Central District of California
Press releases recorded for this federal judicial district.
Idaho Man Serving Sentence in Terrorism Case Indicted on Attempted Murder Charges Stemming from Attack on Federal Prison WardenRead the Press Release
RIVERSIDE, California – A man who was convicted and sentenced to a quarter century in prison for providing material support to a foreign terrorist organization has been indicted on attempted murder charges for allegedly trying to kill the warden of the federal prison where he was serving his sentence.
Fazliddin Kurbanov, 34, was named in a three-count indictment returned yesterday by a federal grand jury. The indictment that charges Kurbanov with attempted murder of a federal officer, assault on a federal officer with a deadly or dangerous weapon, and possession by an inmate of a prohibited object intended to be used as a weapon.
The indictment alleges that Kurbanov used a prison-made knife to attack Warden Calvin Johnson at the Federal Correctional Institute at Victorville on May 31, 2016. Warden Johnson, who is now serving at another facility operated by the United States Bureau of Prisons, was seriously injured in the attack, but he has recovered.
Kurbanov currently is serving a 25-year sentence imposed last year by a federal judge in Idaho after being found guilty of conspiring and attempting to provide material support to a designated foreign terrorist organization and possessing an unregistered destructive device.
In relation to the new indictment filed yesterday in Riverside, Kurbanov will be brought into United States District Court for an arraignment in the coming weeks.
If he is convicted of all three charges in the indictment, Kurbanov would face a statutory maximum sentence of 45 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 the attack on the warden is being conducted by the Federal Bureau of Investigation.
This case is being prosecuted by Assistant United States Attorney Jay H. Robinson of the Terrorism and Export Crimes Section.
Pomona Woman Arrested on Federal Charges that Allege Scheme to Smuggle Restricted Space Communications Technology to ChinaRead the Press Release
LOS ANGELES – A Pomona woman was arrested this morning on federal charges that accuse her of conspiring to procure and illegally export sensitive space communications technology to her native China.
Si Chen, also known as Cathy Chen, 32, is expected to be arraigned this afternoon in United States District Court on charges contained in an indictment that was returned by a federal grand jury on April 27 and was unsealed today after her arrest.
The 14-count indictment accuses Chen of violating the International Emergency Economic Powers Act (IEEPA), which controls and restricts the export of certain goods and technology from the United States to foreign nations. Chen is also charged with conspiracy, money laundering, making false statements on an immigration application, and using a forged passport.
According to the indictment, from March 2013 to December 2015, Chen purchased and smuggled sensitive items to China without obtaining licenses from the U.S. Department of Commerce that are required under IEEPA. Those items allegedly included components commonly used in military communications “jammers” from which Chen removed the export-control warning stickers prior to shipping. Additionally, Chen is suspected of smuggling communications devices worth more than $100,000 that are commonly used in space communications applications. On the shipping paperwork Chen falsely valued the items at $500. The indictment further describes how Chen received payments for the illegally exported products through an account held at a bank in China by a family member.
“Federal export laws are designed to protect American interests by preventing the proliferation of technology that may fall into the wrong hands,” said Acting United States Attorney Sandra R. Brown. “We will vigorously pursue those who traffic items that could harm our national security if they land in the wrong hands.”
Chen was taken into custody this morning without incident by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the U.S. Department of Commerce’s Office of Export Enforcement (OEE); and the Defense Criminal Investigative Service (DCIS).
“One of HSI’s top enforcement priorities is preventing sensitive technology from falling into the hands of those who might seek to harm America or its interests,” said Joseph Macias, special agent in charge for HSI Los Angeles. “The export of items like those identified in this case are tightly controlled with good reason. Given what’s at stake, HSI will continue to work closely with its law enforcement partners to combat this threat and hold the perpetrators accountable for putting the U.S. at risk.”
In addition to the export violations, Chen is also charged with employing several aliases and using a forged passport in an effort to conceal her alleged smuggling activities on behalf of unnamed co-conspirators in China. The indictment alleges the defendant used a Chinese passport bearing her photo and a false name – “Chunping Ji” – to rent an office in Pomona where she took delivery of the export-controlled items. After receiving the goods, the indictment alleges Chen shipped the devices to Hong Kong in parcels that bore her false name, along with false product descriptions and monetary values, all done in an effort to avoid attracting law enforcement scrutiny.
Under IEEPA, it is crime to willfully export or attempt to export items that appear on the Commerce Control List without a license from the U.S. Department of Commerce. These are items authorities have determined could be detrimental to regional stability and national security.
“The partnership between OEE, HSI and DCIS was critical in the apprehension of Si Chen,” said Richard Weir, Special Agent in Charge of Commerce’s Office of Export Enforcement Los Angeles Field Office. “We will continue to work with our law enforcement partners to identify, deter, and prevent any suspected violations.”
“The Defense Criminal Investigative Service and our law enforcement partners will relentlessly pursue anyone who violates laws that are designed to preserve and protect the Department of Defense’s critical technologies,” stated Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service. “Precious DoD resources are invested in technology, and its theft puts our brave soldiers, marines and airmen at risk.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If convicted of the 14 charges in the indictment, Chen would face a statutory maximum penalty of 150 years in prison.
This case is the result of an ongoing investigation being conducted by HSI, OEE and DCIS. The probe began in 2015 after U.S. Customs and Border Protection alerted HSI about a suspicious parcel its officers intercepted that contained communications equipment sent by “Chunping Ji.”
The case against Chen is being prosecuted by Assistant United States Attorney Judith A. Heinz of the National Security Division in the United States Attorney’s Office.
13 Defendants, Many Linked to Local Street Gangs, Charged with Credit Card Skimming and Narcotics TraffickingRead the Press Release
LOS ANGELES – Thirteen people, most of whom are linked to La Mirada- and Norwalk-based street gangs, have been charged in federal court in a bank fraud scheme involving “skimmed” credit cards, and in narcotics cases, one of which alleges a transaction involving over three kilograms of methamphetamine.
Authorities this morning arrested 11 of the defendants, the lead defendant in the credit card fraud case was arrested late this afternoon, and law enforcement continues to search for one more defendant who remains at large.
The credit card skimming operation was allegedly operated by a man linked to a criminal street gangs known as the La Mirada Punks and the Carmelas. Russell Jay Ogden, along with his wife, are accused of leading the scheme that allegedly skimmed credit cards – meaning victims’ credit cards were surreptitiously run through an electronic device that collected the cards’ information. Members of the scheme then encoded the stolen information on counterfeit credit cards and used the fraudulent cards to purchase big ticket items that were later sold for a profit. The investigation has determined that many of the credit cards in this case were skimmed at a restaurant in Huntington Beach.
In total, the conspiracy compromised more than 500 credit cards and caused various financial institutions to suffer losses of more than $500,000 after the cards were used across Southern California at department stores such as Nordstrom and Bloomingdales, sporting goods stores and Toys R Us, according to the bank fraud indictment unsealed today.
Those charged in the 27-count bank fraud indictment are:
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Russell Jay Ogden, also known as “Big Dog,” 43, of La Mirada, who was taken into custody late this afternoon and is expected to be arraigned tomorrow;
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Rudy Leo Aguilar, also known as “Fats” and “Dreamer,” 32, of Norwalk, who was previously convicted of voluntary manslaughter in a gang-related incident and was sentenced to 13 years in state prison;
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Blaine Andrew Porlas, 51, of La Habra, who is linked to the Nazi Low Riders;
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Marco Anthony Alday III, 26, of Whittier;
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Milan Vukelich, also known as “Bo,” 37, of Artesia;
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Shelly Anne Ogden, who is Russell Ogden’s wife, 41, of La Mirada;
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Leo Norman Aguilar, 32, of Norwalk;
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Ameer Adnan Yousef, 32, of La Mirada;
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Shawn Phillip Vasquez, 49, of Hesperia; and
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Lloyd Luis Leyh, 43, of Huntington Beach, who was sentenced to 13 years in state prison in an attempted murder case involving a firearm, and who is currently a fugitive in this case.
Many of these defendants are members of the La Mirada Punks and the Norwalk-based Carmelas criminal street gangs, and most of the defendants have felony records, it was disclosed in court this afternoon.
Each defendant is charged with conspiracy to commit bank fraud, a charge that carries a statutory maximum sentence of 30 years in federal prison. Most of the defendants are also charged in other counts of credit card fraud and aggravated identity theft.
Rudy Leo Aguilar is also named in a separate indictment that charges him with distributing nearly two pounds of methamphetamine.
Two additional defendants are charged in another narcotics-trafficking case involving methamphetamine. They are:
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Gustavo Uribe Meza, also known as “Big Boy” and “Goose,” 24, of Whittier; and
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Peter Chiapparine, also known as “Uncle Pete,” 72, of South Gate.
The final defendant arrested in the takedown is charged in an indictment that accuses him of trafficking approximately 3.6 kilograms of methamphetamine and federal firearms violations. He is:
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Norman Aguilar Jr., also known as “Flea,” who is Leo Aguilar’s brother, 35, of Norwalk.
In court this afternoon, the 11 defendants arrested this morning entered not guilty pleas and were ordered to stand trial on July 18. Prosecutors said that searches conducted today revealed evidence that the credit card scheme was ongoing.
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 the Ogdens and their associates is being conducted by a Task Force that includes the Federal Bureau of Investigation, the Drug Enforcement Administration, the Huntington Beach Police Department, the Brea Police Department and the United States Secret Service.
These cases are being prosecuted by Assistant United States Attorneys Lana Morton-Owens and Saurish Bhattacharjee of the Violent and Organized Crime Section.
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Defense Contractor Employee Pleads Guilty to Selling Satellite Secrets to Undercover Agent Posing as Russian SpyRead the Press Release
LOS ANGELES – An engineer who worked for a cleared defense contractor pleaded guilty today to federal charges of economic espionage and violating of the Arms Export Control Act for selling sensitive satellite information to a person he believed to be an agent of a Russian intelligence service.
Gregory Allen Justice, 49, of Culver City, who worked as an engineer on military and commercial satellite programs, pleaded guilty to two felony offenses that could send him to federal prison for as long as 35 years.
According to a plea agreement filed in this case, Justice stole proprietary trade secrets from his employer and provided them to a person he believed to be a Russian agent – but who in fact was an undercover FBI employee.
In addition to their proprietary nature, the documents contained technical data covered by the United States Munitions List and therefore were subject to controls restricting export from the United States under the International Traffic in Arms Regulations.
In exchange for providing these materials during a series of meeting between February and July of 2016, Justice sought and received thousands of dollars in cash payments. During one meeting, Justice and the undercover agent discussed developing a relationship like one depicted on the television show “The Americans,” and during their final meeting, Justice offered to take the undercover agent on a tour of his employer’s production facilities where Justice said all military spacecraft were built, according to the plea agreement.
Justice specifically pleaded guilty to one count of attempting to commit economic espionage and one count of attempting to violate the Arms Export Control Act.
Justice pleaded guilty before United States District Judge George Wu, who scheduled a sentencing hearing for September 18. Justice has been in custody since his arrest last July.
The case against Justice was investigated by the FBI and the Air Force Office of Special Investigations.
Prosecutors from the Terrorism and Export Crimes Section of the United States Attorney’s Office and the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
Defense Contractor Employee Pleads Guilty to Selling Satellite Secrets to Undercover Agent Posing as Russian SpyRead the Press Release
Today, Gregory Allen Justice, 49, of Culver City, California, pleaded guilty to federal charges of one count of attempting to commit economic espionage and one count of attempting to violate the Arms Export Control Act. The charges are related to Justice’s selling sensitive satellite information to a person he believed to be an agent of a Russian intelligence service. Justice was an engineer who worked for a cleared defense contractor. Specifically, he worked on military and commercial satellite programs.
The announcement was made by Acting Assistant Attorney General for National Security Dana J. Boente and Acting U.S. Attorney Sandra R. Brown for the Central District of California.
According to a plea agreement filed in this case, Justice stole proprietary trade secrets from his employer and provided them to a person he believed to be a Russian agent – but who in fact was an undercover FBI employee.
In addition to their proprietary nature, the documents contained technical data covered by the U.S. Munitions List and therefore were subject to controls restricting export from the U.S. under the International Traffic in Arms Regulations.
In exchange for providing these materials during a series of meeting between February and July of 2016, Justice sought and received thousands of dollars in cash payments. During one meeting, Justice and the undercover agent discussed developing a relationship like one depicted on the television show “The Americans,” and during their final meeting, Justice offered to take the undercover agent on a tour of his employer’s production facilities where Justice said all military spacecraft were built, according to the plea agreement.
Justice faces a maximum sentence of 35 years in prison. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
Justice pleaded guilty before U.S. District Judge George Wu, who scheduled a sentencing hearing for September 18. Justice has been in custody since his arrest in July 2016.
This case was investigated by the FBI and the Air Force Office of Special Investigations.
Attorneys from the Terrorism and Export Crimes Section of the U.S. Attorney’s Office and the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
Manager of Clothing Factory Sentenced to Prison after Offering Bribe to Federal Labor Investigator in Exchange for Closing InvestigationRead the Press Release
LOS ANGELES – The general manager of a La Puente garment factory, who was found guilty of offering to pay bribes to an investigator with the United States Department of Labor in exchange for the investigator closing an investigation into wage violations, has been sentenced to 18 months in federal prison.
Howard Quoc Trinh, 43, of Arcadia, the manager of Seven-Bros. Enterprises, was sentenced yesterday by United States District Judge Christina A. Snyder.
In April 2016, a federal jury, which deliberated for only about one hour, convicted Trinh of two counts of bribery, finding that he offered to pay $10,000 in bribes – and actually paid $3,000 – to a Department of Labor Wage and Hour investigator. As part of the bribery scheme, Trinh promised to pay the balance when the investigation was closed.
The Labor Department investigator was investigating Seven-Bros. for violating the Fair Labor Standards Act (FLSA), which sets standards for minimum wage and overtime pay. The Wage and Hour investigator led a team that conducted an unannounced visit to Seven-Bros on March 10, 2015. The investigation into wage violations covered a period from May 2012 through March 10, 2015 and found that Seven-Bros owed approximately $100,000 to compensate employees for FLSA violations over that period. As part of the investigation, the Labor Department issued a “hot goods” Notice to Restrain the Shipment of Goods, which prevented the company from shipping certain inventory until the back wages were paid to employees.
The investigator returned to Seven-Bros on March 18, at which time Trinh said he did not owe his employees any back wages and that he wanted to “take care” of the investigator. In response to Trinh’s statements, the Labor Department’s Office of Investigator General (OIG) initiated an investigation and outfitted the investigator with recording equipment. On the evening of March 18, during a recorded meeting, Trinh offered the investigator $10,000 to close out the investigation without finding any violations and to lift the hot goods notice. Trinh told the investigator that he wanted a “clean case” with “no violations” and ““I would say to you $10,000…in your pocket.”
The next day, during another recorded meeting, Trinh gave the investigator an initial payment of $3,000 in cash in an unmarked manila envelope. Before he gave the cash to the investigator, Trinh patted the envelope and said “we never met…we never sat at this table…we never had any of this.” On March 20, 2015, Trinh was arrested.
Trinh’s “criminal conduct reflects a complete disregard for the law,” prosecutors wrote in a sentencing memorandum filed with the court. “Rather than pay his employees (most of whom earned minimum wage) the back wages that they were owed for overtime, [the] defendant tried to buy his way out of trouble by bribing” the Labor Department investigator.
Judge Snyder ordered Trinh to begin serving his prison sentence by September 6.
The investigation in this case was conducted by the United States Department of Labor, Office of Investigator General, Office of Labor Racketeering and Fraud Investigations.
This case was prosecuted by Assistant United States Attorney Julian L. André of the Major Frauds Section.
Task Force Investigation Targets Leadership of MS-13, including Former Top ‘Shot-Caller’ of L.A. Faction, a Dozen ‘Shot-Callers’ who Supervised Cliques and Three Members Accused of MurderRead the Press Release
LOS ANGELES – Capping a nearly three-year investigation, federal, state and local law enforcement authorities this morning took into custody a total of 21 members and associates of Mara Salvatrucha, a transnational criminal street gang commonly called MS-13 that was formed in Los Angeles about 30 years ago.
Those arrested today by members of the Los Angeles Metropolitan Task Force on Violent Gangs (LAMTFVG) are among 44 defendants who face federal charges, including the former head of the entire gang in Los Angeles and 12 senior leaders of the gang, who led a majority of the gang’s cliques in the Los Angeles region. These dozen high-ranking gang members had formed a de facto leadership council for the gang – a committee that was needed because no one person was willing to take on the top role in the wake of ongoing scrutiny by law enforcement.
A racketeering indictment charges three MS-13 members for murders they committed in connection with the gang’s activities. These murders were solved as a result of the LAMTFVG investigation and its partnership with LAPD Olympic Division Homicide detectives.
Carlos Alfredo Cardoza Lopez, also known as “Little Boy,” 23, faces a violent crime in aid of racketeering (VICAR) murder charge for allegedly fatally shooting an innocent bystander who was confronted on August 15, 2015 inside the gang-controlled Little San Salvador Nightclub and Restaurant on North Western Avenue. A friend of the murder victim was also stabbed during the attack.
Two other MS-13 members – Samuel Alexander Paredes Rivas, also known as “Blacky,” 39, and Joffri Molina, also known as “Espia,” 24 – are also charged with VICAR murder. Rivas is accused of murdering a man on August 30, 2015 at a strip mall in Pacoima. Molina is accused of murdering a man on September 27, 2015 on a street in North Hollywood.
Lopez, Rivas and Molina are eligible for the death penalty if found guilty of the murder offenses. Prosecutors will decide whether to seek the death penalty at a later date.
“This gang is responsible for murders – both of rival gangsters and innocent bystanders – as well as drug dealing and extortion in many communities in the Los Angeles area,” said Acting United States Attorney Sandra R. Brown. “With thousands of members here in the Southland, the gang’s power is widespread – power which it maintains with severe acts of violence. Today’s charges and arrests, however, will deal a critical blow to the top leadership of this criminal organization and will significantly improve safety in neighborhoods across this region.”
“This case has targeted the leadership and most violent actors of the MS-13 street gang in Los Angeles, as well as MS-13’s links to the Mexican Mafia,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This operation will have a significant impact on this violent gang and their overall ability to maintain control over law-abiding citizens.”
“This operation is a powerful example of the significant impact partnerships play in law enforcement,” said Los Angeles Police Chief Charlie Beck. “The successful arrest of these individuals was only possible because a wide range of agencies collaborated with each other, based on information gleaned from countless investigation hours and tips provided by people who could trust our police officers, regardless of their immigration status.”
At the center of today’s takedown is a 41-count racketeering indictment that charges 34 members and associates of MS-13. The indictment, which alleges violations of the federal Racketeer Influence and Corrupt Organizations (RICO) Act, outlines the gang’s organizational structure, its affiliation with the Mexican Mafia prison gang, and its strict set of rules and punishment. The 127-page indictment describes how MS-13 uses violence and intimidation in an effort to maintain its power and control narcotics trafficking.
The lead defendant in the RICO indictment is Jose Balmore Romero, also known as “Porky,” 43, who in 2013 and 2014 was the overall shot-caller for MS-13 Los Angeles. The indictment alleges that, as the leader of the gang, Balmore oversaw MS-13’s drug trafficking activities, coordinated the collection of extortionate “taxes” and “rent,” some of which was then distributed to Mexican Mafia members who oversaw MS-13. Balmore also allegedly conducted and attended gang meetings, where he disseminated orders, including authorizing the “jumping in” of new members and the assault of members who were in bad standing. Balmore has been in local custody since February 2015, when the LAMTFVG arrested him for ordering a gang-related murder.
In addition to narcotics trafficking and violent crimes, members of MS-13 also allegedly engaged in a wide range of criminal conduct that includes the extortion of street-level drug dealers and innocent business owners who were threatened with death if they did not make payments to the gang. The gang also operates illegal after-hours clubs where it generates profits from gambling and illegal narcotics and alcohol sales.
“This gang uses coercion and intimidation while inflicting horrific violence in the neighborhoods where they operate,” said ATF Los Angeles Field Division Special Agent in Charge Eric Harden. “Today is a great win for justice and a heavy message to the community. Law enforcement will combine their resources and all our areas of expertise to cripple these organizations. We will win, they will lose.”
In addition to the 34-defendant RICO indictment, prosecutors have filed a drug-trafficking indictment against five other gang members who were associated with the Mexican Mafia. These defendants are charged with conspiracy to distribute controlled substances, as well as various narcotics and firearms offenses.
Two other MS-13 members have also been charged separately with narcotics and firearms offenses.
One defendant charged in this sweep is named in a case filed under seal because he was a juvenile at the time of the alleged offenses.
Prosecutors this morning are filing criminal complaints in federal court against two additional defendants who were arrested this morning, one of whom is a shot-caller of an MS-13 clique who is currently on supervised release after being convicted in a prior racketeering case.
“The relationship between drugs, violent crimes, and street gangs isn’t new to DEA – the illicit drug market serves as the life-blood of street gang operations,” said DEA Special Agent in Charge David J. Downing. “The DEA and Southern California Drug Task Force are committed to disrupting the flow of drugs into our communities and mitigating the associated violence these gangs perpetuate.”
During this morning’s operation, authorities arrested a total of 21 federal defendants. Out of the 44 defendants facing federal charges, 20 were already in custody and three are considered to be fugitives.
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.
Those taken into custody today are expected to be arraigned on the charges against them this afternoon in United States District Court. The defendants who are currently in custody will be brought into federal court to face the charges at a later date.
The investigation into MS-13 was conducted by the Los Angeles Metropolitan Task Force on Violent Gangs and was led by the Federal Bureau of Investigation and the Los Angeles Police Department.
The LAMTFVG includes personnel from the Drug Enforcement Administration’s Southern California Drug Task Force pursuant to the High Intensity Drug Trafficking Area (HIDTA) program; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Los Angeles County Sheriff’s Department; U.S. Customs and Border Protection; and the California Department of Corrections and Rehabilitation. U.S. Immigration and Customs Enforcement and the United States Bureau of Prisons participated in the investigation.
Other agencies provided substantial assistance during the investigation, including the Los Angeles Regional Criminal Information Clearinghouse (LA CLEAR), the Los Angeles City Attorney's Office, the Los Angeles County Probation Department, and the Los Angeles County Department of Children and Family Services.
The prosecution of the RICO case and the related federal cases is being handled by Assistant United States Attorneys Joanna Curtis and Jeff Chemerinsky of the Violent and Organized Crime Section.
United States Intervenes in Second False Claims Act Lawsuit Alleging that UnitedHealth Group Inc. Mischarged the Medicare Advantage and Prescription Drug ProgramsRead the Press Release
For the second time in two weeks, the United States has filed a complaint against UnitedHealth Group Inc. (UHG) that alleges UHG knowingly obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in UHG’s Medicare Advantage Plans throughout the United States, the Justice Department announced today. Today’s action follows the government’s filing of a complaint earlier this month in United States ex rel. Swoben v. Secure Horizons, a related action that also alleges that UHG submitted false claims for payment to the Medicare Program.
“The Department of Justice’s pursuit of this matter illustrates its firm commitment to ensure the integrity of the Medicare Program, including those parts of the program that rely on the services of Medicare Advantage Organizations,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.
UHG is the nation’s largest Medicare Advantage Organization, with more than 50 Medicare Advantage and Drug Prescription plans providing healthcare services and prescription drug benefits to millions of Medicare beneficiaries throughout the United States. receives a monthly “risk adjustment” payment from Medicare for each enrolled beneficiary. The risk adjustment payments are based, in significant part, on the health status of the beneficiary, which are reflected by diagnosis that receives from treating physicians and subsequently submits to Medicare for each beneficiary.
The complaint filed today by the United States alleges that UHG knowingly disregarded information about beneficiaries’ medical conditions, which increased the risk adjustment payments UHG received from Medicare. In particular, the lawsuit contends that, for many years, UHG conducted a national Chart Review Program designed to identify additional diagnoses not reported by treating physicians that would increase UHG’s risk adjustment payments. However, UHG allegedly ignored information from these chart reviews showing that hundreds of thousands of diagnoses provided by treating physicians and submitted by it to Medicare were invalid and did not support the Medicare payments it had previously requested and obtained. By ignoring this information, UHG avoided repaying Medicare monies to which it was not entitled.
The complaint also alleges that UHG ignored information about invalid diagnoses from health care providers with financial incentives to furnish such diagnoses. These providers received payments from UHG tied to the amount of payments that UHG received from Medicare, and thus benefitted financially from any increase in Medicare payments resulting from the diagnoses they provided. UHG allegedly knew that its financial arrangements with these providers created a strong incentive for and increased the risk of these providers to report invalid diagnoses. UHG’s own reviews of these providers’ medical records confirmed that the providers were reporting invalid diagnoses. But upon obtaining such evidence, UHG knowingly avoided further efforts to identify invalid diagnoses from these providers and repay Medicare monies to which neither it nor these providers were entitled.
“To ensure that the program remains viable for all beneficiaries, the Justice Department remains tireless in its pursuit of Medicare fraud perpetrated by healthcare providers and insurers,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “The primary goal of publicly funded healthcare programs like Medicare is to provide high-quality medical services to those in need – not to line the pockets of participants willing to abuse the system.”
“As the nation’s largest Medicare Advantage Organization, UHG received substantial overpayments based upon untruthful and inaccurate information about the health status of those enrolled in its plans,” said Acting U.S. Attorney James P. Kennedy Jr. for the Western District of New York. “Such fraudulent spending of taxpayer’s dollars will not be tolerated.”
“With approximately one third of Medicare beneficiaries enrolled in Medicare Advantage plans, careful investigation of charges is more important than ever,” said Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “People receiving health care through these programs and taxpayers deserve nothing less.”
The lawsuit was filed by Benjamin Poehling, the former finance director for the UHG group that managed UHG’s Medicare Advantage Plans. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for 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 part, in this case.
The government’s intervention in this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Western District of New York and the Central District of California and HHS-OIG.
The claims asserted against UHG are allegations only, and there has been no determination of liability.
The case is captioned United States of America ex rel. Benjamin Poehling v. UnitedHealth Group, Inc., No. 16-08697. The Swoben complaint is captioned United States ex rel. Swoben v. Secure Horizons, et al., 09-5013. Both are pending in the United States District Court for the Central District of California.
U.S. Intervenes in Second ‘Whistleblower’ Lawsuit Alleging UnitedHealth Mischarged the Medicare Advantage and Prescription Drug ProgramsRead the Press Release
LOS ANGELES – For the second time in two weeks, the United States this afternoon filed a complaint against UnitedHealth Group Inc. that alleges the company knowingly obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in UnitedHealth’s Medicare Advantage Plans throughout the United States.
Today’s action follows the government’s filing of a complaint earlier this month in United States ex rel. Swoben v. Secure Horizons, a related action that also alleges UnitedHealth submitted false claims for payment to the Medicare Program.
United Health is the nation’s largest Medicare Advantage Organization, with more than 50 Medicare Advantage and Drug Prescription plans providing healthcare services and prescription drug benefits to millions of Medicare beneficiaries throughout the United States. UnitedHealth receives a monthly “risk adjustment” payment from Medicare for each enrolled beneficiary. The risk adjustment payments are based, in significant part, on the health status of the beneficiary, which are reflected by diagnosis that UnitedHealth receives from treating physicians and subsequently submits to Medicare for each beneficiary.
The complaint filed today by the United States alleges that UnitedHealth knowingly disregarded information about beneficiaries’ medical conditions, which increased the risk adjustment payments the company received from Medicare. In particular, the lawsuit contends that, for many years, UnitedHealth conducted a national Chart Review Program designed to identify additional diagnoses not reported by treating physicians that would increase its risk adjustment payments. However, UnitedHealth allegedly ignored information from these chart reviews showing that hundreds of thousands of diagnoses provided by treating physicians and submitted by it to Medicare were invalid and did not support the Medicare payments it had previously requested and obtained. By ignoring this information, UnitedHealth avoided repaying Medicare monies to which it was not entitled.
The complaint also alleges that UnitedHealth ignored information about invalid diagnoses from health care providers with financial incentives to furnish such diagnoses. These providers received payments from UnitedHealth tied to the amount of payments that UnitedHealth received from Medicare, and thus benefitted financially from any increase in Medicare payments resulting from the diagnoses they provided. UnitedHealth allegedly knew that its financial arrangements with these providers created a strong incentive for and increased the risk of these providers to report invalid diagnoses. UnitedHealth’s own reviews of these providers’ medical records confirmed that the providers were reporting invalid diagnoses. But upon obtaining such evidence, UnitedHealth knowingly avoided further efforts to identify invalid diagnoses from these providers and repay Medicare monies to which neither it nor these providers were entitled.
“To ensure that the program remains viable for all beneficiaries, the Justice Department remains tireless in its pursuit of Medicare fraud perpetrated by healthcare providers and insurers,” said Acting United States Attorney Sandra R. Brown. “The primary goal of publicly funded healthcare programs like Medicare is to provide high-quality medical services to those in need – not to line the pockets of participants willing to abuse the system.”
“The Department of Justice’s pursuit of this matter illustrates its firm commitment to ensure the integrity of the Medicare Program, including those parts of the program that rely on the services of Medicare Advantage Organizations,” said Acting Assistant Attorney General Chad A. Readler of the Department’s Civil Division.
“With approximately one-third of Medicare beneficiaries enrolled in Medicare Advantage plans, careful investigation of charges is more important than ever,” said Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services, Office of Inspector General. “People receiving health care through these programs and taxpayers deserve nothing less.”
The lawsuit was filed by Benjamin Poehling, the former finance director for the group that managed UnitedHealth’s Medicare Advantage Plans. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for 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 part, in this case.
The case is captioned United States of America ex rel. Benjamin Poehling v. UnitedHealth Group, Inc., CV16-8697. The Poehling and Swoben cases are pending in the United States District Court for the Central District of California.
This matter was investigated by the United States Attorney’s Office in Los Angeles, the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Western District of New York, and the U.S. Department of Health and Human Services’ Office of Inspector General.
The government’s intervention in this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
The claims asserted against UnitedHealth are allegations only, and there has been no determination of liability.
Longtime Fugitive who Owned Car Dealership Sentenced to 10 Years in Prison for Huge 1980s-Era Bank Fraud SchemeRead the Press Release
LOS ANGELES – An Australian man who ran one of the largest automobile dealerships in the United States before fleeing the country 29 years ago was sentenced this morning to 120 months in federal prison in a bank fraud scheme that caused more than $64 million in losses to banks, one of which collapsed as a result of the losses suffered in the scam.
United States District Judge S. James Otero sentenced Eminiano “Jun” Reodica Jr., 72, this morning. Judge Otero called defendant’s scheme to defraud “extremely serious,” stating it caused “much disruption, much heartache” to “too many victims to count.” Judge Otero said defendant preyed upon members of the Filipino community as well as numerous federally insured financial institutions in perpetrating an extremely serious fraud scheme that resulted in total losses to both individuals and financial institutions of over $90 million.
Reodica, who fled the United States in the summer of 1988, has been in federal custody since he was arrested in late 2012 at Los Angeles International Airport during a layover while traveling from Australia to Canada.
On the day before he was set to go on trial in October 2015, Reodica pleaded guilty to 26 counts of bank fraud and making false statements to financial institutions. From 1984 through 1988, the fraud scheme victimized at least five banks – Union Bank, First Los Angeles Bank, Manilabank, First Central Bank and Imperial Savings.
“The scale of the fraud is virtually unparalleled,” prosecutors wrote in their sentencing memorandum. “[T]he financial institutions that defendant preyed upon suffered losses in excess of $64.2 million. Notably, Imperial subsequently failed and went into receivership with the FDIC based on the losses sustained as the result of defendant’s fraud.”
Reodica was the president of the Glendora-based Grand Wilshire Group (GWG) of Companies, which operated about two dozen car dealerships, including Grand Chevrolet in Glendora. “Over time, GWG became the second-largest Chevrolet dealership in the United States and the third largest car dealership in the United States,” prosecutors wrote in court documents. “Due to the apparent success of GWG, [then-California] Governor [George] Deukmejian appointed defendant to the board of the California Department of Motor Vehicles, and later ousted him from the board when his fraud was discovered.”
GWG had credit agreements with the victim financial institutions under which GWG pledged car contracts as collateral on lines of credit. The agreements required GWG to collect car loan payments from its customers and provide those funds to the financial institutions.
When he pleaded guilty, Reodica specifically admitted that he would promise the same car contract as collateral to two different banks at the same time. In order to accomplish this part of his scheme, Reodica directed employees to forge customer signatures on car contracts that were then promised to a second bank. As another part of his scheme, Reodica also repossessed and resold cars without telling the banks.
Reodica also admitted concealing from the banks that customers were delinquent on their car loans. In some cases, when the overall delinquency rate exceeded a level acceptable to a bank, Reodica used GWG funds to make car payments, which allowed him to continue using those delinquent contracts as collateral. Reodica also made his employees sign for car loans for cars that they were not really buying so that Reodica could increase the lines of credit he obtained from the banks.
As a result of Reodica’s fraud scheme, the Grand Wilshire Group and Grand Chevrolet collapsed into bankruptcy in August 1988, which is when Reodica fled to his native Philippines.
“In addition to the financial institutions, individual investors, who primarily consisted of members of the Filipino community in Los Angeles, trusted defendant with their money, the vast majority of which was lost following the bankruptcy,” prosecutors said in documents filed with the court. “In total, the investors sustained an additional $24.9 million in losses.”
In addition to being sentenced to 10 years in prison, Reodica was ordered to pay $29.7 million restitution.
When special agents with the FBI arrested him at LAX in November 2012, Reodica was traveling under an Australian Passport in the name of “Roberto Coscolluela.” While living in Australia under the name of Coscolluela, he ran a tax preparation and insurance business. Reodica’s activities in these businesses have resulted in allegations of a $7 million fraud in Australia causing him to be dubbed “Brisbane’s Bernie Madoff,” according to government sentencing papers.
The case against Reodica was investigated the Federal Bureau of Investigation.
Today’s sentencing hearing was handled by Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Poonam Kumar and Scott Paetty of the Major Frauds Section
Former MLB Player Doug DeCinces and an Associate Found Guilty of Insider Trading Offenses for Using Non-Public Info to Trade StocksRead the Press Release
SANTA ANA, California – A federal jury today convicted former professional baseball player Douglas DeCinces of insider trading charges for using non-public information to purchase stock in an Orange County company in transactions that netted him $1.3 million in profits.
A second man who illegally took the insider information from DeCinces – David Parker – was also found guilty today of violating federal securities laws.
The guilty verdicts follow a trial that lasted nearly two months in United States District Court.
As a result of the guilty verdicts, DeCinces, 66, of Laguna Beach, and Parker, 65, of Provo, Utah, respectively face statutory maximum penalties of 220 years and 60 years in federal prison.
United States District Judge Andrew J. Guilford will schedule a status conference in the coming weeks to discuss future proceedings in the case, including sentencing hearings.
At trial, prosecutors argued that DeCinces obtained the insider information from James V. Mazzo, 60, a neighbor of DeCinces in Laguna Beach, who was the CEO of the Santa Ana-based Advanced Medical Optics, Inc. Mazzo is accused of telling DeCinces that his company was going to be acquired by Abbott Laboratories. The jury that convicted DeCinces and Parker was unable to reach a unanimous verdict on the charges against Mazzo, and Judge Guilford declared mistrial on these charges.
Mazzo allegedly provided DeCinces with confidential information in advance of Abbott’s January 2009 acquisition of Advanced Medical Optics (NYSE: EYE). DeCinces and his associates, including Parker, used the non-public information to purchase shares of EYE, which increased from approximately $8 to $22 as a result of the acquisition.
The evidence presented at trial showed that DeCinces liquidated his diverse stock portfolio of investments at Merrill Lynch – suffering approximately $80,000 in losses – to obtain approximately $160,000 that he used to purchase EYE stock. DeCinces ultimately purchased a total of 90,700 shares of EYE stock, which he sold soon after Abbott’s tender offer for the company was publicly announced, and realized approximately $1.3 million in profits.
DeCinces gave information on the acquisition of EYE to Parker. After purchasing EYE shares and selling them following the acquisition, Parker realized illegal profits of nearly $350,000.
The jury found DeCinces guilty of 14 counts of insider trading. The jury was unable to reach a unanimous verdict on 18 additional counts of insider trading. Judge Guilford declared a mistrial on the unresolved charges.
Parker was convicted of three counts of insider trading.
As a result of the mistrial, Mazzo still faces 13 counts of insider trading, and another 13 counts of insider trading in the context of a tender offer.
The investigation in this case was conducted by the Federal Bureau of Investigation and IRS Criminal Investigation. The Securities and Exchange Commission provided assistance during the investigation.
This case is being prosecuted by Assistant United States Attorney Stephen Cazares of the Major Frauds Section, as well as Assistant United States Attorneys Jennifer L. Waier, Ivy A. Wang and Lawrence E. Kole of the Santa Ana Branch Office.
Former L.A. County Sheriff Lee Baca Sentence to 3 Years in Federal Prison for Leading Scheme to Obstruct Investigation into JailsRead the Press Release
LOS ANGELES – Former Los Angeles County Sheriff Lee Baca, who was convicted of overseeing a scheme designed to obstruct a federal investigation into corruption and civil rights abuses at county jail facilities, was sentenced today to 36 months in federal prison.
Baca, 74, who also was found guilty of lying to federal investigators, was sentenced this morning by United States District Judge Percy Anderson.
Judge Anderson, who presided over a series of trials that led to the conviction of 10 former members of the Sheriff’s Department involved in the scheme to obstruct justice, said Baca “knew what he was doing was wrong, and he had no problem using his office to further his own agenda.”
Judge Anderson ordered Baca to begin serving his sentence by July 25. In addition to the prison term, the judge ordered Baca to pay a $7,500 fine.
“Blind obedience to a corrupt culture has serious consequences,” Judge Anderson said.
Today’s sentencing follows a trial that ended in March when a federal jury convicted Baca on three felony counts: conspiracy to obstruct justice, obstruction of justice and making false statement to federal investigators. The evidence presented at trial showed that Baca was the top figure in the conspiracy, which also involved his right-hand man and deputies who implemented orders from the Sheriff.
“Rather than fulfill his sworn duty to uphold the law and protect the public, Lee Baca made a decision to protect what he viewed as his empire, and then he took actions in an effort to simply protect himself,” said Acting United States United States Attorney Sandra R. Brown. “He wore the badge, but ultimately, he failed the department and the public’s trust. Today’s sentence demonstrates that no one is above the law – not even the leader of the largest municipal police agency in the nation.”
“As Sheriff, Mr. Baca should have held himself accountable. He should have corrected the actions of others, rather than shift blame and obstruct a federal investigation,” said Deirdre Fike, the Assistant Director in Charge of the Los Angeles Field Office. “I’m proud of the team of agents and prosecutors who persevered throughout this lengthy and challenging investigation, and grateful to the victims and witnesses who came forward.”
The obstruction scheme began in August 2011 after LASD officials discovered a cell phone in an inmate’s cell at the Men’s Central Jail, linked the phone to the FBI’s Civil Rights Squad and learned that the inmate was an FBI informant. The cell phone had been smuggled into the jail by a corrupt deputy who took bribes. The FBI had developed the informant as part of an investigation into the county jail system, which for years had been the subject of allegations of inmate abuse and subsequent cover-ups. The evidence presented at trial showed that the sheriff wanted to avoid federal scrutiny of his troubled jails.
As part of the scheme to obstruct justice, Baca ordered a criminal investigation of the FBI agents conducting the investigation, and he directed his underlings to conceal the informant from federal investigators. Over the course of approximately six weeks, members of the conspiracy then took a series of steps that successfully hid the informant from federal authorities, engaged in witness tampering in an effort to prevent information from being shared with federal authorities, and threatened to arrest the lead FBI agent on the case. When Baca watched a recording of his deputies confronting the FBI agent, he reacted by stating “it was the best laugh he had in some time,” prosecutors noted in their sentencing memorandum filed with the court.
While Baca put his right-hand man, then-Undersheriff Paul Tanaka, in charge of the scheme, Baca participated in dozens of meetings and phone calls with members of the conspiracy and directed his deputies to approach the FBI agent. Baca participated in the scheme after being warned by a top deputy that the actions would amount to obstruction of justice.
The case against Baca is the result of an investigation by the Federal Bureau of Investigation and is one in a series of cases resulting from the investigation into county jail facilities in downtown Los Angeles that has resulted in 21 convictions.
Baca was the tenth member of the Los Angeles Sheriff’s Department convicted in the obstruction scheme. Former Undersheriff Paul Tanaka, who was also found guilty by a federal jury, was sentenced last year to five years in federal prison. At today’s sentencing hearing, Judge Anderson said Baca would have received a sentence as long as Tanaka’s, except for his medical condition and the former sheriff’s lengthy history of public service.
Eleven other former deputies have been convicted of federal charges, mostly related to unprovoked beatings of inmates and subsequent cover-ups.
The investigation of this case was conducted by the Federal Bureau of Investigation. The matter is being prosecuted by Assistant United States Attorney Brandon Fox, Chief of the Public Corruption and Civil Rights Section; Assistant United States Attorney Lizabeth A. Rhodes, Chief of the General Crimes Section; and Assistant United States Attorney Eddie A. Jauregui of the Major Frauds Section.
Two Convicted of Racketeering Offenses Related to Criminal Activities of Florencia 13 Street Gang Receive Lengthy Prison TermsRead the Press Release
LOS ANGELES – Two key operatives of the Florencia 13 street gang who were convicted of racketeering and narcotics offenses following a trial last year have each been sentenced to over a decade in federal prison.
Giselle Casado, also known as “Guera,” 33, of Downey, was sentenced yesterday to 121 months in prison for being a “secretary” to the gang’s “shot-caller,” which allowed her to play an inside role in the gang’s illegal operations.
The evidence presented at last year’s trial showed that Casado relayed gang-related messages, controlled illicit monies, and assisted drug trafficking activities.
A second person found guilty last year by a federal jury – Jose Sanchez, also known as “Trouble” and “Troll,” 41, of Huntington Park – was sentenced last month to 238 months in federal prison. Sanchez, a longtime F13 member, was sentenced on April 17 for his role in the gang’s racketeering activities, as well as related drug trafficking and firearm offenses.
Casado and Sanchez were sentenced by United States District Judge Beverly Reid O’Connell, who presided over a four-week trial that culminated last July with a jury returning guilty verdicts on charges of conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act and conspiracy to distribute narcotics. Sanchez also was found guilty of possessing a firearm in furtherance of a drug trafficking crime for possessing a handgun at a “casita” – one of the illegal gambling establishments run by the gang.
The evidence presented at trial showed that Sanchez was one of the F13’s “soldiers,” who were required to engage in drug trafficking and violent acts on behalf of the gang. Sanchez served as armed security to protect illegal narcotics sales at several casitas. He also sold drugs both at the casitas and from his residence in Huntington Park. When she sentenced Sanchez last month, Judge O’Connell described Sanchez as having “consistently led a life of crime.”
The jury that convicted Casado and Sanchez also returned guilty verdicts against two other F13 members who were charged in a federal racketeering indictment in August 2013. The 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 other two defendants found guilty at trial last summer are scheduled to be sentenced by Judge O’Connell on June 5. Jose Dorado, 35, and Tannous Fazah, 27, both of Huntington Park, were also found guilty of the RICO and drug trafficking conspiracies, with the latter offense based on F13’s street sales of illegal narcotics and smuggling of drugs into the Los Angeles County jail system.
During the trial, prosecutors argued that Dorado and Fazah were also “soldiers” who, among other things, participated in the murder of a junior member of the F13 Gang. At sentencing, Dorado and Fazah are each facing a maximum sentence of life without parole in federal prison.
The investigation into Florencia 13 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.
Santa Ana Man Arrested on Federal Charges of Illegally Selling Feathers from Bald Eagles and Other Protected Migratory BirdsRead the Press Release
LOS ANGELES – A Santa Ana man was arrested today by special agents with the United States Fish and Wildlife Service after he was charged with unlawfully selling feathers from a bald eagle and other protected migratory birds.
Tyler Rene Vela, 27, was arrested this morning without incident pursuant to a criminal complaint filed last week. Vela is scheduled to make his initial appearance this afternoon in United States District Court.
The complaint filed last Wednesday outlines an undercover investigation conducted by agents from the Fish and Wildlife Service to identify individuals who illegally traffic in eagles, red-tail hawks and other protected bird species.
Following a series of undercover Facebook messages, Vela sold “bustles” made from feathers taken from red-tail hawks, turkey vultures and bald eagles, according to the complaint. A bustle is a string of either hawk or eagle feathers attached to a backboard and worn on the back during Native American dance exhibitions. In 2015 2016, Vela allegedly negotiated prices, accepted payments and mailed the bustles to undercover agents.
Southern California is home to a variety of protected native and migratory bird species. Protected wildlife species are generally identified as threatened or endangered and are in need of protection to ensure the viability of the population.
Federal wildlife statutes are in place to protect migratory birds, red-tail hawks and other birds of prey, generally prohibiting the sale and trafficking of their parts. The use of the internet and social media platforms to sell protected bird species – or any other threatened or endangered wildlife – creates a market, increases demand and ultimately leads to the decimation of these vulnerable populations.
The complaint charges Vela with misdemeanor offenses of selling subadult bald eagle feathers and the parts of other protected migratory birds, including a red-tailed hawk. If convicted of violating the Bald and Golden Eagle Protection Act, Vela faces a statutory maximum sentence of one year in federal prison. If convicted of violating the Migratory Bird Treaty Act, he faces a statutory maximum of six months in federal prison.
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 case against Vela is being investigated by the United States Fish and Wildlife Service, Office of Law Enforcement.
The case is being prosecuted by Assistant United States Attorney Amanda M. Bettinelli of the Environmental and Community Safety Crimes Section.
Pasadena Man Sentenced to 9 Years in Federal Prison for Distributing Child Pornography over Peer-to-Peer Computer NetworkRead the Press Release
LOS ANGELES – A Pasadena resident has been sentenced to nine years in federal prison for distributing child pornography over a peer-to-peer file-sharing network.
Michael Brian Perry, 38, was sentenced on Monday by United States District Judge Otis D. Wright II.
Perry pleaded guilty on February 15 to one count of distribution of child pornography. In a plea agreement filed in court, Perry admitted that in October 2014 he “used peer-to-peer software on his computer hard drive to knowingly share with other peer-to-peer users files that defendant knew contained visual depictions of minors engaged in sexually explicit conduct.”
When authorities searched Perry’s residence in November 2014, they recovered computer equipment that contained at least 697 images of child pornography and at least 457 videos of child pornography, some of which depicted children under the age of 12 being used for sexual acts and some of which portrayed sadistic or masochistic sexual conduct against the minor victims.
Once he completes his prison term, Perry will be on supervised release for 20 years and will be required to register as a sex offender.
The case against Perry was brought 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, who work in conjunction with local law enforcement partners, including the Los Angeles Police Department and the Los Angeles Sheriff’s Department.
The case against Perry was prosecuted by Assistant United States Attorney
Vanessa Baehr-Jones of the Violent and Organized Crime Section.
Oncology Therapy Center in High Desert Pays $3 Million to Resolve Allegations of Providing Radiation Treatments without Doctor PresentRead the Press Release
LOS ANGELES – A Lancaster-based radiation therapy center has paid $3 million to resolve allegations that it submitted fraudulent bills over a nearly 10-year period to three government-run healthcare programs for unsupervised radiation oncology services.
Valley Tumor Medical Group paid $2,865,693 to the United States and $134,307 to the State of California on April 13 to resolve allegations in a “whistleblower” lawsuit that it submitted fraudulent bills to the Medicare, Medi-Cal and TRICARE programs.
The civil action, United States ex rel. Shindler v. Valley Tumor Medical Group, et al., CV 15-2249, was unsealed and dismissed on April 20 by United States District Judge R. Gary Klausner. The government learned of the unsealing late yesterday.
From January 3, 2006 through November 13, 2015, Valley Tumor’s radiation therapists allegedly administered radiation oncology treatments at Valley Tumor’s Ridgecrest location to beneficiaries of the three government healthcare programs when no doctor was on-site at the center, which is required by federal regulations. Valley Tumor closed its Ridgecrest location in early 2016.
Valley Tumor was named in a federal “whistleblower” lawsuit filed in 2015 that alleged the company and its doctor-owners knowingly submitted false claims to the Medicare, Medi-Cal and TRICARE programs. The lawsuit was brought by a former Valley Tumor employee under the qui tam – or whistleblower – provisions of the False Claims Act, which allows private citizens to bring suit on behalf of the government and share in any recovery. The whistleblower, Jared Shindler, received $555,000 from the settlement.
Valley Tumor did not admit liability in settling the lawsuit.
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General. The settlement was finalized by Assistant United States Attorney Linda A. Kontos of the Civil Fraud Section.
Two Men Arrested on Federal Charges of Attempting to Smuggle Heroin Worth Nearly $500,000 on Commercial Flights Leaving LAXRead the Press Release
LOS ANGELES – Two men face federal drug trafficking charges after they were arrested earlier this week at Los Angeles International Airport for allegedly attempting to smuggle heroin in luggage on two commercial airline flights.
Cristian Santos, 21, of Compton, was arrested on Tuesday by special agents with the Drug Enforcement Administration after boarding a Delta Airlines flight.
Special agents with the DEA on Tuesday also arrested Joel Aron, 18, of Tijuana, Mexico, after he boarded a Hawaiian Airlines flight.
Both Santos and Aron appeared in United States District Court yesterday afternoon and were ordered to appear for arraignments on June 8.
A criminal complaint filed yesterday alleges narcotics were discovered in Santos’ luggage after he checked in for a flight bound for Indianapolis. After seeing something suspicious in one of Santos’ bags during a scan, the Transportation Security Administration inspected the bag. TSA officers discovered an item wrapped with black electrical tape concealed inside the inner layer of the luggage. After determining the package inside the luggage was not an explosive, TSA officers opened the package and found a brown, tar-like substance. A subsequent test confirmed the presence of heroin. The affidavit in support of the criminal complaint states that estimated street value of the heroin in Indiana is $250,000.
Los Angeles Airport Police located Santos on his Delta Airlines flight, and escorted him off the airplane. During a subsequent interview, Santos admitted to DEA special agents that the luggage belonged to him, and that he was working with other individuals in exchange for payment, according to the affidavit.
The complaint charges Santos with possession with the intent to distribute a controlled substance. If convicted, he faces a statutory maximum sentence of 20 years in federal prison.
In the case against Aron, a criminal complaint also filed yesterday alleges that narcotics were discovered in his luggage after he checked in for a flight bound for Honolulu. The drugs were discovered after TSA officers saw something suspicious in one of Aron’s bags during an image scan. The “mass” seen on an image scan tested positive for the presence of heroin with an estimated street value in Hawaii of $225,000.
Los Angeles Airport Police located Aron on his Hawaiian Airlines flight, and escorted him off the airplane. According to the affidavit in support of the criminal complaint, Aron admitted to DEA special agents during an interview that the luggage belonged to him and this was the fourth time he had acted as a courier. Aron allegedly admitted that, each time he acted as a courier, he travelled from Mexico to Los Angeles, where he received a bag that he brought to Hawaii in exchange for $3,000.
The complaint charges Aron with possession with the intent to distribute a controlled substance. If convicted, he faces a statutory maximum sentence of 20 years in federal prison.
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 DEA Los Angeles International Airport Narcotics Task Force, an inter-agency task force based at LAX, is conducting the two investigations. The Task Force is charged with providing a coordinated law enforcement effort to target airport/airline internal criminal enterprises that use the aviation system to transport large amounts of illicit drugs throughout the United States, and throughout the world.
In addition to the DEA, the Task Force is made up of representatives from the Federal Bureau of Investigation, the Los Angeles Airport Police, the Los Angeles Police Department and the Los Angeles County Sheriff’s Department. The Task Force also works closely with the United States Customs and Border Protection and the Transportation Security Administration.
The cases against Santos and Aron are being prosecuted by Assistant United States Attorney Reema M. El-Amamy of the Organized Crime Drug Enforcement Task Force.
Former Orange County Man Found Guilty of Defrauding Insurance Companies by Billing Millions for Tests that Were Never PerformedRead the Press Release
LOS ANGELES – A former resident of Aliso Viejo has been found guilty of 15 counts of health care fraud for submitting bills to insurance companies that sought millions of dollars in reimbursement for tests and services that were never performed.
Michael Mirando, 40, who currently resides in Portland, Oregon, was found guilty yesterday by a federal jury that needed to deliberate for less than half an hour to reach its verdict after a weeklong trial.
Mirando was an owner of Holter Labs, which provided cardiac monitoring services using an ambulatory electrocardiography device known as a Holter monitor. The evidence presented during the trial in United States District Court showed that Mirando engaged in a fraud scheme in which he was responsible for the submission of millions of dollars in claims for services that were never performed.
Holter Labs provided the Holter monitor to physicians, who prescribed the devices to patients to monitor their heart rates for one to two days. Mirando then billed the patients’ insurance companies for the prescribed 24- or 48-hour tests, but he also submitted bills for services never ordered – such as 30-day tests – and for services the device could not perform – such as brain scans and oxygen studies.
From 2005 through 2016, Mirando submitted tens of thousands of claims to dozens of private health insurance companies. Mirando submitted bills that sought approximately $10 million, which included $7 million for services never performed and another $1 million for duplicate dates of services. The victim health insurance companies paid at least $2.5 million on these fraudulent claims.
After being free on bond since he was charged in this case last year, Mirando was remanded into custody on the first day of his trial after having contact with potential jurors in the case. After learning that Mirando spoke with two potential jurors outside of the courtroom, United States District Judge Percy Anderson revoked the defendant’s bond after finding that he engaged in jury tampering and had attempted to obstruct justice. At the conclusion of the trial, Judge Anderson released Mirando on a $1 million bond and ordered him placed under home detention.
Mirando is scheduled to be sentenced by Judge Anderson on August 21, at which time the defendant will face a statutory maximum sentence of 10 years in federal prison for each of the 15 counts of health care fraud.
Following his conviction yesterday, Mirando signed a stipulation in which he admitted that he purchased his house in Portland with proceeds generated by the fraud scheme. As a result, that residence could be the subject of a forfeiture action.
The case against Mirando was investigated by the Federal Bureau of Investigation.
The case is being prosecuted by Assistant United States Attorneys Michael G. Freedman and Katherine A. Rykken of the General Crimes Section.
CPA Sentenced to 6 years in Federal Prison for Embezzling $7.2 Million from Alanis Morissette and Other CelebritiesRead the Press Release
LOS ANGELES – A certified public accountant who was the business manager for singer-songwriter Alanis Morissette, as well as other well-known entertainment and sports figures, was sentenced today to six years in federal prison for stealing approximately $7.2 million from his clients.
Jonathan Todd Schwartz, 48, a Westlake Village resident who was living in Agoura Hills at the time of the criminal conduct, was sentenced this evening by United States District Judge Dolly M. Gee.
The sentencing follows Schwartz’s guilty pleas in February to wire fraud and tax fraud charges.
Schwartz was a member of GSO Business Management, LLC, a business management firm based in Sherman Oaks that provides financial guidance to high-net worth clients. Schwartz admitted in court that he stole his clients’ money and falsified account records to conceal the embezzlement.
Judge Gee described Schwartz’s crimes as “insidious” and “audacious,” noting that they caused “grave economic and psychological harm” to Schwartz’s victims, whose lives were “upended by the financial turmoil [he] caused.”
Schwartz admitted that between May 2010 and January 2014, he withdrew approximately $4.8 million belonging to Ms. Morissette without her knowledge or authorization. Schwartz further admitted that he falsely labeled the unauthorized cash withdrawals as “sundry/personal expenses” on the accounting records GSO maintained for Morissette. When confronted about the missing funds, Schwartz stated that the money was an investment in illegal marijuana “grow” businesses, a statement that Schwartz later admitted was false.
In court today, Ms. Morissette told Judge Gee that Schwartz had stolen from her in a “long, drawn-out, calculated and sinister manner.” Ms. Morissette said Schwartz not only took from nearly $5 million in cash from her, but he also stole her dreams for a time when she would be able to focus on her family and the causes that are important to her.
Because of his position as a business manager, Schwartz had access to his clients’ bank accounts so he could pay their bills and obtain cash for them. As part of embezzlement scheme, Schwartz submitted cash-withdrawal requests to banks that were not authorized by his clients, and he either had the cash delivered to him or he picked up the money himself. Schwartz was able to conceal the embezzlements because the bank statements were sent to GSO, and not to the clients. GSO prepared monthly statements for the clients based on a ledger of expenses that GSO bookkeepers maintained, and those statements were false because Schwartz had provided false information to the bookkeepers and caused other pertinent information to be deleted from the monthly statements.
“This defendant abused his clients’ trust by stealing from them, causing significant harm not only to these clients, but the firm which employed him,” said Acting United States Attorney Sandra R. Brown. “Embezzlers think that, by virtue of their positions of trust, they can alter financial records to hide their crimes. This case demonstrates that they are wrong.”
In addition to the nearly $5 million stolen from Ms. Morissette, Schwartz admitted that he embezzled more than $1 million from another client and attempted to conceal the theft by claiming the cash withdrawals were used for renovations to the client’s home. Schwartz further admitted that he embezzled $737,500 from another client and forged that client’s signature on at least two cash receipts.
“Mr. Schwartz used his clients’ funds as a personal ATM machine and, in doing so, financially victimized his clients and colleagues,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Individuals have a right to feel secure when placing their trust, as well as large sums of money, with financial managers, and the FBI will continue to do its part by holding accountable those who violate that trust and break the law.”
Schwartz pleaded guilty to filing a false tax return for the year 2012 and admitted that he failed to report nearly $1 million in income that year. But Schwartz also admitted in court that he did not report any of the approximately $7.2 million he obtained through his embezzlement scheme to the IRS. As a result of the entire scheme, Schwartz acknowledges that he owes the IRS more than $1.7 million in federal income taxes.
“Mr. Schwartz abused the trust placed in him as a CPA and Hollywood business manager in order to line his own pockets,” stated IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “As today’s sentence shows, no matter what the source of income, all income is taxable – including money you steal from your employer and clients to fund a lavish lifestyle.”
In addition to the six-year prison term, which will be followed by three years of supervised release, Judge Gee ordered Schwartz to pay $8,657,268 in restitution.
This case was investigated by the Federal Bureau of Investigation and IRS Criminal Investigation. GSO Business Management, LLC fully cooperated during the investigation. The GSO clients who were victimized as a result of Schwartz’s conduct have been reimbursed through payments made by insurance carriers and the company itself.
United States Intervenes in False Claims Act lawsuit Against UnitedHealth Group Inc. for Mischarging the Medicare Advantage and Prescription Drug ProgramsRead the Press Release
The United States has intervened and filed a complaint in a lawsuit against UnitedHealth Group Inc. (UHG) that alleges UHG obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in UHG’s largest Medicare Advantage Plan, UHC of California, the Justice Department announced today. Yesterday’s action follows the government’s intervention in February of this year in United State ex rel. Poehling v. UnitedHealth Group. Inc., a related lawsuit in the Central District of California that also alleges that UHG defrauded the Medicare Program. government is scheduled to file a complaint in that matter no later than May 16.
UHG is the nation’s largest Medicare Advantage Organization (MAO), with more than 50 Medicare Advantage and Drug Prescription plans providing healthcare services and prescription drug benefits to millions of Medicare beneficiaries throughout the United States. receives a monthly payment from Medicare for each beneficiary that is based, in significant part, on the health status of the beneficiary.
The complaint filed yesterday by the United States alleges that UHG knowingly disregarded information about beneficiaries’ medical conditions, which increased the payments UHG received from Medicare. In particular, the lawsuit contends that UHG funded chart reviews conducted by HealthCare Partners (HCP), one of the largest providers of services to UHG beneficiaries in California, to increase the risk adjustment payments received from the Medicare Program for beneficiaries under HCP’s care. However, UHG allegedly ignored information from these chart reviews about invalid diagnoses and thus avoided repaying Medicare monies to which it was not entitled.
“The intervention of the United States in this matter illustrates our commitment to ensure the integrity of the Medicare Part C program,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.
“Medicare Advantage plans not only receive taxpayer-funded payments, but are intended for the health and welfare of the beneficiaries,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “This action sends a warning that our office will continue to scrutinize and hold accountable Medicare Advantage insurers to safeguard the integrity of the Medicare program.”
The lawsuit was filed by James Swoben, a former employee of Senior Care Action Network (SCAN) Health Plan and a consultant to the risk adjustment industry. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for 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 part, in this case.
The government’s intervention in this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Western District of New York and the Central District of California, and the U.S. Department of Health and Human Services Office of Inspector General.
The claims asserted against UHG are allegations only, and there has been no determination of liability.
The case is captioned United States ex rel. Swoben v. Secure Horizons, et al., 09-5013. The Poehling complaint is captioned United States of America ex rel. Benjamin Poehling v. UnitedHealth Group, Inc., No. 16-08697. Both are pending in the U.S. District Court for the Central District of California.
U.S. Intervenes in ‘Whistleblower’ Case Alleging UnitedHealth Group Mischarged Medicare Advantage and Prescription Drug ProgramsRead the Press Release
LOS ANGELES – The United States has intervened and filed a complaint in a lawsuit against UnitedHealth Group Inc. that alleges UnitedHealth obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in its largest Medicare Advantage Plan, UHC of California.
The civil complaint filed yesterday afternoon follows the government’s intervention in February in United State ex rel. Poehling v. UnitedHealth Group. Inc., a related case in Los Angeles that also alleges that UnitedHealth defrauded the Medicare Program. The government is scheduled to file a complaint in the Poehling matter no later than May 16.
UnitedHealth is the nation’s largest Medicare Advantage Organization, with more than 50 Medicare Advantage and Drug Prescription plans providing healthcare services and prescription drug benefits to millions of Medicare beneficiaries throughout the United States. UnitedHealth receives a monthly payment from Medicare for each beneficiary that is based, in significant part, on the health status of the beneficiary.
The complaint filed yesterday by the United States alleges that UnitedHealth knowingly disregarded information about beneficiaries’ medical conditions, which increased the payments UnitedHealth received from Medicare. In particular, the lawsuit contends that UnitedHealth funded chart reviews conducted by HealthCare Partners, one of the largest providers of services to UnitedHealth beneficiaries in California, to increase the risk adjustment payments received from the Medicare Program for beneficiaries under the care of HealthCare Partners. However, UnitedHealth allegedly ignored information from these chart reviews about invalid diagnoses and thus avoided repaying Medicare monies to which it was not entitled.
“Medicare Advantage plans not only receive taxpayer-funded payments, but are intended for the health and welfare of the beneficiaries,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “This action sends a warning that our office will continue to scrutinize and hold accountable Medicare Advantage insurers to safeguard the integrity of the Medicare program.”
The “whistleblower” lawsuit was filed by James Swoben, a former employee of Senior Care Action Network (SCAN) Health Plan and a consultant to the risk adjustment industry. The case is United States ex rel. Swoben v. Secure Horizons, et al., CV09-5013. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for 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 part, in this case.
“The intervention of the United States in this matter illustrates our commitment to ensure the integrity of the Medicare Part C program,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.
This matter was investigated by the United States Attorney’s Office in Los Angeles, the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Western District of New York, and the U.S. Department of Health and Human Services’ Office of Inspector General.
The claims asserted against UnitedHealth are allegations only, and there has been no determination of liability.
The government’s intervention in this matter illustrates the government’s emphasis on combating healthcare fraud. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
Fountain Valley Man Arrested for Attempted Smuggling of Nearly 100 Asian Songbirds from Vietnam – Most of which Died in TransitRead the Press Release
LOS ANGELES – Federal agents this morning arrested a Fountain Valley man on federal animal smuggling charges that allege he illegally brought to the United States 93 Asian songbirds on a flight from Vietnam – most of which died in transit or soon after arriving at Los Angeles International Airport.
Kurtis Law, 49, who also maintains a residence in Vietnam, was arrested pursuant to a federal criminal complaint filed yesterday afternoon.
The complaint alleges that Law attempted to smuggle 93 Asian songbirds into the United States on March 24.
According to the affidavit in support of the complaint, investigators found several species of protected songbirds in Law’s luggage, including Bali Mynas birds (Leucopsar rothschildi), Chinese Hwamei birds (Garrulax canorus), Silver-eared Mesia birds (Leiothrix argentauris), and Red-billed Leiothrix birds (Leiothrix lutea). These species are protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
The complaint alleges that the birds were placed in Law’s suitcases in a way “that allowed each bird little or no movement,” and all but eight of the 93 birds ultimately died as a result of the smuggling.
Law is expected to make his initial appearance this afternoon in federal court in downtown Los Angeles.
A complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
Law is specifically charged with smuggling goods into the United States, a felony offense that carries a statutory maximum penalty of 20 years in federal prison.
The investigation in this case is being conducted by the United States Fish and Wildlife Service, U.S. Customs and Border Protection, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
The prosecution is being handled by Assistant United States Attorneys Dennis Mitchell and Erik M. Silber of the Environmental and Community Safety Crimes Section.
Concert Promoter Arrested on Federal Fraud Charges that Allege He Solicited Investment Money that Was Never Used for Music EventsRead the Press Release
LOS ANGELES – A concert promoter with operations in Dallas, Texas and West Hollywood has been arrested on federal wire fraud charges in a case that alleges he defrauded investors in connection with concerts and other events.
Gabriel Martin Reed, 46, a former Malibu resident who recently relocated to Las Vegas, Nevada, was arrested by special agents with the Federal Bureau of Investigation on Saturday afternoon in McKinney, Texas.
Reed, who does business under the name Gabe Reed Productions, was arrested pursuant to a criminal complaint filed on April 19 in United States District Court in Los Angeles. The case against Reed was announced today after the complaint was unsealed during Reed’s first court appearance. The complaint charges Reed with wire fraud and aggravated identity theft.
Over an 8½-year period, Reed represented himself as a promoter and organizer of hard rock music events, as well as wrestling matches for World Wrestling Entertainment. According to the affidavit in support of the criminal complaint, Reed solicited investors in concert events by touting longstanding relationships with well-known musicians, showing props from alleged previous tours, and, in some instances, creating fabricated financial records related to music events.
The complaint alleges that Reed falsely told investors that musical artists had agreed to participate in events and that their funds would be used to provide up-front financing for the events. However, in many instances, the musical artists had not agreed to participate and, rather than using the funds for the events, Reed allegedly used the investors’ funds for personal expenses.
One Los Angeles investor agreed to put $100,000 into a concert tour Reed was calling “Titans of Rock.” However, many of the promised artists had not agreed to participate in the tour. An FBI review of bank records showed the victim’s money was used to pay for Reed’s personal expenses, including child support, costs related to a birthday, and meals at Ruth’s Chris Steakhouse and Mr. Chow in Beverly Hills, according to the affidavit. Over the course of several months in 2015, the $100,000 “had been depleted,” due in part to ATM withdrawals, and the FBI was “unable to identify the payment of any expenses related to a concert or tour,” the affidavit states.
The complaint alleges that Reed solicited money from at least 15 victims who suffered losses of at least $1.4 million.
Reed made his initial court appearance this morning in United States District Court in Sherman, Texas. Reed has agreed to appear in federal court Los Angeles at a date to be determined. He remains in custody until a detention hearing set for Friday in Texas.
Reed is charged with wire fraud for allegedly bilking the Titans of Rock investor and aggravated identity theft in relation to another promoter whose name Reed allegedly used in connection with the wire fraud.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If he is convicted of the charges, Reed would face a statutory maximum sentence of 20 years in federal prison for the wire fraud count and a mandatory, consecutive two-year sentence for the aggravated identity theft charge.
Investors who provided money to Reed and believe they were defrauded should contact the FBI’s Los Angeles Field Office at (310) 477-6565.
The case against Reed is being investigated by the FBI.
This case is being prosecuted by Assistant United States Attorney Poonam Kumar of the Major Frauds Section.
Orange County Pilot Who Operated Private Jets with Passengers Onboard without Proper License Sentenced to Federal PrisonRead the Press Release
LOS ANGELES – An Irvine man who admitted that he illegally piloted private jet airplanes with passengers onboard without having a valid pilot’s license was sentenced today to 10 months in federal prison.
Arnold Gerald Leto III, 37, was sentenced by United States District Judge Dale S. Fischer, who also ordered the defendant to pay a $5,500 fine.
Leto pleaded guilty in October to two counts of operating an aircraft without a valid airman’s certificate.
According to court documents, Leto operated aircraft with passengers on a number of occasions without the proper authorization from the Federal Aviation Administration. In January 2015, Leto piloted a Cessna Citation turbojet-powered aircraft, with paying passengers, from Santa Monica to Phoenix prior to receiving any type of airman’s certificate for turbojet-powered aircraft.
The following month, Leto obtained an airman’s certificate that authorized him to be a second-in-command pilot on a Cessna Citation turbojet-powered aircraft, but he continued to operate the Cessna citation as a sole pilot with passengers. For example, in April 2015, he piloted a Cessna Citation from Burbank to Bermuda Dunes and from Santa Monica to Bentonville, Arkansas.
Furthermore, on April 8, 2016, Leto was the sole pilot of a Falcon 10 turbojet-powered aircraft, with passengers on board, that flew from Van Nuys to Las Vegas, Nevada. At this time, Leto was not certified to fly the Falcon 10, and the FAA had revoked all of his airman certificates.
This case was investigated by the Department of Transportation – Office of Inspector General, with assistance by the Federal Aviation Administration.
The case was prosecuted by Assistant United States Attorney Dennis Mitchell of the Environmental and Community Safety Crimes Section.
Imposter Attorney Sentenced to Prison in Marriage Fraud SchemeRead the Press Release
LOS ANGELES — A Santa Fe Springs man who posed as an attorney as part of an elaborate immigration fraud scheme in which at least 87 foreign nationals – mostly Chinese citizens – paid tens of thousands of dollars to be “married” to United States citizens was sentenced today to two years in federal prison.
Jason Shiao, also known as “Zheng Yi Xiao,” 67, who operated the Pasadena-based Jason (USA) International Law Corporation, was sentenced by United States District Judge Dale S. Fischer.
Shiao “assisted foreign nationals who were seeking to obtain lawful permanent resident status to remain in the United States by arranging fraudulent marriages for those foreign nationals to United States citizen spouses,” according to documents filed by prosecutors in relation to today’s sentencing.
Shiao was initially charged in this case in 2015, and in January he pleaded guilty to one count of conspiracy to commit visa fraud and marriage fraud.
As part of the scheme, Shiao falsely claimed to be an attorney, paid United States citizens thousands of dollars to participate in the scheme, introduced immigrants seeking benefits to American citizens to facilitate the sham marriages, instructed his clients to pose for wedding photographs, and told clients to lie to officials with U.S. Citizenship and Immigration Services (USCIS).
According to court documents, Chinese nationals paid up to $50,000 to enter into sham marriages in the hopes of obtaining lawful permanent resident cards – often referred to as “Green Cards” – that would allow them to legally reside in the United States.
Shiao’s daughter, Lynn Leung, 45, of Pasadena, also pleaded guilty to a conspiracy charge. Leung was sentenced last week by Judge Fischer to six months in prison.
A third defendant charged in the case – Shannon Mendoza, 50, of Pacoima – was transferred to the Eastern District of Pennsylvania, where he is also being prosecuted for drug trafficking charges based on conduct allegedly committed while on pre-trial release in the immigration fraud case.
While Shiao and Leung served as brokers by arranging the sham marriages and filing immigration applications, Mendoza allegedly acted as a recruiter by finding U.S. citizens who were willing to enter into sham marriages in exchange for payments of up to $15,000.
Court documents describe how the defendants went to considerable lengths to make the fake marriages appear real. According to Shiao’s plea agreement, he and his daughter prepared documentation that was filed with USCIS to bolster the validity of the fraudulent marriages, including staged photographs of “wedding ceremonies” and bogus tax returns, life insurance policies, joint bank account information and apartment lease applications.
The investigation in this case began in September 2012 based on information provided by an anonymous caller who contacted U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).
This case was the result of an undercover investigation by the Los Angeles Document and Benefit Fraud Task Force, which includes HSI, the U.S. Department of State’s Diplomatic Security Service, and U.S. Citizenship and Immigration Services’ Fraud Detection and National Security unit.
The case was prosecuted by Assistant United States Attorney Sheila Nagaraj of the Public Corruption and Civil Rights Section. Assistant United States Attorney Jonathan Galatzan of the Asset Forfeiture Section also worked on the case.
Fontana Company, Owner and 3 Employees Charged with Violating Clean Water Act by Illegally Discharging Industrial Waste into SewersRead the Press Release
LOS ANGELES – A federal grand jury has issued a 12-count superseding indictment that accuses a Fontana company, its owner and three employees with violating the Clean Water Act by regularly engaging in illegal discharges of acidic industrial wastewater into a sewer system, as well as tampering with monitoring devices designed to prevent those violations.
The indictment, which was returned by the grand jury last Wednesday afternoon, charges:
Starlite Reclamation Environmental Services, Inc.;
Christopher Jaramillo, 47, of Victorville, the owner and president of Starlite;
Robert Conn, 74, of Torrance, a former Starlite Vice President who was responsible for overseeing wastewater treatment;
Andrew Hucks, 29, formerly of Riverside and now residing in another state, a former Starlite employee who acted as a plant operator; and
Fernando Torres, 40, formerly of San Bernardino and now believed to be residing in the Central Valley, another former plant operator at Starlite.
The indictment charges the five defendants with conspiring to violate the Clean Water Act, nine counts of violating the Clean Water Act by knowingly discharging a low-pH wastewater pollutant, and two counts of tampering with a monitoring device.
The substantive Clean Water Act counts allege that Starlite discharged wastewater with an average pH of 3 – well below the national standard pH level of 5 mandated by the Clean Water Act. There are strict controls on the discharge of acidic wastewater into sewer systems because low pH wastewater can cause damage to sewage treatment systems.
Starlite treated and disposed of industrial wastewater. But, according to the indictment, the company and the individual defendants repeatedly and regularly discharged acidic wastewater into a sewer system operated by the Inland Empire Utilities Agency, and, ultimately, by the Sanitation Districts of Los Angeles County, from November 2014 through June 2015.
While Starlite was required to monitor the wastewater it discharged into the sewer, the indictment alleges that the defendants attempted to avoid detection of the illegal discharges by placing monitoring devices in buckets of clean water. As a result of this tampering, the monitors created records that showed the discharges were within legal limits, according to the indictment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
The indictment filed last week supersedes an indictment returned by another federal grand jury in June 2015. The initial indictment charged only Conn with 12 counts of violating the Clean Water Act. Conn previously pleaded not guilty to the charges in that indictment.
In relation to the superseding indictment, the five defendants will be summoned to appear in United States District Court for arraignments in May.
If they are convicted of the 12 counts in the indictment, each of the four individual defendants would face a statutory maximum of 54 years in prison. If Starlite is convicted, the company would face fines of up to $6 million.
The investigation in this case was conducted by the Environmental Protection Agency, the Inland Empire Utilities Agency, and the Sanitation Districts of Los Angeles County.
The prosecution of Starlite and the other defendants is being handled by Assistant United States Attorneys Dennis Mitchell and Erik M. Silber of the Environmental and Community Safety Crimes Section.
Federal Correctional Officer Pleads Guilty to Federal Civil Rights Offense for Kicking Inmate in Head and Lying about IncidentRead the Press Release
RIVERSIDE, California – A correctional officer with the U.S. Bureau of Prisons at the Victorville Federal Correctional Complex pleaded guilty today to two counts relating to an incident in which she kicked a restrained female inmate in the head.
Cynthia Flores, 34, of Victorville, pleaded guilty to one count of deprivation of rights under color of law and one count of falsification of records.
Flores assaulted the victim at the women’s prison camp in Victorville on June 2, 2013. During the evening count, when correctional officers ensure that all inmates are present, Flores initiated a physical altercation with the victim. According to a plea agreement filed in this case, Flores “kicked [the victim]’s head after another BOP correctional officer had handcuffed [the victim] and was restraining [her] with [the victim]’s chest pressed to the hallway floor.”
Following the incident, Flores submitted a written incident report and a videotaped oral report in which she described an altercation with the inmate. Flores falsely stated that the inmate unilaterally had assaulted her and failed to disclose using force against the victim “with the intent to impede, obstruct, and influence the BOP’s investigation into the incident,” according to the plea agreement.
Flores pleaded guilty before United States District Judge Jesus G. Bernal, who scheduled a sentencing hearing for July 21, 2017. At sentencing, Flores will face a statutory maximum sentence of 30 years in custody for both offenses, but pursuant to the plea agreement the government will recommend a sentence of no more than 18 months in this case. Judge Bernal will make the final determination as to the appropriate sentence in this case.
This case was investigated by the Justice Department Office of the Inspector General.
The case is being prosecuted by Assistant United States Attorneys Sean D. Peterson and Julius J. Nam of the Riverside Branch Office.
Encino Dermatologist Pays Nearly $2.7 Million to Resolve Allegations He Billed Medicare for Unnecessary Mohs Skin Cancer SurgeriesRead the Press Release
LOS ANGELES – The owner of The Skin Cancer Medical Center in Encino has paid the United States nearly $2.7 million to resolve allegations that he submitted bills to Medicare for Mohs micrographic surgeries for skin cancers that were medically unnecessary.
Dr. Norman A. Brooks, M.D., a dermatologist and surgeon, paid the $2,681,400 settlement on April 10.
The settlement, which was finalized on March 31, resolved allegations in a lawsuit brought by a former employee of The Skin Cancer Medical Center. The settlement was announced today when prosecutors learned that United States District Judge Philip S. Gutierrez had unsealed and dismissed the complaint that was filed under the False Claims Act.
The lawsuit alleged that Brooks falsely diagnosed skin cancer in some of his patients so that he could perform, and bill for, Mohs surgeries.
Mohs surgery is a specialized surgical procedure for removing certain types of skin cancers in specific areas of the body, including the face. The surgery is performed in stages during which the surgeon removes a single layer of tissue which undergoes a microscopic evaluation. The surgeon performs additional stages, if necessary, until all of the cancer is removed.
Given the complexity and time required to perform the procedure, Mohs yields a higher Medicare reimbursement than other procedures used to remove skin lesions.
As part of the settlement, Brooks entered into a three-year Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General. Under the Integrity Agreement, Brooks will establish and maintain a compliance program that includes, among other things, mandated training for Brooks and his employees and review procedures for claims submitted to Medicare and Medicaid programs.
The settlement resolves allegations made in a lawsuit filed by former Brooks employee Janet Burke under the qui tam, or “whistleblower,” provisions of the False Claims Act, which permit private parties to sue on behalf of the government and receive a share of any recovery. For her role in the case, Ms. Burke will receive $482,652.
In settling the case, Brooks did not admit liability in the matter.
The matter was investigated by the United States Attorney’s Office and the U.S. Department of Health and Human Services, Office of Inspector General. The settlement was negotiated by Assistant United States Attorney Donald W. Yoo of the Civil Fraud Section.
The settlement resolved United States ex rel. Burke v. Norman A. Brooks, M.D., Inc. et al., CV14-6735.
SoCal Man Sentenced to 8½ Years in Federal Prison for Tax Evasion and Fleeing from Prosecution on Eve of TrialRead the Press Release
SANTA ANA, California – A former resident of Orange County who now lives in northern San Diego County has been sentenced to 102 months in federal prison for tax evasion and charges related to his attempt to flee in 2013 on the eve of a trial on the tax charge.
Louis Joseph Vadino, 75, a Ramona resident who formerly lived in Lake Forest, was sentenced Monday afternoon by United States District Judge Andrew J. Guilford.
The sentencing follows a five-day jury trial in October that resulted in Vadino being convicted of tax evasion and making false statements to criminal investigators with the Internal Revenue Service. Prior to the trial, Vadino pleaded guilty to additional charges of failing to appear for court, conspiracy, two counts of passport fraud and two counts of aggravated identity theft.
The tax charge resulted from an audit of Vadino’s 1999 tax return, which was completed in 2006 and led the IRS to demand $1.2 million in additional taxes.
Between 1999 and 2002, Vadino used the name of a shell company to purchase five residential properties in Lake Forest where Vadino, his three adult daughters and his mother resided. In the fall of 2006, after the IRS demanded payment of taxes related to the 1999 return, Vadino directed his daughter to obtain refinance loans on three of the Lake Forest properties and he sold a fourth Lake Forest property. These actions generated $2.1 million in loan and sale proceeds that were wire transferred to a Greek bank account that Vadino controlled.
From 2006 to 2011, Vadino took steps to evade paying the $1.2 million tax liability that included concealing the nature and extent of his assets, lying to IRS special agents and using offshore accounts to place funds and property beyond the reach of the IRS.
Vadino was initially indicted on tax evasion charges in 2012. On the eve of a trial scheduled to begin in 2013 and while he was free on bond, Vadino cut off his ankle bracelet and absconded. In October 2014, he applied for a United States passport with a stolen identity. Vadino was captured in December 2014 and has been in custody since then.
When Vadino was captured, “he was found with fake IDs, fake birth certificates, fraudulent passport applications, and a slew of other documents that made clear that he had planned to live as a fugitive in a foreign country,” prosecutors wrote in sentencing documents filed with the court.
In 2015, a federal grand jury named Vadino in a superseding indictment that added charges stemming from his flight from prosecution and efforts to assume a fake identity. He pleaded guilty to those post-flight charges, leaving for trial the tax evasion and false statement counts.
“This lengthy sentence brings to a close the prosecution of a defendant who went to extraordinary lengths to hide income from the IRS and then attempted to escape justice,” said Acting United States Attorney Sandra R. Brown. “While repeatedly telling the IRS that he had no money to pay his outstanding tax liability, he was buying cars, expensive model airplanes, and a nearly million-dollar home. While pending trial on the tax charges, he engaged in a series of calculated acts designed to avoid justice, which included obtaining a birth certificate, military discharge papers and a Veteran Affairs identification card to conceal his true identity. This conduct warrants the lengthy sentence imposed by the court.”
“Mr. Vadino hid assets from the IRS, was a fugitive from justice, and is now a convicted felon,” observed IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “The court’s 102-month sentence demonstrates that lying to the IRS, tax evasion, and identity theft are crimes that impact all and come with serious consequences.”
At sentencing this week, Judge Guilford found that Vadino owes the IRS a total of $4.7 million, which includes taxes due in relation to his 1999 tax return, plus penalties and interest.
A second man – Steven Ness, 45, of Long Beach – was also charged, convicted and sentenced to over four months in prison for assisting Vadino in his attempt to obtain the passport with the stolen identity of Ness’s father.
The investigation into Vadino and Ness was conducted by IRS Criminal Investigation. The case was prosecuted by Assistant United States Attorneys Daniel Ahn and Greg Staples of the Santa Ana Branch Office.
Former Mayor of South El Monte Sentenced to over a Year in Prison Plus Home Detention for Taking Cash Bribes from ContractorRead the Press Release
LOS ANGELES – The former Mayor of South El Monte was sentenced today to one year and one day in federal prison for taking bribes from a contractor doing business with the city – in one instance accepting a bribe during an FBI undercover operation.
Luis Aguinaga, 49, of South El Monte, was sentenced late this afternoon by United States District Judge Fernando M. Olguin. In addition to the prison term, the court ordered Aguinaga to serve one year of home detention, to perform 3,000 hours of community service and to pay a $10,000 fine.
Aguinaga pleaded guilty in September to one count of bribery, admitting that he took bribes from a person who performed engineering and construction work for the City of South El Monte and that the payments were rewards in connection with the approval of city contracts for the contractor. Aguinaga accepted the bribes from 2005 until September 2012.
The contractor – identified in court documents as a confidential witness, or CW – made payments to Aguinaga approximately every two to three weeks, shortly after the contractor was paid by the City of South El Monte. If the contractor failed to pay Aguinaga within a few days of being paid by the city, Aguinaga would call and ask for his payment.
The bribe amounts were initially $500, and later they increased to $1,000. According to court documents, the contractor made the bribe payments by placing cash in envelopes that were left in a bathroom at the South El Monte City Hall or were left inside the passenger side pocket of a car.
Aguinaga accepted a $1,000 bribe during a September 12, 2012 meeting that was being monitored by the FBI, and he took the money even though he “was nervous about meeting with CW because Cudahy city officials, including the Mayor, had recently been arrested and charged with accepting bribes.”
Aguinaga admitted receiving at least $45,000 from the city contractor during the final two years of the bribery scheme.
“Mr. Aguinaga was an elected public official who abused the trust of his constituents by engaging in a pay-for-play scheme,” said Acting United States Attorney Sandra R. Brown. “He accepted tens of thousands of dollars in bribes over several years. This deliberate conduct adversely affected the administration of South El Monte and degraded the public’s view of local government.”
“Mr. Aguinaga abandoned the community he was elected to serve by basing his decisions on greed and ill-gotten financial gain rather than good government,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This extensive corruption scheme has thankfully come to an end, and Mr. Aguinaga will pay the price for compromising South El Monte and its residents."
This case was investigated by the Federal Bureau of Investigation.
This case was prosecuted by Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section.
Man Who Illegally Imported Chinese Cigarettes Sentenced to PrisonRead the Press Release
LOS ANGELES – A Los Angeles man who pleaded guilty to illegally engaging in the business of importing tobacco products was sentenced today to eight months in federal prison.
Zhi Xiong Chen, 56, of Chinatown, was sentenced by United States District Judge George H. Wu. In addition to the prison term, Judge Wu ordered the defendant to pay $152,278 to United States Custom and Border Protection.
From early 2011 until mid-2016, Chen illegally imported thousands of cartons of Chinese-made cigarettes without the necessary permits and without paying excise taxes.
Chen pleaded guilty in January to the felony offense of illegally engaging in the business of importing tobacco products and admitted that for nearly five years, despite not holding a permit to import tobacco products, he used several addresses to receive 15,128 cartons of Chinese-brand cigarettes. During this time, U.S. Customs and Border Protection officers also stopped approximately 9,824 cartons of Chinese-brand cigarettes at international mail facilities in California and New York intended for Chen.
As part of the scheme, Chen admitted that he attempted to evade paying more than $467,000 in federal and state excise taxes on the cigarettes that he illegally imported.
This case was investigated by the Alcohol and Tobacco Tax and Trade Bureau, the U.S. Food and Drug Administration’s Criminal Investigations, United States Postal Service, and IRS Criminal Investigation.
The case is being prosecuted by Assistant United States Attorney Valerie L. Makarewicz of the Tax Division and Trial Attorney Christopher S. Strauss of the Justice Department’s Tax Division.
Los Angeles Man Sentenced to Federal Prison for Fraud Charges Related to Lottery Scheme that Targeted Elderly VictimsRead the Press Release
LOS ANGELES – A Los Angeles man was sentenced today to 18 months in federal prison for his role in a lottery scam that targeted elderly victims with false promises of large cash prizes and cars that would be delivered when victims paid taxes, fees and insurance.
Carl Dean Bullock, 65, of South Los Angeles, pled guilty in February to mail and wire fraud offenses for defrauding victims who were falsely told they had won the Publishers Clearing House sweepstakes or other lottery prizes, but they needed to pay fees or taxes to collect the purported winnings. In addition to the prison term, Bullock was sentenced to three years’ supervised release with specific conditions regarding bank accounts and use of the mail and was ordered to pay restitution to the victims in the total amount of $227,675.21
According to court documents, Bullock admitted that he and his co-schemers collected money from the victims of his scheme via Western Union and MoneyGram wire transfers, money orders sent through the U.S. Mail and direct cash payments. Bullock personally received at least $45,000, some of which he shared with his co-schemers, most of whom were in Jamaica.
The investigation in this case was conducted by the United States Postal Inspection Service, which received substantial assistance from the Glendale Police Department. The prosecution was handled by Assistant United States Attorney Michael G. Freedman of the General Crimes section.
With the Individual Income Tax Filing Deadline Approaching, Justice Department Warns Willful Violations of Tax Laws Are CriminalRead the Press Release
WASHINGTON - With the annual tax return filing deadline almost upon us, the vast majority of taxpayers are complying with their legal obligation to file accurate returns and pay the taxes that they owe. However, there are taxpayers who attempt to evade paying their fair share of taxes, file false returns, fail to file returns or seek to obstruct the Internal Revenue Service (IRS)’s efforts to assess or collect monies that are due. The Justice Department’s Tax Division warns taxpayers who attempt to violate the federal tax laws that they face prosecution, jail, restitution and significant monetary penalties.
“Most Americans follow the tax law and rightfully expect that each of their fellow citizens will do the same,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “Yet every year some taxpayers try to take a different path – they hide money offshore, declare only a small portion of their income, make up bogus deductions and lie to the IRS if they are caught. With this year’s filing deadline approaching, these taxpayers should stop, reverse course and simply pay what they owe. As the Justice Department’s recent criminal prosecutions make clear, the consequences for willful violations are severe: jail time and substantial monetary penalties.”
“The majority of Americans file their taxes without issue and they would tell you that they want strong enforcement of the tax laws to ensure that we are all paying our fair share,” said Chief Richard Weber of IRS Criminal Investigation. “For those thinking about intentionally evading the tax laws – IRS-CI has the finest financial investigators and are trained to follow the money trail wherever it may lead.”
Over the past year, the Tax Division and the U.S. Attorney’s Offices have worked closely with the IRS and other law enforcement partners to enforce the nation’s tax laws fully, fairly and consistently through criminal investigations and prosecutions across the country, as evidenced by the sampling of recent convictions listed below. These enforcement efforts continue year-round.
Recent Tax Evasion and Filing False Tax Returns Prosecutions:
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In March, Denver Nichols, a Labadie, Missouri roofing contractor, pleaded guilty to filing false 2007 and 2008 income tax returns. Nichols operated his roofing business under the name Eagle Roofing Co. He late filed false 2007 and 2008 returns that underreported his business’s gross receipts by approximately $959,500 and $794,680.
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In March, Stephen Leib, a Philadelphia, Pennsylvania tech business owner, pleaded guilty to tax evasion. Leib owned New Wave Logistics Inc. He evaded more than $800,000 in taxes by cashing a significant amount of his business’s gross receipts at a check cashing facility, lying to his accountant about the total amount of income he earned and filing false tax returns.
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In March, Jeffrey Nowak, a Las Vegas, Nevada liquor storeowner, was sentenced to serve 41 months in prison for tax evasion and conspiring to defraud the United States. Nowak conspired with Ramzi Suliman, with whom he jointly owned and operated liquor stores in Las Vegas. Nowak and Suliman skimmed cash receipts and provided their accountant with a phony set of books that omitted nearly $4 million in cash receipts.
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In February, Jose Echeverria, a Chelan Falls, Washington businessman, pleaded guilty to filing a false individual income tax return. Echeverria owned and operated a produce sales business. He underreported his income by approximately $564,292.
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In December 2016, James and Mardeen Perin, former owners of Sully’s Pub in West Des Moines, Iowa, pleaded guilty to aiding and assisting in filing a false tax return. The Perins filed a false 2013 tax return that did not report cash that they earned through their business.
Recent Failure to File Tax Returns Prosecutions:
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In March, James Burton and Lucretia Pecantte-Burton, two Louisiana attorneys, pleaded guilty to failing to file individual income tax returns. Burton and Pecantte-Burton were partners of the law firm Pecantte-Burton & Burton (PB&B) and regularly received cash payments. They also had a partnership interest in a tax return preparation business. Burton and Pecantte-Burton did not file 2007 through 2009 income tax returns.
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In February, Samuel Frazier, a Gulfport, Mississippi businessman, was sentenced to serve 12 months in prison for failing to file an individual income tax return. Frazier owned two companies in Gulfport: Frazier Fire Systems LLC and EZ Haul Demolition and Construction LLC. Frazier failed to file a 2009 tax return despite earning more than $618,253 in income.
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In December 2016, John Raschella, a former Parma, Ohio resident, was convicted at trial for failing to pay more than $1 million in income taxes, interest and penalties for 1995, 1996 and 1998 through 2012 on income earned as an insurance salesman. He also failed to timely file income tax returns between 1989 and 2012.
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In June 2016, Carlos Cortes, a San Antonio, Texas artist, was sentenced to serve 12 months in prison for failing to file an individual income tax return. Cortes did not file tax returns for 2006 through 2009, despite earning more than $1.3 million in income during this time.
Recent Prosecutions Involving the Use of Nominee Entities and Offshore Bank Accounts to Hide Assets and Income:
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In March, Casey Padula, a Port Charlotte, Florida owner of Demandblox, a marketing and information technology business, pleaded guilty to conspiracy to commit tax and bank fraud. Padula conspired to move more than $2.5 million to offshore accounts in Belize and disguised them as business expenses in the corporate records. Padula used the funds to pay for personal expenses and purchase significant personal assets.
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March, Masud Sarshar, a Los Angeles, California businessman, was sentenced to serve 24 months in prison for hiding more than $23.5 million in offshore bank accounts. Sarshar maintained several undeclared bank accounts at Israeli banks, both in his name and in the names of entities that he created. Between 2006 and 2009, Sarshar diverted more than $21 million in untaxed gross business income to those undeclared accounts and earned more than $2.5 million in interest income. Sarshar reported none of this income on his individual and corporate tax returns.
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In January, three Orange County, California residents pleaded guilty to hiding millions of dollars in secret foreign bank accounts. Dan Farhad Kalili, David Ramin Kalili and David Shahrokh Azarian, willfully failed to file legally required reports, commonly known as FBARs, disclosing their bank accounts in Switzerland and Israel.
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In January, Peggy and John DeYoung, a Missoula, Montana couple, pleaded guilty to conspiring to defraud the United States. The DeYoungs had not filed an income tax return since 1998. Peggy DeYoung earned income through her ownership interest in two companies that owned Southern California mobile home parks. The DeYoungs also established a number of purported trusts. They owned bank accounts in the names of these trusts using fabricated taxpayer identification numbers and paid personal expenses from the accounts, causing a tax loss of $376,350.
Recent Prosecutions of Attempts to Obstruct IRS Efforts to Assess and Collect Taxes:
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November 2016, Richard Thomas Grant, a Point Richmond, California man, was sentenced to serve 33 months in prison. Grant stopped filing income tax returns and paying income taxes despite earning significant income as a partner with an engineering company. Grant attempted to frustrate IRS collection and audit efforts by filing lawsuits against the IRS. To conceal his income, Grant used prepaid debit cards and money orders to pay personal expenses.
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In November 2016, Steven Headden Young of St. Petersburg, Florida, was sentenced to serve 21 months in prison. Young evaded a substantial portion of his individual income taxes for 2007 through 2011 and interfered with an IRS audit. He fabricated a letter from the IRS to a bank directing the bank to send subpoenaed records to a bogus address.
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In October 2016, Henti Lucian Baird, a Greensboro, North Carolina resident and former IRS revenue officer, pleaded guilty. Baird filed tax returns each year but has not paid since at least 1998. Baird created nominee bank accounts to hide hundreds of thousands of dollars from the IRS, submitted false information to the investigating IRS officer regarding these accounts and transferred funds from nominee accounts to avoid impending IRS levies.
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June 2016, Paul Tharp, a North Carolina man, was sentenced to serve 21 months in prison. Tharp failed to file tax returns for 2003 through 2006, and the IRS assessed income tax against him for those years. Tharp attempted to evade payment of his tax debt by filing false disclosures with the IRS, omitting businesses that he owned as well as bank accounts and rental income.
More information about the Tax Division’s criminal and civil enforcement efforts in these and other areas is on the division’s website. The IRS website also has information about how to report tax fraud.
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Operators of Trucking School Charged with Defrauding VA by Collecting Tuition for Veterans who Never Attended ClassesRead the Press Release
LOS ANGELES – An operator of a San Fernando Valley trucking school was arrested this morning by federal authorities after he and the owner were indicted on federal charges that allege they bilked the Department of Veterans Affairs out of well over $4 million in tuition and other payments after falsely certifying that veterans had attended classes, when they never had.
Robert Waggoner, 54, of Canyon Country, was arrested this morning at his residence by special agents with the Department of Veterans Affairs’ Office of Inspector General.
The second defendant named in a nine-count indictment returned by a federal grand jury on April 6 – Emmit Marshall, 50, of Woodland Hills – has agreed to self-surrender on Tuesday.
The case was announced this afternoon after a United States Magistrate Judge unsealed the indictment during Waggoner’s arraignment.
Marshall was owner and president of the Chatsworth-based Alliance School of Trucking (AST), and Waggoner was a director at the school.
The two defendants and another person involved in the scheme recruited eligible veterans to take trucking classes paid under the Post-9/11 GI Bill. AST was certified to offer classes under the Post-9/11 GI Bill that included a 160-hour Tractor Trailer & Safety class and a 600-hour Select Driver Development Program.
Pursuant to the Post-9/11 GI Bill, the VA paid tuition and fees directly to the school at which the veteran was enrolled. The VA also paid a housing allowance to the veteran enrolled full-time in an approved program, and, in some cases, the VA paid a books and supplies benefit directly to the veteran.
According to the indictment, Marshall and Waggoner recruited eligible veterans to enroll at AST by telling the veterans they could collect housing and other fees from the VA without attending the programs.
Knowing that the vast majority of veterans enrolling at AST did not intend to attend any portion of those programs, Marshall and Waggoner created and submitted fraudulent enrollment certifications, according to the indictment. They also created student files that contained bogus documents.
From the end of 2011 through April 2015, as a result of the fraudulent scheme, the VA paid AST approximately $2,351,658 in tuition and fee payments for veterans who purportedly attended approved programs at AST, according to the indictment. During that same period, the VA also paid approximately $1,957,715 in education benefits directly to veterans who purportedly attended approved programs at AST.
“The VA offers generous benefits to veterans who have put their lives on the line to safeguard America,” said Acting United States Attorney Sandra R. Brown. “Fraud schemes, particularly those involving schooling for veterans, compromise the system designed to help veterans after they complete their service. Taxpayers who fund these programs also suffer when benefit programs are subject to waste, abuse and fraud.”
Lisa Molinar, Assistant Special Agent-in-Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, Los Angeles Field Office, stated, “This investigation demonstrates the OIG’s continued commitment to aggressively pursue educational institutions and individuals who prey on veterans and conspire to misuse VA Post-9/11 GI Bill education benefits. The VA OIG will continue to work these cases in order to protect the integrity of the program.”
Waggoner is expected to be arraigned on the indictment this afternoon in United States District Court.
Marshall will be arraigned once he surrenders to federal authorities.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
The indictment against Marshall and Waggoner charges each defendant with nine counts of wire fraud. If they are convicted, each defendant would face a statutory maximum sentence of 20 years in federal prison for each count.
The VA’s Office of Inspector General has a hotline where anyone can report information on ongoing fraudulently activities by calling 1-800-488-8244.
The case involving AST is being prosecuted by Assistant United States Attorney Sarah Heidel of the Major Frauds Section.
Owners of Two Los Angeles-Area Drug Wholesale Companies Arrested in $20 Million Federal ‘Structuring’ ConspiracyRead the Press Release
LOS ANGELES – The owners of two local drug wholesale companies were among four defendants taken into custody this morning on federal “structuring” charges that allege they made millions of dollars in cash deposits designed to circumvent federal reporting requirements.
Law enforcement authorities this morning arrested Richard Kayseryan, 41, of Burbank, the owner of Burbank-based TriMed Medical Wholesalers, Inc. Kayseryan is the lead defendant in a 20-count indictment returned on April 6 by a federal grand jury that charges four individuals and TriMed in relation to two separate schemes to structure millions of dollars in proceeds through “funnel” bank accounts set up in the names of shell companies.
Two other defendants – Derou Biglari, 31, and Jivani Markarian, 33, who own the Glendale-based drug wholesale business JD Pharmaceutical Wholesaler, Inc. – and the fourth defendant – Rafik Mesropyan, 56 – surrendered this morning. These three co-conspirators, all Glendale residents, are charged with depositing millions of dollars of TriMed checks for Kayseryan, and returning the funds to him in the form of cash.
The four individuals and TriMed are expected to be arraigned on the indictment this afternoon in United States District Court.
As part of the scheme, TriMed collected millions of dollars from business activities and Kayseryan prepared checks that he delivered to his co-defendants. The co-conspirators deposited the checks into the funnel accounts and immediately withdrew the funds in cash in amounts at or under $10,000 per transaction, according to the indictment. These transactions were designed to prevent banks from reporting the cash withdrawals to the federal government, which is required for every cash transaction of more than $10,000.
The indictment also charges Kayseryan with lying to federal agents about the funds during an interview in June 2016. Kayseryan allegedly falsely claimed that “he issued TriMed checks payable to the shell businesses,…for the purpose of making interest-bearing ‘investments’ in the shell businesses” and that he “did not receive ‘one cent’ of the funds from the TriMed checks back.” In fact, the businesses did not exist at all, and Kayseryan received millions of dollars in funds back from the checks in the form of cash.
Finally, the indictment charges Kayseryan with filing false tax returns that fraudulently overstated TriMed’s business expenses.
Investigators believe that Kayseryan wrote checks to the shell companies from 2010 through 2015 totaling more than $20 million and that Kayseryan claimed these checks were to pay business expenses. In fact, most of the shell companies did not actually exist other than on paper.
This indictment marks the third phase of Operation “Psyched Out.” The investigation previously resulted in convictions against 17 defendants connected with the operators of a fraudulent medical clinic, Manor Medical Imaging. A medical doctor employed at the location, Kenneth Johnson, and two owners of a San Marino pharmacy, Phic Lim and Theanna Khou, were convicted in that case. In the second phase, the owner of a Glendale pharmacy, Peter Bagdasarian, was convicted of prescription drug misbranding connected to the scheme.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
If convicted of the 20 counts in the indictment, Kayseryan would face a statutory maximum of 94 years in prison. Biglari and Markarian, if convicted, would each face 45 years, and Mesropyan could be sentenced to as much as 35 years in prison.
Two other conspirators, identified in the indictment by initials as M.F. and S.G., previously pled guilty to federal structuring charges.
The investigation was conducted by IRS Criminal Investigation, the California Department of Justice Tax Recovery and Criminal Enforcement Task Force, the Department of Health and Human Services – Office of Inspector General, the Federal Bureau of Investigation, and the United States Food and Drug Administration’s Office of Criminal Investigations.
The case is being prosecuted by Assistant United States Attorneys Benjamin R. Barron and Christopher Kendall of the Organized Crime Drug Enforcement Task Force.
5 Eastern European Immigrants Plead Guilty to Credit Card Fraud and Identity Theft Charges Related to Cyberattacks on 3 U.S. CompaniesRead the Press Release
LOS ANGELES – The fifth and final defendant charged with using credit and debit cards obtained from a series of cyberattacks on U.S. companies that resulted in an estimated $5 million in losses – and caused one victim company to go out of business – has pleaded guilty to federal fraud charges.
Irina Fedoseeva, 33, a Russian national who resides in the Koreatown District of Los Angeles, pleaded guilty yesterday afternoon to conspiracy to use unauthorized credit and debit cards and admitted causing more than $225,000 in losses.
In a plea agreement filed in United States District Court, Fedoseeva admitted to helping make fraudulent purchases with debit cards obtained as a result of cyberattacks on two healthcare administrators in December 2015 and February 2016.
After helping a co-defendant make unauthorized purchases from retail stores that included Apple and Best Buy, Fedoseeva resold the merchandise on the internet.
Four other defendants previously pleaded guilty to federal fraud charges for their roles in the computer attacks.
Timur Safin, 29, of Burbank; Dmitry Fedoseev, 34, of Koreatown; and Kristina Gerasimova, 22, of the Miracle Mile District of Los Angeles, all of whom are Russian nationals, each pleaded guilty on March 20 to aggravated identity theft and debit/credit card fraud.
The fifth defendant charged as a result of this investigation – Siarhei Patapau, 26, of the Miracle Mile District of Los Angeles, a native of Belarus – pleaded guilty on March 6 to similar felony charges.
All five defendants pleaded guilty before United States District Judge Stephen V. Wilson, who is scheduled to sentence the defendants during hearings scheduled in June and September.
According to court documents filed in two separate cases, the five defendants conspired with computer hackers, some of whom are believed to be in Russia. The hackers staged attacks that included:
- a July 2014 intrusion into an airline’s computer system in which the hackers funded pre-paid credit cards in the amount of $900,000;
- a December 2015 hack into the system of a healthcare administrator that allowed the cybercriminals to reactivate a dormant dependent care account and order the production of numerous debit cards that were used to make approximately $550,000 in fraudulent purchases; and
- a February 2016 attack on another healthcare administrator that allowed the intruders to order the production of debit cards linked to reactivated accounts that were used to make approximately $3.5 million in fraudulent purchases.
The computer hackers directed the pilfered debit and credit cards to be sent to the five defendants charged in Los Angeles and other co-conspirators. Members of the conspiracy then used the unauthorized cards to make cash withdrawals, purchase money orders and make purchases at retail outlets such as Apple, Best Buy, Home Depot and Target.
For example, Safin admitted in court that he used a number of the pre-paid credit cards to withdraw approximately $5,074 at ATMs throughout Los Angeles County and to purchase money orders totaling $19,420. He used debit cards obtained from the healthcare administrators to make at least $225,000 in fraudulent purchases.
When they were arrested last year, Fedoseev was in the possession of more than 519 unauthorized credit, debit and gift cards, and Patapau was found with approximately 525 credit and debit cards in other people’s names.
As a result of their guilty pleas, Patapau, Safin and Fedoseev each face a statutory maximum sentence of 12 years in federal prison when they are sentenced by Judge Wilson. Gerasimova faces a statutory maximum sentence of seven years, and Fedoseeva faces a statutory maximum sentence of five years.
The investigation that led to the two cases filed in Los Angeles was conducted by the Federal Bureau of Investigation.
The two criminal cases are being prosecuted by Assistant United States Attorneys Bryant Yang and Eric Tung of the General Crimes Section.
Orange County Man Sentenced to over 9 Years for Operating Fake Law Firms that Promised to Help Struggling HomeownersRead the Press Release
SANTA ANA, California – A Brea man was sentenced today to 109 months in custody for operating a multi-million dollar fraudulent mortgage modification scheme that posed as a successful law firm.
Bryan D’Antonio, 50, was sentenced by United States District Judge David O. Carter, who ordered the defendant to spend 97 months in federal prison and to serve the final year of the sentence in a halfway house. In addition to the sentence of over eight years, Judge Carter ordered D’Antonio to pay $3,826,977 in restitution.
D’Antonio pleaded guilty last August to one count of conspiracy to commit mail and wire fraud in relation to his role as owner and operator of Rodis Law Group (RLG) and America’s Law Group (ALG). D’Antonio admitted that, between October 2008 and June 2009, he participated in a scheme that induced homeowners to pay between $3,500 and $5,500 for the services of RLG and its successor entity, ALG.
In connection with his gulty plea, D’Antonio admitted that the RLG and ALG schemes fraudulently obtained approximately $9 million from more than 1,500 victims.
RLG and ALG advertised on radio stations nationwide, urging struggling homeowners to call a toll-free number and stating that the companies 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 and ALG were telemarketing operations that never had teams of experienced attorneys.
D’Antonio was previously convicted of mail and wire fraud and was sentenced to four years in federal prison for his participation in a medical billing scheme. He was also 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.
D’Antonio admitted that he started RLG while he was still on supervised release from his prior conviction. And, in violation of the permanent injunction, RLG and ALG sold their services through an extensive telemarketing operation in which employees routinely misrepresented the services RLG and ALG would provide.
“While still under court supervision after serving a prison term in another telemarketing case, D’Antonio oversaw what was essentially a boiler room operation that preyed upon struggling homeowners,” said Acting United States Attorney Sandra R. Brown. “Hundreds of victims lost millions of dollars after D'Antonio’s employees told a series of lies that misrepresented nearly every aspect of the business. Today’s lengthy sentence will ensure that he will not have the opportunity to defraud unsuspecting victims for many years.”
“This defendant – a repeat telemarketing fraudster - took advantage of vulnerable homeowners facing foreclosure during the mortgage crisis,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “His two fake law firms promised homeowners assistance saving their homes and modifying their mortgages. The sad reality is both firms were nothing more than telemarketing scams.”
RLG and ALG telemarketers working for D’Antonio made numerous misrepresentations regarding the companies’ ability to negotiate loan modifications for homeowners. For example, the telemarketers 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 cases. The telemarketers did not disclose to homeowners that RLG and ALG were owned and operated by D’Antonio, a convicted felon who was prohibited from engaging in telemarketing.
“Mr. D’Antonio preyed upon victims who were already experiencing difficult circumstances and robbed them of their remaining financial resources,” said Deirdre L. Fike, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Homeowners seeking financial assistance should thoroughly investigate businesses before investing their money in advance of receiving services.”
D’Antonio’s was charged along with two co-defendants – Charles Wayne Farris and Ronald Rodis – both of whom pleaded guilty last year to conspiring to commit mail and wire fraud. Farris and Rodis are scheduled to be sentenced by Judge Carter on May 1.
This case was investigated by the Federal Bureau of Investigation, which received the assistance of IRS Criminal Investigation.
“Mr. D’Antonio masterminded a scheme that stole nearly $9 million from homeowners across the country who were already on the verge of losing their homes,” stated IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “Taxpayers deserve our vigilance in the investigation and prosecution of individuals who profit from such unscrupulous acts.”
The case is being prosecuted by Assistant U.S. Attorney Joseph T. McNally of the Santa Ana Branch Office and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch.
Investigations by IRS Lead to Cases Against Tax Return PreparersRead the Press Release
LOS ANGELES –The United States Attorney’s Office and IRS Criminal Investigation today announced a 10-year prison sentence against one defendant and the filing of three criminal cases against four individuals who were involved in the preparation of fraudulent income tax returns.
While the vast majority of tax professionals provide honest and high-quality services, there are some dishonest return preparers who operate each filing season and perpetrate refund fraud, identity theft and other scams that hurt taxpayers. IRS Criminal Investigation and federal prosecutors work closely to shut down tax fraud schemes and prosecute the criminals behind them.
“The majority of tax return preparers are focused on helping taxpayers comply with their obligations to file timely and honest tax returns. The IRS relies upon these professionals to file truthful and accurate returns to deter tax fraud,” said Acting United States Attorney Sandra R. Brown. “Dishonest tax return preparers who defy the tax laws, whether for their own personal financial gain or to fraudulently obtain money for their clients, will be shut down permanently and face federal prosecution, which can result in significant prison sentences.”
“With the April 18th tax deadline looming, those who might consider preparing false tax returns should be aware of the extremely negative consequences of doing so,” stated Special Agent in Charge R. Damon Rowe of IRS Criminal Investigation. “The IRS enforces the nation’s tax laws, but also takes particular interest in return preparers who unjustly enrich either themselves or their clients by preparing false claims for refunds. Be assured that the IRS Criminal Investigation, together with our partners at the U.S. Attorney’s Office, will hold those who engage in similar behavior fully accountable.”
Oxnard Return Preparer Sentenced to 10 Years in Federal Prison in Scheme that Filed Nearly 13,000 Returns that Sought over $56 Million in Refunds
An Oxnard-based tax return preparer was sentenced this morning to 120 months in federal prison for his participation in a conspiracy to prepare and file approximately 12,825 fraudulent income tax returns that claimed more than $56 million in refunds.
Rodrigo Pablo “Paul” Lozano, also known as “El Profe,” 61, was sentenced by United States District Judge Philip S. Gutierrez.
Before the Internal Revenue Service was able to identify and stop the scheme, it had already paid out more than $23 million in refunds to Lozano and his co-conspirators. During today’s sentencing, Judge Gutierrez ordered Lozano to pay restitution of $23,094,300 to the IRS.
Lozano owned and operated an income tax preparation business – Lozano & Associates - Ayuda (“help” in Spanish) – where he hired, trained and supervised primarily Latino females in their late teens or early 20s to prepare clients’ federal income tax returns. Lozano operated his business by renting space from businesses that catered to Latino clients, such as a meat market on Hueneme Road in Oxnard. Lozano, a naturalized United States citizen from Mexico, went by the name “El Profe,” as he was a teacher before he began preparing tax returns.
Following a two-week jury trial last July, Lozano was found guilty of one count of conspiracy to defraud the United States. According to the evidence presented at trial, members of the conspiracy obtained Individual Tax Identification Numbers (ITINs), which are issued in lieu of a social security number to undocumented workers in the United States to allow them to file tax returns. The evidence demonstrated that co-conspirators provided Lozano with fake identification documents, such as Mexican Consular Identification Cards – also known as Matrícula cards – and birth certificates, which Lozano used to obtain ITINs in the names shown on the fake identification documents.
Using fake wage and tax statements (Forms W-2) and fictitious dependents, Lozano used the ITINs to file income tax returns that claimed the Additional Child Tax Credit, an IRS refund program designed to assist lower-income taxpayers with children. The fraudulent tax returns typically sought $3,000 to $4,000 in refunds. Lozano submitted nearly 13,000 false tax returns in an 18-month period in 2011 and 2012 while his employees were telling him that the identity and W-2 documents looked suspicious and the IRS was sending hundreds of warning notices stating that the tax returns and W-2s were invalid. Despite the repeated warnings, Lozano continued to direct his employees to file the fraudulent tax returns.
Lozano split the tax refunds with his co-conspirators. At times, he had employees count out tens of thousands of dollars in cash in a bathroom located next to his office space.
The case against Lozano was prosecuted by Assistant United States Attorney Byron J. McLain of the Major Frauds Section.
Owner of West Covina Tax Preparation Business and Associate Face Conspiracy and Other Federal Charges for Filing Hundreds of Allegedly Fraudulent Returns
The former owner of a West Covina tax preparation business has been arrested on charges that he and a co-conspirator used stolen identities to file 341 fraudulent federal and state tax returns that caused tax authorities to issue approximately $741,099 in tax refunds.
Ashrf Mohammed Aly, 42, the former owner and operator of Speedy Tax Service in West Covina, was arrested on April 3 by special agents with IRS Criminal Investigation and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Aly and a second defendant in the case – Arthur Bakunts, 39 – were named in a 13-count indictment returned on March 14 by a federal grand jury. The indictment charges Aly and Bakunts with conspiracy, wire fraud, unlawful possession of another person’s identification, and aggravated identity theft. Bakunts was arrested in February pursuant to a criminal complaint initially filed in this case.
According to court documents, Aly and Bakunts obtained stolen identities and filed fraudulent federal and state income tax returns in the names of the identity theft victims. The fraudulent tax returns were filed electronically from locations in Mexico and Chula Vista, and the refunds were diverted to Aly and Bakunts.
Bakunts had multiple identity profiles, tax refund checks, and other trappings of identity fraud in his car when he was stopped at a sobriety checkpoint in Glendale on May 24, 2014, according to court documents.
Aly and Bakunts each have entered not guilty pleas to the charges in the indictment. Both men are in custody without bond pending trial. United States District Judge Dale S. Fischer has scheduled trials on May 9 for Bakunts and May 30 for Aly.
If convicted of the charges in the indictment, each defendant would face a maximum sentence of 145 years, plus consecutive two-year sentences for each of four counts of aggravated identity theft.
The case is being prosecuted by Assistant United States Attorney Ranee A. Katzenstein.
Carson Resident Indicted for Tax Return Preparer Fraud
Minon Miller, 52, of Carson, was indicted last week on charges that she prepared and filed fraudulent federal income tax returns for both her clients and herself. Miller will be summonsed to appear for an arraignment in United States District Court.
A federal grand jury returned a 41-count indictment last Thursday that charges Miller with 37 counts of aiding and assisting in the preparation of fraudulent income tax returns, two counts of subscribing to fraudulent tax returns that she filed on her own behalf, and two counts of failing to file an individual tax return.
The indictment alleges that, from 2011 through 2016, Miller prepared and filed 37 tax returns on behalf of her clients that falsely claimed itemized deductions, business income and expenses, education credits and residential energy credits.
The indictment also alleges that Miller filed two personal tax returns that under- reported her actual income. Miller’s 2010 and 2011 tax returns claimed gross receipts, respectively, of $12,155 and $26,200, when Miller knew she received substantially more than the figures on the tax returns, according to the indictment.
In addition, Miller failed to file her 2012 and 2013 individual income tax returns.
If she is convicted, Miller would face a statutory maximum sentence of three years in federal prison for each of the 41 counts in the indictment.
<The case against Miller is being prosecuted by Assistant United States Attorney Paul Rochmes of the Tax Division.
Long Beach Resident Indicted for Tax Fraud
A Long Beach man has been named by a federal grand jury in a 10-count superseding indictment that alleges he prepared and filed fraudulent federal income tax returns for both his clients and himself.
Lewis Jefferson Jr., 60, was charged last Wednesday and will be ordered to appear for an arraignment in United States District Court.
The superseding indictment charges Jefferson with eight counts of aiding and assisting in the preparation of fraudulent income tax returns and two counts of subscribing to fraudulent tax returns that he filed on his own behalf.
The superseding indictment replaces a eight-count indictment filed in January.
The superseding indictment alleges that over the course of 2011, Jefferson prepared and filed eight tax returns on behalf of seven clients that claimed false itemized deductions. The taxpayers were not entitled to claim the deductions – which ranged from $4,272 to $38,493 – on their tax returns.
The indictment also alleges that Jefferson filed two personal tax returns that under-reported his actual income. The 2010 and 2011 tax returns claimed gross receipts of $207,545 and $242,590, respectively, and Jefferson knew he received substantially more gross receipts than stated on the returns, according to the indictment.
If he is convicted of the 10 counts in the indictment, Jefferson will face a statutory maximum penalty of 30 years in federal prison.
The case against Jefferson is being prosecuted by Assistant United States Attorneys Charles Parker and James C. Hughes of the Tax Division.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
Most tax return preparers provide professional tax service. However, a few set out to use the personal and financial information provided to them to perpetrate fraud or other scams that can hurt their customers. Earlier this year, the IRS warned taxpayers that they are legally responsible for what is on the tax return even if someone else prepared the tax return. Taxpayers should be vigilant and ensure that their chosen return preparer reports accurate information. The IRS also warned the public about various schemes deployed by dishonest return preparers in its Dirty Dozen Tax Scams.
Garden Grove Man Who Traveled to Canada to Have Sex with Girl He Met Online Sentenced to over 7 Years in Federal PrisonRead the Press Release
SANTA ANA, California – A Garden Grove man who convinced a 13-year-old girl he met online to send him explicit videos – and then traveled to Canada to have sex with the victim – was ordered this afternoon to serve 87 months in federal prison.
Paul Binh Do, 30, was sentenced by United States District Judge David O. Carter.
Once he completes the prison term, Do will be on supervised release for the rest of his life.
Do pleaded guilty in May 2016 to one count of traveling with the intent to engage in illicit sexual conduct and one count of receipt of child pornography.
According to documents filed in United States District Court, Do began an online relationship with the then-13-year-old girl in September 2013, and soon thereafter they began exchanging naked videos of themselves engaging in sexual conduct.
In May 2014, Do traveled to Canada from Orange County to celebrate the victim’s 14th birthday and have sex with her, but he was stopped by Canadian law enforcement as he attempted to enter into the country.
When he was stopped by Canadian authorities, Do possessed digital devices that contained naked videos of the victim. Following his arrest in Canada, Do obstructed justice when he contacted the victim and asked her to tell law enforcement that she had lied to Do about her age when, in fact, she had been completely truthful about being 13.
In a sentencing memorandum filed with the court, prosecutors noted that evidence gathered from Do’s digital devices “showed that defendant was having conversations of a sexual nature with five other individuals that had indicated that they were minor girls.”
In August 2016, after he pleaded guilty, Do’s bond was revoked and he was remanded into custody after he visited eight different Orange County parks on 12 different occasions in violation of the terms of his release. At the time, Do claimed that he was playing Pokemon Go when he went to the parks in July 2016.
The investigation into Do was conducted by the Orange County Child Exploitation Task Force, which includes special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). The Task Force received substantial assistance from HSI’s attaché office in Vancouver, the Calgary Police Service, Canada Border Services Agency, and the Royal Canadian Mounted Police’s Southern Alberta Internet Child Exploitation Unit.
The case against Do was prosecuted by Assistant United States Attorney Vib Mittal of the Santa Ana Branch Office.
California Twice Convicted Felon Sentenced to Prison for Operating Fake Law Firms That Promised to Help Struggling HomeownersRead the Press Release
An Orange County, California man was sentenced today in U.S. District Court in Santa Ana, California to serve 109 months in prison including the last 12 months in a halfway house for his role as the owner and operator of a multi-million dollar fraudulent mortgage modification scheme that posed as a successful law firm, the Justice Department announced.
Bryan D’Antonio, 50, of Brea, California, pleaded guilty to conspiracy to commit mail and wire fraud on Aug. 9, 2016. In addition to the term of prison imposed by U.S. District Judge David O. Carter, Judge Carter ordered D’Antonio to pay $3,826,977.95 in restitution.
D’Antonio admitted that, between October 2008 and June 2009, he participated in a scheme with Ronald Rodis, Charles Wayne Farris, and others to induce homeowners to pay between $3,500 and $5,500 for the services of Rodis Law Group (RLG) and its successor entity, America’s Law Group (ALG). RLG and ALG advertised on radio stations nationwide, urging struggling homeowners to call a toll-free number and stating that the companies 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 and ALG were telemarketing operations that never had teams of experienced attorneys, and that collected these payments from distressed homeowners, without providing anything of value to the overwhelming majority of them. During much of the scheme, Ronald Rodis was the only attorney at RLG.
“This defendant – a repeat telemarketing fraudster - took advantage of vulnerable homeowners facing foreclosure during the mortgage crisis,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “His two fake law firms promised homeowners assistance saving their homes and modifying their mortgages. The sad reality is both firms were nothing more than telemarketing scams.”
“While still under court supervision after serving a prison term in another telemarketing case, D’Antonio oversaw what was essentially a boiler room operation that preyed upon struggling homeowners,” said Acting U.S. Attorney Sandra R. Brown. “Hundreds of victims lost millions of dollars after D’Antonio’s employees told a series of lies that misrepresented nearly every aspect of the business. Today’s lengthy sentence will ensure that he will not have the opportunity to defraud unsuspecting victims for many years.”
D’Antonio was previously convicted of mail and wire fraud and sentenced to four years in federal prison for his participation in a medical billing scheme. He was also 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. D’Antonio admitted that he started RLG while he was still on supervised release from his prior conviction. In violation of D’Antonio’s permanent injunction, RLG and ALG sold their services through an extensive telemarketing operation in which employees routinely misrepresented the services RLG and ALG would provide.
RLG and ALG telemarketers working for D’Antonio made numerous misrepresentations regarding the companies’ ability to negotiate loan modifications for homeowners. For example, the telemarketers stated that RLG and ALG 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. The telemarketers did not disclose to homeowners that RLG and ALG were owned and operated by Bryan D’Antonio, a convicted felon who was prohibited from engaging in telemarketing.
In connection with his guilty plea, D’Antonio admitted that the RLG and ALG schemes fraudulently obtained approximately $9 million from more than 1,500 victims.
“Mr. D’Antonio preyed upon victims who were already experiencing difficult circumstances and robbed them of their remaining financial resources,” said Assistant Director in Charge Deirdre L. Fike of the FBI’s Los Angeles Field Office. “Homeowners seeking financial assistance should thoroughly investigate businesses before investing their money in advance of receiving services.”
D’Antonio’s co-defendants, Charles Wayne Farris and Ronald Rodis, both previously pleaded guilty to one count of conspiracy to commit mail and wire fraud. Farris and Rodis are scheduled to be sentenced on May 1.
This case was investigated by the FBI 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.
Ventura County Man Indicted by Federal Grand Jury for Allegedly Producing Child Pornography Involving 6-Year-Old GirlRead the Press Release
LOS ANGELES – A Simi Valley man was indicted today by a federal grand jury on charges of producing child pornography in a case involving a 6-year-old girl.
Eric Allen Haensgen, 38, who until August 2015 lived in Huntley, Illinois, is also charged with distributing and possessing child pornography.
The indictment alleges that Haensgen produced still photos and videos of the young victim. Investigators found 83 images and three videos of a 6-year-old girl that had been shot with Haensgen’s iPhone and downloaded to a computer, according to court documents.
Haensgen allegedly distributed over the BitTorrent Network other examples of child pornography he obtained from the internet.
Haensgen was arrested on March 24 by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) after federal prosecutors filed a criminal complaint that accused him of one count of producing child pornography.
Haensgen is scheduled to be arraigned on the indictment on April 13 in United States District Court. Haensgen remains in custody without bond.
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 charge of producing child pornography carries a mandatory minimum penalty of 15 years in federal prison and a statutory maximum sentence of 30 years. The charge of distributing child pornography carries a mandatory minimum sentence of five years and a maximum sentence of 20 years. The charge of possessing child pornography carries a statutory maximum sentence of 20 years in federal prison.
This case is being prosecuted by Assistant United States Attorney Vanessa Baehr-Jones of the Violent and Organized Crime Section.
Hermosa Beach Couple Found Guilty in Tax Scam and Passing Fraudulent Financial Instruments to Pay Off DebtsRead the Press Release
LOS ANGELES – A federal jury this afternoon convicted a Hermosa Beach couple of a host of charges related to their participation in a scheme that filed fraudulent tax returns with the Internal Revenue Service seeking millions of dollars in refunds and used bogus financial instruments as a way to pay off debt.
Sean David Morton, 58, and his wife, Melissa Ann Morton, 50, each were convicted of one count of conspiracy to defraud the United States, two counts each of filing false claims against the United States, and various counts of passing false or fictitious financial instruments (specifically, 26 counts against Sean Morton, and 25 counts against Melissa Morton).
On the fourth day of trial, the jury heard closing arguments and deliberated for approximately two hours before issuing the guilty verdicts.
The charges against the Mortons stem from their participation in a “redemption” scheme, which is the most common scheme used across the nation by tax defiers and “sovereign citizens.” Proponents of this scheme falsely claim that the United States government controls bank accounts – often referred to as “U.S. Treasury Direct Accounts” – for U.S. citizens that can be accessed by submitting paperwork with state and federal authorities. Individuals promoting this scam frequently cite various discredited legal theories and may refer to the scheme as “Redemption” or “Strawman.” This scheme, which repeatedly has been rejected by courts, predominately uses fraudulent financial documents that appear to be legitimate.
“These defendants orchestrated a scheme that used bogus ‘legal’ filings that sought to abuse the tax system and defraud the IRS out of millions of dollars,” said Acting United States Attorney Sandra R. Brown. “These fraudulent schemes are designed to do only one thing – victimize others for profit.”
“Sean and Melissa Morton made multiple attempts to defraud the IRS and the taxpaying public,” stated Special Agent in Charge R. Damon Rowe for IRS Criminal Investigation. “Today’s verdict reinforces our commitment to every American taxpayer to identify and prosecute those individuals who devise illegal tax schemes to obtain refunds to which they are not entitled.”
The evidence presented at trial showed that the Mortons filed income tax returns with the Internal Revenue Service that falsely claimed they had income from various banking institutions reported on Forms 1099-OID. As part of the scheme, the Mortons falsely reported large withholdings and claimed they were owed refunds from the IRS.
As a result, the IRS erroneously issued a refund of $480,323 to Sean Morton for a 2008 income tax return. On the same day the refund was deposited into the Mortons’ joint bank account, the couple took immediate steps to conceal the money, which included opening two new accounts, transferring over $360,000 to the two new accounts, and withdrawing $70,000 in cash.
When the IRS took steps to collect the erroneous refund, the Mortons began a campaign to thwart the government’s collection efforts. Specifically, when the IRS placed a levy on the couple’s joint bank account, Melissa Morton repeatedly sent letters to the IRS that falsely claimed it was her sole and separate account.
When the IRS attempted to collect the erroneous refund from the Mortons, the Mortons presented to the IRS various “coupons” and “bonds” that purported to pay off their debt with the IRS. The Mortons created and submitted these bogus documents to the IRS, instructing the agency to draw upon funds with the United States Treasury to satisfy their debt.
The Mortons also sold the bond scheme to others who were in debt to governmental organizations, such as the IRS and the State of California, and private bank institutions for mortgage or credit card debt. The Mortons charged their clients thousands of dollars to prepare and file useless UCC-1 documents declaring their clients’ “strawman” status, and to prepare and send false bonds to the government or banks which purported to pay off the clients’ debt.
The Mortons are scheduled to be sentenced by United States District Judge Stephen V. Wilson on June 19. As a result of today’s guilty verdicts, Sean Morton faces a statutory maximum sentence of 650 years in federal prison, and Melissa Morton could be sentenced to as much as 625 years.
The investigation into the Mortons was conducted by IRS Criminal Investigation. The case is being prosecuted by Assistant United States Attorneys Valerie Makarewicz and James C. Hughes of the Tax Division.
Grand Jury Accuses Inland Empire Man of 17 Child Exploitation Offenses Related to Six Boys Coerced to Make Explicit VideosRead the Press Release
RIVERSIDE, California – An Inland Empire man was named today in a federal grand jury indictment that charges him with a series of child exploitation crimes for allegedly coercing six boys around the nation to send him sexually explicit videos.
Francisco Javier Soledad, 24, of Eastvale, was charged today in a 17-count indictment that alleges six counts of producing of child pornography, six counts of using the internet to induce a minor to engage in criminal sexual activity, two counts of advertising child pornography, two counts of distributing child pornography, and one count of possessing child pornography on an iPhone.
Soledad was arrested on March 9 by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) after federal prosecutors filed a criminal complaint that accused him of one count of producing child pornography in relation to one 13-year-old victim.
The indictment filed today outlines how Soledad victimized six boys between the ages of 12 and 15 over the course of several months in 2016. Soledad allegedly found the victims, who spanned the nation from California to Georgia, on social media sites.
According to court documents, Soledad assumed different personas – sometimes a 13-year-old boy, and other times an adult woman – to convince the victims to send him explicit photographs and videos. Several of the victims refused demands to send additional images, which allegedly prompted Soledad to threaten to publish the previously sent images on social media platforms. In at least one instance, Soledad did in fact publish one of the victim’s nude images on Twitter.
A search of Soledad’s digital devices revealed thousands of images and videos of suspected child pornography. The majority of the child pornography images appear to have been self-produced by the depicted victims. Law enforcement has not yet identified all of the children Soledad may have victimized.
Anyone with information about Soledad – or his Snapchat handle, “linkinparkrocks” – is encouraged to call HSI’s toll-free tip line 1-866-2DHS-ICE or 1-866-234-7423.
Soledad is scheduled to be arraigned on the indictment on April 12 in United States District Court in Los Angeles. Soledad is currently free on a $170,000 bond.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The charges of producing child pornography and advertising child pornography each carry a mandatory minimum penalty of 15 years in federal prison and a statutory maximum sentence of 30 years. The charge of enticing a minor carries a mandatory minimum sentence of 10 years in prison and a maximum possible sentence of life. The charge of distributing child pornography carries a mandatory minimum sentence of five years and a maximum sentence of 20 years. The charge of possessing child pornography carries a statutory maximum sentence of 10 years in federal prison.
This case is being prosecuted by Special Assistant United States Attorney Teresa K.B. Beecham.
Two Men Linked to Detroit-Based Drug Trafficking Organization Named in Federal Criminal Case Filed in Los AngelesRead the Press Release
LOS ANGELES – As part of an investigation stemming from a multi-kilogram narcotics seizure at Los Angeles International Airport last month, two men have been named in a federal criminal complaint that alleges they were key operatives in a drug trafficking organization that shipped cocaine and heroin from Los Angeles to Detroit.
A Pasadena resident – Kevin Blair, also known as “Wood,” 45 – was taken into federal custody yesterday morning and was ordered held without bond at a court hearing late yesterday afternoon.
The second man charged in the complaint filed yesterday morning in United States District Court – Delano Leflore, also known as “Bop Bop,” 37, of Detroit – is a fugitive who is being sought by federal authorities.
The criminal complaint charges Blair and Leflore with conspiracy to possess with intent to distribute and to distribute heroin and cocaine, a charge which carries a potential penalty of life in federal prison.
The case against Blair and Leflore follows the seizure of approximately two kilograms of heroin and approximately one kilogram of cocaine at LAX on March 7. After the narcotics were discovered in checked luggage, federal prosecutors charged a 28-year-old Detroit woman with being a drug courier. Last Friday, a federal grand jury indicted the woman, Kennsha Mason, on three counts: conspiracy to possess with intent to distribute and to distribute heroin and cocaine, possession with intent to distribute heroin, and possession with intent to distribute cocaine. Mason, who remains in federal custody in Los Angeles, is scheduled to be arraigned on the indictment this afternoon.
During the investigation of Mason, investigators with the DEA Los Angeles International Airport Narcotics Task Force developed evidence that Blair and Leflore coordinated the shipment of narcotics that Mason was allegedly ferrying to Detroit.
According to the criminal complaint filed yesterday, Leflore hired Mason to transport narcotics and made arrangements for her to travel from Detroit to Los Angeles. Once in Los Angeles in early March, Mason travelled to a townhouse on South Oakland Avenue in Pasadena, where Blair allegedly supplied the narcotics that were discovered by law enforcement in her suitcase.
Blair was taken into custody on Friday by the Pasadena Police Department pursuant to an outstanding felony warrant for assault with intent to murder that was issued by a court in Wayne County, Michigan. After he was arrested, authorities found a receipt for a UPS shipment sent from Los Angeles to Detroit.
Yesterday morning, law enforcement authorities in Michigan intercepted the package Blair sent by UPS, and they recovered one kilogram of suspected heroin and one ounce of suspected fentanyl, according to the criminal complaint.
Blair was transferred to federal custody after the criminal complaint was filed yesterday.
At yesterday afternoon’s court hearing, Blair was ordered to appear in United States District Court for a preliminary hearing on April 17 and an arraignment on April 21.
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 DEA Los Angeles International Airport Narcotics Task Force, an inter-agency task force based at LAX, is conducting this investigation. The Pasadena Police Department provided assistance.
In addition to the DEA, the Task Force is made up of representatives from the Federal Bureau of Investigation, the Los Angeles Airport Police, the Los Angeles Police Department and the Los Angeles County Sheriff’s Department. The Task Force also works closely with the United States Customs and Border Protection and the Transportation Security Administration.
The case against Mason is being prosecuted by Assistant United States Attorney Reema M. El-Amamy of the Organized Crime Drug Enforcement Task Force.
Inland Empire Dentist Pleads Guilty to Possessing Child Pornography and Admits Distributing Images on Computer NetworkRead the Press Release
RIVERSIDE, California – A dentist who formerly lived and worked in Temecula pleaded guilty this afternoon to possession of child pornography, including videos of children under the age of 10 engaged in sexually explicit conduct.
Milan Irvin, 34, who currently resides in Rancho Cucamonga, pleaded guilty this afternoon to one count of possession of child pornography and admitted in a plea agreement that he “downloaded, received, possessed and distributed images and videos of child pornography using the internet.”
Irvin specifically admitted possessing a sexual explicit video depicting a girl under 10 and distributing another video involving a girl between 10 and 12. Irvin possessed approximately 200 images and 50 videos of child pornography on a computer.
Irvin pleaded guilty today before United States District Judge Jesus G. Bernal, who scheduled a sentencing hearing for July 10.
The charge of possession of child pornography carries a statutory maximum sentence of 20 years in federal prison. The plea agreement calls for a prison sentence of three years to five years, to be followed by 10 years of supervised release. The actual sentence will be determined by Judge Bernal, but if the court decides to deviate from the agreed-upon sentence, both parties have the option to withdraw from the plea agreement and proceed to trial.
Once he completes his prison sentence in this case, Irvin will be required to register as a sex offender and will be prohibited from associating with people under the age of 18.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), which received substantial assistance from the Riverside County District Attorney’s Office, Sexual Assault Felony Enforcement (SAFE) Team. Irvin came to the attention of investigators during an undercover investigation involving the Ares peer-to-peer network.
This case is being prosecuted by Special Assistant United States Attorney Teresa K.B. Beecham.
Law Enforcement Authorities Arrest 10 Members and Associates of 18th Street Gang on Federal Narcotics and Weapons ChargesRead the Press Release
LOS ANGELES – Federal and local authorities have arrested 10 members and associates of the 18th Street gang, primarily on federal narcotics charges.
In a sweep that began Tuesday evening and continued into Wednesday, special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI), as well as deputies with the Los Angeles County Sheriff’s Department and officers with the Los Angeles Police Department, took the eight defendants into custody. One defendant was arrested in Honolulu, and another in Indianapolis.
Three other people who face federal charges were already in local custody, and law enforcement continues to search for five more defendants.
The arrests are the culmination of an HSI-led investigation that began in December 2014. The investigation focused on the distribution and sale of methamphetamine and unlicensed sales of firearms.
During the course of the investigation, authorities seized approximately four kilograms of methamphetamine and 14 firearms, including five assault rifles. The investigation led to six indictments that charge a total of 18 defendants.
Among those arrested yesterday are Giovanny Ochoa, also known as “Sporty” and “Speedy,” 26, of Hawthorne, and Aveline Villalba, also known as “Gordo” and “Fatboy,” 36, of South Los Angeles, who are charged in an indictment with selling approximately one-quarter pound of methamphetamine in the fall of 2016 to an undercover operative. Ochoa is additionally charged in relation to another quarter-pound sale, as well as transactions involving one-ounce quantities of meth. If they are convicted of conspiracy and narcotics-distribution charges, Ochoa and Villalba each would face a mandatory minimum sentence of 10 years in federal prison and could be sentenced to as much as life.
Ochoa, Villalba and the other six defendants arrested in the Los Angeles area have been arraigned in United States District Court. All eight pleaded not guilty and were ordered held without bond pending trial.
The two defendants arrested in other districts have also been ordered held without bond and are expected to be transported to Los Angeles in the coming weeks.
The six cases are being prosecuted by Assistant United States Attorneys Joshua Mausner, Jennifer Weinhold and Damaris M. Diaz, and Special Assistant United States Attorney Stacey Fernandez, all of the General Crimes Section.
Former Orange County Resident Who Fled United States to Avoid Prosecution in Healthcare Fraud Case Sentenced to Federal PrisonRead the Press Release
LOS ANGELES – A medical doctor who fled the United States nearly 15 years ago and faked his own death to avoid prosecution in a healthcare fraud case was sentenced late this afternoon to 29 months in federal prison for fleeing justice.
Tigran Svadjian, 58, a naturalized U.S. citizen originally from Armenia who was residing in Newport Beach prior to fleeing the country in September 2002, was sentenced late this afternoon by United States District Judge Michael W. Fitzgerald.
Svadjian pleaded guilty in November to one count of unlawful flight to avoid prosecution.
In a case filed in 2002 in United States District Court in Sacramento, Svadjian, who operated medical clinics in Los Angeles and Fresno, had agreed to plead guilty in a $2.4 million scheme to defraud Medi-Cal by submitting bills for tests that had not been performed, in many cases because the “patients” were dead. After being ordered to appear in federal court in the Eastern District of California for an arraignment in that case, he fled to Russia, leaving behind his wife and son.
On October 24, 2002, the United States Embassy in Moscow received notification that Svadjian had died of pneumonia and that his body had been cremated. Relying on this false information, the Embassy then issued a report documenting the death, and Svadjian’s defense counsel submitted that report to federal prosecutors.
When he pleaded guilty, Svadjian admitted that he paid a Russian police officer in 2002 to submit an official report about his death to the United States Embassy. Soon after, Svadjian obtained a fraudulent Russian passport in a different name and relocated to Hurghada, Egypt, where he occasionally worked as a scuba instructor.
In January 2013, after lengthy and unsuccessful attempts to locate Svadjian or to obtain further confirmation of his death, prosecutors in the Eastern District of California dismissed the healthcare fraud case.
Svadjian was taken into custody by Egyptian authorities on August 1 – nearly 14 years after he fled the United States. Svadjian had been deported to Egypt by Ukrainian authorities after they determined he was travelling on a fraudulent Lithuanian passport. Egyptian authorities discovered in his residence an old United States passport with his true name.
Svadjian “did not simply flee from prosecution,” prosecutors wrote in a sentencing memorandum filed with the court. “Instead, defendant planned and implemented a sophisticated, fraudulent scheme that involved bribing foreign officials, using false statements to mislead U.S. State Department officials into creating a false death certificate, and submitting that false certificate to federal prosecutors. Defendant then hid from U.S. authorities through the use of false identities for approximately 15 years. He abandoned his wife, son, and parents, and started a whole new life without them because he did not want to spend time in prison.”
This case was investigated by the Federal Bureau of Investigation.
This case was being prosecuted by Assistant United States Attorney Bryant Y. Yang of the General Crimes Section.
Former O.C. Superior Court Clerk Pleads Guilty to RICO Charge in Bribery Scheme to ‘Fix’ Criminal Cases and Traffic ChargesRead the Press Release
SANTA ANA, California – A former clerk of the Orange County Superior Court pleaded guilty this afternoon to federal racketeering charges stemming from a scheme in which he accepted more than a quarter-million dollars in bribes to illegally resolve criminal cases and traffic offenses on terms favorable to hundreds of defendants without the knowledge of prosecutors or judges.
Jose Lopez Jr., 36, of Anaheim, pleaded guilty today to one count of conspiring to violate the federal Racketeer Influenced and Corrupt Organizations Act (RICO).
In a plea agreement filed last week, Lopez admitted that he was at the center of a scheme in which co-conspirators paid him as much as $8,000 in bribes to “fix” cases. The co-conspirators were middlemen who recruited individuals with pending cases to pay money that was given to Lopez to resolve their cases without the authorization of the court.
“In total, defendant [Lopez] improperly resolved approximately 1,034 cases, including 69 misdemeanor driving under the influence cases, 160 other misdemeanor cases and 805 traffic-related infraction cases,” Lopez admitted in the plea agreement.
Over the course of more than five years, Lopez “resolved” cases by entering information into the court’s computers to make it appear that a defendant had pleaded guilty, paid required fees or had performed community service. In some cases, Lopez fraudulently created records that made it appear drunk driving charges had been dismissed or defendants had served mandatory jail time.
In addition to taking bribes and falsifying court records, Lopez also forged the signature of a prosecutor with the Orange County District Attorney’s Office.
The conspiracy ended in the spring of 2015 when the court learned about the misconduct and took steps to reopen the cases that Lopez tampered with.
“This defendant compromised the justice system in Orange County to line his pocket with money he used to travel abroad, take trips to Las Vegas and open a Mexican restaurant,” said Acting United States Attorney Sandra R. Brown. “This scheme affected hundreds of cases and caused havoc in the Orange County Superior Court – problems that were further complicated when the former clerk encouraged others to lie about the scheme.”
Lopez pleaded guilty before United States District Judge Josephine L. Staton, who is scheduled to sentence the defendant on September 22. As a result of today’s guilty plea, Lopez faces a statutory maximum sentence of 20 years in federal prison.
“The defendant ignored the rule of law and potentially undermined public safety by essentially serving as judge and jury in scores of cases to enrich himself,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI and our partners will continue to investigate complaints of corruption by public officials and those with access to sensitive information.”
“IRS Criminal Investigation will continue to use our financial investigative skills to combat corruption and hold public officials accountable for their actions,” stated IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “Today’s guilty plea should serve as a reminder of what can happen when officers of the court try to profit from their position.”
With Lopez’s guilty plea late this afternoon, and the guilty plea of a co-defendant earlier today, 10 people charged last fall with participating in the racketeering scheme by acting as recruiters have pleaded guilty. One more defendant is scheduled to plead guilty next month, and the twelfth defendant in the case is pending trial.
The other 10 defendants who have pleaded guilty or have agreed to plead guilty are:
- Ricardo Quinones, 33, of Santa Ana;
- Juan C. Rosas Santillana, 33, of Chino Hills, who is scheduled to plead guilty on April 21;
- Ramon Salvador Vasquez, 28, of Santa Ana;
- Manuel Galindo Jr., 27, of Santa Ana;
- Gibram Rene Lopez, also known as “Ivan,” 27, of Anaheim;
- Agustin Sanchez Jr., 32, of Santa Ana;
- Luis Alberto Flores Guillen, also known as “Bills,” 26, of Santa Ana, who pleaded guilty earlier today;
- Oscar Centeno, also known as “Mosquito,” 27, of Santa Ana;
- Jeff Reynes Fernandez, also known as “Lean,” 25, of Fullerton; and
- Jesus Saldana, 28, of Garden Grove.
The final defendant in the case – Javed Asefi, also known as “Joey,” 44, of Ladera Ranch, who in addition to the RICO count is charged with making false statements to the FBI during its investigation into the bribery scheme – is scheduled to go on trial before Judge Staton on May 2.
Prior to the 12-defendant indictment being returned by a federal grand jury last fall, three other recruiters pleaded guilty to federal bribery charges, including Rebeca Sarai Rosell, who worked at a Santa Ana bail bonds company and funneled a bribe to Lopez from a drunk driving defendant.
This case is being investigated by special agents with the Federal Bureau of Investigation and IRS Criminal Investigation.
Former Compton Treasury Official Arrested on Federal Charges Related to Embezzlement of $3.7 Million from City CoffersRead the Press Release
LOS ANGELES – The former deputy city treasurer for the City of Compton was arrested today on federal charges related to the theft of more than $3.7 million of city funds.
Salvador Galvan, 47, of La Mirada, was arrested this morning by special agents with the FBI pursuant to a criminal complaint that charges him with theft concerning programs receiving federal funds.
Galvan faces federal charges stemming from allegations that he stole $3,721,924 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 the criminal complaint filed late yesterday in United States District Court, Galvan skimmed cash from the daily receipts on numerous occasions. An audit of the city’s cash deposits “identified discrepancies which vary from approximately $200 to $8,000 per day,” according to the affidavit in support of the complaint.
The FBI interviewed Galvan’s supervisor, who “reflected about Galvan’s time in the office, his unexplained affluence, and his generosity,” according to the affidavit. The supervisor told investigators that Galvan went from driving an “old Toyota” to increasingly luxurious vehicles, including a black Audi sedan. That affidavit states that Galvan told his supervisor that he purchased a residence in La Mirada and demolished the house so he could rebuild it – all on an annual salary of approximately $60,000.
“The people of Compton deserved better,” said Acting United States Attorney Sandra R. Brown. “This defendant stole millions of dollars intended to help residents, placing his own greed over their interests.”
Galvan was arrested late last year by the Los Angeles County Sheriff’s Department in relation to the theft of city funds. The federal case that led to Galvan’s arrest this morning resulted from further investigation by the Federal Bureau of Investigation.
“Defendant Galvan violated the trust of the public he served by stealing money designated for the betterment of the Compton community,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “By operating a scheme whereby he skimmed Compton city coffers to live beyond his means, Mr. Galvan faces significant federal charges and time behind bars.”
Galvan is scheduled to make his initial court appearance this afternoon in United States District Court.
If he is convicted of the embezzlement charge, Galvan would face a statutory maximum sentence of five years in federal prison.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
The case against Galvan is being investigated by the FBI, which is receiving assistance from the Los Angeles County Sheriff’s Department.
This matter is being prosecuted by Assistant United States Attorney Daniel O’Brien of the Public Corruption and Civil Rights Section
Riverside County Man Sentenced to 20 Years in Federal Prison for Leading Bank Heist Crew that Cut through Roofs to Penetrate VaultsRead the Press Release
LOS ANGELES – A Banning man who led a group of burglars that conducted a 10-year-long series of heists targeting Southland banks by cutting through rooftops has been sentenced to 20 years in federal prison for participating in two burglaries.
Alceu Johnny Andreis, 48, of Banning, received the 240-month sentence yesterday afternoon from United States District Judge Dale S. Fischer.
In addition to the prison term, Judge Fischer ordered Andreis to pay $12,082,403 in restitution to two financial institutions, their insurance carriers and numerous safe deposit box customers.
Following a jury trial in December, Andreis was convicted of two counts of bank burglary in relation to thefts from an East West Bank branch in Rowland Heights in 2011 and a BBCN Bank branch in Diamond Bar in 2012. Andreis was sentenced to the statutory maximum sentence of 10 years for each of the burglaries.
The evidence presented at trial showed that Andreis led a crew of rooftop bank burglars for at least a decade. Andreis and his crew burglarized the victim banks after detailed and thorough planning, which included “casing” the banks, learning about the bank’s security systems, and conducting numerous “dry runs” of the heists. Prior to the actual burglaries, they cut holes in the roofs of the banks and resealed them so as not to arouse suspicion.
During the burglaries, members of the team wiped down their equipment to ensure no DNA or fingerprints were left behind, communicated via walkie-talkies, disabled the banks’ security systems, re-opened the pre-cut rooftop holes, jackhammered holes into the banks’ thick concrete vaults and rappelled down into the vaults.
Once they had access to the vaults, the burglars opened dozens of safe deposit boxes to steal cash, jewelry, coins and other valuables inside, and they took the cash inside the vaults.
During the planning and actual burglaries, Andreis and his crew had a lookout person to warn of potential witnesses or law enforcement.
Andreis “ensured that his burglary crew worked out together, drug-tested, wore identical clothing and shoes, cleaned the tools, planned the burglaries together, and evenly split the burglary proceeds,” prosecutors noted in a sentencing memorandum filed with the court.
Andreis was one of four defendants convicted in relation to the bank burglaries. The other three defendants pleaded guilty, and two have been sentenced, receiving prison terms of up to 10 years. One more defendant is pending sentencing before Judge Fischer.
In 2014, in another case involving the attempted burglary of a Citibank branch in Diamond Bar, Judge Fischer sentenced Andreis to 51 months in prison for conspiracy and attempted burglary. The 20-year sentence issued yesterday will run consecutive to the 51-month sentence.
Andreis and his co-defendants were arrested while attempting to burglarize the Citibank branch.
Judge Fischer yesterday issued an order that forfeited from Andreis two Mercedes-Benz automobiles and four Ducati motorcycles that he had purchased with cash obtained during the two burglaries.
The case against Andreis and his crew was investigated by the Los Angeles County Sheriff’s Department, which received substantial assistance from the Federal Bureau of Investigation.
This matter was prosecuted by Assistant United States Attorney Joanna M. Curtis of the Violent and Organized Crime Section and Assistant United States Attorney Christen A. Sproule of the Asset Forfeiture Section.