Central District of California
Press releases recorded for this federal judicial district.
Operators of Bogus Medical Clinics Charged in Conspiracy to Divert Massive Amounts of Prescription Narcotics to the Black MarketRead the Press Release
LOS ANGELES – The operators of seven sham medical clinics were among 12 defendants taken into custody this morning on federal drug trafficking charges that allege they diverted at least 2 million prescription pills – including oxycodone and other addictive and dangerous narcotics – to the black market.
Two indictments returned late last month by a federal grand jury alleges that members of the conspiracy profited from illicit prescriptions that were issued without any legitimate medical purpose through a series of clinics that periodically opened and closed in a “nomadic” style. The fraudulent prescriptions allegedly allowed the conspirators to obtain bulk quantities of prescription drugs that were sold on the street.
Those arrested this morning include Minas Matosyan, an Encino man also known as “Maserati Mike,” who is charged with leading the scheme and controlling six of the sham clinics. Matosyan allegedly hired corrupt doctors who allowed the conspirators to issue fraudulent prescriptions under their names in exchange for kickbacks.
“The two indictments charge 14 defendants who allegedly participated in an elaborate scheme they mistakenly hoped would conceal a high-volume drug trafficking operation,” said Acting United States Attorney Sandra R. Brown. “In addition to generating illicit profits, this scheme helped drive the prescription drug epidemic that is causing so much harm across our nation.”
“This investigation targeted a financially motivated racket that diverted deadly and addictive prescription painkillers to the black market,” said DEA Special Agent in Charge David Downing. “Today’s arrests underscore our resolve – DEA and its law enforcement partners will not tolerate criminal enterprises that fuel and exploit the opioid epidemic.”
The indictments unsealed today and search warrants executed this morning describe how Matosyan would “rent out recruited doctors to sham clinics.” Matosyan allegedly supplied corrupt doctors in exchange for kickbacks derived from proceeds generated when the other sham clinics created fraudulent prescriptions or submitted fraudulent bills to health care programs. In one example described in the court documents, Matosyan provided a corrupt doctor to a clinic owner in exchange for $120,000. When the clinic failed to pay the money and suggested instead that Matosyan “take back” the corrupt doctor, Matosyan demanded his money and said, “Doctors are like underwear to me. I don’t take back used things.”
In a recorded conversation described in court documents, Matosyan discussed how one doctor was paid “for sitting at home,” while thousands of narcotic pills were prescribed in that doctor’s name and Medicare was billed more than $500,000 for purported patient care.
The conspirators also allegedly stole the identities of doctors who refused to participate in the scheme. In an intercepted telephone conversation described in court documents, Matosyan offered a doctor a deal to “sit home making $20,000 a month doing nothing.” When the doctor refused the offer, the conspirators nevertheless created prescription pads in the doctor’s name and allegedly began selling fraudulent prescriptions for oxycodone without the doctor’s knowledge or consent.
According to court documents, the conspirators also issued prescriptions and submitted fraudulent billings in the name of a doctor who at the time was hospitalized and later died.
“The defendants in this scheme heartlessly lined their pockets with cash from the sale of thousands of addictive prescription drugs sold through the black market,” stated IRS Criminal Investigation’s Special Agent in Charge, R. Damon Rowe. “IRS Criminal Investigation, along with our law enforcement partners, will continue to aggressively pursue those who seek to profit from the sale and distribution of illegitimate prescription narcotics creating a drug crisis of epic portions in our country.”
“For the sake of mere profit, the operators of these medical clinics spewed deadly prescription drugs onto our streets. The opioid epidemic gripping this country is well documented and our communities in the Los Angeles area have been impacted,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Too often those ill-gotten gains came at the expense of innocent Americans. It has been a pleasure working with our law enforcement colleagues to bring these people to justice.”
“Today’s enforcement actions, and the long-term multiagency investigation that preceded them, have dealt a major blow to a sophisticated healthcare fraud and identity theft scheme that posed a double threat. Not only did the defendants in this case use physicians’ names to write fraudulent prescriptions and fleece Medicare out of millions of dollars, but they’re also accused of funneling large quantities of dangerous prescription opiates, including oxycodone and hydrocodone, into the community,” said Joseph Macias, special agent in charge for Homeland Security Investigations in Los Angeles. “In collaboration with our law enforcement partners, HSI will continue to aggressively target those who compromise the integrity of our healthcare system and public safety to satisfy their own greed.”
The indictment also charges Matosyan and others – including Glendale-based criminal defense attorney Fred Minassian – with obstruction of justice for allegedly creating fraudulent medical records in an effort to deter the investigation.
After a load of Vicodin was seized from one of the conspiracy’s major customers, Matosyan allegedly oversaw the creation of fake medical paperwork in an effort to make it appear the drugs had been legitimately prescribed. The indictment describes intercepted conversations in which Minassian strategized on how to deceive law enforcement, which included a plan to bribe a doctor to lie to authorities.
The 12 defendants arrested this morning are:
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Minas Matosyan, 36, of Encino, who is accused of leading the scheme by recruiting corrupt doctors, overseeing the theft of other doctors’ identities, and negotiating the sale of fraudulent prescriptions and narcotic pills;
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Armen Simonyan, 52, of Burbank, who allegedly managed the operations at some of the fraudulent clinics;
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Grisha Sayadyan, 66, of Burbank, who allegedly managed the operations at various clinics and sold oxycodone and Vicodin pills directly to black market customers;
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Sabrina Guberman, 45, of Encino, who, while working at the sham clinics, allegedly lied to pharmacies seeking to verify the fraudulent narcotic prescriptions, which included creating and sending fake medical paperwork;
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Frederick Manning Jr., 47, of Santa Ana, allegedly one of the major drug customers of the clinics, who is charged with agreeing to purchase as many as 1,000 pills per week of narcotics from Matosyan;
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Fred Minassian, 50, of Glendale, the criminal defense attorney who allegedly spearheaded the scheme to lie to law enforcement by making it falsely appear that Vicodin seized from Freddie Manning Jr. had been legitimately prescribed by a doctor;
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Ralph Manning, 49, of North Hills (no relation to Frederick Manning Jr.), who is charged with being one of the principal couriers Matosyan used to deliver fraudulent prescriptions and “bulk quantities” of narcotic pills;
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Hayk Matosyan, 30, of Granada Hills, Matosyan’s brother, who allegedly filled fraudulent narcotic prescriptions at pharmacies and sold the resulting narcotics pills to black-market customers.
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Marisa Montenegro, 54, of West Hills, who allegedly filled fraudulent prescriptions;
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Elizabeth Gurumdzhyan, 25, of Hollywood, who allegedly filled fraudulent prescriptons;
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Anait Guyumzhyan, 27, of Hollywood, who allegedly filled prescriptions for oxycodone and returned the drugs to Matosyan-operated clinics in exchange for cash payment; and
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James Wilson, 54, of Venice, who alone is charged in the second indictment with illegally selling oxycodone prescriptions out of a Long Beach clinic that he controlled.
The 12 defendants arrested this morning are expected to be arraigned on the indictment this afternoon in United States District Court.
Authorities are continuing to seek two defendants named in the main indictment. Those fugitives are: Gary Henderson, 62, of Lancaster, who allegedly purchased fraudulent oxycodone prescriptions from Matosyan; and an unidentified conspirator known only by the name “Cindy.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
All of the defendants face significant terms in federal prison if they are convicted. For example, if convicted of the nine counts in which he is charged, Matosyan would face a statutory maximum sentence of 165 years in prison.
The investigation in this case was conducted by the Drug Enforcement Administration; IRS Criminal Investigation; the U.S. Department of Health and Human Services - Office of Inspector General; the Ventura County Sheriff’s Office, Pharmaceutical Crimes Unit; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
The primary investigative agencies received substantial assistance from the Los Angeles County Sheriff’s Department, the Los Angeles Police Department, the California Department of Justice, and the Orange Police Department.
The case is being prosecuted by Assistant United States Attorneys Benjamin Barron and Jamie Lang of the Organized Crime Drug Enforcement Task Force.
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Former Congressional Staffer Indicted on Federal Bribery Charge that Accuses Him of Extorting $5,000 from Compton Marijuana ShopRead the Press Release
LOS ANGELES – A former staffer for a member of the United States Congress was arrested today on federal extortion and bribery charges after allegedly taking $5,000 with promises of helping to prevent the closure of a Compton marijuana shop.
Michael Kimbrew, 44, of Carson, was arrested without incident this morning by special agents with the FBI.
Kimbrew was arrested pursuant to a two-count indictment that was returned by a federal grand jury on July 21 and unsealed this afternoon. Kimbrew is charged with one count of attempted extortion and one count of receiving a bribe.
At his arraignment this afternoon, Kimbrew pleaded not guilty and was ordered freed on a $15,000 bond. He was ordered to stand trial on September 26.
According to the indictment, Kimbrew approached an employee of the marijuana shop, told him the store was violating the law, and said the shop would be shut down – unless the owners reached an agreement with him.
Kimbrew subsequently met with the owners of the marijuana shop inside Compton City Hall. The indictment alleges that Kimbrew claimed to be working with the FBI, and he could “make things happen” by ensuring the store had the appropriate permits in exchange for $5,000.
According to the indictment, an undercover FBI agent posing as a business partner met with Kimbrew, who reiterated his claims he could prevent the shutdown of the shop in exchange for $5,000. In a second meeting between Kimbrew and the undercover agent, Kimbrew allegedly accepted the $5,000 bribe.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If convicted of the two counts in the indictment, Kimbrew would face a statutory maximum sentence of 18 years in federal prison.
This case is being investigated by the Federal Bureau of Investigation.
The prosecution is being handled by Assistant United States Attorney Lindsey Greer Dotson of the Public Corruption and Civil Rights Section.
U.S. Files New Complaint Alleging City of L.A. Received Millions of Dollars by Making False Promises to Provide Housing to Persons with DisabilitiesRead the Press Release
LOS ANGELES – The United States late yesterday filed a complaint in intervention against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles) alleging that together they fraudulently obtained millions of dollars in housing grants from the U.S. Department of Housing and Urban Development (HUD) by falsely certifying that the money was being spent in compliance with federal accessibility laws.
The complaint in intervention – which replaces a complaint previously filed on behalf of the United States by a “whistleblower” – alleges the city and CRA/LA received federal money by falsely promising to create accessible housing for people with disabilities. Instead of creating accessible housing, they used the money to create inaccessible housing that deprived people with disabilities an equal opportunity to find housing of their choice.
The city repeatedly certified its compliance with federal accessibility laws to obtain the federal funds without taking the required steps to ensure it complied, according to the complaint, which further alleges that many of the HUD-assisted apartment buildings failed to meet minimal accessibility requirements. The city allegedly approved the design and construction of inaccessible buildings, with, among other things:
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slopes and ramps that are too steep for safe passage by persons with mobility disabilities;
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door thresholds that are too tall for wheelchairs to roll over;
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steps that prohibit access to common areas;
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kitchen cabinets, shelves and surfaces that are outside of the accessible reach ranges of persons who use wheelchairs;
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sinks, grab bars, mailboxes and circuit breakers mounted beyond the reach of wheelchair users;
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pipes below sinks and lavatories that are not insulated, thereby posing a physical threat of burns to people who use wheelchairs; and
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insufficient numbers of accessible parking spaces in garages and lots.
“Despite the federal government investing hundreds of millions of dollars in Los Angeles to create housing for everyone, the City of Los Angeles instead created housing only for some,” said Acting United States Attorney Sandra R. Brown. “For 17 years, the city falsely certified that it had complied with federal law and covered up its repeated disregard of historic and important civil rights laws.”
“The complaint filed yesterday underscores the Department’s commitment to ensure that people with disabilities are provided equal access to federally-funded public housing, as required by law,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.
The city and the CRA/LA allegedly violated Section 504 of the Rehabilitation Act, the Americans with Disabilities Act and the Fair Housing Act, as well as failed to fulfill their duty to affirmatively further fair housing. Congress passed these accessibility laws to ensure people with disabilities have an opportunity to live in an integrated society, achieve independent living, and have the same opportunities for economic and social self-sufficiency as other citizens.
By law, the city and the CRA/LA are required to comply with the federal accessibility laws. They could not – neither directly, nor through contractual or other arrangements – deny people with disabilities the opportunity to benefit from housing services or subject them to discrimination based on disability.
The accessibility laws require recipients of federal funds to operate their housing programs in a manner that is accessible to people with disabilities. Among other things, they must have a system in place to ensure compliance with the laws. They are required to develop non-discriminatory policies and practices, hire a coordinator knowledgeable about accessibility, and implement a grievance procedure that allows for just resolution of complaints. They also must maintain a publicly available list of accessible units and their accessibility features so that people who require those features are able to find housing.
The federal accessibility laws also require that recipients of federal monies have a method in place to avoid giving accessible units needed by people with disabilities to people who do not need accessibility features. The laws also require that recipients of federal monies monitor apartment buildings to ensure they are designed, constructed and altered in compliance with the law so that, among other things, 5 percent of all units in certain multifamily housing will be accessible to people with mobility impairments, and an additional 2 percent will be accessible to people with visual and auditory impairments.
The United States’ lawsuit alleges that the city and CRA/LA failed to meet these legal obligations.
The lawsuit, United States ex rel. Ling, et al. v. City of Los Angeles, et al., CV11-974-PG, was originally filed in United States District Court by whistleblowers Mei Ling, a resident of Los Angeles who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group. The United States elected to intervene in the lawsuit and take over the litigation, which prompted the unsealing of the whistleblowers’ complaint in June. The case is pending before United States District Judge Philip S. Gutierrez.
The lawsuit was filed under the qui tam – or whistleblower – provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.
This matter was investigated by Assistant United States Attorney Lisa A. Palombo of the Civil Fraud Section, the Commercial Litigation Branch of the Justice Department’s Civil Division, and the HUD Office of Inspector General.
The claims asserted against the City of Los Angeles and the CRA/LA are allegations only; there has been no determination of liability.
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U.S. Files New Complaint Against City of L.A. and a Former Redevelopment Agency to Recover Millions of Federal Grant Dollars Allegedly Obtained by Making False Promises to Provide Housing to Persons with DisabilitiesRead the Press Release
The United States late yesterday filed a complaint in intervention against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles) alleging that together they fraudulently obtained millions of dollars in housing grants from the U.S. Department of Housing and Urban Development (HUD) by falsely certifying that the money was being spent in compliance with federal accessibility laws.
The complaint in intervention – which replaces a complaint previously filed on behalf of the United States by a “whistleblower” – alleges the city and CRA/LA received federal money by falsely promising to create accessible housing for people with disabilities. Instead of creating accessible housing, they used the money to create inaccessible housing that deprived people with disabilities an equal opportunity to find housing of their choice.
The city repeatedly certified its compliance with federal accessibility laws to obtain the federal funds without taking the required steps to ensure it complied, according to the complaint, which further alleges that many of the HUD-assisted apartment buildings failed to meet minimal accessibility requirements. The city allegedly approved the design and construction of inaccessible buildings, with, among other things:
- slopes and ramps that are too steep for safe passage by persons with mobility disabilities;
- door thresholds that are too tall for wheelchairs to roll over;
- steps that prohibit access to common areas;
- kitchen cabinets, shelves and surfaces that are outside of the accessible reach ranges of persons who use wheelchairs;
- sinks, grab bars, mailboxes and circuit breakers mounted beyond the reach of wheelchair users;
- pipes below sinks and lavatories that are not insulated, thereby posing a physical threat of burns to people who use wheelchairs; and
- insufficient numbers of accessible parking spaces in garages and lots.
“The complaint filed yesterday underscores the Department’s commitment to ensure that people with disabilities are provided equal access to federally-funded public housing, as required by law,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.
“Despite the federal government investing hundreds of millions of dollars in Los Angeles to create housing for everyone, the City of Los Angeles instead created housing only for some,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “For 17 years, the city falsely certified that it had complied with federal law and covered up its repeated disregard of historic and important civil rights laws.”
The city and the CRA/LA allegedly violated Section 504 of the Rehabilitation Act, the Americans with Disabilities Act and the Fair Housing Act, as well as failed to fulfill their duty to affirmatively further fair housing. Congress passed these accessibility laws to ensure people with disabilities have an opportunity to live in an integrated society, achieve independent living, and have the same opportunities for economic and social self-sufficiency as other citizens.
By law, the city and the CRA/LA are required to comply with the federal accessibility laws. They could not – neither directly, nor through contractual or other arrangements – deny people with disabilities the opportunity to benefit from housing services or subject them to discrimination based on disability.
The accessibility laws require recipients of federal funds to operate their housing programs in a manner that is accessible to people with disabilities. Among other things, they must have a system in place to ensure compliance with the laws. They are required to develop non-discriminatory policies and practices, hire a coordinator knowledgeable about accessibility, and implement a grievance procedure that allows for just resolution of complaints. They also must maintain a publicly available list of accessible units and their accessibility features so that people who require those features are able to find housing.
The federal accessibility laws also require that recipients of federal monies have a method in place to avoid giving accessible units needed by people with disabilities to people who do not need accessibility features. The laws also require that recipients of federal monies monitor apartment buildings to ensure they are designed, constructed and altered in compliance with the law so that, among other things, five percent of all units in certain multifamily housing will be accessible to people with mobility impairments, and an additional two percent will be accessible to people with visual and auditory impairments.
The United States’ lawsuit alleges that the city and CRA/LA failed to meet these legal obligations.
The lawsuit, United States ex rel. Ling, et al. v. City of Los Angeles, et al., CV11-974-PG, was originally filed in U.S. District Court by whistleblowers Mei Ling, a resident of Los Angeles who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group. The United States elected to intervene in the lawsuit and take over the litigation, which prompted the unsealing of the whistleblowers’ complaint in June. The case is pending before U.S. District Judge Philip S. Gutierrez.
The lawsuit was filed under the qui tam – or whistleblower – provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California and the HUD Office of Inspector General.
The claims asserted against the City of Los Angeles and the CRA/LA are allegations only; there has been no determination of liability.
Southland Man Arrested for Alleged Scheme to Smuggle Export-Controlled Rifle Scopes and Tactical Equipment to SyriaRead the Press Release
SANTA ANA, California – The chief executive officer of an Orange County check-cashing business was arrested this morning on federal charges that accuse him of procuring and illegally exporting rifle scopes, laser boresighters and other tactical equipment from the United States to Syria in violation of the International Emergency Economic Powers Act (IEEPA).
Rasheed Al Jijakli, 56, of Walnut, is expected to be arraigned this afternoon in the United States District Court on a three-count indictment that was returned by a federal grand jury on July 14. The indictment was unsealed this morning after Jijakli was taken into custody without incident by law enforcement authorities.
The indictment accuses Jijakli of violating IEEPA, which authorizes the president to impose economic sanctions on a foreign country in response to an unusual or extraordinary threat to the national security, foreign policy or economy of the United States. In accordance with that authority, the president issued an executive order that included broad restrictions on exports to Syria. The Department of Commerce subsequently issued corresponding regulations restricting exports to Syria of items subject to the Export Administration Regulations.
Jijakli also faces charges of conspiring to violate IEEPA and smuggling.
From January 2012 through March 2013, Jijakli and three other individuals purchased and smuggled export-controlled items to Syria without obtaining licenses from the Department of Commerce. Jijakli and others allegedly hand-carried the items through Istanbul, Turkey and provided them to fighters in Syria. Those items allegedly included day- and night-vision rifle scopes, laser boresighters (tools used to adjust sights on firearms for accuracy when firing), flashlights, radios, a bulletproof vest and other tactical equipment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If he is convicted of all three charges in the indictment, Jijakli would face a statutory maximum penalty of 50 years in prison.
This case is the result of an ongoing investigation being conducted by the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Department of Commerce’s Office of Export Enforcement, and IRS Criminal Investigation.
The case against Jijakli is being prosecuted by Assistant U.S. Attorney Mark Takla of the Terrorism and Export Crimes Section and Trial Attorney Christian Ford of the Counterintelligence and Export Control Section of the Justice Department’s National Security Division.
Orange County Man Pleads Guilty to Federal Charge of Failing to Properly Overhaul Part Used on Apache HelicoptersRead the Press Release
LOS ANGELES – A Yorba Linda man who owns a Gardena company that contracted with the U.S. Army to overhaul linear actuators used on Apache helicopters pleaded guilty to violating his contract with the military by making unauthorized repairs to motors inside the part.
Bahram Bordbar, 62, the owner of Prototype Engineering and Manufacturing, Inc., pleaded guilty today to a federal charge of making false statements involving aircraft. Bordbar admitted that his fraudulent conduct led to him improperly receiving approximately $320,000 from the Army.
Prototype had a contract to overhaul and repair linear actuators that were used on the Army’s AH-64-A Apache helicopter. Prototype was not authorized to repair DC motors used in the linear actuators unless the company received specific authorization from the Army.
According to a plea agreement filed in United States District Court, Prototype used an outside contractor to repair 105 DC motors when those repairs had not been approved by the military. Those repaired motors were installed into overhauled linear actuators which were delivered to the Army.
Bordbar also pleaded guilty to one count of aiding and abetting in the filing of a false tax return related to an employee’s tax return. Bordbar paid the employee $100,000, but told the employee the money was a gift and that he would pay the taxes, which prompted the employee to not report the money as income on a federal tax return. Bordbar has agreed to pay the Internal Revenue Service more than $28,000 to pay the employee’s back taxes.
Bordbar pleaded guilty before United States District Judge John F. Walter, who is scheduled to sentence the defendant on October 16. At sentencing, Bordbar will face a statutory maximum sentence of 13 years in federal prison.
In a parallel civil investigation under the False Claims Act, Bordbar in June agreed to pay over $900,000 after the government determined that he had caused Prototype to submit false claims to the U.S. Army. The civil investigation found that, in addition to improperly installing repaired DC motors, Prototype also installed cheaper replicas of a jacket-and-nut assembly component, rather than purchasing that component from the original manufacturer. As part of the civil settlement, Prototype agreed to cease doing business and dissolve, and Bordbar agreed that he will no longer solicit, accept or perform any federal government or military contract.
This case was investigated by the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service; the U.S. Army Criminal Investigation Command; the Federal Bureau of Investigation; and IRS Criminal Investigation.
The criminal case was handled by the Major Frauds Section. The civil settlement was handled by Assistant United States Attorney Donald W. Yoo of the Civil Fraud Section.
Murrieta Man Sentenced to 17 years in Federal Prison for Enticing Girl to Take Pictures while Engaged in Sexually Explicit ActsRead the Press Release
LOS ANGELES – A Murietta man has been sentenced to 17 years in federal prison after pleading guilty to enticing a girl who lived in the Seattle area to engage in sexually explicit activity that resulted in the production of child pornography.
Curtis Audun Larssen, 33, was sentenced yesterday by United States District Judge S. James Otero to 210 months in prison.
Larssen pleaded guilty in June 2017 to one count of using the internet to induce a minor to engage in criminal sexual activity.
According to court documents, Larssen directed a girl, who is described as being no older than 13, to have sexual contact with adult men. Larssen encouraged the victim to allow him to watch the sexual conduct, and to take photos and videos to send to Larssen. In one case, the girl sent Larssen a photo showing her engaged in sexual activity with a 35-year-old man.
In a plea agreement, Larssen admitted that he used a peer-to-peer network to trade child pornography. During a search of his residence in 2014, authorities found in his possession approximately 470 videos depicting child pornography.
Once he completes his prison sentence, Larssen will be on supervised release for the rest of his life.
Larssen was one of 11 defendants arrested in April 2016 as part of Operation Wide Net, an investigation conducted by the Los Angeles Internet Crimes Against Children (ICAC) Task Force. ICAC includes special agents with the Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the United States Postal Inspection Service. These federal law enforcement agencies work with local law enforcement partners, including the Los Angeles Police Department and the Los Angeles Sheriff's Department.
The case against Larssen was prosecuted by Assistant United States Attorney Jennifer Chou of the Violent and Organized Crime Section.
California Man Arrested for Alleged Scheme to Smuggle Export-Controlled Rifle Scopes and Tactical Equipment to SyriaRead the Press Release
Rasheed Al Jijakli, 56, the chief executive officer of an Orange County, California check cashing business, was arrested this morning on federal charges that accuse him of procuring and illegally exporting rifle scopes, laser boresighters and other tactical equipment from the U.S. to Syria, in violation of the International Emergency Economic Powers Act (IEEPA). Jijakli is expected to be arraigned this afternoon in the U.S. District Court for the Central District of California, on a three-count indictment that was returned by a federal grand jury on July 14. The indictment was unsealed this morning after Jijakli was taken into custody without incident by law enforcement authorities.
Acting Assistant Attorney General for National Security Dana J. Boente and Acting U.S. Attorney Sandra R. Brown for the Central District of California made the announcement.
The indictment accuses Jijakli, a naturalized U.S. citizen, of violating IEEPA, which authorizes the President of the U.S. to impose economic sanctions on a foreign country in response to an unusual or extraordinary threat to the national security, foreign policy or economy of the U.S. In accordance with that authority, the President issued an executive order that included broad restrictions on exports to Syria. The U.S. Department of Commerce subsequently issued corresponding regulations restricting exports to Syria of items subject to the Export Administration Regulations. Jijakli also faces charges of conspiring to violate IEEPA and smuggling.
From January 2012 through March 2013, Jijakli and three other individuals purchased and smuggled export-controlled items to Syria without obtaining licenses from the Department of Commerce. Jijakli and others allegedly hand-carried the items through Istanbul, Turkey and provided them to fighters in Syria. Those items allegedly included day-and night-vision rifle scopes, laser boresighters (tools used to adjust sights on firearms for accuracy when firing), flashlights, radios, a bulletproof vest and other tactical equipment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court. If convicted of all three charges in the indictment, Jijakli would face a statutory maximum penalty of 50 years in prison. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the defendant’s sentence will be determined by the court after considering the advisory Sentencing Guidelines and other statutory factors.
This case is the result of an ongoing investigation being conducted by the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Department of Commerce’s Office of Export Enforcement and IRS Criminal Investigation.
This case is being prosecuted by Assistant U.S. Attorney Mark Takla of the Terrorism and Export Crimes Section of the Central District of California, and Trial Attorney Christian Ford of the Counterintelligence and Export Control Section of the Justice Department’s National Security Division.
Four Inland Empire Individuals Charged in Tax Fraud and Identity Theft Scheme Claiming Nearly $2 Million in Fraudulent Tax RefundsRead the Press Release
LOS ANGELES – Federal authorities on Monday and Tuesday arrested three defendants charged with participating in a tax fraud scheme that used stolen identities to file at least 527 fraudulent federal income tax returns claiming more than $1.9 million in fraudulent tax refunds with the Internal Revenue Service.
The 41-count indictment was returned by a federal grand jury on July 12th and unsealed yesterday and charges the defendants with conspiracy to defraud the government with respect to claims, filing false claims against the government, theft of government property, wire fraud, possession of 15 or more unauthorized access devices, possession of an identification document with intent to defraud the United States, aggravated identity theft, and criminal forfeiture. The Indictment also names a fourth defendant, Raymond Salazar, 53, of Los Angeles who remains at large.
The three defendants taken into custody on Monday and Tuesday are:
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Charlene Castrejon, 58, of Hemet, California;
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Rebecca Mona Sandoval, 33 of San Jacinto, California; and
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Robert Manuel Gamboa, Jr., known as Paul Timothy Garcia, 29, of Highland, California.
At their initial court appearances this week in the United States Courthouse in Riverside, Castrejon and Sandoval were released on bond and Gamboa remains in federal custody pending his detention hearing on July 28.
The indictment alleges that Castrejon, Salazar, and Sandoval prepared fraudulent federal income tax returns in the names of identity theft victims with false income, dependent, earned income credit, education credit and child tax credit information. As a result of the false information, the returns claimed fraudulent tax refunds. The tax returns were filed without the knowledge or consent of the identity theft victims.
The Indictment further alleges that the refund payments were either mailed to addresses or deposited directly into taxpayer debit card accounts that Castrejon, Salazar, and Sandoval controlled. Gamboa worked with the other defendants by depositing the refund checks into the accounts that he and the others controlled.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If convicted of wire fraud, each defendant will face a statutory maximum sentence of 20 years in federal prison and a fine of up to $250,000. In addition, each count of aggravated identity theft carries a mandatory sentence of two years in federal prison.
This week’s arrests are part of an ongoing investigation being conducted by IRS Criminal Investigation and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. Throughout the operation, IRS CI and HSI received substantial assistance from the FBI Safe Streets San Bernardino Gang Impact Team.
The case is being prosecuted by Assistant United States Attorney Julius J. Nam from the Riverside Branch Office.
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Monterey Park Man Arrested on Federal Smuggling Charges Stemming from Shipment of Live King CobrasRead the Press Release
LOS ANGELES – A Monterey Park man was taken into custody late this morning on federal smuggling charges stemming from the seizure of a package that contained three king cobras hidden in potato chip canisters.
Rodrigo Franco, 34, was arrested this morning by special agents with the United States Fish and Wildlife Service (USFWS), Office of Law Enforcement after he was named in a criminal complaint filed on July 21.
Franco, who is charged with one count of illegally importing merchandise into the United States, is expected to make his initial appearance this afternoon in United States District Court.
According to the affidavit in support of the complaint, United States Customs and Border Protection on March 2 inspected a package sent from Hong Kong and discovered three live king cobra snakes – a protected and highly venomous reptile – each of which was approximately two-feet long. In addition to the three snakes, the parcel being sent through the United States Postal Service contained three albino Chinese soft-shelled turtles.
On the same date, Franco also mailed six protected turtles – desert box turtles, three-toed box turtles and ornate box turtles – from the United States to Hong Kong, but that shipment also was intercepted by the USFWS.
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. Immediately after the package was delivered, agents with the USFWS and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations executed a search warrant at the residence.
While executing the search warrant, agents found the package that originated in Hong Kong in the children’s bedroom, in which, they also discovered a tank containing a live baby Morelet’s crocodile and tanks containing alligator snapping turtles, a common snapping turtle, and five diamond back terrapins – all of which are protected species, according to the affidavit.
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.
During the ensuing investigation, authorities obtained evidence from Franco’s phone that revealed messages in which Franco and an individual in Asia discussed shipping turtles and snakes between the United States and Asia. According to the complaint, the messages indicate that Franco had previously received live cobras from his contact in Asia and was going to give five of the snakes to a relative of his contact.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The smuggling charge alleged in the complaint carries a statutory maximum sentence of 20 years in federal prison.
The prosecution is being handled by Assistant United States Attorney Erik M. Silber of the Environmental and Community Safety Crimes Section.
Celgene Agrees to Pay $280 Million to Resolve Fraud Allegations Related to Promotion of Cancer Drugs for Uses Not Approved by FDARead the Press Release
LOS ANGELES – Celgene Corp., a manufacturer of pharmaceuticals headquartered in Summit, New Jersey, has agreed to pay $280 million to settle fraud allegations related to the promotion of two cancer treatment drugs for uses not approved by the Food and Drug Administration, the Justice Department announced today.
Celgene agreed to pay the settlement to resolve a “whistleblower” lawsuit that alleged it had violated the federal False Claims Act by submitting false claims to Medicare. The lawsuit also alleged that Celgene violated the laws of 28 states and the District of Columbia by submitting fraudulent claims to state health care programs, including California’s Medi-Cal program.
Pursuant to the settlement, which was finalized last week, Celgene will pay $259.3 million to the United States and $20.7 million to the 28 states and the District of Columbia. California will receive $4.7 million, more than any other state.
The settlement resolves allegations brought in a “whistleblower” lawsuit that Celgene promoted two cancer drugs – Thalomid and Revlimid – for uses that were not approved by the FDA and not covered by federal health care programs. The allegations included the use of false and misleading statements about the drugs, and paying kickbacks to physicians to induce them to prescribe the drugs.
“Patients deserve to know their doctors are prescribing drugs that are likely to provide effective treatment, rather than drugs marketed aggressively by pharmaceutical companies,” said Acting United States Attorney Sandra R. Brown.
The whistleblower lawsuit was filed in United States District Court by Beverly Brown, who was employed as a sales manager by Celgene, under the qui tam provisions of the False Claims Act and similar laws of the District of Columbia and the 28 states included in the lawsuit. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action.
“Today’s recovery again spotlights the importance of the False Claims Act in preserving precious government health plan resources,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “This invaluable law enlists all in the battle against fraudulent health care schemes.”
The case, United States ex rel. Brown v. Celgene Corp., CV10-3165, was monitored by the United States Attorney’s Office, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.
The claims settled by this agreement are allegations only, and the defendant did not admit liability in settling the action.
Beverly Hills Plastic Surgeon Pleads Guilty to Hiding Offshore Bank Account from the IRSRead the Press Release
LOS ANGELES – A Beverly Hills plastic surgeon who earned nearly $1.3 million while working in Dubai over a three-year period pleaded guilty today to failing to disclose a foreign bank account to the Internal Revenue Service.
Marc Edward Mani, 49, pleaded guilty before United States District Judge R. Gary Klausner.
Mani pleaded guilty to one count of failing to file a foreign bank and financial account report (FBAR) for the 2013 tax year.
According to the plea agreement filed in this case, while working as a plastic surgeon in Beverly Hills, Mani began to travel to Dubai in 2011 to perform plastic surgery for a foreign medical center. Mani’s accountant, who was aware that Mani was earning foreign income, informed him that he would be required to report any foreign bank accounts under his ownership or control to the IRS.
In 2012, Mani opened a bank account with a financial institution based in Dubai and began depositing income he earned from abroad into this account. By February 2013, Mani’s foreign bank account held more than $400,000. However, Mani willfully failed to file a FBAR to disclose his foreign bank account for the calendar years 2012 and 2013.
In addition to failing to disclose his interest in his foreign bank account, Mani also failed to report on his federal income tax returns the vast majority of the approximately $1.28 million in foreign income he earned in Dubai for the years 2012, 2013 and 2014.
United States citizens who have an interest in or authority over a financial account in a foreign country with assets over $10,000 are required to disclose and report the foreign financial account to the United States Department of Treasury for each year the financial account exists.
Mani is scheduled to be sentenced by Judge Klausner on February 5. The statutory maximum sentence he can receive is five years in federal prison.
This case is the product of an investigation by IRS Criminal Investigation.
The case was prosecuted by Assistant United States Attorneys Charles Parker and James C. Hughes of the Tax Division.
Ex-Correctional Officer at Federal Prison in Victorville Sentenced to 6 Months in Prison for Taking Bribe to Smuggle Contraband to PrisonerRead the Press Release
SANTA ANA, California – A former federal correctional officer who worked at the United States Penitentiary in Victorville was sentenced today to six months in federal prison and six months of home detention for taking a $1,000 bribe to smuggle contraband to a prisoner inside the facility.
Ignacio Adrian Sobers Jr., 31, of San Bernardino, was sentenced this morning by United States District Judge Josephine L. Staton.
During the sentencing hearing, Judge Staton said, “Corruption in the prison system is no small matter…. If the officer corrupts that system, the system breaks down, and the public pays for that breakdown.”
Sobers pleaded guilty in March to one count of acceptance of a bribe by a public official.
Sobers was arrested by federal authorities on January 21 after receiving a $1,000 payment and a gift-wrapped package filled with contraband in a parking lot of a fast food restaurant in San Bernardino.
The contraband that Sobers received for the purpose of smuggling to the inmate included one cellular phone, three MP3 players, four pornographic magazines, and one multi-DVD set of pornographic movies. Sobers knew that inmates were prohibited from possessing these objects.
The inmate’s contact outside the prison cooperated with law enforcement during the January 21 incident in which Sobers accepted $1,000 in cash to smuggle the package to the inmate.
The investigation in this case was conducted by the Justice Department’s Office of the Inspector General, Investigations Division, Los Angeles Field Office.
The case is being prosecuted by Assistant United States Attorney Julius J. Nam of the Riverside Branch Office.
California Resident Indicted for Impeding the Internal Revenue Laws and Filing False Tax Returns that Did Not Report Secret German and Israeli AccountsRead the Press Release
A Beverly Hills, California resident was indicted by a federal grand jury in the Central District of California for corruptly endeavoring to impede the internal revenue laws, filing false tax returns, filing false reports regarding his offshore bank accounts and making false statements to a federal agent, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Sandra R. Brown for the Central District of California.
The indictment charges that from 2006 through 2014, Teymour Khoubian impeded the administration of the internal revenue laws. According to the indictment, Khoubian filed false individual tax returns with the Internal Revenue Service (IRS) for tax years 2005 through 2010 that did not report his financial interest in multiple Israeli and German bank accounts or the interest income that he earned from those accounts. He also allegedly falsely claimed refundable tax credits to which he was not entitled, including the Earned Income Tax Credit, which is intended for low-to moderate-income working individuals. In 2008, Khoubian is alleged to have held approximately $20 million in assets in his undisclosed accounts. The indictment charges that Khoubian also filed a false 2011 tax return that underreported the interest income he earned from his Israeli accounts and continued to fail to disclose that he held an account in Germany. Khoubian is also alleged to have filed false 2012 and 2013 Reports of Foreign Bank and Financial Accounts forms (FBARs) with the U.S. Department of Treasury that concealed his German account. U.S. citizens, resident aliens, and permanent legal residents with a foreign financial interest in or signatory authority over a foreign financial account worth more than $10,000 are required to file an FBAR disclosing the account.
In addition to filing false tax returns and FBARs, Khoubian allegedly provided his German bank with a copy of his Iranian passport and a residential address located in Israel to prevent the bank from disclosing the account to the IRS. He also allegedly sent a letter to Bank Leumi falsely claiming he was living in Iran when, in fact, he resided in Beverly Hills, California.
Khoubian is also charged with making false statements to an IRS Criminal Investigation (CI) special agent – denying that he owned an account in Germany between 2005 and 2010, stating that the German account was closed, when it was in fact still open, and stating that the funds had been transferred to the United States, when Khoubian had allegedly transferred over $600,000 from his German account to his accounts in Israel.
If convicted, Khoubian faces a statutory maximum sentence of three years in prison for corruptly endeavoring to impede the internal revenue laws and each count of filing a false return and five years in prison for each count of filing a false FBAR and making a false statement. He also faces a period of supervised release, restitution and monetary penalties.
The charges contained in the indictment are only allegations. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Brown thanked special agents of IRS CI, who conducted the investigation, and Trial Attorneys Christopher S. Strauss and Ellen M. Quattrucci of the Tax Division and Assistant U.S. Attorney Robert Conte, who are prosecuting this case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Beverly Hills Man Indicted for Impeding the Internal Revenue Laws and Filing False Tax Returns That Did Not Report Secret German and Israeli AccountsRead the Press Release
LOS ANGELES – A Beverly Hills resident was indicted today by a federal grand jury for corruptly endeavoring to impede the internal revenue laws, filing false tax returns, filing false reports regarding his offshore bank accounts and making false statements to a federal agent, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Sandra R. Brown for the Central District of California.
The indictment charges that from 2006 through 2014, Teymour Khoubian impeded the administration of the internal revenue laws. According to the indictment, Khoubian filed false individual tax returns with the Internal Revenue Service (IRS) for tax years 2005 through 2010 that did not report his financial interest in multiple Israeli and German bank accounts or the interest income that he earned from those accounts. He also allegedly falsely claimed refundable tax credits to which he was not entitled, including the Earned Income Tax Credit, which is intended for low-to moderate-income working individuals. In 2008, Khoubian is alleged to have held approximately $20 million in assets in his undisclosed accounts. The indictment charges that Khoubian also filed a false 2011 tax return that underreported the interest income he earned from his Israeli accounts and continued to fail to disclose that he held an account in Germany. Khoubian is also alleged to have filed false 2012 and 2013 Reports of Foreign Bank and Financial Accounts forms (FBARs) with the U.S. Department of Treasury that concealed his German account. U.S. citizens, resident aliens, and permanent legal residents with a foreign financial interest in or signatory authority over a foreign financial account worth more than $10,000 are required to file an FBAR disclosing the account.
In addition to filing false tax returns and FBARs, Khoubian allegedly provided his German bank with a copy of his Iranian passport and a residential address located in Israel to prevent the bank from disclosing the account to the IRS. He also allegedly sent a letter to Bank Leumi falsely claiming he was living in Iran when, in fact, he resided in Beverly Hills, California.
Khoubian is also charged with making false statements to an IRS Criminal Investigation (CI) special agent – denying that he owned an account in Germany between 2005 and 2010, stating that the German account was closed, when it was in fact still open, and stating that the funds had been transferred to the United States, when Khoubian had allegedly transferred over $600,000 from his German account to his accounts in Israel.
If convicted, Khoubian faces a statutory maximum sentence of three years in prison for corruptly endeavoring to impede the internal revenue laws and each count of filing a false return and five years in prison for each count of filing a false FBAR and making a false statement. He also faces a period of supervised release, restitution and monetary penalties.
The charges contained in the indictment are only allegations. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Brown thanked special agents of IRS CI, who conducted the investigation, and Trial Attorneys Christopher S. Strauss and Ellen M. Quattrucci of the Tax Division and Assistant U.S. Attorney Robert Conte, who are prosecuting this case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Director of South Korea’s Earthquake Research Center Convicted in L.A. of Money Laundering Stemming from Million Dollar Bribe SchemeRead the Press Release
LOS ANGELES – A former director of South Korea’s Earthquake Research Center at the Korea Institute of Geoscience and Mineral Resources (KIGAM) has been found guilty of using a Southern California bank account to launder bribes he received from two seismological companies, including one based in Pasadena.
Heon-Cheol Chi, 59, of South Korea, was convicted late yesterday of one count of transacting in criminally derived property, an offense that carries a statutory maximum sentence of 10 years in federal prison.
Chi was convicted of the money laundering charge following a four-day jury trial in United States District Court. The jury that issued the guilty verdict was unable to reach a unanimous decision on five other money laundering charges.
According to the evidence presented at trial, Chi laundered funds that were the proceeds of bribes he accepted in violation of South Korea law.
“The American financial system is not to be used as a storehouse for the proceeds of corrupt activity,” said Acting United States Attorney Sandra R. Brown. “This defendant used a bank account here in Southern California to conceal over one million dollars in bribe money obtained through the abuse of his public position. This conviction sends a message that should be heard around the world.”
“Defendant Chi exploited the U.S. banking system to enrich himself and to conceal his corrupt practices,” said Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Field Office. “The FBI and our partners will continue to hold accountable international offenders who gain the advantage on the global playing field by breaking U.S. law.”
From at least 2009 through 2015, Chi abused his official position at KIGAM to demand and receive over $1 million in bribes from two seismological companies in exchange for providing them with unfair business advantages in the South Korean seismological market. The trial evidence showed that Chi advocated the purchase and use of equipment from these two companies by KIGAM and other South Korean customers. He also provided these companies with market intelligence and inside information, including confidential information about their competitors and the KIGAM bidding process.
The evidence showed that Chi directed that his bribe payments be paid in cash or wired to his personal account at a Bank of America branch in Glendora. From that account, Chi transferred approximately half of those bribe payments to an investment account he held in New York City, and he spent approximately 70 percent of the remaining funds in South Korea, where he resided and worked.
In addition to his use of cash payments and the U.S. banking system, the trial evidence showed that Chi took a number of steps to conceal his bribery scheme, including instructing representatives of the companies to delete or not respond to his emails, requesting that these company representatives not inform his colleagues at KIGAM of his illegal arrangements with these companies, and by sending fictitious invoices listing a false address in New Jersey. As Chi acknowledged in an email to one of the companies in 2005, “Usually I deleted almost all e-mail or papers related to [payments from these companies] because I am the director of earthquake research center and I am not allowed to be involved in it.”
The evidence at trial included numerous additional emails in which Chi admitted that he was acting illegally. For example, in 2014 Chi wrote to a British company that also paid him bribes: “I am a governmental officer and I should not have any contact with [a] private company. Moreover, it is illegal to assist any company related to the test.”
According to the trial evidence, Chi accepted bribes that exceeded his legitimate income from KIGAM by a substantial margin.
“International corruption undermines the rule of law, threatens our national security, and harms honest companies who are playing by the rules,” said Acting Assistant Attorney General Kenneth Blanco of the Justice Department’s Criminal Division. “As this case demonstrates, the Criminal Division will hold responsible the companies and individuals who are paying bribes to foreign government officials, and the foreign government officials themselves. For the second time in recent months, the Criminal Division has convicted a foreign official who solicited bribes and then laundered the illicit proceeds in the United States. We will continue to hold such individuals responsible and accountable.”
Chi is scheduled to be back on court on Thursday to appear before United States District Judge John F. Walter on a motion by prosecutors to have him remanded into custody.
Judge Walter is scheduled to sentence Chi on October 2.
The case against Chi is part of an ongoing investigation by the FBI’s International Corruption Squad in Los Angeles. Assistant United States Attorney Poonam Kumar of the Major Frauds Section, and Trial Attorneys David Fuhr and Anna Kaminska of the Criminal Division’s Fraud Section, are prosecuting the case.
The Criminal Division’s Office of International Affairs provided substantial assistance in this matter.
The Justice Department is grateful to the government of South Korea for providing substantial assistance in gathering evidence during this investigation. The Department also thanks its law enforcement colleagues in the United Kingdom for their assistance in the Department’s investigation.
Director of South Korea's Earthquake Research Center Convicted of Money Laundering in Million Dollar Bribe SchemeRead the Press Release
The Director of South Korea’s Earthquake Research Center at the Korea Institute of Geoscience and Mineral Resources (KIGAM) was convicted yesterday following a four-day jury trial of laundering bribes that he received from two seismological companies based in California and England through the U.S. banking system. Sentencing is scheduled to occur before the Honorable John F. Walter of the U.S. District Court for the Central District of California, on October 2.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Sandra R. Brown for the Central District of California and Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Field Office, announced the conviction.
Heon-Cheol Chi (Chi), 59, of South Korea, was convicted of one count of transacting in criminally derived property, in violation of 18 U.S.C. § 1957. According to the charges, the funds that he laundered were proceeds derived through violations of South Korea’s bribery law, Article 129 of South Korea’s Criminal Code.
“International corruption undermines the rule of law, threatens our national security, and harms honest companies who are playing by the rules,” said Acting Assistant Attorney General Blanco. “As this case demonstrates, the Criminal Division will hold responsible the companies and individuals who are paying bribes to foreign government officials, and the foreign government officials themselves. For the second time in recent months, the Criminal Division has convicted a foreign official who solicited bribes and then laundered the illicit proceeds in the United States. We will continue to hold such individuals responsible and accountable.”
“The American financial system is not to be used as a storehouse for the proceeds of corrupt activity,” said Acting U.S. Attorney Brown. “This defendant used a bank account here in Southern California to conceal over one million dollars in bribe money obtained through the abuse of his public position. This conviction sends a message that should be heard around the world.”
“Defendant Chi exploited the U.S. banking system to enrich himself and to conceal his corrupt practices,” said Assistant Director in Charge Fike. “The FBI and our partners will continue to hold accountable international offenders who gain the advantage on the global playing field by breaking U.S. law.”
According to the evidence presented at trial, between at least 2009 and 2015, Chi abused his official position at KIGAM to demand and receive over $1 million in bribes from two seismological companies in exchange for providing them with unfair business advantages in the South Korean seismological market. In particular, the trial evidence showed that Chi advocated the purchase and use of equipment from these two companies by KIGAM and other South Korean customers, and he provided these companies with market intelligence and inside information, including confidential information about their competitors and the KIGAM bidding process. The evidence also showed that Chi directed that his bribe payments be paid in cash or wired to his personal bank account in Glendora, California. From that account, Chi transferred approximately half of those bribe payments to an investment account he held in New York City and spent approximately 70 percent of the remaining funds back in South Korea, where he resided and worked, according to the evidence.
In addition to his use of cash payments and the U.S. banking system, the trial evidence showed that Chi took a number of steps to conceal his bribery scheme, including instructing representatives of the companies to delete or not respond to his emails, requesting that these company representatives not inform his colleagues at KIGAM of his illegal arrangements with these companies, and by sending fictitious invoices listing a false address in New Jersey. As Chi acknowledged in an email to one of the companies in 2005, “Usually I deleted almost all e-mail or papers related to [payments from these companies] because I am the director of earthquake research center and I am not allowed to be involved in it.”
The evidence at trial included numerous additional emails in which Chi admitted that he was acting illegally. For example, Chi wrote to a company representative in 2014, “I am a governmental officer and I should not have any contact with [a] private company. Moreover, it is illegal to assist any company related to the test.”
According to the trial evidence, the total of the bribe payments to Chi exceeded his legitimate income from KIGAM by a substantial margin and, during the relevant time period, Chi was paid more in bribes than in KIGAM salary.
The case is being investigated by the FBI’s International Corruption Squad in Los Angeles. Trial Attorneys David Fuhr and Anna Kaminska of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Poonam Kumar of the Central District of California are prosecuting the case. The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter.
The Department is grateful to the government of South Korea for providing substantial assistance in gathering evidence during this investigation. The Department also thanks its law enforcement colleagues in the United Kingdom for their assistance in the Department’s investigation.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.
Crips Gangster Sentenced to 30 Years in Federal Prison after Being Convicted in Racketeering and Crack Cocaine ConspiraciesRead the Press Release
LOS ANGELES – A member of the Five Deuce Broadway Gangster Crips (BGC) – who was found guilty by a jury last year of conspiring to engage in racketeering activities, which included him selling crack cocaine on Skid Row – has been sentenced to 360 months in federal prison.
Tony Gordon, also known as “Wodi,” 36, of Freeport, Illinois, who has a lengthy criminal history that includes three prior felony narcotics convictions, was sentenced yesterday by United States District Judge S. James Otero.
Gordon was convicted late last year of conspiring to violate the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. Members of conspiracy engaged in murders, robberies, witness and informant intimidation, and narcotics sales. The jury further convicted Gordon of agreeing to distribute approximately 10 ounces of crack cocaine, as well as marijuana.
Gordon “was also a long time crack cocaine seller who preyed on the most vulnerable of the most vulnerable,” prosecutors wrote in sentencing papers filed with the court. Gordon “purposely traveled from his own neighborhood to infiltrate the Skid Row area of downtown, despite its own dangers, where, as established at trial, defendant sold directly adjacent to substance abuse recovery centers and mental health centers. Defendant purposefully and thoughtfully capitalized on these individuals’ most debilitating vice.”
During the trial, prosecutors presented evidence of Gordon’s membership in BGC and in the “Gremlin Riderz,” the gang’s violent “hit squad.” The jury saw videos of Gordon at gang meetings providing guidance on how the gang should operate, at one point bragging that he solved problems “the best way I can” – through “violence.” Other videos showed Gordon describing shooting at gang rivals, recounting a home invasion robbery, and discussing how to discipline gang “snitches.”
During yesterday’s sentencing hearing, Judge Otero noted that Gordon continued to come to court in a wheelchair despite no evidence of a disability and a jail video showing Gordon engaging in a fistfight with another inmate. Judge Otero concluded that Gordon committed perjury when he testified about his fabricated medical condition.
Gordon’s sentencing follows a hearing last month when BGC’s leader – Tyrine Martinez, 36, of Vernon – was sentenced to nearly 22 years in federal prison. Other BGC members have recently received substantial prison sentences.
Gordon, Martinez and other key defendants in the case who have been sentenced agreed to be banned from living in the BGC territory and subject to expansive search conditions after their release from prison.
Martinez was the lead defendant named in a 213-page RICO indictment that charged 72 members and associates of the BGC, a street gang that claims territory in South Los Angeles and controls drug sales in an area just west of Skid Row. The indictment outlined two decades of criminal conduct, including murders, robberies, extortion, illegal firearms possession, witness intimidation and narcotics trafficking. Fifty-seven of the defendants in the case have been convicted by guilty plea or at trial. The remaining 15 defendants are scheduled to go on trial in November.
The investigation into 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, and Assistant United States Attorneys Max Shiner and Wilson Park of the Violent and Organized Crime Section.
Former Compton Deputy Treasurer Admits $3.7 Million EmbezzlementRead the Press Release
SANTA ANA, California – The former deputy treasurer for the City of Compton pleaded guilty yesterday to federal charges stemming from his theft of more than $3.7 million of city funds.
Salvador Galvan, 47, of La Mirada, pleaded guilty to one count of theft from an organization receiving federal funds, a felony offense that carries a statutory maximum sentence of 10 years in federal prison.
Galvan pleaded guilty before United States District Judge Josephine L. Staton, who scheduled a sentencing hearing for November 3, 2017.
When he pleaded guilty, Galvan admitted that he stole $3,721,924 from the City of Compton from May 2010 through December 2016
Galvan, who worked in the Compton Treasurer’s Office for more than 20 years, was responsible for tallying the cash received by the city as payment for parking tickets, business licenses and other fees. After the cash was counted, Galvan prepared the money for deposit into a city bank account.
According to court documents, Galvan skimmed cash from the daily receipts on numerous occasions, sometimes taking as much $8,000 per day.
Galvan has agreed to forfeit to the government the remaining proceeds of his embezzlement, which includes cash and cars purchased with the stolen money. He has also agreed to pay restitution to the City of Compton as ordered by Judge Staton.
In conjunction with Galvan’s guilty plea, his wife – Rosa Maria Galvan – was charged with money laundering related to the embezzled funds. She pleaded guilty to that charge yesterday as well and will also be sentenced on November 3, 2017.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Daniel O’Brien, Deputy Chief of the Public Corruption and Civil Rights Section. Assistant United States Attorney Jonathan Galatzan of the Asset Forfeiture Section is assisting in the case.
As Part of National Health Care Fraud Takedown, Federal Prosecutors in Los Angeles Charge 14 Defendants in Fraud Schemes that Allegedly Cost Public Healthcare Programs nearly $150 MillionRead the Press Release
LOS ANGELES – In the largest-ever health care fraud enforcement action by federal prosecutors, 14 defendants – including doctors, nurses and other licensed medical professionals – have been charged in the Central District of California for allegedly participating in health care fraud schemes that caused approximately $147 million in losses.
The defendants charged locally are among hundreds of people charged across the United States in cases that cumulatively allege approximately $1.3 billion in false billings. The nationwide sweep includes charges against more than 120 defendants – some of whom are doctors – who allegedly prescribed and distributed opioids and other dangerous narcotics.
In the Central District of California, 14 defendants were charged for their roles in schemes to defraud health insurance programs such as Medicare. The cases allege health care fraud and kickback schemes involving compounded drugs, home health services, physical therapy, acupuncture, Medicare Part D prescription drugs, diagnostic sleep studies and hospice care.
“Health care fraud schemes such as these threaten the vital trust between a patient and his or her health care provider, undermine the integrity of our health care system, and cost all Americans billions of dollars,” said Acting United States Attorney Sandra R. Brown. “Today’s announcement serves as a clear warning that we will continue to work with our law enforcement partners to identify and hold accountable health care professionals who commit these crimes.”
The defendants charged locally include four physicians, including Dr. Jeffrey Olsen, who was charged with illegally prescribing controlled substances, including the opiate oxycodone.
The 57-year-old Olsen surrendered to authorities on Tuesday after being indicted last week by a federal grand jury on 34 counts of illegally prescribing controlled drugs, including oxycodone, and one count of false statement on a DEA registration application. Olsen, a resident of Laguna Beach, allegedly sold prescriptions to addicts and drug dealers in exchange for fixed cash fees, without any medical basis for the prescriptions.
During the investigation, Olsen also sold hundreds of prescriptions to addicts in other states, such as Oregon, without ever seeing the “patients” for an in-person examination. In text messages to these out-of-state customers, Olsen allegedly told customers that, in exchange for exorbitant fees as high as $3,000, he would write prescriptions for whatever drug they wanted, and that he would never check whether they were actually taking the prescribed drugs or whether they were getting additional narcotic prescriptions from other doctors. Olsen allegedly sold more than 1.2 million pills of narcotics, which were almost entirely at maximum strength, in addition to hundreds of thousands of pills of other controlled drugs such as the sedatives Xanax and Soma. The case against Olsen is being prosecuted by Assistant United States Attorneys Ben Barron and Bryant Yang.
In another local case involving a physician, Dr. Thomas S. Powers and Anthony Paduano were arrested Tuesday on healthcare fraud charges that allegedly bilked TRICARE.
The indictment in this case alleges that Powers, of Santa Ana, authorized prescriptions for compounded medications for patients he never examined. Under an agreement, Paduano, of Newport Beach, allegedly paid Powers $200 for each prescription. Paduano received approximately $1.2 million for referring the prescriptions to a local pharmacy that billed TRICARE more than $4.8 million and was paid more than $3.1 million. This case is being handled by Assistant United States Attorneys Mark Aveis, Paul Stern and Cassie Palmer.
“Americans already struggling with health care issues and rising premiums are further burdened with each dollar lost to fraud,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The losses estimated in Los Angeles for this operation alone are staggering as the abundance of health care fraud schemes in southern California adds considerably to this nationwide crime issue. By collaborating with our partners, we will continue to hold accountable those who get rich by targeting federal health care programs with fraud.”
“Those who would enrich themselves through healthcare fraud – including billing for unnecessary services, accepting kickbacks, and billing for prescriptions that were never provided – are putting profits over patients, stealing from government health programs and taxpayers alike,” said Special Agent in Charge Christian Schrank, of the U.S. Department of Health and Human Services Office of Inspector General. “These operations show yet again our commitment to working with our federal and state law enforcement partners. In fighting this epidemic, we must all stand together.”
“IRS Criminal Investigation will not stand still while criminals line their pockets with illicit proceeds obtained from publicly funded health care programs,” said IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “It depletes scarce taxpayer dollars and will not be tolerated. IRS Criminal Investigation will continue to work with our federal and state law enforcement partners to bring justice to those individuals who prey on the nation's health care system for their own personal greed.”
“Our office, in partnership with our fellow investigative agencies, will continue to uncompromisingly investigate and bring to justice the people who perpetrate these criminal acts,” said Amtrak Inspector General Tom Howard. We will remain vigilant in protecting Amtrak employees, retirees, and their dependents, by ensuring our health care dollars are not wasted on fraudulent providers,"
“The Department of Labor – Employee Benefits Security Administration will continue to vigorously investigate wrongdoers committing health care fraud against employer sponsored health plans in Southern California which also impact TRICARE, Medicare, Medicaid” said Crisanta Johnson, DOL-EBSA’s Los Angeles Regional Office.
The other cases filed in federal court in Los Angeles as part of the nationwide sweep are:
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Aniceto Baliton, of Diamond Bar, co-owner and managing employee of Bliss Hospice in Glendora, was charged yesterday with one count of conspiracy to pay and receive illegal remunerations for health care referrals. The charge stems from Baliton’s role in a fraud scheme to pay kickbacks in exchange for Medicare beneficiaries referred to Bliss and billed by Bliss for hospice services. As part of the fraud scheme, Baliton and the co-owners of the hospice also agreed to generate cash for the illegal kickbacks by disguising such monies as payroll expenses. Based on the referrals that Baliton and his co-conspirators obtained through illegal kickbacks, Bliss submitted claims to Medicare and was paid approximately $2.4 million. The case is being handled by DOJ Trial Attorney Claire Yan.
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Aleksandr Suris and Maxim Sverdlov, co-owners and operators of Royal Care Pharmacy in Los Angeles, were arrested Monday on charges related to a scheme that allegedly brought in more than $41.5 million from Medicare and CIGNA. The indictment in this case charges Suris with two counts of conspiracy to commit health care fraud and 10 counts of health care fraud, and Sverdlov with one count of conspiracy to commit health care fraud and four counts of health care fraud. The defendants allegedly submitted fraudulent bills for prescription drugs that were never filled by the pharmacy or were not provided to the person to whom the drug was prescribed. The case is being handled by DOJ Trial Attorney Robyn N. Pullio.
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Dr. Kanagasabai Kanakeswaran was indicted late last month on one count of conspiracy to pay and receive kickbacks for health care referrals and four counts of receiving kickbacks for health care referrals. The charges arise from a kickback conspiracy at a home health company called Star Home Health Resources. The owners and operators of Star allegedly paid kickbacks to referring physicians, including Dr. Kanakeswaran, in exchange for the physicians referring Medicare beneficiaries to receive home health services from Star. The indictment alleges that from May 2008 to May 2016, Star was paid $4,157,311 from Medicare based on home health services that Dr. Kanakeswaran referred to Star in exchange for illegal kickbacks. The case is being handled by Assistant United States Attorney Alex Porter and DOJ Trial Attorney Claire Yan.
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Jamen Oliver Griffith and Damon Glover were charged late last month with conspiring to solicit, receive and pay illegal kickbacks for health care referrals. The charges stem from defendants’ role in a scheme involving undisclosed payments for generating and steering prescriptions of compounded drugs to Valley View Drugs, Inc., a pharmacy located in La Mirada. As set forth in plea agreements that have been filed in court, Griffith and Glover owned and operated Western Medical Solutions, a “marketing” company that paid non-employee “marketers” to generate compounded drug prescription referrals for Valley View. Commission payments to “marketers” for prescription referrals were based on a percentage of the amount insurance companies reimbursed Valley View. Health insurers ultimately reimbursed Valley View $13,860,083 for prescriptions generated by WMS-affiliated marketers. In turn, Valley View paid WMS approximately $7,622,864 for the prescription referrals. The case is being handled by Assistant United States Attorney Ashwin Janakiram.
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Xiao “Kimi” Gudmundsen, a licensed acupuncturist and the owner of Healthy Life Acupuncture Center, Inc., which operated at two sites in Los Angeles and Riverside, was charged on June 22, with eight counts of health care fraud and three counts of money laundering. The charges arise from allegations that Gudmundsen recruited Amtrak employees to visit Healthy Life and then, among other things, billed the Amtrak health care plan for acupuncture and other services that were not actually provided. The indictment also charges that Gudmundsen laundered payments received from Amtrak for the false bills through various accounts, including accounts held in the names of relatives. Also charged in the indictment are Suzana Cortez, a Healthy Life employee (who faces five counts health care fraud) and Gladys Perez, an Amtrak employee (who faces two counts of health care fraud). This case is being handled by Assistant United States Attorney Poonam Kumar.
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James Chen pleaded guilty on June 19 to a health care fraud charge related to his pharmacy processing and billing TRICARE for approximately $62 million for fraudulent prescriptions for compounded medications after Chen paid more than 50 percent in referral fees to marketers. The case is being handled by Assistant United States Attorneys Mark Aveis, Paul Stern and Cassie Palmer.
Indictments and criminal informations contain allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The cases from the Central District of California are the result of investigations conducted by the United States Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the Defense Criminal Investigative Service; the Drug Enforcement Administration; IRS Criminal Investigation; the Office of Personnel Management, Office of Inspector General; the Veterans Administration, Office of the Inspector General; the Department of Labor - Employee Benefits Security Administration; the California Department of Insurance, Fraud Division; the United States Postal Service, Office of the Inspector General; Amtrak’s Office of the Inspector General; the California Board of Pharmacy; California’s Department of Health Care Services; and the California Department of Justice.
The local cases were filed by Assistant United States Attorneys and Trial Attorneys with the Justice Department’s Medicare Fraud Strike Force. The Strike Force operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
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Two California Men Sentenced to Prison for Their Roles in Fake Law Firms that Promised to Help Struggling HomeownersRead the Press Release
Two Orange County, California men were sentenced yesterday in U.S. District Court in Santa Ana, California to serve 41 and 47 months in prison, respectively, for their roles in a multi-million dollar fraudulent mortgage modification scheme posing as a successful law firm, the Justice Department announced.
Ronald Rodis, 52, of Long Beach, California, and Charles Wayne Farris, 56, of Aliso Viejo, California, each previously pleaded guilty to one count of conspiracy to commit mail and wire fraud. In addition to the terms of prison imposed by U.S. District Judge David O. Carter, Judge Carter ordered Farris to pay $3,534,927.43 in restitution and ordered Rodis to pay $3,826,947.95 in restitution.
Both defendants previously admitted that, between October 2008 and June 2009, they participated in a scheme to induce homeowners to pay between $3,500 and $5,500 for the services of the Rodis Law Group. These defendants and their co-conspirators made numerous misrepresentations regarding RLG’s ability to negotiate loan modifications from the homeowners’ mortgage lenders. They hid the involvement of Bryan D’Antonio, the true owner of the scheme. D’Antonio was a convicted felon and subject to a permanent injunction prohibiting him from having any involvement with any business that engaged in telemarketing or misrepresented the services it would provide.
“These defendants played key roles in a scheme that victimized homeowners facing foreclosure during the mortgage crisis,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The defendants promised homeowners assistance saving their homes and modifying their mortgages, yet took their money knowing the promised benefits would never be realized.”
“These two defendants used their legal knowledge and expertise to coerce and victimize vulnerable homeowners,” said Acting U.S. Attorney Sandra R. Brown of the Central District of California. “Rather than help these individuals as promised, their fraudulent scheme cost the victims millions of dollars.”
Rodis was a licensed California attorney who allowed his name to be used to lend legitimacy to the scheme. He recorded radio advertisements encouraging struggling homeowners to call RLG. In the ads, Rodis falsely claimed that RLG consisted of “a team of experienced attorneys” who were “highly skilled in negotiating lower interest rates and even lowering your principal balance.” In fact, RLG was a telemarketing operation that never had a team of experienced attorneys and rarely achieved any of the promised results for homeowners. During much of the scheme, Rodis was the only attorney at RLG. After his involvement with the RLG scheme, Rodis surrendered his law license.
supervised a sales force of dozens of telemarketers who fielded calls from struggling homeowners. At Farris’s direction and using scripts that he helped create, the telemarketers made numerous misrepresentations regarding the companies’ ability to negotiate loan modifications from the homeowners’ mortgage lenders. For example, the telemarketers stated that RLG and America’s Law Group – a successor to RLG – had been in business for 11 years when in fact the company had only opened in October 2008. They falsely stated that RLG and ALG routinely obtained positive results for homeowners, including lower monthly payments, reductions in principal balance and lower interest rates. In fact, positive results were rarely achieved for any RLG or ALG clients. Telemarketers also falsely reiterated that homeowners would have a team of attorneys and real estate professionals assigned to their case.
On April 10, Bryan D’Antonio, the leader of the scheme, was sentenced to 97 months in prison followed by 12 months in a halfway house and was ordered to pay $3,826,977.95 in restitution.
This case was investigated by the FBI Los Angeles Field Office and is being prosecuted by Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Joseph T. McNally of the Central District of California.
For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca.
Two California Men Sentenced to Prison for Their Roles in Fake Law Firms That Promised to Help Struggling HomeownersRead the Press Release
LOS ANGELES – Two Orange County, California men were sentenced yesterday in U.S. District Court in Santa Ana, California to serve 41 and 47 months in prison, respectively, for their roles in a multi-million dollar fraudulent mortgage modification scheme posing as a successful law firm, the Justice Department announced.
Ronald Rodis, 52, of Long Beach, California, and Charles Wayne Farris, 56, of Aliso Viejo, California, each previously pleaded guilty to one count of conspiracy to commit mail and wire fraud. In addition to the terms of prison imposed by U.S. District Judge David O. Carter, Judge Carter ordered Farris to pay $3,534,927.43 in restitution and ordered Rodis to pay $3,826,947.95 in restitution.
Both defendants previously admitted that, between October 2008 and June 2009, they participated in a scheme to induce homeowners to pay between $3,500 and $5,500 for the services of the Rodis Law Group. These defendants and their co-conspirators made numerous misrepresentations regarding RLG’s ability to negotiate loan modifications from the homeowners’ mortgage lenders. They hid the involvement of Bryan D’Antonio, the true owner of the scheme. D’Antonio was a convicted felon and subject to a permanent injunction prohibiting him from having any involvement with any business that engaged in telemarketing or misrepresented the services it would provide.
“These defendants played key roles in a scheme that victimized homeowners facing foreclosure during the mortgage crisis,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The defendants promised homeowners assistance saving their homes and modifying their mortgages, yet took their money knowing the promised benefits would never be realized.”
“These two defendants used their legal knowledge and expertise to coerce and victimize vulnerable homeowners,” said Acting U.S. Attorney Sandra R. Brown of the Central District of California. “Rather than help these individuals as promised, their fraudulent scheme cost the victims millions of dollars.”
Rodis was a licensed California attorney who allowed his name to be used to lend legitimacy to the scheme. He recorded radio advertisements encouraging struggling homeowners to call RLG. In the ads, Rodis falsely claimed that RLG consisted of “a team of experienced attorneys” who were “highly skilled in negotiating lower interest rates and even lowering your principal balance.” In fact, RLG was a telemarketing operation that never had a team of experienced attorneys and rarely achieved any of the promised results for homeowners. During much of the scheme, Rodis was the only attorney at RLG. After his involvement with the RLG scheme, Rodis surrendered his law license.
Farris supervised a sales force of dozens of telemarketers who fielded calls from struggling homeowners. At Farris’s direction and using scripts that he helped create, the telemarketers made numerous misrepresentations regarding the companies’ ability to negotiate loan modifications from the homeowners’ mortgage lenders. For example, the telemarketers stated that RLG and America’s Law Group – a successor to RLG – had been in business for 11 years when in fact the company had only opened in October 2008. They falsely stated that RLG and ALG routinely obtained positive results for homeowners, including lower monthly payments, reductions in principal balance and lower interest rates. In fact, positive results were rarely achieved for any RLG or ALG clients. Telemarketers also falsely reiterated that homeowners would have a team of attorneys and real estate professionals assigned to their case.
On April 10, Bryan D’Antonio, the leader of the scheme, was sentenced to 97 months in prison followed by 12 months in a halfway house and was ordered to pay $3,826,977.95 in restitution.
This case was investigated by the FBI Los Angeles Field Office and prosecuted by Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Joseph T. McNally of the Central District of California.
Former United States Air Force Airman Indicted on Two Counts of Involuntary Manslaughter in Fatal Collision near Vandenberg AFBRead the Press Release
LOS ANGELES – A former airman with the United States Air Force has been indicted on two counts of involuntary manslaughter stemming from a traffic collision last summer near Vandenberg Air Force Base that caused the death of two people and the serious injury of a third.
Shaquille Lindsey, 23, of Covington, Georgia, was named in a three-count indictment returned by a federal grand jury on Wednesday. Lindsey previously served at Vandenberg Air Force Base in Lompoc.
The indictment alleges two counts of involuntary manslaughter while driving under the combined influence of both alcohol and marijuana, and while using his cellphone. The third count alleges driving under the influence and causing bodily injury.
Lindsey allegedly drove his car into oncoming traffic and collided head on into the victim’s vehicle, causing the death of the driver and his wife, and seriously injuring the driver’s adult son.
The indictment alleges that on August 28, 2016, Lindsey was driving on Santa Lucia Canyon Road – allegedly going more than 15 miles above the speed limit – when his vehicle veered into the oncoming lane and collided head-on with the victim’s car.
An indictment or 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.
Lindsey is expected to make his initial court appearance in United States District Court in Georgia in early July.
If convicted of the three offenses charged in the indictment, Lindsey would face a statutory maximum sentence of 18 years in federal prison.
The investigation of this case was conducted by the United States Air Force, Office of Special Investigations. The case is being prosecuted by Assistant United States Attorneys Joanna Curtis and Julian André.
Federal Protective Service Officer Indicted for Civil Rights ViolationRead the Press Release
LOS ANGELES – An officer with the Department of Homeland Security’s Federal Protective Service was named today in an indictment that charges him with violating the civil rights of a person in handcuffs by kicking him in the head.
Jason Michael Rouswell, 46, of the El Sereno District of Los Angeles, was charged with one count of deprivation of rights under color of law in relation to the October 20, 2016 incident.
Rouswell, who holds the rank of inspector with the Federal Protective Service, is accused of kicking the victim in the head after the victim had already been handcuffed and while the victim was face down in a prone position. The incident took place outside the offices of the Social Security Administration in Pomona.
The indictment charges Rouswell with willfully depriving the victim of the right to be free from the use of unreasonable force by one acting under the color of law. The indictment further alleges that the victim suffered bodily injury.
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.
Rouswell has agreed to self-surrender to federal authorities on July 5 to face the charge in the indictment.
The civil rights offense alleged in the indictment carries a statutory maximum sentence of 10 years in federal prison.
The case against Rouswell is the result of an investigation by the Department of Homeland Security’s Office of Inspector General and the FBI.
The case is being prosecuted by Assistant United States Attorney Bryant Yang of the General Crimes Section.
Los Angeles Hospital Agrees to Pay $42 Million to Settle Alleged False Claims Act Violations Arising from Improper Payments to PhysiciansRead the Press Release
PAMC Ltd., and Pacific Alliance Medical Center Inc., which together own and operate Pacific Alliance Medical Center, an acute care hospital located in Los Angeles, California, have agreed to pay $42 million to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today. Of the total settlement amount, $31.9 million will be paid to the Federal Government, and $10 million will be paid to the State of California.
The settlement announced today resolves allegations brought in a whistleblower lawsuit that the defendants submitted false claims to the Medicare and MediCal Programs for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of (1) arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices, and (2) marketing arrangements that allegedly provided undue benefit to physicians’ practices. The lawsuit alleged that these relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.
“This is another example of how the False Claims Act whistleblower provisions can help protect the public fisc,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers.”
The lawsuit was filed by Paul Chan, who was employed as a manager by one of the defendants, under the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action. Mr. Chan will receive over $9.2 million as his share of the federal recovery.
“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals – this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”
“This settlement is a warning to health care companies that think they can boost their profits by entering into improper financial arrangements with referring physicians,” said Special Agent in Charge Christian J. Schrank of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to crack down on such deals, which work to undermine impartial medical judgement, drive up health care costs, and corrode the public’s trust in the health care system.”
The case, United States ex rel. Chan v. PAMC, Ltd., et al., Case No. 13-cv-4273 (C.D. Cal.), was monitored by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Los Angeles Hospital Agrees to Pay $42 Million to Settle Allegations Arising from Improper Financial Arrangements with PhysiciansRead the Press Release
LOS ANGELES – The owners of Pacific Alliance Medical Center, an acute care hospital located in the Chinatown District of Los Angeles, have agreed to pay $42 million to settle allegations that they were involved in improper financial relationships with referring physicians, the Justice Department announced today.
PAMC, Ltd. and Pacific Alliance Medical Center Inc., the owners of the hospital, agreed to pay the settlement to resolve a lawsuit that alleged they had violated the False Claims Act by submitting false claims to the Medicare and MediCal programs.
The settlement, which was finalized this week, calls for PAMC Ltd. and Pacific Alliance Medical Center Inc. to pay $31.9 million to the United States and $10 million to the State of California.
The settlement resolves allegations brought in a “whistleblower” lawsuit that the defendants submitted or caused to be submitted false claims to Medicare and MediCal for services rendered to patients who had been referred by physicians with whom the defendants had improper financial relationships.
These improper relationships took the form of (1) arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices, and (2) marketing arrangements that allegedly provided undue benefit to physicians’ practices.
The lawsuit alleged that these relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.
“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals – this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said Acting United States Attorney Sandra R. Brown. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”
The whistleblower lawsuit was filed by Paul Chan, who was employed as a manager by one of the defendants, under the qui tam provisions of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action. Mr. Chan will receive over $9.2 million as his share of the federal recovery.
“This is another example of how the False Claims Act whistleblower provisions can help protect the public fisc,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers.”
“This settlement is a warning to health care companies that think they can boost their profits by entering into improper financial arrangements with referring physicians,” said Special Agent in Charge Christian J. Schrank of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to crack down on such deals, which work to undermine impartial medical judgement, drive up health care costs, and corrode the public’s trust in the health care system.”
The case, United States ex rel. Chan v. PAMC, Ltd., et al., CV13-4273 (C.D. Cal.), was monitored by the United States Attorney’s Office, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.
The defendants have until July 7 to make the settlement payments.
The claims settled by this agreement are allegations only, and the defendants did not admit liability in settling the action.
Former Orange County Income Tax Return Preparer Sentenced to 21 Months in Federal Prison for Filing Fraudulent ReturnsRead the Press Release
LOS ANGELES – An Orange County man who prepared tax returns for clients after falsely claiming to be a certified public accountant and a former IRS agent was sentenced this morning to serve 21 months in federal prison for preparing and filing fraudulent federal income tax returns.
Michael Raymond Martinez, 48, of Fullerton, was sentenced by United States District Judge Beverly Reid O’Connell. In addition to the prison term, Judge O’Connell ordered Martinez to pay $205,465 in restitution to the Internal Revenue Service.
Martinez – who operated his tax preparation business under the names Your Home Tax Service, Great Tax Services and Great Tax Solutions – pleaded guilty in February to one count of aiding and abetting in the preparation of a false income tax return. In marketing materials provided to clients and potential clients, Martinez claimed he could get them “The Largest Refund…Guaranteed!!!”
Martinez, who often met with clients at their homes or at public locations, admitted that he prepared and filed with the IRS at least 245 false federal income tax returns that resulted in tax losses to the United States of approximately $1,155,006.
According to a plea agreement filed in this case, from the beginning of 2009 through April 2015, Martinez had brief meetings with clients to obtain their documents and to receive his payment. Martinez typically prepared and electronically filed the tax returns, but he would not review the returns with his clients.
According to documents filed with the court, Martinez prepared and filed tax returns that claimed false deductions and expenses that his clients were not entitled to receive. The tax returns included fraudulent moving expenses, education expenses and itemized deductions. The fraudulent deductions and expenses lowered the taxpayers’ income tax liability.
In addition to the 245 fraudulent tax returns filed for clients, Martinez failed to report his own taxable income from his tax preparation business for the years 2011 and 2012, which caused a loss to the government of approximately $85,000.
This case is the product of an investigation by IRS Criminal Investigation.
The case was prosecuted by Assistant United States Attorneys Paul Rochmes and Benjamin Tompkins of the Tax Division.
Pasadena Man Indicted in Bank Robbery Spree Attributed to the ‘Dual Valley Bandit’Read the Press Release
LOS ANGELES – A Pasadena man was named today in a seven-count indictment that charges him with committing a series of bank robberies culminating in an armed robbery in which he allegedly used a loaded shotgun.
Shownee Shon Smith, 41, was charged robbing a Wells Fargo Bank branch in East Pasadena on June 10 while armed with a loaded shotgun.
The Pasadena Police Department responded to alarms and a 911 call from inside the Wells Fargo branch and arrested Smith immediately after he exited the bank.
The indictment alleges that Smith committed six bank robberies between May 15 and June 10. In addition to the Wells Fargo robbery, Smith is charged with robbing branches of US Bank in Burbank on May 15, Wells Fargo in South Pasadena on the same day, Chase Bank in East Pasadena on May 20, Chase in North Hollywood on May 27, and Citibank in Tarzana on the same day. Prior to the Wells Fargo robbery on June 10, Smith had allegedly used notes to demand money from bank employees.
Smith is additionally charged with brandishing a firearm during the June 10 robbery.
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.
Smith, who is being held in custody without bond, is scheduled to be arraigned on the indictment on July 5 in United States District Court.
The five bank robbery charges in the indictment carry a statutory maximum sentence of 20 years in federal prison, and the armed bank robbery count carries a maximum sentence of 25 years. If convicted of the count alleging brandishing of a firearm, Smith would face a mandatory seven-year sentence that would run consecutively to any other sentence imposed in the case.
The case against Smith is the result of an investigation by the FBI, which received substantial assistance from the Pasadena Police Department, the South Pasadena Police Department, the Burbank Police Department, the Los Angeles Police Department and the Santa Monica Police Department.
The case is being prosecuted by Assistant United States Attorney A. Carley Palmer of the General Crimes Section.
Monterey Park Woman Arrested on Federal Charges after Allegedly Injecting Foreign Substance into Woman for Buttocks EnhancementRead the Press Release
LOS ANGELES – Law enforcement authorities have arrested a Monterey Park woman on federal charges of injecting a currently unknown substance – possibly silicone – into a woman’s buttocks during cosmetic procedures that caused so much damage the woman needed a major operation to correct the problem.
Ana Bertha Diaz Hernandez, 47, was taken into custody late yesterday afternoon by special agents with the United States Food and Drug Administration, Office of Criminal Investigations and investigators with the California Department of Consumer Affairs, Division of Investigation, Health Quality Investigation Unit, Operation Safe Medicine Unit (formerly known as the California Medical Board).
The arrest followed the filing yesterday of a criminal complaint charging Diaz with three felony offenses – receipt of an adulterated and misbranded medical device, smuggling, and misbranding prescription drugs.
According to the affidavit in support of the complaint, a victim identified as “I.T.”, filed a complaint with the California Medical Board after seeking treatments from Diaz to enhance her buttocks. I.T. stated that the product Diaz had injected into her buttocks had migrated to her “back, hips and legs,” the affidavit states. I.T. explained that she had to have surgery and was ultimately hospitalized due to the injections administered by Diaz.
During a series of treatments that cost thousands of dollars, Diaz explained to I.T. that she was injecting a “natural product,” at points claiming the injections were “lamb’s fat.”
However, after a series of treatments, I.T. began to suffer pain and sought the assistance of a doctor in Colombia who specialized in reversing cosmetic procedures. The victim underwent a major surgery to remove the substance injected into her buttocks, and she will need further medical procedures, according to the affidavit.
According to the complaint, the FDA has never approved the use of silicone for the purpose of body contouring, even when administered by a medical doctor.
“Injections of silicone for body contouring purposes, especially deep tissue injections into the buttocks of the large amounts of silicone that would be required to achieve visible buttocks augmentation and enhancement, present serious risks and dangers,” the affidavit states. “Included among the risks of such injections are the potential of injection into a blood vessel resulting in embolism, migration of injected silicone to other bodily regions and resultant interference with organs and bodily systems, serious sepsis infection and infection-related disorders, silicone-filled scar tissue formations (“granulomas”), necrosis, skin discoloration, immune system hyperactivity and related adverse systemic conditions, disfigurement, discomfort, and pain.”
Diaz is expected to make her first court appearance this afternoon in United States District Court.
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 she is convicted of the three charges in the complaint, Diaz would face a statutory maximum sentence of 26 years in federal prison.
This case is being prosecuted by Assistant United States Attorney Joseph O. Johns, Chief of the Environmental and Community Safety Crimes Section, and Assistant United States Attorney Amanda M. Bettinelli of the Environmental and Community Safety Crimes Section.
Orange County Man Who Led Conspiracy that Illegally Imported and Distributed Synthetic Narcotics Sentenced to 10 Years in PrisonRead the Press Release
SANTA ANA, California – A Newport Beach man who orchestrated a wide-reaching conspiracy that smuggled, manufactured and distributed millions of dollars worth of analogue drugs which were used, among other things, to manufacture synthetic marijuana has been sentenced to 120 months in federal prison.
Sean Libbert, 41, was sentenced late last night by United States District Judge Cormac J. Carney.
According to court documents, Libbert organized and led a drug trafficking conspiracy that manufactured, marketed and sold synthetic marijuana – commonly called “spice” – under the brand name of “Da Kine Blend.” When he pleaded guilty last year, Libbert admitted that at least 100 kilograms of synthetic marijuana was manufactured using the analogue chemicals he provided, and that he knew the “spice” was being distributed for human consumption.
Libbert pleaded guilty last November to federal offenses related to the distribution of “spice.” Libbert pleaded guilty to four felony offenses: conspiring to manufacture, possess and distribute controlled substance analogues; conspiracy to smuggle controlled substance analogues into the United States; being a felon in possession of firearms and ammunition; and money laundering.
“Spice” is known as an analogue drug because its chemical composition is very similar to a controlled substance. Analogues are intended to have a substantially similar or greater physiological effect than the narcotics they mimic. Popular with teenagers and younger adults because of the cheaper cost and glossy packaging, “spice” has been linked to overdoses, serious injuries and deaths across the country. In fact, the 2014 indictment – which was the first in this district involving drug analogues – alleged that chemicals distributed by Libbert nearly killed a victim in Florida who had ingested them. Though containing THC (the active ingredient in marijuana) and despite it being commonly referred to as “fake marijuana,” “spice” is considered by scientists and health officials to be much more dangerous than marijuana because of its high potency, and because the quality and quantity of chemicals used to make the “spice” is unregulated. The chemical analogues are typically manufactured in clandestine laboratories in China.
Over the course of 16 months in 2011 and 2012, Libbert’s organization smuggled over 200 pounds of chemicals into the U.S., knowing that the drugs would be used to manufacture “spice” that was smoked or taken orally. During yesterday’s lengthy sentencing hearing, Judge Carney noted that Libbert used fraudulent documents and misbranded labels to smuggle the chemical analogues from China.
As part of the scheme, Libbert incorporated a series of companies, opened up a series of bank accounts and private mailboxes, and sold more than $5 million worth of “spice” to people across the United States, including other distributors and individual users.
Previously in this case, two other defendants pleaded guilty, including a Chinese national who sold Libbert and his associates synthetic drugs that were smuggled into the United States. Another three defendants charged in separate cases pleaded guilty to conspiring with Libbert to manufacture, possess and distribute controlled substance analogues. These other five defendants are expected to be sentenced by Judge Carney later this year.
The investigation into the analogue drug ring was conducted by the Los Angeles HIDTA (High-Intensity Drug Trafficking Area) Southern California Drug Task Force, which includes special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Drug Enforcement Administration and IRS Criminal Investigation.
In July 2012, HIDTA investigators executed a series of federal search warrants and seized several luxury vehicles, hundreds of pounds of analogues, and firearms –including a rifle, a shotgun, two pistols, and approximately 700 rounds of ammunition, all of which Libbert was prohibited from possessing as a result of three prior felony convictions, including a 2002 drug trafficking conviction.
In addition to the drug and firearms charges, Libbert also pleaded guilty to one count of money laundering stemming from his purchase of real estate in Ohio using drug proceeds. Investigators seized more than $1.1 million in assets connected to the case – including more than $700,000 in profits from the sale of Libbert’s former residence in San Juan Capistrano – all of which have been administratively forfeited to the United States.
The case is being prosecuted by Assistant United States Attorney Carol Alexis Chen of the Organized Crime Drug Enforcement Task Force.
Orange County Man Arrested on Federal Charges Related to Illegal Importation of Ozone-Depleting Refrigerant R-22Read the Press Release
LOS ANGELES – A Garden Grove man was arraigned this afternoon on an indictment that charges him with illegally importing a large shipment of a highly regulated chemical compound known as R-22 under the pretense that he was actually bringing into the United States a safe refrigerant that does not destroy the ozone layer.
Mahmoud Alkabbani, 63, the owner of USA Car Parts in Garden Grove, pleaded not guilty this afternoon to the nine-count indictment. A trial date was set for August 8.
Alkabbani was arrested Friday evening at Los Angeles International Airport after he returned to the United States from a trip abroad. At today’s arraignment, he was ordered released on a $30,000 bond.
R-22 is R22Chlorodifluoromethane, sometimes known as HCFC-22, a refrigerant gas and class II ozone-depleting substance. Pursuant to international treaty, the use of R-22 is being phased out around the world. In the United States, pursuant to the Clean Air Act, only parties with unexpended “consumption allowances” are allowed to import the chemical.
According to the indictment, Alkabbani entered into an agreement with a Chinese company to purchase R-22, which was packaged in cylinders bearing counterfeit “Glacier” trademarks. The 2013 contract with the Chinese company listed the product as R-134a – which is not regulated by the Clean Air Act and does not deplete the ozone layer – but a second, secret agreement called for the Chinese company to actually sell R-22 to Alkabbani.
The indictment charges Alkabbani with conspiracy, one count of entry of goods by means of false statement, five counts of passing false and fraudulent papers through a customhouse, one count of smuggling and one count of violating the Clean Air Act by improperly selling R-22 to an undercover agent.
If convicted of the nine counts in the indictment, Alkabbani would face a statutory maximum sentence of 132 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.
The investigation into Alkabbani is being conducted by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Environmental Protection Agency.
The prosecution is being handled by Assistant United States Attorney Cameron L. Schroeder of the Cyber and Intellectual Property Crimes Section and Assistant United States Attorney Mark Williams of the Environmental and Community Safety Crimes Section.
Van Nuys Man Named in Federal Fraud Indictment Alleging $7 Million Foreclosure-Delay Scam Targeting Struggling HomeownersRead the Press Release
LOS ANGELES – The alleged mastermind of a foreclosure-avoidance scam that targeted distressed homeowners has been arrested on federal charges that he orchestrated a bankruptcy fraud scheme that brought in more than $7 million from victims.
Michael “Mickey” Henschel, 68, of Van Nuys, was arrested Wednesday morning by federal agents with the FBI and the Federal Housing Finance Agency’s Office of Inspector General (FHFA-OIG). Henschel was arrested pursuant to an 11-count indictment returned by a federal grand jury on June 8.
During a court hearing this afternoon, Henschel was ordered detained pending trial.
According to the indictment unsealed after his arrest, Henschel owned a Van Nuys-based company he operated under several names, including Valueline. Henschel and several co-conspirators marketed illegal foreclosure- and eviction-delay services to homeowners who had defaulted on their mortgages and renters who were facing eviction. As part of the scheme, Henschel and the others allegedly convinced homeowners to sign fake grant deeds that purported to show the homeowners had conveyed an interest in their properties to fictional third parties.
Henschel and his co-conspirators allegedly filed bankruptcies in the names of fictional persons and entities to trigger the automatic stay provision of the Bankruptcy Code, which meant that foreclosure sales were stalled.
Henschel allegedly delayed evictions in a similar way, filing fraudulent documents in state eviction actions and sending similar documents to sheriff’s offices.
Henschel allegedly charged some homeowners large fees before agreeing to clear title to their properties, in addition to the monthly fees paid for the illegal services. During the course of the scheme, from October 2010 through July 2013, Henschel and his co-conspirators collected more than $7 million, according to the indictment.
The indictment charges Henschel with one count of conspiracy, eight counts of bankruptcy fraud and two counts of wire fraud.
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.
Following his arrest on Wednesday, Henschel was arraigned on the indictment. He entered a not guilty plea, and a trial was scheduled for August 8.
If he is convicted of the charges in the indictment, Henschel would face a statutory maximum sentence of five years in federal prison for each of the conspiracy bankruptcy fraud counts. The two wire fraud counts carry a statutory maximum sentence of 20 years.
The case against Henschel is the result of an investigation by the FBI and FHFA-OIG, which received assistance from the Alameda County District Attorney’s Office and the United States Trustee’s Office for the Central District of California.
This case is being prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.
United States Seeks to Recover Approximately $540 Million Obtained from Corruption Involving Malaysian Sovereign Wealth FundRead the Press Release
LOS ANGELES – The Justice Department today filed civil forfeiture complaints seeking the forfeiture and recovery of approximately $540 million in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund.
Combined with civil forfeiture complaints filed in July 2016 that seek more than $1 billion, and civil forfeiture complaints filed last week that seek approximately $100 million in assets, this case represents the largest action brought under the Kleptocracy Asset Recovery Initiative. Assets now subject to forfeiture in this case total almost $1.7 billion.
The complaints filed today seek the forfeiture of Red Granite Pictures' interest in the movies “Dumb and Dumber To” and “Daddy’s Home,” a condominium in New York City worth nearly $5 million, diamond jewelry, artworks by Picasso and Basquiat, and a $260 million megayacht called The Equanimity.
According to the complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1Malaysia Development Berhad (1MDB) was allegedly misappropriated by high-level officials of 1MDB and their associates. 1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people.
“These cases involve billions of dollars that should have been used to help the people of Malaysia, but instead was used by a small number of individuals to fuel their astonishing greed,” said Acting United States Attorney Sandra R. Brown. “The misappropriation of 1MDB funds was accomplished with an extravagant web of lies and bogus transactions that were brought to light by the dedicated attorneys and law enforcement agents who continue to work on this matter. We simply will not allow the United States to be a place where corrupt individuals can expect to hide assets and lavishly spend money that should be used for the benefit of citizens of other nations.”
“The Criminal Division is steadfast in our efforts to protect the security, safety, and integrity of the American financial system from all manner of abuse, including by kleptocrats seeking to hide their ill-gotten or stolen wealth,” said Acting Assistant Attorney General Kenneth A. Blanco. “Today’s complaints reveal another chapter of this multi-year, multi-billion-dollar fraud scheme, bringing the total identified stolen proceeds to $4.5 billion. This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people. We are unwavering in our commitment to ensure the United States is not a safe haven for corrupt individuals and kleptocrats to hide their ill-gotten wealth or money, and that recovered assets be returned to the victims from which they were taken.”
As alleged in the complaints, the members of the conspiracy – which included officials at 1MDB, their relatives and other associates – diverted more than $4.5 billion in 1MDB funds. Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and shell companies with bank accounts located in the United States and abroad. These transactions allegedly served to conceal the origin, source and ownership of the funds, and ultimately passed through U.S. financial institutions to then be used to acquire and invest in assets located in the United States and overseas.
The complaints filed today allege that in 2014, the co-conspirators misappropriated approximately $850 million in 1MDB funds under the guise of repurchasing certain options that had been given in connection with a guarantee of 2012 bonds. As the complaints allege, 1MDB had borrowed a total of $1.225 billion from a syndicate of banks to fund the buy-back of the options. The complaints allege that approximately $850 million was instead diverted to several offshore shell entities. From there, the complaints allege, the funds stolen in 2014, in addition to money stolen in prior years, were used, among other things, to purchase the 300-foot luxury yacht valued at over $260 million, certain movie rights, high-end properties, tens of millions of dollars of jewelry and artwork. A portion of the diverted loan proceeds were also allegedly used in an elaborate, Ponzi-like scheme to create the false appearance that an earlier 1MDB investment had been profitable.
“Today’s filing serves as a reminder of the important role that the FBI plays in rooting out international corruption. When corrupt foreign officials launder funds through the United States in furtherance of their criminal activity, the FBI works tirelessly to help hold those officials accountable, and recover the misappropriated funds,” said Assistant Director Stephen E. Richardson of the FBI’s Criminal Investigative Division. “I applaud all my colleagues and our international partners who have worked to help recover an immense amount of funds taken from the Malaysian people, who are the victims of this abhorrent case of kleptocracy.”
“Today’s announcement is the result of untangling a global labyrinth of multi-layered financial transactions allegedly used to divert billions of dollars from the people of Malaysia and fund the co-conspirators’ lavish lifestyles,” said Deputy Chief Don Fort of IRS Criminal Investigation. “The IRS is proud to partner with other law enforcement agencies and share its world-renowned financial investigative expertise in this complex financial investigation. It’s important for the world to see, that when people use the American financial system for corruption, the IRS will take notice.”
As alleged in the earlier complaints, in 2009, 1MDB officials and their associates embezzled approximately $1 billion that was supposed to be invested to exploit energy concessions purportedly owned by a foreign partner. Instead, the funds allegedly were transferred through shell companies and were used to acquire a number of assets. The complaints also allege that the co-conspirators misappropriated close to $1.4 billion in funds raised through the bond offerings in 2012, and more than $1.2 billion following another bond offering in 2013.
The FBI’s International Corruption Squads in New York City and Los Angeles, and IRS Criminal Investigation are investigating the case.
Assistant United States Attorneys John Kucera and Christen Sproule of the Asset Forfeiture Section, along with Deputy Chief Woo S. Lee and Trial Attorneys Kyle R. Freeny and Jonathan Baum of the Criminal Division’s Money Laundering and Asset Recovery Section, are prosecuting the case. The Criminal Division’s Office of International Affairs is providing substantial assistance.
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies and U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered asset to benefit the people harmed by these acts of corruption and abuse of office. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] or https://tips.fbi.gov/.
A civil forfeiture complaint is merely an allegation that money or property was involved in or represents the proceeds of a crime. These allegations are not proven until a court awards judgment in favor of the United States.
U.S. Seeks to Recover Approximately $540 Million Obtained from Corruption Involving Malaysian Sovereign Wealth FundRead the Press Release
The Justice Department announced today the filing of civil forfeiture complaints seeking the forfeiture and recovery of approximately $540 million in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund. Combined with civil forfeiture complaints filed in July 2016, seeking more than $1 billion, and civil forfeiture complaints filed last week seeking approximately $100 million in assets, this case represents the largest action brought under the Kleptocracy Asset Recovery Initiative. Assets now subject to forfeiture in this case total almost $1.7 billion.
Acting Assistant Attorney General Kenneth A. Blanco, Acting U.S. Attorney Sandra R. Brown of the Central District of California, Assistant Director Stephen E. Richardson of the FBI’s Criminal Investigative Division, and Deputy Chief Don Fort of the IRS-Criminal Investigation (IRS-CI) made the announcement.
According to the complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1Malaysia Development Berhad (1MDB) was allegedly misappropriated by high-level officials of 1MDB and their associates. 1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people.
“The Criminal Division is steadfast in our efforts to protect the security, safety, and integrity of the American financial system from all manner of abuse, including by kleptocrats seeking to hide their ill-gotten or stolen wealth,” said Acting Assistant Attorney General Blanco. “Today’s complaints reveal another chapter of this multi-year, multi-billion-dollar fraud scheme, bringing the total identified stolen proceeds to $4.5 billion. This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people. We are unwavering in our commitment to ensure the United States is not a safe haven for corrupt individuals and kleptocrats to hide their ill-gotten wealth or money, and that recovered assets be returned to the victims from which they were taken.”
“These cases involve billions of dollars that should have been used to help the people of Malaysia, but instead was used by a small number of individuals to fuel their astonishing greed,” said Acting U.S. Attorney Brown. “The misappropriation of 1MDB funds was accomplished with an extravagant web of lies and bogus transactions that were brought to light by the dedicated attorneys and law enforcement agents who continue to work on this matter. We simply will not allow the United States to be a place where corrupt individuals can expect to hide assets and lavishly spend money that should be used for the benefit of citizens of other nations.”
“Today’s filing serves as a reminder of the important role that the FBI plays in rooting out international corruption. When corrupt foreign officials launder funds through the United States in furtherance of their criminal activity, the FBI works tirelessly to help hold those officials accountable, and recover the misappropriated funds,” said Assistant Director Richardson. “I applaud all my colleagues and our international partners who have worked to help recover an immense amount of funds taken from the Malaysian people, who are the victims of this abhorrent case of kleptocracy.”
“Today’s announcement is the result of untangling a global labyrinth of multi-layered financial transactions allegedly used to divert billions of dollars from the people of Malaysia and fund the co-conspirators’ lavish lifestyles,” said Deputy Chief Fort. “The IRS is proud to partner with other law enforcement agencies and share its world-renowned financial investigative expertise in this complex financial investigation. It’s important for the world to see, that when people use the American financial system for corruption, the IRS will take notice.”
As alleged in the complaints, the members of the conspiracy – which included officials at 1MDB, their relatives and other associates – diverted more than $4.5 billion in 1MDB funds. Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and shell companies with bank accounts located in the U.S. and abroad. These transactions allegedly served to conceal the origin, source and ownership of the funds, and ultimately passed through U.S. financial institutions to then be used to acquire and invest in assets located in the U.S. and overseas.
The complaints filed today allege that in 2014, the co-conspirators misappropriated approximately $850 million in 1MDB funds under the guise of repurchasing certain options that had been given in connection with a guarantee of 2012 bonds. As the complaints allege, 1MDB had borrowed a total of $1.225 billion from a syndicate of banks to fund the buy-back of the options. The complaints allege that approximately $850 million was instead diverted to several offshore shell entities. From there, the complaints allege, the funds stolen in 2014, in addition to money stolen in prior years, were used, among other things, to purchase a 300 foot luxury yacht valued at over $260 million, certain movie rights, high-end properties, tens of millions of dollars of jewelry, and artwork. A portion of the diverted loan proceeds were also allegedly used in an elaborate, Ponzi-like scheme to create the false appearance that an earlier 1MDB investment had been profitable.
As alleged in the earlier complaints, in 2009, 1MDB officials and their associates embezzled approximately $1 billion that was supposed to be invested to exploit energy concessions purportedly owned by a foreign partner. Instead, the funds were transferred through shell companies and were used to acquire a number of assets, as set forth in the complaints. The complaints also allege that the co-conspirators misappropriated close to $1.4 billion in funds raised through the bond offerings in 2012, and more than $1.2 billion following another bond offering in 2013.
The FBI’s International Corruption Squads in New York City and Los Angeles, and the IRS-CI are investigating the case. Deputy Chief Woo S. Lee and Trial Attorneys Kyle R. Freeny and Jonathan Baum of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorneys John Kucera and Christen Sproule of the Central District of California are prosecuting the case. The Criminal Division’s Office of International Affairs is providing substantial assistance.
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered asset to benefit the people harmed by these acts of corruption and abuse of office. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption. Individuals with information about possible proceeds of foreign corruption located in or laundered through the U.S. should contact federal law enforcement or send an email to [email protected] (link sends e-mail) or https://tips.fbi.gov/.
A civil forfeiture complaint is merely an allegation that money or property was involved in or represents the proceeds of a crime. These allegations are not proven until a court awards judgment in favor of the U.S.
Orange County Man Sentenced to over 8 Years in Federal Prison for Possessing Large Collection of Child PornographyRead the Press Release
SANTA ANA, California – A Westminster man has been sentenced to over 8 years in federal prison for possession of child pornography.
Peter Henry Herz, 61, yesterday received a 97-month sentence from United States District Judge Cormac J. Carney.
Following the completion of his prison term, Herz will be subject to supervised release for the rest of his life. Judge Carney also ordered the defendant to pay $7,500 to one of the victims of his offense.
Herz pleaded guilty in February to one count of possession of child pornography, admitting he had still images and videos of child pornography on his digital devices in 2009. After being charged and arrested for that conduct, Herz was freed on bond. While awaiting trial, Herz obtained new digital devices and possessed additional images of child pornography. Herz possessed a total of more than 500,000 images and 369 videos depicting child pornography.
From 2003 through 2013, Herz worked as the pianist and musical director for Pageant of the Masters in Laguna Beach and was the staff accompanist at the Theater Department at California State University, Fullerton.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).
This case was prosecuted by Assistant United States Attorney Mark Takla.
Fresno Man Arrested on Federal Copyright Violations for Alleged Illegal Upload of ‘Deadpool’ Movie to the InternetRead the Press Release
LOS ANGELES – A Fresno man was arrested this morning on a federal criminal charge of copyright infringement that alleges he posted the movie “Deadpool” to his Facebook page.
As a result of the illegal upload, more than 5 million people were able to view the film copyrighted by the Twentieth Century Fox Film Corporation.
Trevon Maurice Franklin, 21, who used the screen name “Tre-Von M. King,” allegedly uploaded “Deadpool” approximately eight days after its February 2016 release to theaters.
Franklin is charged in a one-count indictment returned by a federal grand jury on April 7 with reproducing and distributing a copyrighted work, a felony offense that carries a statutory maximum penalty of three 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.
Franklin is expected to make his initial court appearance this afternoon in United States District Court in Fresno.
The case against Franklin is the product of an investigation by the Federal Bureau of Investigation.
This case is being prosecuted by Assistant United States Attorneys Ryan White and Vicki Chou of the Cyber and Intellectual Property Crimes Section
San Juan Capistrano Woman Pleads Guilty to Stealing over $1.5 Million from Clients of Her Orange County Accounting BusinessRead the Press Release
SANTA ANA, California – The owner and operator of Mulder Financial Consulting – a financial services company that provided accounting, tax and bookkeeping services – pleaded guilty this afternoon to federal charges for embezzling more than $1.5 million from her clients.
Elizabeth Jane Mulder, who also goes by “Lizzie,” a 34-year-old resident of San Juan Capistrano, pleaded guilty to wire fraud and subscribing to a false income tax return for failing to disclose the misappropriated funds to the Internal Revenue Service.
According to documents filed in United States District Court, from July 2009 until last month, Mulder obtained money from small business clients by gaining the trust of their owners, some of whom allowed her to gain control over their financial accounts.
In relation to nearly all of her victims, Mulder convinced clients to make checks payable to “Income Tax Payments” with promises that those payments would satisfy the clients’ outstanding IRS tax obligations and would be forwarded to the appropriate federal, state or local tax authority. Mulder then deposited these checks into a bank account she created under the name “Income Tax Payments” and converted the funds for her own personal use.
Mulder took money from victims after creating false personas that appeared to be investors and/or representatives of other companies, which led her clients to believe various expenses were being paid for the benefit of their respective businesses. In fact, Mulder simply was depositing clients’ money into her own bank account.
In total, Mulder’s fraudulent scheme resulted in the theft of approximately $1,538,771 from several Orange County-based businesses, including JAC Wines in San Clemente, Kurtz-Ahlers & Associates in San Juan Capistrano and Andra Builders, Inc. in Costa Mesa.
Mulder used the money obtained from her fraudulent scheme for a variety of personal expenses, including a rental home in Laguna Beach, cosmetic surgery, vacations and horse rentals.
Mulder is scheduled to be sentenced by United States District Judge David O. Carter on October 16, at which time she will face a statutory maximum penalty of 23 years in prison and a fine of $350,000.
This case was investigated by the Federal Bureau of Investigation; IRS Criminal Investigation; and the Laguna Beach Police Department, Investigations Division.
The case is being prosecuted by Assistant United States Attorney Scott D. Tenley of the Santa Ana Branch Office.
Manhattan Beach Resident Convicted of Embezzlement and Filing False Tax ReturnsRead the Press Release
WASHINGTON – A federal jury convicted a Manhattan Beach resident today of wire fraud and filing false tax returns, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Alana W. Robinson for the Southern District of California.
According to the evidence presented at trial, James Miller was the president and managing partner of MWRC Internet Sales LLC, an Internet sales company. As part of his duties, Miller had check signing authority for the company’s business bank account. From January 2009 through October 2012, Miller wrote unauthorized checks to himself, embezzling more than $300,000 from the company. Miller used this money to pay for personal expenses and did not report it on his personal tax returns for 2009 through 2012, causing a tax loss of approximately $58,000.
Sentencing is scheduled for Aug. 7, 2017. Miller faces a statutory maximum sentence of 20 years in prison for each count of wire fraud and three years in prison for each count of filing a false tax return. He also faces a period of supervised release, restitution and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Robinson commended special agents of FBI and Internal Revenue Service Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Rebecca Kanter and Trial Attorney Benjamin Weir of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Lead Defendant in Federal Case Targeting Crips Gang Sentenced to Nearly 22 Years in Prison for Racketeering Offenses, including Murder PlotRead the Press Release
LOS ANGELES – A leader of the Five Deuce Broadway Gangster Crips (BGC) – who pleaded guilty to five federal charges, including being the leader a scheme that led to the murder of a former-gangster-turned-cooperator, was sentenced today to 262 months in federal prison.
Tyrine Martinez, also known as “Lil’ C-Bone,” 36, of Vernon, was sentenced this morning by United States District Judge S. James Otero.
Martinez admitted in court that he conspired with other BGC members to murder a fellow gang member who had provided law enforcement with information about a 2012 BGC gang shooting that killed an unarmed teenager with no gang affiliation and wounded three others, including a 10-year-old girl and her mother;
Martinez pleaded guilty last September to conspiring to violate the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, conspiring to commit murder, conspiring to traffic crack cocaine, selling crack cocaine near schools, and illegally possessing a firearm in furtherance of his drug trafficking and violent crimes.
Martinez was a “vital leader” to the BGC subset, or “clique,” known as the Gremlin Riderz, which served as the gang’s “hit squad” and whose members bore tattoos from the 1984 movie “Gremlins,” according to court documents. As leader of the Gremlin Riderz, Martinez “served as the prototype of why and how gangs destroy communities (most often their own) through violence, intimidation, fueling crack cocaine addiction and by contriving a self-serving and morally corrupt ‘code,’” prosecutors wrote in a sentencing memorandum.
Martinez directed the group assault of another BGC member who had also provided information to law enforcement regarding a BGC murder (that fellow gang member was also murdered just over a month later in a case that remains under investigation). Martinez also “direct[ed] the killing of rivals” and discussed the stabbing of a man by a BGC member in front of the victim’s baby because the man was in BGC territory without permission, according to court documents.
Martinez was the lead defendant charged in a 213-page RICO indictment that charged 72 members and associates of the BGC, a street gang that claims territory in South Los Angeles and controls drug sales in an area just west of the “Skid Row” district of Los Angeles. The indictment outlined two decades of criminal conduct, including murders, robberies, extortion, illegal firearms possession, witness intimidation and narcotics trafficking.
In recent months, several other BGC leaders and significant members have been sentenced:
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Tracy Harris, aka “Woody,” 51, of Inglewood, was sentenced on May 30 to 15 years in federal prison after pleading guilty last year to participating in the racketeering conspiracy, conspiring to sell methamphetamine after having been convicted of a prior drug felony, and selling methamphetamine near schools. Harris, a gang leader or “Original Gangster” (OG), had negotiated his leadership position while in prison on a prior federal conviction, dealt drugs and presided over large gang meetings in which he called for enhancing the operations of the gang and increasing punishments for those who violated gang rules.
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Roosevelt Sumpter, aka “TuTu,” 43, of Los Angeles, was sentenced on November 7, 2016 to 20 years in prison after pleading guilty to participating in the racketeering conspiracy, conspiring to distribute crack cocaine, illegally possessing a firearm in furtherance of the RICO and drug conspiracies, and selling crack cocaine near schools. Sumpter, also an OG of the gang, was a main supplier of narcotics to BGC members, directed the operation of drug stash house locations in the gang’s territory, and employed other gang members and associates to transport the drugs.
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Tyrell Thomas, Sr., aka “Big Rave,” 53, of Los Angeles, was sentenced on January 30 to 10 years in prison after pleading guilty to participating in the racketeering conspiracy and conspiring to distribute crack cocaine. Thomas, also an OG member of the gang, led gang meetings where he instructed younger BGC members to guard the gang’s territory, retaliate against rival gangs, sell drugs, carry firearms, and to not cooperate with law enforcement;
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Keefe Dashiell, aka “Bugz,” 48, of Los Angeles, was sentenced last Friday to 10 years in prison after pleading guilty to participating in the racketeering conspiracy, conspiring to distribute marijuana, and possessing with intent to distribute marijuana near schools. Dashiell, another OG of the gang, operated an illegal marijuana grow that supplied other members of the gang, possessed firearms, and directed other members to obtain firearms and violently guard the gang’s territory against rival gangs.
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Akia Pete, aka “Studder Box,” 35, of Gardena, was sentenced on March 13 to 13 years in prison after pleading guilty to participating in the racketeering conspiracy and conspiring to distribute crack cocaine. Pete was a member of a BGC robbery crew that, armed with firearms, tasers and zip ties, followed victims home from banks and robbed them of their cash.
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Juan Tyars, 45, of Los Angeles, was sentenced April 3 to 11 years in prison after pleading guilty to participating in the racketeering conspiracy and conspiring to distribute crack cocaine. Tyars was a BGC associate who sold crack cocaine, converted powder cocaine into crack for resale by the gang’s members, and carried firearms to protect the gang’s drug selling territory.
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Patrick Swaffi, 41, of Los Angeles, was sentenced last Monday to 15 years in prison after pleading guilty to participating in the racketeering conspiracy, conspiring to distribute crack cocaine, selling crack cocaine near schools, and illegally possessing a firearm in furtherance of the RICO and drug conspiracies. Swaffi, a BGC member who admitted to engaging in a shootout with a rival, was a drug dealer who repeatedly carried firearms to further the gang’s drug dealing and to protect its territory.
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Kenneth Washington, aka “Tiny Dulow,” 26, of Los Angeles, was sentenced on January 30 to 12 years in prison after pleading guilty to participating in the racketeering conspiracy and conspiring to distribute crack cocaine. Washington was a member of the Gremlin Riderz hit squad and participated in a violent takeover robbery of a jewelry store that netted over $40,000, sold drugs, carried firearms, committed robbery, and directed violence by other members of the BGC.
All the defendants discussed above agreed to be banned from living in the BGC territory after their release from prison, and subject to expansive search conditions after their release from prison.
Another BGC and Gremlin Riderz member faces a mandatory life sentence when he is sentenced next month. Tony Gordon, aka “Wodi,” 36, of Freeport, Illinois, was found guilty after a week-long trial at the end of 2016 of conspiring to commit RICO offenses, including murder, extortion, robbery and conspiracy to traffic crack cocaine. Gordon is scheduled to be sentenced by Judge Otero on July 17, and because of three narcotics-related prior convictions, he faces life without parole in federal prison.
The RICO indictment charged 72 defendants, 57 of whom have been convicted by guilty plea or at trial. The remaining 15 defendants are scheduled to go on trial in November.
The investigation into 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, and Assistant United States Attorneys Max Shiner and Wilson Park of the Violent and Organized Crime Section.
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Glendale Tax Return Preparer Who Stole over $1.2 Million in Refunds Owed to His Clients Sentenced to 46 Months in Federal PrisonRead the Press Release
LOS ANGELES – The operator of a Glendale tax preparation business who admitted defrauding his clients out of more than $1.2 million by diverting their tax refunds into his own bank accounts was sentenced today to 46 months in federal prison.
Michael Joseph Calalang Cabuhat, 42, a resident of the Hollywood Hills West neighborhood of Los Angeles, who refers to himself in online postings as “celebritytaxguy,” was sentenced by United States District Judge John F. Walter.
At this morning’s sentencing hearing, Judge Walter said Cabuhat’s scheme was “vicious” because it led to both financial and emotional harm to his victim-clients. Judge Walter noted that the stolen money was used simply to enhance Cabuhat’s lifestyle, allowing him to obtain a big house and a fancy car “all on the backs of these individuals who placed their trust” in Cabuhat.
Cabuhat is a half-owner of VisionQwest Resource Group, Inc., which operates VisionQwest Accountancy Group and Icon Tax Group, Inc., in Glendale. By pleading guilty, Cabuhat admitted that, from 2010 through 2016, he defrauded his clients in two ways.
In some instances, the client was given a copy of a tax return that showed a much smaller refund amount than on the tax return that Cabuhat actually filed with the IRS. Sometimes, Cabuhat would simply increase the amount of tax owed on the taxpayer’s copy of the return, thereby decreasing the refund; and sometimes he would manipulate the expenses reported on the filed returns to increase the refund. Without the taxpayer’s knowledge, Cabuhat filed paperwork that directed the IRS to deposit the small amount reflected on the taxpayer’s copy of the tax return into the taxpayer’s bank account, and to deposit the remainder into a bank account that Cabuhat controlled.
In other instances, Cabuhat gave the client a copy of a tax return that falsely showed a tax due, but Cabuhat would file with the IRS a tax return that sought a refund. In these instances, Cabuhat would tell the taxpayer to make the “tax payment” directly to him so he could remit the payment to the IRS. In fact, Cabuhat kept the “tax payment” and directed the IRS to deposit the refund that the client should have received into a bank account that he controlled.
Using these fraudulent means, Cabuhat stole more than $1.2 million that belonged to over 150 of his clients. Cabuhat also admitted that he failed to report this money on his own tax returns, which allowed him to evade the payment of approximately $268,000 that he owed to the IRS.
Cabuhat pleaded guilty in June 2016 to wire fraud and subscription to a false federal income tax return.
In addition to the prison sentence, Judge Walter ordered Cabuhat to pay $1,496,416 in restitution to his victims and the IRS. Cabuhat has already transferred and agreed to transfer to federal authorities $426,528 derived from the sale of his residence and a Ferrari 360 Spider that was seized from Cabuhat when he was arrested last year.
This case was investigated by IRS Criminal Investigation and the U.S. Treasury Inspector General for Tax Administration (TIGTA).
U.S. Army Contracting Officer Pleads Guilty to Accepting Bribes from South Korean Companies that Were Paid for Work Not PerformedRead the Press Release
LOS ANGELES – A U.S. Army Contracting Officer Representative pleaded guilty today to federal bribery charges stemming from his approval of fraudulent invoices issued by South Korean contractors in return for payments totaling at least $170,000.
Marcus D. Flowers, 50, of Enterprise, Alabama, pleaded guilty to one count of conspiracy to commit bribery, a felony offense that carries a statutory maximum sentence of five years in federal prison.
Flowers pleaded guilty before United States District Judge Percy Anderson, who scheduled a sentencing hearing for September 11.
Flowers, who worked as a Contracting Officer for the United States Army, was responsible for approving invoices issued by various South Korean contractors that installed closed circuit televisions at U.S. military installations in the Republic of Korea. According to court documents, Flowers accepted between $170,000 and $543,783 in cash and other items of value in return for approving payments to contractors despite their non-installation of CCTVs, or the installation of cheaper, inferior CCTV models than those required by the contracts.
As part of his plea, Flowers has agreed to forfeit to the government any remaining proceeds of the bribery scheme, which includes cash and real estate purchased in the Philippines.
Flowers flew to the United States from South Korea and surrendered himself to authorities in Los Angeles on Tuesday. He is currently free on his personal recognizance.
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.
Two Florencia 13 Gang Members Convicted of Racketeering Acts, Including a Murder, Sentenced to Life Without Parole in Federal PrisonRead the Press Release
LOS ANGELES – Two Huntington Park men who are members of the Florencia 13 street gang and participated in the murder of another gang member have been sentenced to life without parole in federal prison after being convicted at trial of racketeering, narcotics, and weapons offenses.
Jose Dorado, also known as “Yogi,” 35, and Tannous Fazah, aka “Terist,” 27, were sentenced on Monday by United States District Judge Beverly Reid O’Connell.
Judge O’Connell sentenced the two men after presiding over a four-week trial last summer that ended with a jury returning guilty verdicts on multiple charges against the two defendants – including conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act, conspiracy to commit violent crimes in aid of racketeering (VICAR), conspiracy to traffic narcotics, possession with intent to distribute methamphetamine and heroin, and felon in possession of firearms and ammunition.
The evidence presented at trial showed that Dorado and Fazah received an order from an incarcerated, senior member of the F13 gang in March 2010 that instructed them to beat and kill a junior member of the gang. Within hours of receiving the order, in an alley in Huntington Park, Dorado, Fazah and other members of the gang circled the victim and proceeded to punch and kick him repeatedly. While the victim lay unconscious, Fazah brandished a handgun and fatally shot the victim in the face.
“[T]here is no crime more serious than murder, and the brutality of this particular homicide – that is, a vicious beating carried out at the center of a circle of gang members, who continued to pound on the victim even after he had lost consciousness, and concluding with Fazah shooting the victim in the face at point blank range – supports a sentence at the statutory maximum,” prosecutors wrote in sentencing memorandums that recommended life sentences for Fazah and Dorado.
The drug trafficking charges against Dorado and Fazah were based on the F13 gang’s street sales of illegal narcotics and smuggling of drugs into the Los Angeles County jail system.
The jury that convicted Dorado and Fazah also returned guilty verdicts against two other F13 members who also were charged in the 2013 federal racketeering indictment. Those other two defendants were sentenced recently to lengthy prison terms. The RICO indictment named 30 members and associates of the F13 gang. With the four convictions last summer, a total of 25 defendants have been convicted in the case (one charged defendant died, and the other four remain fugitives).
The investigation in this case was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Los Angeles County Sheriff’s Department; the California Department of Corrections and Rehabilitation; the Huntington Park Police Department; and the Los Angeles Police Department.
The case is being prosecuted by Assistant United States Attorneys Terrence P. Mann of the Santa Ana Branch Office, Sheila Nagaraj of the Public Corruption and Civil Rights Section, and Victoria A. Degtyareva of the General Crimes Section.
Los Angeles Strike Force Indictment Targets Traffickers that Allegedly Shipped Hundreds of Pounds of Narcotics to U.S.Read the Press Release
LOS ANGELES – The first major narcotics trafficking indictment resulting from an investigation by the Los Angeles Strike Force was unsealed today as authorities arrested seven defendants charged with drug trafficking, money laundering and weapons offenses.
The indictment charges a total of 22 defendants who allegedly were members of a drug trafficking organization linked to the Sinaloa Cartel. The charged 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.
In addition to the seven defendants arrested this morning, one of the defendants was already in a California prison on unrelated charges. The remaining 14 defendants, including four whose true names are not yet known, are fugitives, most of whom are believed to be in Mexico.
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. During the investigation, authorities also seized 33 firearms, three vehicles with hidden compartments and $1.3 million in cash.
The indictment specifically details 14 significant seizures, one of which involved more than 15 kilograms of cocaine and methamphetamine, as well as over 28 firearms. Another seizure involved more than 70 pounds of methamphetamine, cocaine and heroin as well as two vacuum-sealed bundles of cash.
The Los Angeles Strike Force investigation was 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. These Strike Force members uncovered a sophisticated international drug trafficking network that regularly transported narcotics across the U.S.-Mexico border and at times stored drugs in “stash houses” across the San Gabriel Valley. The narcotics then were distributed throughout the United States.
“The Strike Force has become a leader in using innovative investigative techniques to target Mexico-based drug trafficking organizations,” said Acting United States Attorney Sandra R. Brown. “We are committed to stemming the illegal flow of narcotics into our country, and law enforcement initiatives like the Strike Force will continue to have a significant impact in protecting Americans from dangerous drugs and the violence that often accompanies illegal drug trafficking.”
“The stream of narcotics coming into the United States fuels violence in local neighborhoods and contributes to the current drug epidemic in the United States,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Today’s multi-agency operation is the result of a lengthy investigation targeting cartel members for their roles in an international drug importation network that enriched Mexico-based cartel members while American communities were being adversely affected. The FBI will continue to address this crime problem by working with our law enforcement partners, and by engaging with leaders of communities affected by narcotics trafficking.”
“The indictment and today’s arrests demonstrate the Strike Force’s ability to reach both sides of the border, impacting the Sinaloa Cartel by disrupting their drug supply chain and neutralizing key players in the organization,” said DEA Special Agent in Charge David J. Downing. “We’ve sent a message to the cartels – they won’t be allowed to operate freely in Los Angeles or conduct business as usual.”
The 19-count indictment specifically charges the defendants with being members of a conspiracy to distribute controlled substances. The indictment contains 14 counts alleging possession with the intent to distribute narcotics. One defendant also is charged with illegally possessing seven handguns while engaged in drug trafficking activities.
The seven defendants arrested today are:
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Julian Rocha, also known as “JRoc,” 33, of Azusa, who is charged with being a Los Angeles-based purchaser of Mexican narcotics;
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Froilan Villarreal, also known as aka “DeL MoNtE,” of Azusa, who allegedly illegally possessed seven firearms when authorities seized large quantities of cocaine and methamphetamine from his El Monte residence;
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Oscar Arredondo, 53, of Bakersfield, an alleged drug transporter who was arrested in the Eastern District of California;
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Maria Ernestina Limon Elenes, 64, of Azusa, an alleged facilitator and the mother of lead defendant/fugitive Jeuri Limon Elenes;
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Antonio Orozco, also known as “El Sr.,” 45, of Long Beach, who allegedly transported narcotics across the international border;
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Martin Ruiz Saldana, of Santa Ana, who allegedly received narcotics from Villarreal; and
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Audrey Rose Urrea, of Chula Vista, who allegedly attempted to transport narcotics across the international border and who was arrested this morning in the Southern District of California.
The five defendants arrested today in the Central District of California are being arraigned this afternoon in United States District Court in Los Angeles.
One additional defendant – Fernando Madueno Sanchez – was already in state prison. Prosecutors will seek to transfer him to federal custody to face the charges in the indictment unsealed today.
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.
The lead defendant in the indictment – Jeuri Limon Elenes (also known as “Prude,” “Rzr,” “Fox,” and “Royal Nuevo”) – is charged with acquiring narcotics in Mexico and arranging for the transportation of the drugs into the United States. Limon is a fugitive at this time.
In addition to the narcotics and weapons offenses, the indictment includes a charge of conspiracy to launder money that alleges the drug trafficking organization used the United States banking system to launder drug proceeds by making multiple cash deposits into purportedly legitimate accounts to disguise the origin of thousands of dollars of illicit funds.
“When drug traffickers amass large quantities of cash from narcotics sales, they often attempt to legitimize these ill-gotten profits through the use of banks and financial institutions,” said R. Damon Rowe, Special Agent in Charge of IRS Criminal Investigation. “This joint investigation demonstrates our efforts to ensure that the banking industry will not be abused by large-scale narcotics traffickers, but will be operated in a fair and honest manner to promote the public interest.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If they are convicted in this case, all of the defendants would be subject to potential sentences of life without parole in federal prison.
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Former Orange County Income Tax Return Preparer Sentenced to One Year in Federal Prison for Falsifying Deductions on Clients’ ReturnsRead the Press Release
LOS ANGELES – The former owner of a Tustin income tax preparation business called First Quality Tax Services was sentenced today to one year and one day in federal prison for preparing and filing fraudulent federal income tax returns claiming false deductions for his clients.
Thomas P. Butcher, 62, of Rancho Santa Margarita, was sentenced by United States District Court Judge John A. Kronstadt.
In addition to the prison term, which he will begin serving by July 25, Butcher was ordered to pay $197,549 in restitution to the Internal Revenue Service.
Butcher pleaded guilty in January to two counts of aiding and abetting in the preparation of a false income tax return.
According to court documents Butcher prepared and filed tax returns for tax years 2009 through 2011 that claimed false credits and deductions that his clients were not entitled to receive.
Butcher “inflated or completely fabricated various itemized deductions on his clients’ Schedules A, particularly those involving gifts to charity and alleged job expenses,” prosecutors wrote in a sentencing memorandum filed with the court.
The fraudulent deductions and credits lowered the taxpayers’ income tax liability. During the course of the scheme, Butcher prepared and filed with the IRS hundreds of false federal income tax returns that resulted in tax losses to the United States of at least $1,045,956. The IRS was able to recoup much of that money through audits of Butcher’s clients. These clients “are victims of his scheme, as many of them underwent lengthy and costly IRS audits to not only pay back the refund to which they were not entitled, but interest and additional penalties,” according to the sentencing memo.
The investigation into Butcher was conducted by IRS Criminal Investigation’s Los Angeles Field Office. The case was prosecuted by Assistant United States Attorney Valerie L Makarewicz of the Tax Division.
United States Intervenes in False Claims Act Lawsuit Against the City of Los Angeles and CRA/LA for Knowingly Failing to Provide Accessible HousingRead the Press Release
The United States has intervened in a lawsuit against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles) alleging that they falsely certified compliance with federal accessibility laws in connection with claims submitted to the U.S. Department of Housing and Urban Development (HUD) for housing grants, the Department of Justice announced today. The accessibility laws allegedly violated include Section 504 of the Rehabilitation Act, the Fair Housing Act, and the duty to affirmatively further fair housing, which are meant to ensure that people with disabilities have fair and equal access to public housing.
The lawsuit alleges that the City applied for and received from HUD millions of dollars in federal housing funds, a portion of which it provided to the CRA/LA, to develop affordable housing that was accessible for people with disabilities. As recipients of HUD funds, the City and the CRA/LA must comply with the accessibility laws allegedly violated. Among other things, these laws require that five percent of all units in certain federally-assisted multifamily housing be accessible for people with mobility impairments, and an additional two percent be accessible for people with visual and auditory impairments. They also require that the City and the CRA/LA maintain a publicly available list of accessible units and their accessibility features. Likewise, they require that the City and the CRA/LA have a monitoring program in place to ensure people with disabilities are not excluded from participation in, denied the benefits of, or otherwise subjected to discrimination in, federally-assisted housing programs and activities solely on the basis of a disability.
The City annually had to certify compliance with Section 504, the Fair Housing Act, and the duty to affirmatively further fair housing as a precondition for receiving HUD funds. The lawsuit alleges that none of the HUD-assisted multifamily housing supported by the CRA/LA, or other developers, met the minimum number of accessible units. The lawsuit also alleges that the City and the CRA/LA neither monitored sub-recipients of HUD funds for compliance with federal accessibility laws nor maintained a publicly-available list of accessible units and their accessibility features.
“Recipients of federal housing funds must honor their commitments to accommodate people with disabilities,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Denying people with disabilities equal access to public housing deprives one of the most disadvantaged groups in society of fair housing opportunities.”
“This case alleges that the City of Los Angeles repeatedly violated the law by falsely certifying that millions of federal dollars were being used to build housing that included units accessible to people with disabilities,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “While people with disabilities struggled to find accessible housing, the city and its agents denied them equal access to housing while falsely certifying the availability of such housing to keep the dollars flowing. The conduct alleged in this case is very troubling because of the impact on people who did not have access to housing that met their needs.”
“This case demonstrates the important role whistleblowers play in the process of uncovering waste, fraud, and abuse,” said HUD Inspector General David A. Montoya. “It further displays our commitment to fully pursue allegations that are brought to our attention.”
The lawsuit, United States ex rel. Ling, et al. v. City of Los Angeles, et al., No. CV11-00974 (PG), was filed in the U.S. District Court in Los Angeles by Mei Ling, a resident of Los Angeles who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group. The lawsuit was filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery. The False Claims Act permits the government to intervene in such a lawsuit, as it has done in this case.
These matters were investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, and the HUD Office of Inspector General.
The claims asserted against the City of Los Angeles and the CRA/LA are allegations only; there has been no determination of liability.
U.S. Intervenes in ‘Whistleblower’ Lawsuit against City of Los Angeles that Alleges City Received Millions of Dollars in Federal Grants and Knowingly Failed to Provide Housing Accessible to the DisabledRead the Press Release
LOS ANGELES – The United States has intervened in a lawsuit against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles) alleging that they falsely certified compliance with federal accessibility laws in connection with housing grants from the U.S. Department of Housing and Urban Development (HUD), the Department of Justice announced today.
The lawsuit alleges that the city and the CRA/LA violated accessibility laws – including Section 504 of the Rehabilitation Act and the Fair Housing Act – and the duty to affirmatively further fair housing, which are meant to ensure that people with disabilities have fair and equal access to public housing.
The lawsuit alleges that the City of Los Angeles applied for and received millions of dollars in federal housing funds, a portion of which it provided to the CRA/LA, to develop affordable housing that was accessible to people with disabilities. As recipients of HUD funds, the city and the CRA/LA were required to comply with the accessibility laws.
Among other things, the accessibility laws require that 5 percent of all units in certain federally-assisted multifamily housing units be accessible to people with mobility impairments, and an additional 2 percent be accessible to people with visual and auditory impairments. The laws also require that the City of Los Angeles and the CRA/LA maintain a publicly available list of accessible units and their accessibility features. The laws further require that the city and the CRA/LA have a monitoring program in place to ensure that people with disabilities are not excluded from participation in, denied the benefits of, or otherwise subjected to discrimination in federally-assisted housing programs and activities solely on the basis of a disability.
As a precondition for receiving HUD funds, each year the city certified compliance with Section 504 and the Fair Housing Act, and certified that it satisfied its duty to affirmatively further fair housing. The lawsuit alleges that the city and CRA/LA failed to operate their housing programs in compliance with these federal civil rights laws, which resulted in public housing that was built without the minimum number of accessible units. The lawsuit also alleges that the city and the CRA/LA neither monitored sub-recipients of HUD funds to ensure that they complied with federal accessibility laws nor maintained a publicly-available list of accessible units.
“This case alleges that the City of Los Angeles repeatedly violated the law by falsely certifying that millions of federal dollars were being used to build housing that included units accessible to people with disabilities,” said Acting United States Attorney Sandra R. Brown. “While people with disabilities struggled to find accessible housing, the city and its agents denied them equal access to housing while falsely certifying the availability of such housing to keep the dollars flowing. The conduct alleged in this case is very troubling because of the impact on people who did not have access to housing that met their needs.”
“Recipients of federal housing funds must honor their commitments to accommodate people with disabilities,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Denying people with disabilities equal access to public housing deprives one of the most disadvantaged groups in society of fair housing opportunities.”
The lawsuit, United States ex rel. Ling, et al. v. City of Los Angeles, et al., CV11-974 (PG), was filed in United States District Court in Los Angeles by Mei Ling, a resident of Los Angeles who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group. After a lengthy investigation, the United States elected to intervene in the lawsuit, which was unsealed on May 31 in an order signed by United States District Judge Philip S. Gutierrez. The government learned that the case was unsealed earlier this week.
The lawsuit was filed under the qui tam – or whistleblower – provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery. The False Claims Act permits the government to intervene in such a lawsuit, as it has done in this case. The United States has until July 31 to file its complaint in intervention.
“This case demonstrates the important role whistleblowers play in the process of uncovering waste, fraud, and abuse,” said HUD Inspector General David A. Montoya. “It further displays our commitment to fully pursue allegations that are brought to our attention.”
This matter was investigated by Assistant United States Attorney Lisa A. Palombo of the Civil Fraud Section of the United States Attorney’s Office, the Commercial Litigation Branch of the Justice Department’s Civil Division, and the HUD Office of Inspector General.
The claims asserted against the City of Los Angeles and the CRA/LA are allegations only. There has not yet been a determination of liability.
Pimp Pleads Guilty to Federal Sex Trafficking Charge Related to Young Woman Forced to Work as Prostitute in Inland EmpireRead the Press Release
SANTA ANA, California – A local pimp who recruited a woman through a social media website and advertised her services as a prostitute in an online publication has pleaded guilty to a federal sex trafficking charge.
Lawrence T. Gunn Jr., 33, whose last known residence was in Woodland Hills, pleaded guilty yesterday to one count of sex trafficking by force, fraud or coercion.
Gunn pleaded guilty before United States District Judge David O. Carter, who scheduled a sentencing hearing on October 2. As a result of yesterday’s guilty plea, Gunn faces a mandatory minimum sentence of 15 years in prison, and he could be sentenced to as much as life in federal prison.
Gunn, who is also known as “Classified,” forced the victim to get a tattoo of his moniker on her face after he recruited her on Facebook, according to a plea agreement filed in United States District Court.
Gunn admitted that he used force, threats of force, fraud and/or coercion that led the victim to engage in commercial sex acts between May 2015 and late February 2016.
Gunn took all of the money the victim collected from customers, according to the plea agreement. Gunn physically struck the woman if she attempted to keep any of the money or if she tried to leave, breaking her nose on one occasion. Gunn also admitted in his plea agreement that he threatened to kill the victim if she tried to leave him.
Once he completes his prison term, Gunn will be required to register as a sex offender.
This case was investigated by the Riverside County Anti-Human Trafficking Task Force, which include representatives from the Riverside County Sheriff’s Department and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The Moreno Valley Police Department, the San Bernardino County Sherriff’s Office, the Los Angeles County Sheriff’s Department and the Los Angeles Police Department assisted in the investigation.
This case is being prosecuted by Assistant United States Attorney Abigail Evans of the Riverside Branch Office.
Orange County Man Pleads Guilty to Taking $2.2 Million from Distressed Homeowners in Bogus Loan Modification SchemeRead the Press Release
SANTA ANA, California – An Orange County man pleaded guilty this morning to federal charges relating to his operation of a fraud scheme that took $2.2 million from distressed homeowners through false promises that he could help them avoid foreclosure by obtaining modifications to their mortgages.
Kevin Frank Rasher, 45, who has been in custody since his arrest at his Coto de Caza residence one year ago, pleaded guilty to 12 counts of mail fraud.
Rasher pleaded guilty before United States District Judge Josephine L. Staton, who is scheduled to sentence the defendant on September 29. Rasher faces a statutory maximum sentence of 240 years in federal prison.
In a plea agreement filed in federal court, Rasher admitted that, between 2011 and March 2016, he falsely told distressed homeowners that he was an employee of HUD and/or an attorney, and that the homeowners had been approved for a reduced mortgage payment or interest rate. Rasher then instructed the homeowners to mail their mortgage payments to one of his businesses, claiming that he would forward the money to the homeowners’ mortgage lenders. Instead of forwarding the money to the mortgage lenders, Rasher deposited the money into his bank accounts and used it for his own personal expenses.
Rasher admitted that he fraudulently obtained approximately $2.24 million from more than 500 victims.
This case was investigated by the U.S. Department of Housing and Urban Development, Office of the Inspector General; the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); the United States Postal Inspection Service; the Federal Housing Finance Agency’s Office of the Inspector General; and the Federal Bureau of Investigation.
The case against Rasher is being prosecuted by Assistant United States Attorneys Rosalind Wang and Robert J. Keenan of the Santa Ana Branch Office.
Local Newspaper Editor Sentenced to 41 Months in Federal Prison for Illegally Possessing Firearms in ‘Guns for Haiti’ InvestigationRead the Press Release
LOS ANGELES – The editor of a newspaper that covers the Sunland/Tujunga area has been sentenced to 41 months in federal prison for illegally possessing firearms.
David “Doc” DeMulle, 75, of Tujunga, the editor-in-chief of The Foothills Paper, was sentenced on Monday by United States District Judge Otis D. Wright III.
DeMulle pleaded guilty in 2016 to being a convicted felon in possession of firearms. When he imposed the sentence earlier this week, Judge Wright found that DeMulle possessed 25 firearms and hundreds of pounds of ammunition that he was forbidden to possess because of convictions for perjury and welfare fraud in 1990.
This matter came to the attention of the firearms trafficking unit of the Los Angeles Police Department and ATF agents when DeMulle published an advertisement in his paper concerning “Guns for Haiti Quake Relief.” The ad solicited donations of firearms, which DeMulle then purportedly would sell, using the proceeds to support earthquake relief efforts in Haiti. Undercover LAPD officers responded to the advertisement and delivered two firearms to DeMulle, who illegally accepted them.
Subsequent searches of DeMulle’s home and business led authorities to recover 23 additional firearms, as well as hundreds of pounds (not rounds) of ammunition.
The investigation also revealed that DeMulle had previously placed classified ads in The Foothills Paper soliciting firearms, which resulted in him purchasing several firearms from a private citizen while falsely claiming that he possessed a federal firearms dealer’s license and would handle the firearms transfer paperwork.
The case against DeMulle was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Los Angeles Police Department.
This case was prosecuted by Assistant United States Attorney Gregory Lesser of the Violent and Organized Crime Section.
U.S. Files 9 Lawsuits Seeking Forfeiture of Properties Worth over $30 Million Allegedly Bought with Proceeds of EB-5 Visa Fraud SchemeRead the Press Release
LOS ANGELES – Federal Prosecutors have filed nine civil complaints that seek the forfeiture of nine real properties across Southern California that were allegedly purchased with proceeds generated by a fraudulent scheme that collected more than $50 million from foreign investors seeking “Green Cards” through the EB-5 visa program.
The nine lawsuits filed yesterday afternoon in United States District Court allege that much of the money collected from the primarily Chinese investors either was refunded to the foreign nationals or was stolen by participants in the scheme.
The asset forfeiture complaints allege that attorney Victoria Chan and her father, Tat Chan, operated a business called California Investment Immigration Fund, LLC (CIIF) from 2008 until this year. In April, authorities executed federal search warrants as part of an ongoing investigation.
According to the lawsuits filed yesterday, CIIF 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. Those involved in the scheme allegedly convinced more than 100 Chinese nationals to invest over $50 million in CIIF and related companies.
“Rather than legitimately investing the funds into American businesses, CIIF either refunded the funds to the EB-5 investors while the investors’ EB-5 petitions were pending, in direct violation of the EB-5 program, or stole millions of dollars to use for personal expenditures, including buying million-dollar homes,” according to the lawsuits that allege “many foreign nationals were able to improperly obtain U.S. green cards.”
The lawsuits allege that the properties named in the asset forfeiture lawsuits were purchased with proceeds derived from mail fraud, wire fraud or visa fraud and that the purchases themselves constituted money laundering.
The lawsuits seek the forfeiture of nine properties:
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a commercial property in the City of Industry valued at over $3 million;
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five residences in the cities of Rancho Cucamonga, Arcadia (worth approximately $4 million), Diamond Bar, Riverside and Duarte (valued at $5.5 million); and
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parcels of land located in Ontario, Indio (worth nearly $6 million) and Rancho Cucamonga (valued at more than $7.7 million).
The asset forfeiture lawsuits contain allegations only. In order to forfeit the properties named in the complaints, the government must show by a preponderance of the evidence that the properties were purchased with proceeds derived from criminal activity.
The ongoing investigation into the EB-5 fraud scheme is being conducted by the FBI and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
The asset forfeiture complaints were filed by Assistant United States Attorney Jonathan Galatzan of the Asset Forfeiture Section.
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