Violent and Organized Crime Section.

          RIVERSIDE, California – A San Bernardino County man faces federal sex trafficking charges after he allegedly posted an advertisement on Craigslist that offered “sexual tutoring” to females of any age and later agreed to provide “training” to a 12-year-old girl.

          Jacob Aaron Schaffran, a 20-year-old resident of Highland, was named in a two-count indictment returned yesterday by a federal grand jury. The indictment charges Schaffran with attempted sex trafficking of a child and use of the internet to attempt to induce a minor to engage in criminal sexual activity.

          Schaffran was arrested in this case on December 5 after he arrived at a Riverside fast food restaurant to meet the mother of the purported 12-year-old. The “mother” was an undercover law enforcement officer who had engaged in a series of email, text and phone communications with Schaffran. According to court documents, Schaffran repeatedly said that he wanted to meet with the girl and explained in detail how he wanted to engage in sexual activity with the 12-year-old girl.

          The investigation in this case started in mid-November when the National Center for Missing and Exploited Children sent a tip to the Riverside County District Attorney’s Office about a posting on Craigslist that sought females of any age he could “teach about sex.”

          The investigation quickly uncovered the online ad with the heading “Sex Lesson, Sexual Tutoring, Sex Training, Sexual Education, Sex ed,” and specifically stated, “Age is not an issue however young or old I just like to know because each age and experience group should be handled a little bit differently.”

          In late November, a law enforcement official responded to the ad and started a series of communications with a person later identified as Schaffran. The law enforcement officer assumed the persona of the mother of a fictional 12-year-old girl named “Robin.”

          In the communications, Schaffran allegedly agreed to have sex with the girl in exchange for $100, explaining to the undercover officer that he previously had taught two other girls and that the 12-year-old girl’s lack of prior sexual experience did not pose a problem.

          On December 5, Schaffran made final plans to meet with the undercover officer and agreed to bring condoms and a rose for the child. After meeting with the purported mother, reiterating his intention to have sex with the 12-year-old and receiving payment of $105, authorities took Schaffran into custody.

          Schaffran was initially charged in a criminal complaint filed in federal court. During his first court appearance on December 6, he was ordered released on a $115,000 bond.

          Schaffran is scheduled to be arraigned on the indictment on January 3.

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

          If he were to be convicted, Schaffran would face a potential sentence of life in federal prison. The charge of attempted sex trafficking of a child carries a mandatory minimum sentence of 15 years in prison. The charge of attempted enticement of a minor carries a mandatory minimum sentence of 10 years in federal prison.

          The investigation in this case is being conducted by the FBI and the Riverside County District Attorney’s Office, Internet Crimes Against Children/Sexual Assault Felony Enforcement Team.

          This case is being prosecuted by Special Assistant United States Attorney Teresa K.B. Beecham of the Riverside Branch Office.

          WASHINGTON – A federal jury found two Los Angeles-area managers of foreclosure rescue companies guilty today for their roles in a foreclosure rescue scheme.

          Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division, Special Agent in Charge R. Damon Rowe of Internal Revenue Service Criminal Investigation’s (IRS-CI) Los Angeles Field Office, Deputy Inspector General for Investigations Rene Febles of the Federal Housing Finance Agency-Office of Inspector General (FHFA-OIG), and Sheriff Jim McDonnell of the Los Angeles County Sheriff’s Department made the announcement.

          Jamie Matsuba, 33, and her father, Thomas Matsuba, 67, both of Chatsworth, were convicted after a one-week trial of one count of conspiracy to commit wire fraud, making false statements to federally insured banks and committing identity theft. In addition, both defendants were convicted of one count of making false statements to federally insured banks. Sentencing has been scheduled for May 14, 2018 at 10 a.m., before U.S. District Judge R. Gary Klausner, who presided over the trial.

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

          Three other defendants have been charged in this matter. Defendant Dorothy Matsuba, 66, of Chatsworth, who is the mother of Jamie Matsuba and wife of Thomas Matsuba, and her daughter, Jane Matsuba-Garcia, 41, of Camarillo, previously pleaded guilty and are awaiting sentencing. Defendant Young Park, of Los Angeles, is a fugitive. In addition, in related cases, Jason Hong, 36, of Chatsworth, and Ryu Goeku, 47, of Canoga Park, previously pleaded guilty and are awaiting sentencing.

          This case was investigated by the FBI, IRS-CI, FHFA-OIG and the Los Angeles County Sheriff’s Department. Trial Attorney Niall M. O’Donnell, Senior Litigation Counsel David A. Bybee and Trial Attorney Jennifer L. Farer of the Criminal Division’s Fraud Section are prosecuting the case. Senior Trial Attorney Nicholas Acker previously worked on the investigation.

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

          LOS ANGELES – Federal and local law enforcement authorities today took into custody seven defendants linked to a drug-distribution ring that operated out of Van Nuys and used a fleet of cars and a staff of drivers to make rapid deliveries – primarily of heroin – in response to phone orders.

          Today’s arrests follow the filing of three indictments returned yesterday afternoon by a federal grand jury. The main indictment, which charges 14 defendants, outlines the operations of “Manny’s Delivery Service,” a telephone order narcotics-delivery service that allegedly sold heroin and cocaine, often supplying to customers who were directed to meet delivery drivers at locations across the San Fernando Valley.

          While the delivery service sold small user-quantities to customers who phoned in orders, the conspiracy allegedly sold larger quantities as part of its sophisticated, high-volume narcotics business. The indictment discusses managers who obtained narcotics, delivery vehicles with hidden compartments and the movement of bulk cash collected from narcotics transactions.

          In relation to the alleged conspiracy to distribute controlled substances, the indictment outlines activities over a two-month period that began in late August. During this period, members of the drug ring obtained multi-kilogram quantities of heroin and moved hundreds of thousands of dollars in cash, according to wiretapped conversations outlined in the indictment. Bulk narcotics were stored in a “stash house,” and smaller quantities of drugs were packaged and dispatched to customers from a facility maintained by the ring in Van Nuys.

          During today’s enforcement operations, law enforcement authorities seized approximately 14 pounds of heroin, more than one pound of cocaine and a significant amount of cash.

          The main indictment charges 14 defendants who played various roles in the Manny’s Delivery Service. The defendants, many of whom have aliases, are:

• Sigifredo Gurrola Barrientos, 40, of Sylmar, the alleged manager of the drug trafficking operation who oversaw the movement of narcotics and the operation’s fleet of delivery vehicles (arrested today);

• Adrian Munoz-Garcia, 24, of Buena Park, who is described in the indictment as Barrientos’ right-hand man (arrested today);

• Juan Carlos Bonilla, 21, of Phoenix, Arizona, who allegedly took customers’ orders and helped coordinate deliveries (currently a fugitive);

• Eduardo Daniel Ramirez-Hernandez, 26, of Van Nuys, who also allegedly took customers’ orders and arranged for deliveries (arrested today);

• Joel Cortes-Solano, 26, of Anaheim, who allegedly was a dispatcher, delivered drugs and collected proceeds from other delivery drivers (currently a fugitive);

• A currently unidentified man known only as “Gangster,” who allegedly also worked as a dispatcher;

• Jacqueline De La Rosa, 24, of Pacoima, who allegedly purchased wholesale quantities of narcotics and stored them at her residence, as well as transported large sums of narcotics proceeds (arrested today);

• A man charged in the indictment under the moniker “Lineas” who was taken into custody today and identified as Gerardo Aguilar-Castillo, 27, of Orange;

• Alexander Abraham Talamantes Garcia, 40, of Anaheim, who allegedly provided narcotics to and collected funds from delivery drivers (currently a fugitive);

• Manuel Ruelas, 21, of Phoenix, Arizona, who allegedly provided narcotics to and collected funds from delivery drivers (who is currently in state custody and is expected to be turned over to federal authorities soon);

• Alan Pineda, 23, of Santa Ana, who allegedly was a delivery driver (currently a fugitive);

• Arnold Pineda, 20, of Santa Ana, who allegedly was a delivery driver (currently a fugitive);

• Christian Elias, 21, of Santa Ana, another alleged delivery driver (currently a fugitive); and

• Anthony Salvador Magallon, 19, of Santa Ana, who allegedly was a delivery driver (currently a fugitive).

          Two additional indictments returned yesterday by the grand jury name individual defendants who allegedly purchased larger quantities of drugs from Manny’s Delivery Service. These defendants are charged with various narcotics distribution offenses that allegedly took place in Ventura County. They are:

• Douglas Von Brunner, 33, of Ventura, who is charged with possession with the intent to distribute nearly one pound of heroin and possession with the intent to distribute fentanyl (who was in state custody and was turned over to federal officials today); and

• Christopher Daniel Rumsey, 31, of Newbury Park, who allegedly distributed heroin (arrested today).

          The seven defendants taken into custody today are expected to be arraigned tomorrow morning in United States District Court in downtown Los Angeles. Authorities are continuing to search for the eight fugitives.

          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 main indictment charges the 14 defendants in a conspiracy to distribute, and to possess with intent to distribute, controlled substances. If they were to be convicted of that offense, each defendant would face a mandatory minimum sentence of 10 years in federal prison and a potential sentence of life without parole.

          The investigation into “Manny’s Delivery Service” was conducted by the Drug Enforcement Administration and the Ventura County Narcotics Task Force. The Los Angeles Police Department and the Glendale Police Department provided substantial assistance during today’s operations.

          These cases are being prosecuted by Assistant United States Attorneys Christopher C. Kendall and A. Carley Palmer of the Organized Crime Drug Enforcement Task Force.

          LOS ANGELES – A Tijuana woman who was charged in the first major narcotics trafficking indictment resulting from an investigation by the Los Angeles Strike Force was sentenced today to 151 months in federal prison for transporting 21 pounds of pure methamphetamine across the United States-Mexico border on behalf of a drug trafficking organization linked to the Sinaloa Cartel.

          Diana Margarita Ortega Garcia, 25, was sentenced today by United States District Judge Dale S. Fischer.

          A federal jury found Ortega guilty in August of one count of conspiracy to distribute and to possess with intent to distribute methamphetamine following a three-day trial.

          Ortega was one of 22 defendants named in a 19-count grand jury indictment that was unsealed in June. The defendants allegedly were responsible for the importation of hundreds of pounds of methamphetamine, cocaine and heroin from Mexico into the United States. The narcotics were distributed throughout the country via a network of cartel associates, and the proceeds from the domestic narcotics sales were then funneled back to Mexico, according to the indictment.

          During the two-year wiretap investigation, members of the Strike Force seized narcotics with an approximate street value in Los Angeles of more than $6 million, including approximately 290 pounds of methamphetamine, 280 pounds of cocaine, 30 pounds of heroin and 81 pounds of marijuana.

          Ortega is one of 10 defendants who have been taken into custody pursuant to the indictment. The other nine defendants are currently scheduled to go on trial on March 13.

          The evidence presented during Ortega’s trial showed that she used her own vehicle to drive the concealed methamphetamine across the international border on February 1, 2015. Ortega agreed to smuggle the narcotics in exchange for $6,000, and she took the 21 pounds of methamphetamine to a drop house in the Moreno Valley. Most of the methamphetamine was seized by law enforcement in the days after the delivery.

          The Los Angeles Strike Force investigation is being led by the Federal Bureau of Investigation, in partnership with the Drug Enforcement Administration, IRS Criminal Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Marshals Service and the Azusa Police Department.

          The indictment issued as a result of the Strike Force investigation revealed a sophisticated international drug trafficking network that regularly transported narcotics across the U.S.-Mexico border and at times stored drugs in “stash houses” located in the San Gabriel Valley. The narcotics then were distributed throughout the United States.

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

          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 the remaining defendants in this case are convicted, all of them would face potential sentences of life without parole in federal prison.

          This case is being prosecuted by Assistant United States Attorneys Jennifer A. Corbet and A. Carley Palmer of the Organized Crime Drug Enforcement Task Force, and Scott Lara of the General Crimes Section.

          SANTA ANA, California – A Garden Grove man who worked for the United States Postal Service for more than two decades was sentenced today to 75 months in federal prison for stealing thousands of credit cards from the U.S. Mail and selling the credit cards on the black market.

          Chinh Vuong, 49, was sentenced by United States District Judge Cormac J. Carney, who also ordered the defendant to pay $325,085 in restitution to Chase Bank USA and American Express.

          Vuong pleaded guilty in August 2016 to conspiracy to commit bank fraud and aggravated identity theft.

          Vuong told federal investigators that he made at least $6,000 per month selling stolen credit cards and “used the funds from the sale of stolen credit cards to pay for personal expenses, including designer handbags and boots, two BMW automobiles, alcohol and drugs,” according to court documents.

          Prior to being confronted with evidence of the thefts, Vuong had worked at the United States Postal Service Santa Ana Processing and Distribution Center as a mail processing clerk for about 25 years. On October 6, 2015, federal authorities searched Vuong’s residence and seized approximately 199 stolen credit cards and luxury items, such as more than 20 handbags from designers that included Prada, Louis Vuitton and Gucci.

          “On the day of the warrant, [Vuong] described to federal agents how he executed the bank fraud conspiracy and identity theft scheme,” according to a sentencing memorandum filed with the court. “While at work, [Vuong] would identify envelopes that contained American Express and Chase credit cards but had been marked ‘undeliverable.’ Rather than let those envelopes be returned to the respective bank, [Vuong] stuffed the envelopes with new credit cards inside into his waistband. Then, he made trips to his car while on break to hide the stolen credit cards.”

          Vuong admitted to investigators that in the year prior to the search, he had stolen an average of 40 credit card envelopes, three to five nights per week, which means he stole at least 6,240 credit cards over a one-year period.

          The investigation into Vuong was conducted by the U.S. Postal Inspection Service’s Identity Theft & Economic Crimes Task Force; the United States Postal Service, Office of the Inspector General; and the Federal Bureau of Investigation.  The Westminster Police Department provided assistance during the investigation.

          The case against Vuong was prosecuted by Assistant United States Attorney Vibhav Mittal of the Santa Ana Branch Office.

          LOS ANGELES – A company that repaired railcars at a Terminal Island facility has pleaded guilty to a federal environmental offense of dumping parts into the ocean to conceal that it was performing unnecessary and improper repairs for several railcar operators.

          United Industries LLC – a subsidiary of Progress Rail Services, Inc., which itself is a subsidiary of Caterpillar, Inc. – appeared yesterday afternoon in United States District Court and pleaded guilty to the federal water pollution charge.

          Immediately after the guilty plea, United States District Judge Dolly M. Gee imposed a sentence that required United Industries to pay a $5 million criminal fine. Judge Gee also ordered United Industries to pay $20 million in restitution to three victim companies – TTX Company, Pacer International, and Greenbrier Company, all of whom owned and operated railcars that were improperly serviced and repaired.

          United Industries admitted in a plea agreement filed in federal court that its employees “knowingly conducted inadequate inspections” on railcars the company serviced. United Industries employees improperly replaced functioning parts that did not need to be removed in a process known as making repairs to “green parts.” Employees also made random repairs on the railcars without conducting a proper inspection. The victim companies were then charged for the unnecessary and improper repairs.

          “In order to conceal their unnecessary and improper repairs, United Industries’ employees, operating within the scope of their employment and motivated by an intent to benefit the company, concealed the replacement of ‘green’ railcar parts by throwing such parts into the Port of Long Beach (also known as Long Beach Harbor), a navigable water of the United States, from the shore alongside the Terminal Island repair facility,” according to the plea agreement.

          After receiving a tip about the improper dumping, Port authorities conducted underwater dives that led to the discovery of a “large debris field” and the recovery of railcar parts that did not show any signs of mechanical wear that would have required replacement.

          As a result of illegal conduct that spanned the years 2008 through 2014 – including the unnecessary and improper repairs on railcar adapters, brake beams, grating platforms, brake shoes, friction castings, hand brakes, roof liners and side bearings – United Industries earned at least $5 million.

          After the investigation was initiated, United Industries exited the intermodal railcar repair business and no longer operates intermodal repair facilities on Terminal Island or elsewhere.

          United Industries pleaded guilty to a misdemeanor offense of depositing refuse in navigable waters, specifically the Port of Long Beach.

          The investigation into United Industries’ improper repairs did not uncover any rail accidents attributable to the company’s illegal activities.

          The investigation into United Industries was conducted by the United States Environmental Protection Agency, Criminal Investigation Division; the Federal Bureau of Investigation; the Federal Rail Administration; and the Los Angeles Port Police, Hazardous Materials Investigations Unit.

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

          LOS ANGELES – A Los Angeles man pleaded guilty today to two counts of unlawful manufacturing and dealing in firearms, specifically short-barreled AR-15-style assault rifles and silencers.

          Axel Fernando Galvez, 36, who resides in Watts, pleaded guilty to two felony firearm offenses before United States District Judge Christina A. Snyder.

          Galvez admitted in court that he purchased components for firearms from multiple sellers to disguise the quantity he was buying. Galvez then finished the parts and assembled the assault rifles at a South Los Angeles machine shop where he worked.

          On August 28, 2017, Galvez sold five of these assault rifles, through an intermediary, to an undercover operative with the United States Postal Inspection Service. Galvez believed that the undercover operative was a convicted felon and was going to resell the weapons in Egypt and the Philippines.

          In further discussions with the undercover operative, Galvez negotiated the sale of another 100 homemade assault rifles, offering a bulk discount.

          In a plea agreement filed in federal court, Galvez also admitted that he manufactured five silencers for firearms.

          Galvez, who is being detained without bond, is scheduled to be sentenced by Judge Snyder on March 12. As a result of today’s guilty pleas, Galvez faces a statutory maximum sentence of 10 years in prison.

          A second man charged as a result of this investigation – Marcos Ernesto Chavarria, 31, of Inglewood – also pleaded guilty today and admitted conspiring to distribute methamphetamine. Judge Snyder is scheduled to sentence Chavarria also on March 12, at which time he will face a statutory maximum sentence of 20 years in federal prison.

          During the investigation into Galvez, the Postal Inspection Service worked jointly with the Los Angeles Police Department Parcel Task Force. The Bureau of Alcohol Tobacco, Firearms and Explosives; and the Los Angeles Joint Regional Intelligence Center provide substantial assistance.

          This case is being prosecuted by Assistant United States Attorney Andrew Brown of the Major Frauds Section.

          LOS ANGELES – A doctor who operated a medical clinic in Lynwood has been found guilty of drug-trafficking charges after a federal jury found that he issued prescriptions for powerful narcotics and sedatives without a medical purpose for mostly young “patients” who sometimes traveled more than 100 miles to get prescriptions.

          Dr. Edward Ridgill, 65, who has residences in Whittier and Newbury Park, was found guilty late yesterday afternoon of 26 felony counts of illegally distributing controlled substances.

          The evidence presented during a one-week trial showed 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.

          Prosecutors presented evidence at trial from a California database that tracks prescriptions and “confirms [Ridgill]’s predatory prescribing,” according to court documents that describe young “patients” traveling from Victorville, Palmdale and Desert Hot Springs to obtain prescriptions.

          The jury heard that, in 2014 alone, Ridgill wrote nearly 9,000 prescriptions, and 95 percent of those prescriptions were for hydrocodone, alprazolam and carisoprodol, typically for the maximum strength. “The combination of these three drugs is the most sought-after drug cocktail on the black market, and one for which there is no legitimate medical purpose,” prosecutors said in a court filing.

          Jurors in the case heard testimony about undercover DEA operatives who received prescriptions from Ridgill in exchange for 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.”

          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 found 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 about 30 minutes 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.

          Ridgill is scheduled to be sentenced on March 19 by United States District Judge S. James Otero. As a result of yesterday’s verdicts, Ridgill faces decades in federal prison, including up to 20 years in prison for six of the counts related to distributing hydrocodone.

          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 is being handled by Assistant United States Attorneys Catharine A. Richmond and Catherine S. Ahn of the General Crimes Section.

          LOS ANGELES – A Northeast Los Angeles gang member who was one of the top figures in a conspiracy that united three rival gangs under the authority of a Mexican Mafia member pleaded guilty today to federal charges and admitted being an active narcotics trafficker who worked to further the goals of the criminal enterprise.

          Jonathan Zepeda, 28, a resident of Elysian Valley and a longtime member of the Frogtown gang, admitted in court today that he distributed methamphetamine and collected “taxes” from other narcotics dealers who were allowed to sell drugs in areas controlled by the coalition of three gangs.

          Jonathan Zepeda pleaded guilty to conspiring to violate the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, conspiracy to traffic methamphetamine, carrying a firearm in relation to a drug-trafficking crime, and being a felon in possession of firearms and ammunition.

          As a result of today’s guilty pleas, Jonathan Zepeda will face a mandatory minimum sentence of 15 years in federal prison – and a potential sentence of life without parole – when he is sentenced by United States District Judge Philip S. Gutierrez on March 5.

          Jonathan Zepeda’s brother – Santos Zepeda, a senior member of the Frogtown gang who helped manage the street gang coalition – pleaded guilty in August to conspiring to violate RICO and conspiring to traffic methamphetamine.

          The Zepedas were among 22 defendants named in a 2015 federal racketeering indictment that outlined how Mexican Mafia member Arnold Gonzales ordered the unification of three street gangs that were traditional rivals. The “peace treaty” imposed by Gonzales in 2010 brought together the Frogtown, Toonerville and Rascals gangs, which worked together to control the narcotics trade and other illegal activities in an area that ran along the Los Angeles River from Elysian Park nearly to Burbank.

          Because he was incarcerated in Pelican Bay State Prison after being convicted of murder, Gonzales appointed another Frogtown gang member, Jorge Grey, to be his emissary on the streets, according to the RICO indictment. Santos Zepeda served as Grey’s top lieutenant, provided narcotics to the racketeering enterprise, and coordinated the collection of “taxes” imposed on street-level drug dealers.

          After Gonzales took control of the three gangs, he exercised his authority through Grey and criminal associates that included Santos Zepeda, according to the indictment. The organization generated revenue through extortion, specifically the imposition of taxes on the gangs and others who distributed narcotics in the territory controlled by the criminal enterprise. Members of the racketeering conspiracy allegedly implemented Gonzales’ orders, imposed discipline on those who attempted to violate the orders or contest the power of the enterprise, and collected firearms that were used to enforce their authority. When he pleaded guilty today, Jonathan Zepeda admitted possessing a number of firearms, including a machine gun.

          The RICO indictment details numerous transactions involving narcotics and firearms, and also contains charges related to two shootings allegedly committed against individuals who defied the rules imposed by Gonzales and his associates.

          The indictment targeting the Arnold Gonzales Organization 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, 13 have pleaded guilty. The remaining nine defendants, including Grey, are scheduled to go on trial on March 6.

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

          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.

          LOS ANGELES – A Riverside man who sold a powerful opioid very similar to fentanyl to a friend – who then suffered a fatal overdose from the narcotic – has pleaded guilty to federal drug trafficking offenses.

          Adam Scott Caward, 33, pleaded guilty yesterday afternoon to two federal offenses – distribution of acetyl fentanyl resulting in death, and possession with the intent to distribute acetyl fentanyl.

          The federal investigation into Caward began in June, 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 an 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 a plea agreement filed in United States District Court, Caward admitted exchanging 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.

          Caward pleaded guilty yesterday before United States District Judge John A. Kronstadt, who scheduled a sentencing hearing on March 1.

          As a result of his guilty pleas, and because the narcotics involved in the distribution offense resulted in death, Caward faces a mandatory minimum sentence of 20 years in federal prison, and a possible sentence of life without parole.

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

          LOS ANGELES – A longtime fugitive was named today in a nine-count indictment that alleges he participated in a $9 million loan fraud scheme that targeted Wells Fargo Bank.

          Napoleon Olarte, 40, who is believed to be in Venezuela after fleeing the United States approximately eight years ago, was indicted late this afternoon by a federal grand jury.

          The indictment alleges that Olarte carried out the mortgage fraud scheme with two co-conspirators – Juan Jose Calle and Nancy Karina Coleman – both of whom previously pleaded guilty to charges related to the scheme.

          Olarte and his co-conspirators allegedly defrauded Wells Fargo Bank, where Coleman worked as a mortgage consultant. Olarte and Calle allegedly ran a rogue brokerage and escrow company in Northridge called Fast Escrow. Olarte resided in Reseda at the time of the alleged scheme.

          According to court documents, Coleman accepted bribes and other favors in exchange for approving approximately $9 million in fraudulent loans for Olarte and Calle. The indictment alleges that Olarte submitted fraudulent loan applications to Wells Fargo that listed false information for borrowers’ income, assets and employment. In relation to some loans financed by Wells Fargo, Olarte and Calle allegedly failed to pay off existing loan holders and failed to record liens in favor of Wells Fargo, leaving the bank with no collateral when the loans defaulted.

          The indictment charges Olarte with one count of conspiracy, six counts of bank fraud, and two counts of making false statements to a financial institution. If he were to be convicted in this case, Olarte would face a statutory maximum sentence of 30 years in federal prison for each of the nine counts.

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

          Previously, Calle pleaded guilty to wire fraud, and Coleman pleaded guilty to conspiracy to make false statements to a financial institution.

          Federal authorities believe that Olarte is currently residing in Venezuela. Anyone with information about his whereabouts should contact the Federal Bureau of Investigation at (310) 477-6565.

          The case against Olarte is the result of an investigation by the Federal Bureau of Investigation, and the United States Department of Housing and Urban Development’s Office of Inspector General.

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

A former employee of a Southern California ambulance company and a former employee of a Los Angeles dialysis treatment center both pleaded guilty today to fraud charges for their roles in a fraud scheme that resulted in more than $6.6 million in fraudulent claims to Medicare.  Three other individuals charged in the case previously pleaded guilty.

 

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Sandra R. Brown 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 Acting Assistant Director in Charge Danny Kennedy of the FBI’s Los Angeles Division made the announcement.

 

Aharon Aron Krkasharyan, 53, of Los Angeles, California, pleaded guilty in federal court in Los Angeles to one count of conspiracy to commit health care fraud.  Maria Espinoza, 47, also of Los Angeles, pleaded guilty to one count of conspiracy to pay and receive kickbacks for health care referrals.  U.S. District Judge George H. Wu of the Central District of California accepted the guilty pleas.  Krkasharyan is scheduled to be sentenced on March 29, 2018, and Espinoza is scheduled to be sentenced on April 2, 2018.

 

Krkasharyan was employed as the Quality Improvement Coordinator for Mauran Ambulance Inc., 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.  According to admissions made in connection with his plea, between June 2011 and April 2012, Krkasharyan 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. 

 

Espinoza was an administrative assistant at DaVita Doctors Dialysis of East Los Angeles.  As part of her guilty plea, Espinoza admitted that she conspired with an employee of Mauran to receive cash kickbacks in return for referrals of dialysis patients to Mauran for whom Mauran submitted claims to Medicare for non-emergency ambulance transportation services.

 

Earlier this month, Toros Onik Yeranosian, 55, the former owner of Mauran, and Oxana Loutseiko 57, the former general manager of Mauran, each pleaded guilty before Judge Wu to one count of conspiracy to commit health care fraud for their roles in the fraud scheme.  The former Dispatch Supervisor at Mauran, Christian Hernandez, 36, pleaded guilty to one count of conspiracy to commit health care fraud in December 2015. 

 

In connection with his guilty plea, Yeranosian admitted that during the course of the conspiracy, Mauran submitted to Medicare at least $6.6 million in false and fraudulent claims for medically unnecessary transportation services, of which Medicare paid at least $3.1 million.  As part of their plea agreements, all five defendants agreed to pay restitution to Medicare.

 

The case was investigated by the FBI and HHS-OIG, and 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.  Trial Attorneys Alexis D. Gregorian and Jeremy R. Sanders of the Fraud Section are prosecuting the case.

 

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, 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.

          WASHINGTON – A former employee of a Southern California ambulance company and a former employee of a Los Angeles dialysis treatment center both pleaded guilty today to fraud charges for their roles in a fraud scheme that resulted in more than $6.6 million in fraudulent claims to Medicare. Three other individuals charged in the case previously pleaded guilty.

          Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Sandra R. Brown 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 Acting Assistant Director in Charge Danny Kennedy of the FBI’s Los Angeles Division made the announcement.

          Aharon Aron Krkasharyan, 53, of Los Angeles, California, pleaded guilty in federal court in Los Angeles to one count of conspiracy to commit health care fraud. Maria Espinoza, 47, also of Los Angeles, pleaded guilty to one count of conspiracy to pay and receive kickbacks for health care referrals. U.S. District Judge George H. Wu of the Central District of California accepted the guilty pleas. Krkasharyan is scheduled to be sentenced on March 29, 2018, and Espinoza is scheduled to be sentenced on April 2, 2018.

          Krkasharyan was employed as the Quality Improvement Coordinator for Mauran Ambulance Inc., 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. According to admissions made in connection with his plea, between June 2011 and April 2012, Krkasharyan 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.

          Espinoza was an administrative assistant at DaVita Doctors Dialysis of East Los Angeles. As part of her guilty plea, Espinoza admitted that she conspired with an employee of Mauran to receive cash kickbacks in return for referrals of dialysis patients to Mauran for whom Mauran submitted claims to Medicare for non-emergency ambulance transportation services.

          Earlier this month, Toros Onik Yeranosian, 55, the former owner of Mauran, and Oxana Loutseiko 57, the former general manager of Mauran, each pleaded guilty before Judge Wu to one count of conspiracy to commit health care fraud for their roles in the fraud scheme. The former Dispatch Supervisor at Mauran, Christian Hernandez, 36, pleaded guilty to one count of conspiracy to commit health care fraud in December 2015.

          In connection with his guilty plea, Yeranosian admitted that during the course of the conspiracy, Mauran submitted to Medicare at least $6.6 million in false and fraudulent claims for medically unnecessary transportation services, of which Medicare paid at least $3.1 million. As part of their plea agreements, all five defendants agreed to pay restitution to Medicare.

          The case was investigated by the FBI and HHS-OIG, and 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. Trial Attorneys Alexis D. Gregorian and Jeremy R. Sanders of the Fraud Section are prosecuting the case.

          The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, 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.

          SANTA ANA, California – An attorney who lives in El Monte pleaded guilty today to federal fraud and money laundering charges for participating in a multi-faceted scheme that collected more than $50 million from foreign investors seeking “Green Cards” through the EB-5 visa program.

          Victoria Chan [陳莹莹], who along with her father operated a San Gabriel-based business called California Investment Immigration Fund, LLC (CIIF), admitted that she exploited the EB-5 visa program,which provides lawful permanent residence – commonly known as a “Green Card” – to foreign nationals who invest at least $500,000 in a domestic business that creates 10 new American jobs.

          Chan admitted that much of the money collected by CIIF from the primarily Chinese investors either was stolen by the conspirators or was refunded to the foreign nationals. This undermined one of the basic principles of the EB-5 program because the money was not actually invested in the United States, nor did it lead to the creation of 10 new American full-time jobs, as required under the program.

          Chan admitted submitting about 130 fraudulent EB-5 visa applications to federal immigration authorities, and many of those applications falsely claimed that the foreign investments were being used to fund construction projects that were creating new jobs.

          As part of the wire fraud conspiracy, Chan admitted that she fraudulently used hundreds of thousands of dollars in EB-5 investor funds to purchase homes in her name, including residential properties each worth nearly $1 million in Diamond Bar and Rancho Cucamonga.

          “This fraud scheme subverted the federal immigration process, which resulted in dozens of foreign nationals obtaining green cards they were not entitled to receive,” said Acting United States Attorney Sandra R. Brown. “In addition to the millions of dollars they charged in fees, Chan and her father personally benefited by wrongfully using the EB-5 investment funds to purchase expensive homes in their names. We are committed to preserving the integrity of this nation’s immigration system as part of our overarching dedication to protecting the national security of the United States.”

          Chan, 35, pleaded guilty to conspiracy to commit visa fraud, conspiracy to commit wire fraud, and international money laundering. Chan pleaded guilty before United States District Judge Cormac J. Carney, who is scheduled to sentence the defendant on July 9, 2018.

          “Defendant Chan got rich by operating a long-term fraudulent scheme during which she manipulated a government program intended to encourage investors and stimulate the U.S. economy,” said Danny Kennedy, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI and our federal partners will continue to investigate allegations of visa fraud which damage the credibility of immigration incentives and discourage foreign investment.”

          “Our message is clear – America’s legal immigration system is not for sale,” said Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “In addition to posing significant security and safety vulnerabilities that could be exploited by criminals and others who pose a danger to our community, immigration benefit fraud undermines the integrity of our legal immigration process and penalizes those who abide by the law. HSI will work closely with our law enforcement partners to ensure that those who would exploit our nation’s immigration system for their own enrichment are brought to justice.”

          In relation to this case, Chan, along with other people and entities related to her, agreed to forfeit to the government eight properties worth nearly $25 million that federal prosecutors linked to the fraudulent scheme. A ninth property named in an asset forfeiture complaint related to the scheme, a parcel in Rancho Cucamonga, is expected to be forfeited in the coming weeks.

          Chan pleaded guilty to charges contained in a criminal information filed earlier this month. According to the information and a related plea agreement, Chan played a key role in the scheme by submitting fraudulent visa applications to U.S. Citizenship and Immigration Services and refunding the purported investments by wire transferring millions of dollars to Chinese nationals.

          Members of the conspiracy convinced more than 100 Chinese nationals to invest over $50 million in CIIF and related companies, according to court documents. Some of the foreign nationals were on China’s “100 Most Wanted List” after being charged with crimes such as bribery.

          “Government programs designed to provide a pathway to permanent legal residency for foreigners and full-time jobs for Americans will not be exploited by greed,” stated IRS Criminal Investigation’s Special Agent in Charge, R. Damon Rowe. “Today’s guilty plea is the result of untangling a global web of complex financial transactions used by Ms. Chan to facilitate her immigration fraud scheme. IRS Criminal Investigation is proud to share its hallmark financial investigative expertise in this and other increasingly sophisticated financial investigations.”

          The scheme related to CIIF started in 2008 in Garden Grove and was later relocated to San Gabriel. The operation was shut down in April when federal authorities executed a series of search warrants on CIIF’s office and Chan’s residence.

          As a result of the today’s guilty pleas, Chan faces a statutory maximum sentence of 45 years in federal prison.

          The ongoing investigation into the EB-5 fraud scheme is being conducted by the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), and IRS-Criminal Investigation. United States Citizenship and Immigration Services (USCIS) also provided valuable assistance in the investigation and prosecution of the case.

          USCIS Los Angeles District Director Donna Campagnolo stated: “This is an excellent example of federal agencies working together to combat fraud and maintain the integrity of our immigration system. USCIS is committed to providing information to our investigative colleagues to bring fraudsters to justice.”

          Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office is prosecuting the criminal case. The asset forfeiture complaints were filed by Assistant United States Attorney Jonathan Galatzan of the Asset Forfeiture Section.

          LOS ANGELES – A Norwalk man has been sentenced to five years in federal prison for using the internet as part of his efforts to solicit a 15-year-old girl to have sex.

          Mauricio Edgardo Estrada, 29, who at the time of the offense was a police officer with the Los Angeles Unified School District, was sentenced yesterday by United States District Judge Dale S. Fischer.

          Estrada pleaded guilty in June to one count of using the internet to transmit information about a minor in connection with criminal sexual activities.

          The case against Estrada was the result of an undercover operation by the Los Angeles Regional Human Trafficking Task Force, which includes representatives of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI), the Los Angeles County Sheriff’s Department and the Department of State’s Diplomatic Security Service. The Task Force was conducting an anti-sex trafficking operation in Artesia and posted an advertisement on the Craigslist website that was designed to attract individuals interested in engaging in commercial sex acts with minors.

          On April 20, 2016, Estrada responded to the advertisement via e-mail and subsequently engaged in a series of text messages with an undercover agent he thought was a 15-year-old girl, according to court documents. Estrada agreed to pay $150 to engage in sex with the “girl.” When he arrived at a gas station in Artesia for the encounter with the “girl,” Estrada had condoms and approximately $150 in his possession.

          The case against Estrada was prosecuted by Assistant United States Attorney Lana Morton-Owens of the Violent and Organized Crime Section

          LOS ANGELES – A federal grand jury has charged a San Pedro man with threatening to murder United States Representative Maxine Waters in a phone call to her Capitol Hill office last month.

          Anthony Scott Lloyd, 44, was charged with one count of threatening a United States official in an indictment filed Friday in United States District Court.

          Lloyd was arrested in this case on November 9, one day after federal prosecutors filed a criminal complaint that accused Lloyd of making the threatening phone call to Rep. Waters’ office. According to the affidavit in support of the complaint, Lloyd called the Congresswoman’s office on October 22 and left a voicemail laced with expletives and epithets that uses the words “dead” and “kill” a total of four times.

          Lloyd, who was freed on a $20,000 bond after his arrest, is scheduled to be arraigned on the indictment on December 7.

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

          If he were to be convicted of making the threat against Rep. Waters with the intent to interfere with the Congresswoman while she engaged in her official duties, Lloyd would face a statutory maximum sentence of 10 years in federal prison.

          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 Veronica Dragalin of the General Crimes Section.

          LOS ANGELES – Four San Diego-area nursing homes owned by Los Angeles-based Brius Management Co. have agreed to pay as much as $6.9 million to resolve civil allegations that their employees paid kickbacks for patient referrals and submitted fraudulent bills to government health care programs.

          The settlement with the four nursing homes resolves an investigation into allegations that their employees paid kickbacks to discharge planners at Scripps Mercy Hospital San Diego to induce patient referrals to the nursing homes in violation of the federal Anti-Kickback Statute.

          The investigation examined additional allegations made in a “whistleblower” lawsuit that the nursing homes submitted false claims to Medicare and Medi-Cal for services provided to patients referred from Scripps Mercy Hospital. Bills submitted for patients referred as a result of illegal kickbacks would constitute fraud against the United States and the State of California.

          The four nursing homes involved in the settlement are: Point Loma Convalescent Hospital, Brighton Place – San Diego, Brighton Place – Spring Valley, and Amaya Springs Health Care Center in Spring Valley.

          These same four nursing homes entered into Deferred Prosecution Agreements (DPAs) with the United States Attorney’s Office in San Diego in 2016. In the DPAs, the four entities admitted that nursing home employees conspired to pay kickbacks without the knowledge of Brius Management Co. The nursing homes admitted that their employees used corporate credit cards to pay for gift cards, massages, tickets to sporting events, and a cruise on the Inspiration Hornblower that were given to planners at Scripps Mercy Hospital as kickbacks.

          “Kickbacks for patient referrals are illegal under federal law because of the corrupting influence on our nation’s healthcare system,” said Acting United States Attorney Sandra R. Brown. “This settlement demonstrates our resolve to combat fraud that compromises the care provided to patients served by a government healthcare plan. This case further shows the power of whistleblowers to shine a light on corrupt activities and obtain significant recoveries on behalf of United States taxpayers.”

          The settlement calls for guaranteed payments of $1,785,967 to the United States, to be paid in three annual installments, and a $240,950 lump sum payment to the State of California. The nursing homes paid the first installment to the United States on November 6, and California received its payment on November 10.

          The hospitals also agreed to pay up to $4.9 million to the United States if certain operational contingencies are met, making the total settlement worth up to $6,926,917.

          The four nursing homes have also entered into Corporate Integrity Agreements with the Department of Health and Human Services.

          “Skilled nursing facilities that pay kickbacks in order to boost profits will be held accountable for their improper conduct,” said Christian J. Schrank, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General. “We will continue to crack down on kickback arrangements, which can corrupt medical decision-making and undermine the public’s trust in the health care system.”

          Eric S. Birnbaum, Special Agent in Charge of the San Diego Division of the Federal Bureau of Investigation, stated, “The FBI will continue to bring our resources to bear in support of False Claims Act investigations to protect the integrity of the Medicare Trust Fund.”

          The settlement resolves a lawsuit brought by a former employee of one of the nursing homes under the qui tam – or whistleblower – provisions of the federal and state False Claims Acts, which allow private citizens to file lawsuits on behalf of the United States and California and share in any recovery. The whistleblower, Viki Bell-Manako, will receive 20 percent of each settlement payment. Pursuant to the settlement, United States District Judge John F. Walter today dismissed the lawsuit, United States of America, State of California ex rel. Bell-Manako v. Brius Management Co., et al., CV11-2036-JFW.

          The settlement with the four nursing homes was negotiated by the Civil Fraud Section of the United States Attorney’s Office following an investigation by the Department of Health and Human Services, Office of Inspector General, and the Federal Bureau of Investigation.

          LOS ANGELES – A federal grand jury has returned a new indictment in a racketeering case targeting the Five Deuce Broadway Gangster Crips (BGC) street gang that adds a murder charge stemming from a previously unsolved 2012 homicide, Acting United States Attorney Sandra R. Brown announced today.

          The “second superseding indictment” charges BGC member Joshua Perez, also known as “Tiny Ange,” in the murder of 37-year-old William Sherman, who was killed after BGC gangsters mistakenly identified him as being part of a group that were members of a rival gang.

          The new indictment also alleges that co-defendant Marquis Shaw, also known as “T-Loon,” participated in the attack that resulted in Sherman’s murder. Shaw also faces charges previously filed in the BGC case that allege he committed a 2003 murder of a non-gang member outside of the House of Blues in West Hollywood.

          Perez, 26, and Shaw, 43, allegedly are prominent members of a BGC clique known as the Gremlin Riderz, a violent enforcement arm that acts as the gang’s hit squad, which includes enforcing discipline among the gang’s members and carrying out acts of retaliation against rival gangs.

          The new charges in the indictment accuse Perez of committing murder in aid of racketeering and using a firearm in relation to a crime of violence that caused death. Each of these offenses carries a mandatory sentence of life without parole in federal prison.

          The indictment alleges that Sherman was murdered during a May 10, 2012 incident in which BGC members were retaliating against a rival gang for the murder of a BGC member. BGC members traveled in a multi-vehicle convoy to a party being held by the rival gang, and fired at least 40 shots into a group of men who were walking to the party. Sherman was killed and two others were injured in the shooting. The victims were not members of the rival gang targeted by BGC. Prior to the second superseding indictment, no one had been charged in the killing.

          The second superseding indictment returned by a federal grand jury on November 9 charges Perez, Shaw and five other BGC members with participating in a conspiracy to violate the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. Members of the conspiracy allegedly engaged in murders, robberies, witness and informant intimidation, and narcotics sales.

          The new indictment is the latest development in a case originally filed in 2014 against 72 members and associates of the BGC, a violent and primarily African-American gang that controls parts of South Los Angeles and downtown Los Angeles. Out of the 72 defendants originally charged in a 213-page RICO indictment, 64 defendants have pleaded guilty and one was convicted at trial. Many of those convicted have received lengthy prison sentences – including the leader of the BGC, who was sentenced to nearly 22 years in federal prison – and those defendants have been banned from living in BGC territory after they complete their prison terms.

          After the filing of the original indictment in this case, federal and local law enforcement authorities continued to investigate the BGC, which included reexamining the 2012 attack that led to Sherman’s murder and developing new witnesses to that incident.

          The seven defendants named in the second superseding indictment – the only defendants remaining in the BGC case – are scheduled to go on trial on February 6, 2018 before United States District Judge S. James Otero. Perez and Shaw each face mandatory terms of life in prison if convicted of the murder charges alleged in the indictment.

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

          The investigation into the BGC was conducted by agents and officers with the Federal Bureau of Investigation and the Los Angeles Police Department. Considerable assistance was provided during this investigation by the California Department of Corrections and Rehabilitation, the Torrance Police Department, the Buena Park Police Department, the El Segundo Police Department, the San Bernardino Police Department and the Los Angeles City Attorney’s Office.

          This case is being prosecuted by Assistant United States Attorney Mack Jenkins, Chief of the Public Corruption and Civil Rights Section; Assistant United States Attorneys Max Shiner and Wilson Park of the Violent and Organized Crime Section; and Assistant United States Attorney Sheila Nagaraj of the Public Corruption and Civil Rights Section.

          LOS ANGELES – Federal authorities this morning arrested a South Los Angeles man who allegedly made a series of online threats to kill law enforcement personnel and others at the Los Angeles Superior Court’s Inglewood Courthouse, a nearby school and a private business.

          John Patrice Hale, 42, who used the online moniker “Frost K Blizzard,” allegedly made the threats using techniques designed to make his internet communications anonymous, which included using Tor and proxy servers.

          Hale is expected to be arraigned on a 10-count indictment this afternoon in United States District Court in downtown Los Angeles.

          The indictment alleges that Hale sent the online threats over several days in May 2017 to the Los Angeles Sheriff’s Department’s Court Services Division website. Some of the threats invoked ISIS, but authorities have not uncovered any evidence linking Hale to international terrorism. The threats specifically alleged in the indictment are:

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

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

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

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

          The indictment further alleges that on May 25 Hale submitted bogus information to the FBI’s “Tips and Public Leads” webpage, despite a warning posted on that webpage that submitting a false tip could result in a fine and/or imprisonment. In the submission, Hale allegedly made the false claim that he knew a man who “would supply ISIS with explosives even planting them for them” and who had received instructions from ISIS “to send inglewood sheriff department bomb threats via email.”

          The indictment returned by a federal grand jury on November 7 charges Hale with five counts of making false and misleading statements concerning terrorism, four counts of making threats to injure in interstate commerce and one count of making false statements to federal law enforcement.

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

          If Hale were to be convicted of the charges in the indictment, he would face a statutory maximum sentence of five years in federal prison for each of the 10 counts.

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

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

          LOS ANGELES – An Inland Empire woman who ran a home health agency that paid more than $1.25 million in illegal kickbacks for referrals of Medicare patients has been sentenced to 30 months in federal prison.

          Elaine C. Lat, 47, of Fontana, was sentenced on Monday by United States District Judge Philip S. Gutierrez. In addition to the prison term, Judge Gutierrez ordered Lat to pay $41,930 in restitution to Medicare.

          Lat pleaded guilty in May to one count of conspiracy and four counts of paying illegal kickbacks.

          Lat was the chief operating officer of Star Home Health Resources, Inc., a La Verne-based home health agency that received more than $8.5 million from Medicare after Star submitted bills for services provided to patients who were referred through the illegal kickback scheme.

          According to court documents, from May 2008 through May 2016, Lat conspired with others to pay illegal kickbacks to physicians and individuals in exchange for referrals of Medicare beneficiaries to Star for home health services. Lat and her co-conspirators paid kickbacks totaling at least $1,257,487 to physicians and other referral sources, including marketers. Lat paid the kickbacks with cash she withdrew from Star’s bank accounts or with checks drawn from the accounts, directly to the physicians and marketers.

          Five other defendants have been charged in relation to the Star kickback scheme. Four of those defendants were named in the same indictment as Elaine Lat. Elaine Lat’s parents – Errol Lat, 73, and Thelma Lat, 72, both of Alta Loma – also pleaded guilty in May to conspiracy to pay illegal kickbacks and four counts of paying illegal kickbacks. They are scheduled to be sentenced on March 26, 2018.

          Corinne Chavez, 34, a resident of Rosamond in Kern County, who was a marketer for Star, pleaded guilty in June to conspiracy to pay and receive illegal kickbacks. Chavez is scheduled to be sentenced on June 11, 2018.

          Dr. Kain Kumar, 54, of Malibu, California, one of the physicians who allegedly received kickbacks from Star, has pleaded not guilty to 19 charges contained in a second superseding indictment that accuses him of participating in the Star kickback conspiracy, as well as engaging in health care fraud and illegally prescribing controlled substances. According to the indictment in this case, Medicare paid $4,398,599 to Star after the illegal referrals by Kumar.

          Kumar – who operated medical clinics in Palmdale, Rosamond and Ridgecrest – is scheduled to go on trial before Judge Gutierrez on May 8, 2018.

          Another doctor who allegedly received kickbacks from Star is charged in a separate case. Dr. Kanagasabai Kanakeswaran, 65, of Lancaster, has pleaded not guilty and is scheduled to go on trial on January 30, also before Judge Gutierrez.

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

          The case against Lat and the other charged defendants was investigated by the Federal Bureau of Investigation; the Department of Health and Human Services, Office of Inspector General, Office of Investigations; and the Drug Enforcement Administration.

          The case is being prosecuted by Assistant United States Attorney Alexander F. Porter of the Major Frauds Section and Trial Attorney Claire Yan of the Fraud Section in the Criminal Division of the Justice Department.

          WASHINGTON – The Justice Department announced today that it has obtained an additional $5.4 million for servicemembers whose vehicles were unlawfully repossessed by Wells Fargo Bank, N.A. in violation of the Servicemembers Civil Relief Act (SCRA). The bank, which does business under the name Wells Fargo Dealer Services, has agreed to pay this money to approximately 450 servicemembers under a 2016 settlement that resolved the department’s SCRA lawsuit against the company. This additional amount brings the total compensation under the settlement to more than $10.1 million and the total number of servicemembers eligible for relief to more than 860.

          On Sept. 29, 2016, the department filed a complaint in United States v. Wells Fargo Bank N.A., d/b/a Wells Fargo Dealer Services in United States District Court in Los Angeles, alleging that Wells Fargo repossessed 413 vehicles of SCRA-protected servicemembers without court orders between Jan. 1, 2008 and July 1, 2015. On the same day, the department agreed to a settlement that required Wells Fargo to pay $10,000 to each of the affected servicemembers, plus any lost equity in the vehicle with interest. Wells Fargo was also required to pay a $60,000 civil penalty to the United States and repair the credit of all affected servicemembers. At the time of the settlement, the department announced that 413 servicemembers were eligible to receive compensation.

          Since entering into the settlement with the department in September 2016, Wells Fargo has identified additional violations affecting approximately 450 servicemembers that occurred during the period covered by the settlement. Wells Fargo has begun to provide over $5.4 million in compensation to these additional servicemembers under the agreement. Together with the compensation previously announced by the department in September 2016, a total of more than 860 servicemembers and their co-borrowers are eligible to receive $10,183,950.  

          “Just a few days ago, we observed Veterans Day to honor those who have served our country so bravely,” said Acting Assistant Attorney General John M. Gore. “The Justice Department will continue to honor their service throughout the year by vigorously enforcing servicemembers’ rights under federal law. The men and women of our armed forces should be able to devote their full attention to their military duties, without having to worry about their cars being repossessed back home. We are pleased that our settlement agreement has ensured that hundreds of additional servicemembers will be compensated for the damages they suffered as a result of illegal auto repossessions.”

          “The SCRA provides important protections and is intended to prevent unnecessary financial hardship for the brave women and men who serve in our armed forces,” said Acting United States Attorney Sandra R. Brown. “Losing an automobile through an unlawful repossession while serving our country is a problem servicemembers should not have to confront. We are pleased that Wells Fargo is taking action to compensate these additional servicemembers as required under the settlement with the Justice Department. My Office is committed to protecting the rights of servicemembers on all fronts.”

          The SCRA requires a court to review and approve any repossession if the servicemember took out the loan and made a payment before entering military service. The court may delay the repossession or require the lender to refund prior payments before repossessing. The court may also appoint an attorney to represent the servicemember, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the servicemember. By failing to obtain court orders before repossessing motor vehicles owned by protected servicemembers, Wells Fargo prevented servicemembers from obtaining a court’s review of whether their repossessions should be delayed or adjusted to account for their military service.

          For more information about the department’s SCRA enforcement, please visit www.servicemembers.gov. Servicemembers and their dependents who believe that their rights under SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office.

          LOS ANGELES – A concert promoter who operated in Dallas, Texas and West Hollywood pleaded guilty this morning to a federal fraud charge for defrauding investors, promoters and performers who invested in concerts and World Wrestling Entertainment events.

          Gabriel Martin Reed, 46, a former Malibu resident who currently lives in McKinney, Texas, pleaded guilty this morning to one count of wire fraud.

          Reed, who conducted business under the name Gabe Reed Productions, admitted in court today that he received money from victims after falsely telling them that events would take place, certain performers had agreed to participate in those events, and their money 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 personal expenses, including rent, utility bills and travel expenses.

          According to court documents, over an 8½-year period, 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.

          “To execute his scheme to defraud, [Reed] used sophisticated means, including, but not limited to, creating email addresses in the names of other individuals and entities to convince his victims that their funds were legitimately invested,” according to a plea agreement filed in federal court. “In addition, [Reed] produced and distributed to victims fraudulent and fabricated artist contracts, bank statements, and correspondence.”

          One Los Angeles investor 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 tour, according to the plea agreement. The FBI reviewed bank records that showed the victim’s money was used to pay for Reed’s personal expenses, including child support, costs related to a birthday party, and meals at Ruth’s Chris Steakhouse and Mr. Chow in Beverly Hills, according to an affidavit previously filed in this case.

          Documents previously filed in this case state that victims suffered losses of at least $1.4 million.

          Reed pleaded guilty before United States District Judge Philip S. Gutierrez, who scheduled a sentencing hearing on March 19, 2018. As a result of today’s guilty plea, Reed faces a statutory maximum sentence of 20 years in federal prison.

          The case against Reed is being investigated by the Federal Bureau of Investigation.

          This case is being prosecuted by Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.

          LOS ANGELES – The owner of a business that operated parking lots was arrested this morning after being charged with bilking the U.S. Department of Veteran’s Affairs out of more than $11 million that should have been paid in relation to a contract to operate parking facilities on the VA’s Los Angeles medical campuses.

          Richard Scott, 58, the owner of Westside Services LLC (WSS), was arrested without incident this morning at his Santa Monica residence.

          The arrest was made pursuant to a criminal complaint filed on November that charges Scott with major fraud against the United States. Scott is expected to make his first court appearance this afternoon in United States District Court in downtown Los Angeles.

          An FBI agent described the fraud in a 103-page affidavit filed in support of the criminal complaint. As outlined in the affidavit, Scott obtained a contract to operate parking lots on the campuses of the VA Greater Los Angeles Healthcare System (VA GLAHS) and soon after began defrauding the VA by failing to properly report income and expenses. The vast majority of the activity authorized under the contract took place at the West Los Angeles VA Medical Center near Westwood.

          For approximately the past 15 years, Scott has had a contract with the VA that required him to provide the VA with 60 percent of the gross revenues from the parking lots, according to the affidavit. In order to determine these amounts, 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.

          The investigation determined that Scott maintained at least two sets of financial books, according to the affidavit. 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.

          “The investigation has revealed that Scott underreported revenue to the VA by a minimum of $4,689,081 and over-reported expenses to the VA by a minimum of $8,219,762, which caused a direct loss to the VA of $11,397,779,” according to the affidavit. The court document notes that the amount of unreported revenue is likely greater because cash generated from parking during UCLA baseball games and other events – which potentially totals more than $1 million – also was not reported to the VA.

          As part of the scheme to defraud the VA, Scott allegedly began bribing the VA contracting official responsible for overseeing the contract in 2003 and continued to bribe him on a regular basis until the official abruptly retired in 2014 after he was confronted by federal agents. According to the affidavit, Scott continued making payments to the retired VA official to continue the scheme and attempt to avoid termination of his parking contract.

          As a result of the long-running scheme to defraud the VA, Scott amassed considerable wealth, including three $2.5 million condominiums in Santa Monica, numerous high-end collectible cars, a Cigarette Top Gun racing boat that is docked in Miami, and brokerage accounts, according to the affidavit. Between 2003 and 2016, Scott allegedly used WSS business bank accounts to pay for approximately $740,000 in travel, $413,000 in meals and entertainment, his salary of $3.1 million, and numerous personal expenses and owner’s draws. The affidavit states, “The travel and meal/entertainment expenses are especially suspicious because the business of WSS consisted of overseeing parking lots at the VA GLAHS, only two of which were regularly staffed, which did not require any travel beyond the few mile area” around the VA’s West Los Angeles campus.

          This morning, pursuant to court orders, federal authorities are moving to seize Scott’s assets, including the racing boat and vehicles that include three Ferraris, a 1969 Corvette L88, two high-end Mercedes-Benzes and a Shelby Super Snake Mustang.

          The former VA contracting official began cooperating with the federal investigation in May, according to the affidavit, which states that the retired VA official admitted he participated in the bribery scheme and knew Scott was underreporting revenue and inflating expenses reported to the VA. Furthermore, the former VA official said that Scott used proceeds from cash parking events to pay the official. During an interview earlier this year recounted in the affidavit, the former official said, “He [Scott] was definitely bribing me and I was definitely looking the other way.”

          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 Scott were to be convicted of the charge of committing a major fraud against the United States, he would face a statutory maximum sentence of 10 years in federal prison.

          The VA contract with WSS was terminated early this year after the VA settled a lawsuit that challenged the VA’s use of its West Los Angeles campus for any purposes not specifically related to the care and housing of veterans. However, pursuant to the agreement, WSS will continue to operate the parking lots until January.

          The case against Scott is part of an ongoing investigation being conducted by the United States Department of Veterans Affairs, Office of Inspector General; the Federal Bureau of Investigation; and IRS Criminal Investigation.

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

          RIVERSIDE, California – Adelanto City Councilmember Jermaine Wright is expected to make his first court appearance this afternoon after being arrested yesterday on federal charges that allege he took a $10,000 cash bribe and that he hired a man to burn down his restaurant to collect insurance proceeds.

          Jermaine Wright, 41, was arrested yesterday by FBI special agents after he was named in a criminal complaint filed on Monday that charges him with bribery and attempted arson of a building.

          Wright’s initial appearance will be this afternoon in United States District Court in Riverside.

          The criminal complaint outlines two schemes. In the first, Wright allegedly solicited and accepted a $10,000 bribe from an undercover FBI agent who told Wright he wanted the councilmember’s assistance in navigating city rezoning and code enforcement issues related to a supposed marijuana transportation business.

          In the second scheme, Wright allegedly paid $1,500 to another undercover FBI agent to burn down his restaurant.

          The investigation into Wright, which began as a probe into possible corruption in the City of Adelanto, utilized an informant who introduced Wright to both of the undercover FBI agents and recorded a series of conversations in which Wright discussed both plots, according to the affidavit in support of the criminal complaint filed on Monday.

          Soon after the investigation began, the informant – who is identified in the affidavit as a CHS, or confidential human source – introduced Wright to a man who said he wanted to move his marijuana cultivation business to Adelanto. The man who purportedly wanted to relocate his marijuana business was an undercover FBI agent who told Wright he was interested in using a property outside of the zone designated by the city for marijuana cultivation. The undercover operative – who is called UC-1 in the affidavit – specifically wanted Wright’s assistance in expanding the area where marijuana cultivation was permitted.

          During a meeting in June, Wright said that “to obtain the necessary votes from the Adelanto City Council for the expansion of the area zoned for marijuana cultivation, UC-1 would have to purchase Wright’s vote,” according to the affidavit. After Wright said that his “price” was “20” – interpreted by the undercover agent to be $20,000 – Wright said a “donation” had to be made to a third party “because he keeps us out of jail.”

          In mid-July, the Adelanto City Council approved the expansion of the marijuana zone with Wright voting in favor of the issue.

          After the City Council action, the undercover agent sought Wright’s assistance in fast-tracking an approval for the purported marijuana business, which Wright agreed to do in exchange for “15.”

          Wright did not receive the $20,000 for his vote because the City Council’s action occurred sooner than anticipated and the funds to pay the bribe were not available at the time, according to the affidavit. Wright similarly was not paid for his services in speeding up the permit process for the marijuana cultivation operation because it required the purchase of a property prior to paying the bribe. However, the informant later told the FBI that Wright was willing to take money in exchange for his help in securing an “exemption” that would allow the undercover operative to operate a marijuana transportation business.

          After two meetings with the informant in which Wright discussed how the undercover agent could open a marijuana transportation business, Wright participated in a third meeting that also involved the undercover agent.

          “During a meeting on October 6, UC-1 then placed $10,000 dollars on a box being used as a table, made up of two stacks of $50 bills, and told Wright, ‘that’s for you, or your non-profit, whatever,’” according to the affidavit. “Wright responded, ‘my non-profit, yes sir, thank you sir.’ Wright eventually placed the $10,000 in his pocket.”

          After taking the bribe, Wright confirmed that he would assist with code enforcement and votes, according to the affidavit. Wright also said he could curtail code enforcement activities against the marijuana transportation business, but it would require a “stack” – which Wright identified as $2,000 – each time Wright interceded.

          In the second scheme, Wright sought the informant’s assistance in setting fire to Wright’s business, an Adelanto restaurant called Fat Boyz Grill. The affidavit alleges that Wright subsequently solicited a second FBI undercover agent (UC-2) to assist Wright in burning down his restaurant so he could collect $300,000 in insurance proceeds. Wright eventually paid the second undercover agent $1,500, gave the agent a tour of the restaurant, and assisted in the planning of the arson by providing a ladder for the undercover agent and discussing various tactics to maximize the damage.

          The informant first reported the arson scheme to the FBI in early August, according to the affidavit. In late August, the informant reported that Wright had again sought his assistance in finding someone to burn down Fat Boyz Grill. In late September, Wright asked the informant to pass his cell phone number to the “electrician” – so named because Wright wanted the cause of the fire to appear to be an electrical problem.

          Wright met the “electrician” – actually the second undercover FBI agent – on October 3 and said he wanted the fire on the following Saturday when the sprinkler system would be turned off, according to the affidavit. After Wright assured the undercover agent that his insurance policy covers everything, the “electrician” agreed to do the job for $1,500. At a meeting three days later, Wright paid the $1,500 after the undercover agent told Wright he needed more time to prepare for the job.

          On October 17, FBI agents executed a federal search warrant at the restaurant and interviewed Wright. According to the affidavit, Wright confessed to paying the undercover agent to burn down Fat Boyz Grill and that the would-be arsonist assured him that “this place be gone.” The FBI told Wright that the “electrician” was providing agents with information about the scheme. The affidavit states that, after Wright confessed to the attempted arson plot, Wright agreed to cooperate with the FBI’s investigation into corruption in the City of Adelanto, which included agreeing to surreptitiously use a recording device if requested by the FBI, tell the truth and maintain the confidentiality of the investigation.

          The very next day, October 18, the informant reported to the FBI that Wright had called the informant, disclosed the FBI search warrant on the restaurant, and said that the so-called electrician was a “snitch.” Wright requested the CHS’s assistance in making UC-2 “go away,” according to the affidavit.

          Wright later contacted the informant and asked the informant to attack Wright. According to the affidavit, one of the reasons Wright wanted to be assaulted was to obtain “the dismissal of criminal charges due to memory loss Wright would claim he suffered as a result of the assault.” Wright instructed the informant to “put a rat next to me,” explaining that the FBI “would suspect someone has found out that I have talked to them [the FBI], and they’re sending me a message.” According to the affidavit, Wright continued, “I am going to lose at least three months of memory or more.”

          On the morning of November 3, the San Bernardino County Sheriff’s Department received a call for medical aid from an employee at Fat Boyz Grill. When deputies responded, they observed Wright on the ground in the restaurant’s parking lot being treated by firefighters. While he had no visible injuries, Wright was transported to a hospital, and he reported being attacked and robbed by an unknown assailant.

          Wright was taken into custody yesterday by FBI agents after he was summoned for another interview.

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

          If Wright were to be convicted of the two charges in the complaint, he would face a statutory maximum sentence of 10 years in prison for the bribery count and up to 20 years in prison for the arson charge. The arson charge also carries a mandatory minimum prison sentence of five years in prison.

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

          This case is being prosecuted by Assistant United States Attorneys Sean D. Peterson of the Riverside Branch Office and Joseph B. Widman, Chief of the Riverside Branch Office.

          LOS ANGELES – A Simi Valley man who admitted that he distributed child pornography – including a video with a filename indicating an 8-year-old girl was being abused – has been sentenced to 15 years in federal prison.

          Eric Allen Haensgen, 38, was sentenced yesterday by United States District Judge Percy Anderson.

          Haensgen pleaded guilty on August 22 to one count of distribution of child pornography, admitting that he used peer-to-peer software on his computer to share files that he knew depicted minors, some of whom were under the age of 12, engaged in sexually explicit conduct.

          During the execution of a search warrant in 2016 at Haensgen’s residence, federal law enforcement authorities recovered digital devices that contained at least 114 images of child pornography and at least 3 videos of child pornography.

          During yesterday’s sentencing hearing, Judge Anderson noted Haensgen’s history of possessing child pornography, citing evidence that the defendant in 2003 had paid a website for child pornography. Judge Anderson also found that Haensgen had sexually abused a minor by taking photographs and videos of a 6-year-old girl that focused on her genitals.

          Haensgen has been in custody since he was arrested on March 24 by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).

          This case was prosecuted by Assistant United States Attorney Vanessa Baehr-Jones of the Violent and Organized Crime Section.

          LOS ANGELES – A U.S. Army contracting officer representative who admitted taking hundreds of thousands of dollars in bribes from South Korean contractors in return for approving fraudulent invoices was sentenced today to 18 months in federal prison.

          Marcus D. Flowers, 51, of Enterprise, Alabama, was sentenced by United States District Judge Percy Anderson. In addition to the prison term, Judge Anderson ordered Flowers to pay $351,043 in restitution to the United States Army.

          Flowers pleaded guilty in June to one count of conspiracy to commit bribery.

          Flowers, who worked as a contracting officer representative for the United States Army, was responsible for approving invoices related to the installation of closed circuit televisions at U.S. military installations in the Republic of Korea after verifying the completion of work by contractors. According to court documents, Flowers accepted $351,043 in cash over the course of four years in return for approving payments despite the fact that some contractors never installed the CCTVs, or they installed inferior CCTV models than those required by the contracts.

          “This case presents an extreme example of pervasive corruption,” prosecutors wrote in a sentencing memorandum filed with the court. “For at least four years, [Flowers] essentially engaged in a business of betraying his country and dispensing government money in return for cash. The scope was massive, cheating taxpayers out of millions of dollars and reaping [Flowers] the benefit of hundreds of thousands of dollars.”

          As part of his plea, Flowers has agreed to forfeit to the government any remaining proceeds of the bribery scheme, which includes real estate purchased in the Philippines.

          Prior to surrendering to U.S. authorities late last spring, Flowers was convicted of offenses related to the bribery scheme in a South Korean court and he served approximately 10 months in prison there.

          Flowers was permitted to begin serving his prison term on June 25, 2018 so that he may receive medical treatment for a serious health condition.

          The federal case that led to Flowers’ arrest and subsequent plea resulted from a joint investigation conducted by the U.S. Army Criminal Investigation Command, the Federal Bureau of Investigation, and the Defense Criminal Investigative Service, which received assistance from South Korean authorities.

          The case is being prosecuted by Assistant United States Attorney Daniel O’Brien of the Public Corruption and Civil Rights Section. Assistant United States Attorney Jonathan Galatzan of the Asset Forfeiture Section is assisting in the case.