Central District of California
Press releases recorded for this federal judicial district.
Two Former L.A. Sheriff’s Deputies Sentenced to Federal Prison for Violating Civil Rights of Jail Inmate who was BeatenRead the Press Release
LOS ANGELES – Two former deputies with the Los Angeles Sheriff’s Department were ordered today to serve time in federal prison for violating the civil rights of a mentally ill jail inmate who was beaten, kicked and pepper sprayed after showing disrespect to a jail employee at the Twin Towers Correctional Facility.
Bryan Brunsting, 32, and Jason Branum (also known as Jason Johnson), 36, were sentenced this morning by United States District Judge George W. Wu. Brunsting received a 21-month prison term, while Branum was sentenced to five months in custody.
Brunsting and Branum each were found guilty in May of three felony counts related to the unprovoked attack on the inmate on March 22, 2010, and subsequent cover-up. Following the trial, federal prosecutors reached an agreement with Brunsting in which he admitted his role in another use-of-force incident on August 20, 2009 at Twin Towers.
Writing about Brunsting in a sentencing memorandum filed with the court, prosecutors said, “Both incidents show that defendant’s need for ‘respect’ from inmates was above anyone’s need for justice.”
The evidence presented during a one-week trial in United States District Court showed that Brunsting and Branum assaulted the victim in the 2010 incident after the inmate verbally showed disrespect to a civilian Sheriff’s Department employee. Brunsting, who was a training officer assigned to a rookie deputy who had just started working at the jail, told his trainee that they were going to “teach him a lesson.”
Brunsting, Branum and the rookie deputy brought the victim out of the visiting area and directed him to a locked hallway without any surveillance cameras. Once in the hallway, the inmate realized he was going to be assaulted and began to run. The victim was tackled. Brunsting and Branum then beat the victim with fists, kicked him in the genitals and sprayed him in the eyes with pepper spray. Once other deputies arrived, they instructed the rookie deputy to handcuff the victim before he was led away for medical treatment.
After the beating, Brunsting, Branum and the rookie deputy met to coordinate and falsify their stories. The rookie deputy testified that he was told what to say and how to write his report. As prosecutors argued at trial, the reports submitted by Brunsting and the rookie were strikingly similar, and were written to justify the use of force by falsely claiming that the victim had attempted to punch the rookie.
“Both defendants engaged in a vicious, premeditated assault on an inmate,” said United States Attorney Eileen M. Decker. “Deputy Brunsting’s conduct was even more egregious given that he was involved in the abuse of a second inmate, and he was training new deputies on how to violate inmates’ civil rights and get away with it. These defendants tarnished all law enforcement with their conduct, undermining the outstanding work by the vast majority of officers in the Los Angeles Sheriff’s Department and the nation.”
Brunsting and Branum were found guilty of conspiracy to violate civil rights, deprivation of civil rights with bodily injury, and falsification of records for preparing reports that tried to justify their use of force against the victim.
The case against Brunsting and Branum is the result of an investigation by the FBI, and is one in a series of cases resulting from an investigation into corruption and civil rights abuses at county jail facilities in downtown Los Angeles. As a result of today’s guilty verdicts, 20 current or former members of the Los Angeles Sheriff’s Department have now been convicted of federal charges.
The case against Brunsting and Branum was prosecuted by Assistant United States Attorneys Brandon D. Fox and Lindsey Greer Dotson of the Public Corruption and Civil Rights Section.
Long Beach Man Sentenced to 4 Years in Federal Prison for Misusing Bankruptcy Courts to Operate a Foreclosure Rescue SchemeRead the Press Release
LOS ANGELES – A Long Beach man was sentenced today to four years in federal prison in relation to a mortgage rescue scheme that brought in nearly $3 million from fees from distressed homeowners.
Karl Robinson, 52, was sentenced today by United States District Judge Manuel L. Real, who also ordered the defendant to pay a $10,000 fine.
Robinson pleaded guilty in August to one count of bankruptcy fraud in connection with a five-year scheme he operated under his own name and companies with names such as “Stay In Your Home Today,” “21st Century Development” and “Genesis Ventures Corporation.”
Robinson solicited clients who were facing foreclosure with false promises that he could save their homes. Instead of providing legitimate services to his clients, Robinson filed hundreds of fraudulent bankruptcy petitions that delayed foreclosure and eviction proceedings.
As part of the scheme, Robinson filed falsified grant deeds with county recorders and other fake documents in state court eviction proceedings to make it appear that fictional debtors held interests in the distressed properties. In a plea agreement filed in federal court, Robinson admitted that he misused notary stamps of other individuals in order to fake signatures on legal documents and that he charged distressed homeowners additional fees if they wanted to unwind fake filings.
“This scheme was never about providing assistance to distressed homeowners,” said United States Attorney Eileen M. Decker. “It was about lying to distressed homeowners and collecting fees based on false promises. This defendant abused the bankruptcy system and stole identities to perpetrate his fraudulent scheme.”
The criminal case against Robinson is the result of an investigation by the Federal Bureau of Investigation and the Federal Housing Finance Agency, Office of the Inspector General (FHFA-OIG).
“Mr. Robinson lured homeowners with empty promises and used his ties to a church to gain their trust and steal their hard-earned money,” said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The FBI and our partners with the FHFA-OIG and the U.S Attorney's Office will continue to combat schemes that manipulate government rules and target victims faced with losing their homes.”
“Karl Robinson selfishly preyed on the misfortune of others and as a result has been sentenced to prison,” said Leslie P. DeMarco, Special Agent in Charge of FHFA-OIG’s Western Region. “He now has ample time to reflect on his behavior. FHFA-OIG will continue to work with our law enforcement partners to prevent more innocent victims from falling prey to similar schemes and to protect the housing market.”
The case against Robinson was prosecuted by Special Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.
Member of South L.A. Street Gang Pleads Guilty in Federal Racketeering Case, Admitting Drug Dealing and Armed RobberiesRead the Press Release
LOS ANGELES – A longtime member of the Five Deuce Broadway Gangster Crips (BGC) street gang has pleaded guilty to federal charges and admitted to trafficking in narcotics and participating in a series of armed robberies that targeted bank customers and small businesses.
Akia Pete, also known as “Studda Box,” 35, of Gardena, pleaded guilty on Friday, November 18 to conspiring to violate the federal RICO statute and conspiring to traffic in narcotics.
Pete pleaded guilty before United States District Judge S. James Otero, who is scheduled to sentence the defendant on March 13.
Pete was an active participant in the BGC’s drug trafficking activities and worked to help the gang maintain its “territorial monopoly,” according to a plea agreement filed in federal court. Pete also participated in robbery crews that, “armed with firearms, tasers and zip ties, would follow victims home from banks and rob them of their cash,” in one case taking $10,000 in cash from a victim business owner.
Pete also admitted to being a member of the “Baby Gremlins,” a violent enforcement clique within the gang that would “encourage younger members of the BGC to engage in violence against rivals and insubordinate members.”
As a result of last week’s guilty plea, Pete faces a statutory maximum sentence of 60 years in federal prison. Pete will also be subject to a mandatory minimum penalty of five years for distributing crack cocaine. After completing his prison term, Pete has agreed to accept a provision of supervised release that will prohibit him from residing in the gang’s claimed South Los Angeles territory.
“Street gangs victimize innocent people, bringing drugs and violence into our communities,” said United States Attorney Eileen M. Decker. “It is a top priority of my office to pursue prosecutions that remove the leadership of such gangs from the streets and cripple their ability to operate, in order to make our communities safer.”
“The defendant and his co-conspirators targeted residents with intimidation and violence in an area they unlawfully claimed to control,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Field Office. “The FBI will continue to build cases aimed at dismantling criminal enterprises by working with local police to identify the street gangs plaguing Los Angeles communities with violent crime and narcotics trafficking.”
Pete was one of 72 people named in a 112-count indictment targeting the BGC that was unsealed in 2014. The gang, which was formed in the 1970s, allegedly has grown into a violent criminal enterprise that conducts regular meetings, espouses a strict set of rules, and exacts punishments, including death, against those who cooperate with law enforcement.
In addition to committing crimes in its claimed territory east of the Harbor Freeway, the indictment alleges that the Broadway Crips sell drugs near the Skid Row section of downtown Los Angeles. “This area is desirable to the gang because it is close to Skid Row, where there is a large and vulnerable customer base of drug addicts and mentally ill persons,” according to the indictment.
Seventy-one of the defendants named in the indictment have now appeared in federal court to face charges in the indictment (the final defendant is in state custody), which include conspiracy to violate the federal Racketeer Influenced and Corrupt Organizations Act (RICO), violent crimes in aid of racketeering, a series of robberies that targeted bank customers, weapons offenses and various drug trafficking charges.
With Pete’s guilty pleas last week, over 40 defendants have now been convicted in the case, including the three lead defendants in the RICO case – Tyrine Martinez, Tracy Harris and Roosevelt Sumpter – each of whom pleaded guilty this past summer to federal charges. Earlier this month, Sumpter was sentenced to 20 years in federal prison. Martinez and Harris are scheduled to be sentenced by Judge Otero on December 19, at which time both defendants will face potential life sentences and mandatory minimum prison terms of 15 and 10 years, respectively.
Three other top defendants in the case are scheduled to go on trial January 3. Other defendants are scheduled to go on trial on December 6 and April 5.
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 BGC, which was called Operation “Gremlin Riderz,” was conducted by the FBI and the Los Angeles Police Department under the auspices of the FBI’s Task Force on Violent Crime in the City of Los Angeles, which is one of several dozen Safe Streets Task Forces around the nation.
This case is being prosecuted by Assistant United States Attorney Mack Jenkins of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Max B. Shiner and Wilson Park of the Violent and Organized Crime Section.
Orange County Salesman Sentenced to Federal Prison in Scheme to Defraud Consumers through Debt Relief FirmsRead the Press Release
LOS ANGELES – A Newport Beach man was sentenced today in connection with a fraudulent debt relief firm, the Justice Department and U.S. Postal Inspection Service announced. The defendant worked at Nelson Gamble and Associates and Jackson Hunter Morris and Knight, companies that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees.
John Vartanian, 57, was sentenced to serve 27 months in prison, followed by three years of supervised release, and ordered to pay $1,208,086 in restitution. Vartanian admitted to selling the firm’s fraudulent debt relief services through telephone calls with consumers nationwide. The sentence was imposed Monday by U.S. District Court Judge Dale Fischer of the Central District of California in Los Angeles. The defendant previously pleaded guilty for his role in the scheme.
“These scams take advantage of consumers already struggling with debt,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will continue to work with its law enforcement partners to protect consumers from fraud, especially when they are targeted based on their financially vulnerable conditions.”
“Mr. Vartanian preyed upon vulnerable consumers who were already in financial distress,” said U.S. Attorney Eileen M. Decker of the Central District of California. “This defendant provided his victims with false hopes and instead stole their money as part of an elaborate scheme.”
“We are gratified by today’s sentencing, on behalf of the many unsuspecting victims who sought financial relief, only to be further burdened by these criminals,” said Inspector in Charge Regina L. Faulkerson of Criminal Investigations, U.S. Postal Inspection Service. “We applaud the work of the Justice Department’s Consumer Protection Branch in bringing this fraudulent credit repair salesman and his accomplices to justice.”
Vartanian pleaded guilty to one count of conspiracy to commit mail and wire fraud. Four other defendants also pleaded guilty and were sentenced last week in connection with the fraudulent scheme.
Vartanian and other members of the conspiracy at times portrayed Nelson Gamble and Jackson Hunter as law firms or attorney-based companies. Clients were told the companies would negotiate favorable settlements with creditors. Clients made monthly payments expecting the money to go toward settlements. The conspirators instead took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.
The scheme ran from February 2010 to September 2012 and, in 2011, changed names from Nelson Gamble to Jackson Hunter. Conspirators told victims that Nelson Gamble had gone bankrupt and that Jackson Hunter was an unrelated company that had taken over some of the accounts. Participants in the scheme blamed past problems on Nelson Gamble and denied requests for refunds of money paid to Nelson Gamble. Some victims who previously demanded refunds accepted the explanation that Nelson Gamble was bankrupt and did not pursue complaints against Jackson Hunter.
In September 2012, the Federal Trade Commission (FTC) brought a civil case against the companies and its principal, Jeremy Nelson, alleging that the defendants misrepresented debt relief services offered to consumers (See https://www.ftc.gov/enforcement/cases-proceedings/122-3030-x120048/nelson-gamble-associates-llc-et-al). The case was settled by entry of a consent decree in August 2013.
Principal Deputy Assistant Attorney General Mizer commended the Postal Inspection Service team assigned to the Civil Division’s Consumer Protection Branch for their investigative efforts. Mizer thanked the U.S. Attorney’s Office for the Central District of California for their contributions to the case and expressed appreciation to the FTC for referring the case to the Consumer Protection Branch. The case is being prosecuted by trial attorneys Alan Phelps and James Harlow of the Consumer Protection Branch.
For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.
Ally Financial Agrees to Pay $52 Million to Resolve Investigation into Improper Conduct Related to Issuance of Mortgage-Backed SecuritiesRead the Press Release
LOS ANGELES – Ally Financial Inc. has agreed to pay the United States $52 million to settle allegations that its subsidiaries acted improperly in relation to 10 subprime residential mortgage backed securities (RMBS) in 2006 and 2007.
A settlement agreementannounced today resolves an investigation into alleged violations of the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), specifically conduct related to the packaging, securitization, marketing, sale and issuance of the RMBS.
Under the settlement agreement, Ally is required to pay a $52 million civil penalty and to immediately discontinue operations of its registered broker-dealer, Ally Securities, LLC, which served as the lead underwriter on the subprime RMBS at issue in this matter.
The subsidiary will be wound-down immediately and de-registered as a broker-dealer as acknowledgment of the improper conduct. The broker-dealer served as the lead underwriter on the 10 subprime RMBS offerings issued in the RASC-EMX series between 2006 and 2007. Ally Securities dedicated a specialized marketing effort to create the RASC-EMX brand, securing investors for the RMBS offerings, and directing third-party due diligence on samples of the mortgage loan pools underlying the RMBS to test whether the loans comply with disclosures made to investors in the public offering documents.
As the lead underwriter, Ally Securities recognized in 2006 and 2007 that there was a consistent trend of deterioration in the quality of the mortgage loan pools underlying the RASC-EMX Securities that stemmed, at least in part, from deficiencies in the subprime mortgage loan underwriting guidelines and diligence applied to the collateral prior to securitization. All the RASC-EMX Securities sustained losses as a result of underlying mortgage loans falling delinquent.
“These securities were marketed to investors with the knowledge that a significant percentage of the pooled subprime mortgages were toxic, meaning that they were underwritten to risky guidelines likely to result in the loans falling delinquent,” said United States Attorney Eileen M. Decker. “Nevertheless, Ally Securities continued to market the RMBS, and investors lost millions of dollars as the value of the securities plummeted. Today's settlement demonstrates that financial institutions are responsible, and therefore will be held accountable, for products they sell to the public."
FIRREA authorizes the federal government to impose civil penalties against financial institutions that violate various criminal offenses, including wire and mail fraud. The settlement expressly preserves the government’s ability to bring criminal charges against Ally, and does not release any individuals from potential criminal or civil liability.
Under the settlement agreement, Ally is required to pay the entirety of the $52 million settlement in the coming weeks.
The investigation into the securitization of subprime mortgages by Ally’s subsidiaries was led by Assistant United States Attorney Indira Cameron-Banks, who worked with special agents with the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
“The sale of toxic mortgage backed securities crushed the housing market and the economy, leading to years of uncertainty and hardship for many,” said Leslie P. DeMarco, Special Agent in Charge of the Federal Housing Finance Agency-Office of Inspector General’s Western Region. “Today Ally Securities is being held accountable for the role it played. As we move forward, FHFA-OIG will continue to hold entities responsible and work toward building a healthier housing market.”
“Ally received substantial TARP bailout funds. With this agreement, Ally acknowledges that the underwriting and diligence process was deficient in connection with the securitization of 40,000 toxic subprime mortgage loans by its subsidiaries – exactly the type of abuse that contributed to the financial crisis,” said Christy Goldsmith Romero, the Special Inspector General for the Troubled Asset Relief Program. “SIGTARP is committed to working with our law enforcement partners to protect taxpayers and hold those responsible for the financial crisis accountable.”
Ally was cooperative in resolving this matter.
This settlement is part of the Financial Fraud Enforcement Task Force’s RMBS Working Group, which has made recoveries on behalf of American consumers and investors for claims against large financial institutions arising from misconduct related to the financial crises. The RMBS Working Group has brought together attorneys, investigators, analysts and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the U.S. Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, SIGTARP, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country. Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at www.stopfraud.gov.
Undercover Operation by Coast Guard Investigators Leads to Dismantling of 5 ‘Document Mills’ that Produced Bogus ID DocumentsRead the Press Release
LOS ANGELES – As part of an ongoing undercover operation by Special Agents with the Coast Guard Investigative Service (CGIS), five fraudulent “documents mills” have been dismantled in recent months, and the investigation has now resulted in charges against 13 defendants who allegedly produced bogus identity documents.
Two of those defendants pleaded guilty today in United States District Court, each admitting that they sold undercover agents and confidential informants counterfeit Legal Permanent Resident cards (also known as “Green Cards”) and Social Security cards.
Today’s guilty pleas are the latest convictions stemming from Operation “Buzzkill,” a CGIS investigation that shut down three fraudulent “document mills” near MacArthur Park in September. Two other document mills were closed in June.
Operation Buzzkill identified the manufacturers of bogus documents, as well as the sellers and “runners” who facilitate their sale. As a result of the investigation, over the past year, federal prosecutors have filed a series of cases that charge 13 defendants with participating in a black market for counterfeit documents.
The document mills allegedly produced a range of counterfeit identity documents, including driver’s licenses, Social Security cards, United States passports, military identification cards, and highly regulated Transportation Worker Identification Credentials (TWICs), which enable unrestricted access to secure facilities within the ports and waterways of Los Angeles. TWICs are issued by the Transportation Security Administration (TSA) and enforced by the United States Coast Guard (USCG) for the purpose of restricting individuals with significant criminal records, non-United States citizens and members of terrorist organizations from gaining access to the sensitive infrastructures surrounding our nation’s trade routes.
“Our national security and the integrity of many government programs rests on our ability to ascertain the true identity of individuals,” said United States Attorney Eileen M. Decker. “False identification documents – even if they can be easily recognized by knowledgeable individuals – may allow unauthorized individuals to access controlled areas or to fraudulently receive benefits.”
“Proper identification and background checks of transportation workers are an important aspect of our multi-agency, multi-layered port security system,” said Rear Admiral Todd Sokalzuk, commander of the 11th Coast Guard District, which includes the Los Angeles/Long Beach region. “I applaud the skill and tenacity of our Coast Guard Investigative Service agents and partner agencies who shut down these counterfeit ID operations, and appreciate the help of a vigilant maritime community in keeping our ports safe and secure.”
The two defendants who pleaded guilty today are:
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Gustavo Nunez Garcia, also known as Gustavo Garcia Nunuz and “Octavio,” 34, of the Westlake District of Los Angeles, who pleaded guilty this morning before United States District Judge S. James Otero; and
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Miguel Rueda, also known as “El Pelon,” 44, of Paramount, who pleaded guilty before United States District Judge Otis D. Wright II.
Both defendants pleaded guilty to one count of production of false identity documents, a felony offense that carries a statutory maximum penalty of 15 years in federal prison. Garcia and Rueda are both scheduled to be sentenced on February 27.
Garcia was one of five Westlake District residents who were arrested by CGIS special agents on October 3. The other defendants arrested last month on charges of producing false identity documents are:
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Argenis Capistran, also known as “Pac Man,” 23, who allegedly worked with Garcia;
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Ivonne Adriana Sanchez Hernandez, 49, who allegedly helped produce counterfeit TWICs and Green Cards in relation to a Westlake business called Galaxi Photo;
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Fernando Hernandez, also known as “Tio,” 59, who was also associated with Galaxi Photo; and
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Jose Manuel Perez Cruz, 31, another person associated with Galaxi Photo, who allegedly sold and/or produced Green Cards, Social Security cards, driver’s licenses from multiple states, United States Passports, United States military identification documents and TWICs.
These four defendants are currently scheduled to go on trial within the next month, but it is anticipated that all four trials will be delayed until next year.
An indictment or criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Miguel Rueda was one of five people arrested in June in relation to a document mill run out of a Huntington Park storefront called Pacific Mill that produced Green Cards, Social Security cards, driver’s licenses and TWICs. Previously in this case, Rueda’s brother, Francisco Casteneda Rueda, 48; Alejandro Gabriel Rivera, 34; and Armando Guerrero Vasquez, 47, previously pleaded guilty. A fifth defendant charged in relation to this case – Laura Balcazar, 38, of Lynwood – is a fugitive who absconded after being freed on bond in this case.
Operation Buzzkill is a CGIS-led project designed to dismantle document mills producing counterfeit TWICs and other bogus credentials. In this investigation, CGIS has joined with the Transportation Security Administration, the Los Angeles Police Department, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the State Department’s Diplomatic Security Services, the United States Secret Service and LA CLEAR.
Earlier this year, as part of the investigation, a San Fernando Valley man who operated a document mill in Sylmar pleaded guilty to unlawful possession and production of authentication features and admitted being a felon in possession of firearms and ammunition. Brian Alan Dunmore, 51, of Porter Ranch, is scheduled to be sentenced on December 19, at which time he faces up to 25 years in federal prison.
A South Los Angeles resident arrested in February has agreed to plead guilty to producing false identity documents. Ricardo Gama-Diaz, also known as “Ricardo Rios-Gama” and “Coy,” 51 is expected to enter his plea in December.
A Monterey Park man who was charged in April has also pleaded guilty. Hector Hugo Aquino, 46, who admitted producing Social Security cards and Green Cards, was sentenced in September to serve four months in federal prison, to be followed by three years of supervised release.
The criminal cases stemming from Operation Buzzkill are being prosecuted by Assistant United States Attorney Amanda M. Bettinelli of the Environmental and Community Safety Crimes Section.
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Medical Doctor Convicted of Federal ‘Structuring’ Charges for Making Cash Deposits to Avoid Federal Reporting RequirementsRead the Press Release
LOS ANGELES – A Los Angeles doctor has been convicted of federal “structuring” charges for making cash deposits totaling nearly a half million dollars that were designed to circumvent federal reporting requirements.
Washington Bryan II, 48, of Westwood, was found guilty yesterday afternoon by a jury in United States District Court.
At the conclusion of a three-day trial, the jury found Bryan guilty of 29 counts of structuring, finding that he made a series of illegal cash deposits totaling approximately $478,000 between October 2011 and January 2013.
Bryan made deposits of less than $10,000 into four separate accounts for the purpose of preventing banks from reporting the deposits to the federal government, which is required for every cash transaction of more than $10,000. For each of the 29 counts, Bryan made cash deposits into multiple bank accounts on the same day – sometimes within minutes of each other – that added up to more than $10,000.
The jury learned that Bryan received a letter in 2007 from Wachovia Bank informing him of the reporting requirement and alerting him that his pattern of currency deposits at the time appeared to be violating federal law.
Federal prosecutors presented evidence that Bryan structured the cash deposits for the purpose of concealing income he received from thousands of prescriptions that he issued for narcotic painkillers and HIV medications out of his Brentwood office.
The evidence at trial showed that Bryan was disciplined by the Medical Board of California for excessively prescribing narcotic medications, including OxyContin, and place on three years of probation. The cash structuring began after Bryan was placed on probation and while he continued to routinely prescribe high dosages of painkillers to patients – most of whom paid $500 in cash each time they visited Bryan’s Brentwood office and obtained prescriptions, sometimes without ever seeing the doctor.
“The federal structuring statute is part of a comprehensive anti-money laundering program enacted to expose the large profits that can be generated by criminal activity,” said United States Attorney Eileen M. Decker. “As this conviction demonstrates, criminals cannot escape punishment by arranging financial transactions to avoid bank reporting requirements.”
“Going to two or three banks in the same day, usually just minutes apart, to conduct a transaction that could have been completed at one bank has no benign explanation,” stated IRS Criminal Investigation’s Acting Special Agent in Charge, Anthony J. Orlando. “IRS Criminal Investigation is committed to unraveling complex financial transactions where individuals attempt to conceal the true source of their money.”
As a result of yesterday’s guilty verdicts, Bryan faces a statutory maximum sentence of 145 years in federal prison when he is sentenced by United States District Judge R. Gary Klausner on February 27.
The investigation into Bryan was conducted by IRS Criminal Investigation, the Drug Enforcement Administration, the Department of Health and Human Services – Office of Inspector General, the Department of Defense – Defense Criminal Investigative Service, the California Department of Justice and the Los Angeles Police Department.
This is case is being prosecuted by Assistant United States Attorneys Damaris M. Diaz and William Rollins of the General Crimes Section and Assistant United States Attorney Mark Aveis of the Major Frauds Section.
Former Orange County Teacher in Sex Tourism Case Found Guilty of Traveling to Philippines to Molest Young Girls and Filming the AbuseRead the Press Release
SANTA ANA, California – A former teacher with the Santa Ana School District who traveled to the Philippines to engage in sex with two girls and produced videos of the abuse has been convicted in federal court of seven child exploitation offenses.
Robert Ruben Ornelas, 65, of Santa Ana, a onetime school teacher and girl’s softball coach, was found guilty yesterday afternoon of seven counts – two counts of engaging in sexual conduct in a foreign place, three counts of producing child pornography, and two counts of possessing child pornography.
As a result of the guilty verdicts, Ornelas faces a statutory maximum penalty of 190 years in federal prison when he is sentenced by United States District Judge Cormac J. Carney on February 27. At sentencing, Ornelas will face mandatory minimum 15-year prison terms for each of the three child pornography production charges.
The evidence presented during a six-day trial showed that Ornelas traveled to the Philippines on multiple occasions. He was convicted in relation to three specific trips – in 2006, 2008 and 2012 – where he sexually assaulted two girls who were as young as approximately 8. During all three trips, Ornelas took videos of the molestation and brought the images with him when he returned to the U.S.
The two victims travelled to the United States to testify during the trial about the sexual assaults.
“Pedophiles in the U.S. will not escape prosecution by traveling to foreign lands to victimize children,” said United States Attorney Eileen M. Decker. “Federal law contains provisions designed to protect children, whether they live in the United States or abroad. This case serves as a lesson and warning to any other person considering trips to engage in sex with minors. American law enforcement is adept at investigating this crime and will pursue a criminal case that could lead to a very lengthy prison sentence.”
The investigation into Ornelas began in 2013 when federal authorities received a tip that he possessed a large quantity of child pornography. During the execution of a search warrant, investigators found images, videos and information on Ornelas’ computer and digital media.
The federal charges are the product of an investigation 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 Federal Bureau of Investigation, the Newport Beach Police Department and the Orange County Sheriff’s Department.
“This conviction should serve as a warning to every sexual predator who mistakenly believes they can evade justice by violating the innocence of children overseas,” said Joseph Macias, special agent in charge of HSI Los Angeles. “There can be no place for the abuse of foreign children by our citizens, and HSI will seek to defend the rights of those victims no matter how far they live from our shores.”
This case is being prosecuted by Assistant United States Attorneys Sandy N. Leal and Anne C. Gannon of the Santa Ana Branch Office.
SoCal Woman Who Admitted Kidnapping Her Two Children to Keep Them from Their Father Sentenced to 13 Months in Federal PrisonRead the Press Release
LOS ANGELES – A Los Angeles-area woman who brought her two children to Mexico to keep them from their father was sentenced today to 13 months in prison in a federal kidnapping case.
Faye Hsin-I Ku, 42, of Lakewood, was sentenced this morning by United States District Judge John A. Kronstadt.
Ku pleaded guilty in September to two counts of international parental kidnapping.
When she pleaded guilty, Ku admitted that on August 29, 2015, she took her two children – who were 15 and 9 at the time – into Mexico through the San Ysidro Port of Entry. “At the time, Ms. Ku had the intent to obstruct the lawful exercise of parental rights” of the father, Ku admitted when she pleaded guilty.
After bringing the children to Mexico, Ku brought the children to Sinaloa. The FBI’s Legal Attaché in Mexico City pursued a series of leads to identify their location and passed information to Mexican officials, who took prompt action, assuring the safety of the children. The children were reunited with their father on February 12.
“This defendant sought to deprive her children’s father of his court-sanctioned parental rights by fleeing the United States,” said United States Attorney Eileen M. Decker. “She abducted her children, abused their emotional attachment to her, brought them to a dangerous part of Mexico and had a destructive impact on the entire family.”
FBI officials in Seattle and Mexico City coordinated the deportation of Ku with Mexican authorities. On February 12, Mexican officers accompanied Ku to Los Angeles International Airport, where she was taken into federal custody.
“Bringing the children home safely was only possible due to extraordinary partnerships with law enforcement agencies across multiple states and in Mexico,” said FBI Special Agent in Charge Jay S. Tabb Jr. of the FBI’s Seattle Division. “The children’s well-being was the ultimate triumph after six months of dedicated investigative work, but today’s sentencing provides additional satisfaction by reassuring communities that parental kidnapping will not be tolerated.”
Once she completes her prison sentence, Ku will be on supervised release for one year.
The investigation in this case was conducted by the FBI’s Seattle Division, which received substantial assistance from the FBI’s Legal Attaché in Mexico City, Mexico’s National Institute of Migration, the FBI’s Los Angeles Division, the Bellevue (Washington) Police Department, the Los Angeles County Sheriff’s Department and the National Center for Missing & Exploited Children.”
This case was prosecuted by Assistant United States Attorney Scott Paetty of the Major Frauds Section, who coordinated with the U.S. Attorney’s Office for the Western District of Washington and the King County (Washington) Prosecutor’s Office.
Desert Hot Springs Man Found Guilty by Federal Jury of Multiple Firearms Violations and Distribution of MethamphetamineRead the Press Release
LOS ANGELES – The first of six defendants charged as the result of an anti-gang operation in the Coachella Valley earlier this year has been found guilty of possession of an unregistered short barreled shotgun, being a felon in possession of a firearm and ammunition, and two counts of distribution of methamphetamine.
Mario Vincent Lopez, 49, of Desert Hot Springs, who had previously been convicted of multiple state felony offenses, was found guilty yesterday by a federal jury that deliberated for less than an hour.
Lopez will face a mandatory minimum penalty of 10 years in federal prison – and a possible term of life imprisonment – when he is sentenced by United States District Judge André Birotte Jr. on February 13, 2017.
“Illegal firearms and drug trafficking is a volatile combination that poses a significant danger to the community,” said United States Attorney Eileen M. Decker. “This defendant was undeterred by his prior felony convictions, but now he faces a much longer prison sentence as a result of this jury’s verdicts.”
Lopez was one of six men charged as the result of an investigation by the Coachella Valley Gang Impact Team, a joint task force involving both federal and local authorities. All six men have been in custody since they were arrested in June.
In addition to Lopez, Julio Cesar Gomez, also known as “Spanky,” 31, of Indio; Angel Alejandro Carmona, aka “Lil Criminal,” 30, of Coachella; and Steven Andrew Gonzalez, aka “Cubs,” 32, of Indio, were charged with engaging in a conspiracy to distribute methamphetamine. Gomez was also charged with being a felon in possession of an assault rifle with an obliterated serial number, and Carmona was charged with being a felon in possession of a .357-caliber handgun. These three defendants are scheduled to go on trial on April 18, 2017.
In another case, Francisco Remigio Figueroa, aka “Toro,” 34, of Desert Hot Springs, was charged in an indictment with distributing methamphetamine and marijuana. Figueroa was also charged with possessing a 20-gauge shotgun and ammunition after being convicted of multiple state felonies. Figueroa’s trial is set for February 21, 2017.
Finally, Donnie Darnel Dennis, 38, of Desert Hot Springs, was charged with distributing methamphetamine. His case is set for trial on January 24, 2017.
An indictment or criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The Gang Impact Team is a multiagency task force responsible for conducting gang, firearm and violent crime investigations throughout Riverside County. The team is made up of officers and agents from local, state, county and federal agencies, and it is part of the Riverside County District’s Attorney’s Office Organized Crime Bureau. The Team includes representatives from the Riverside County District Attorney’s Office; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Federal Bureau of Investigation; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the United States Border Patrol; the Riverside County Housing Authority; and the Desert Hot Springs Police Department.
The case was prosecuted by Assistant United States Attorneys Abigail Evans and Sean Peterson of the Riverside branch office.
Former Orange County Resident Pleads Guilty to Fleeing United States to Avoid Prosecution in Health Care Fraud CaseRead the Press Release
LOS ANGELES – A medical doctor who was facing charges in a federal health care fraud case when he fled the United States 14 years ago and faked his own death in Russia has pleaded guilty to federal charges related to his flight from 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, pleaded guilty yesterday before United States District Judge Michael W. Fitzgerald.
Svadjian pleaded guilty to unlawful flight to avoid prosecution, the sole count in an indictment that was returned by a federal grand jury on September 2, 2016.
In a case filed in 2002 in Sacramento, Svadjian was charged in a 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 went to Russia, leaving behind his wife and children.
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. The Embassy issued a report documenting the death, and Svadjian’s defense counsel submitted that report to federal prosecutors. 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 health care fraud case.
During his change of plea hearing yesterday, Svadjian admitted that he paid a Russian police officer in 2002 to fake his death and submit an official report about his death to the United States Embassy. Soon after, Svadjian relocated to Hurghada, Egypt, where he occasionally worked as a scuba instructor.
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.
“Although this defendant’s attempted flight from justice delayed his prosecution, he could not escape it,” said United States Attorney Eileen M. Decker. “This defendant developed an elaborate hoax to avoid prosecution, a scheme that involved faking his death and assuming a false identity. But he seriously underestimated the dedication of the Department of Justice, and he now faces the prospect of a lengthy stay in federal prison.”
“Mr. Svadjian’s luck in deceiving authorities in the U.S. and abroad for many years ultimately ran out,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “FBI Agents around the world took part in bringing Mr. Svadjian back to face the consequences of his actions. This case demonstrates not only the global reach of the FBI, but our commitment to holding accountable individuals who flee from justice, regardless of how far they run or how much time has passed.”
Judge Fitzgerald is scheduled to sentence Svadjian on February 9, at which time the defendant faces a statutory maximum sentence of five years in federal prison.
This case was investigated by the Federal Bureau of Investigation.
This case is being prosecuted by Assistant United States Attorney Bryant Y. Yang of the General Crimes Section.
Former AFLAC Employee Convicted in Scheme to Defraud Insurance Company out of $4 Million through Bogus Disability ClaimsRead the Press Release
SANTA ANA, California – A former sales representative for AFLAC has been found guilty of federal fraud charges stemming from a scheme that bilked the insurance company out of $4 million with fake disability claims.
Patricia Diane Smith Sledge, 60, of Redlands, was convicted late Tuesday in the scheme involving fictitious employers and “employees” who falsely claimed to have suffered injuries that prevented them from working.
At the conclusion of a two-week trial, the jury convicted Sledge of six counts of mail fraud. The jury also found that Sledge committed two counts of witness tampering while on bond in this case.
United States District Judge James V. Selna, who presided over the trial, ordered Sledge to return to court for a sentencing hearing on March 20, 2017, at which time the defendant will face a statutory maximum sentence of 160 years in federal prison.
The evidence presented at trial showed that Sledge, who was residing in Irvine while working for the company formally known as American Family Life Assurance Company, sold disability insurance policies to bogus companies and people who supposedly worked for those companies. Sledge then orchestrated the filing of fraudulent disability claims and directed the purported employees to doctors that would sign off on the fake injury claims.
As a result of the false claims, AFLAC suffered losses of approximately $4 million.
Sledge made money both from the commissions related to the sale of the fraudulent insurance policies and from kickbacks she received from the supposedly injured “employees.”
“Using knowledge she gained as a company insider, this defendant was able to game the system, causing her employer to suffer millions of dollars in losses,” said United States Attorney Eileen M. Decker. “While her scheme went unnoticed for a period of time, her employer was able to uncover the conduct and referred the matter to federal authorities. This cooperation from the victim and a thorough investigation by law enforcement has resulted in this successful prosecution.”
Sledge was also found guilty of witness tampering for encouraging potential witnesses to lie to federal investigators and discouraging them from cooperating in the investigation. Both counts related to conduct after Sledge became aware of the federal investigation, and one count stemmed from conduct after she was indicted in this case and freed on bond in 2012.
“Defendant Sledge illegally misused the authority granted to her as a licensed insurance agent in California for her own personal gain, at the expense of her trusted employer,” said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “In addition, the defendant's brazen attempt of witness tampering to tilt the justice system in her favor further demonstrates her lack of respect for the rule of law. The lengthy prison sentence the defendant faces should serve as a warning to anyone contemplating insurance fraud.”
Two others have been prosecuted for acting as fake employers and fake employees in this scheme.
The case against Sledge and the others involved in the scheme is the result of an investigation by United States Department of Labor - Officer of Inspector General, the Federal Bureau of Investigation, and California’s Department of Insurance.
This case is being prosecuted by Assistant United States Attorney Vibhav Mittal of the Santa Ana Branch Office and Assistant United States Attorney Joshua O. Mausner of the General Crimes Section.
Four Southland Residents Sentenced in Scheme to DefraudRead the Press Release
LOS ANGELES – Four defendants were sentenced today in connection with a fraudulent Orange County, California, debt relief firm, the Justice Department and U.S. Postal Inspection Service announced. The defendants all worked at Nelson Gamble and Associates and Jackson Hunter Morris and Knight, companies that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees.
“These scams take advantage of consumers already struggling with debt,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will continue to work with its law enforcement partners to protect consumers from fraud, especially when they are targeted based on their financially vulnerable conditions.”
“Pretending to operate as a law firm, these defendants falsely promised hope to struggling debtors,” said United States Attorney Eileen M. Decker. “But the promises were empty as the ‘debt relief’ firm was nothing more than an advance fee scheme designed to line the pockets of the defendants.”
“We are gratified by today’s sentencing, on behalf of the many unsuspecting victims who sought financial relief, only to be further burdened by these criminals,” said Inspector in Charge Regina L. Faulkerson of Criminal Investigations, U.S. Postal Inspection Service. “We applaud the work of the Justice Department’s Consumer Protection Branch in bringing these fraudulent credit repair conspirators to justice.”
The sentences were imposed Monday by U.S. District Judge Dale Fischer. The four defendants all previously pleaded guilty for their roles in the scheme.
Jeremy Nelson, 31, of Dana Point, was sentenced to serve 87 months in prison and ordered to pay $4,225,924 in restitution. Nelson admitted to being the owner and CEO of the companies and overseeing the scheme
Elias Ponce, 30, of Santa Ana, was sentenced to serve 42 months in prison and ordered to pay $2,340,373 in restitution. Ponce worked in the “customer service” department and handled complaints.
Christopher Harati, 33, of Long Beach, was sentenced to serve 27 months in prison and ordered to pay $408,403 in restitution. Harati worked with Ponce in customer service at the companies.
Athena Maldonado, 32, of Lake Forest, was sentenced to serve one month in prison and six months home confinement and ordered to pay $130,224 in restitution. Maldonado handled complaints and held herself out as the vice president of the company’s “legal department.”
Nelson and Ponce both pleaded guilty to one count of conspiracy to commit mail and wire fraud. Harati and Maldonado pleaded guilty to a separate Information charging one count of conspiracy to commit wire fraud. A fifth defendant, John Vartanian, 57, of Newport Beach, California, pleaded guilty to conspiracy in July in connection to his role as a salesman at the companies. He is scheduled to be sentenced on Nov. 21.
Members of the conspiracy at times portrayed Nelson Gamble and Jackson Hunter as law firms or attorney-based companies. Clients were told the companies would negotiate favorable settlements with creditors. Clients made monthly payments expecting the money to go toward settlements. The conspirators instead took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.
The scheme ran from February 2010 to September 2012. Nelson changed the name of the company from Nelson Gamble to Jackson Hunter in 2011. Nelson and his co-conspirators told victims that Nelson Gamble had gone bankrupt and that Jackson Hunter was an unrelated company that had taken over some of the accounts. Nelson and his co-conspirators blamed past problems on Nelson Gamble and denied requests for refunds of money paid to Nelson Gamble. Some victims who previously demanded refunds accepted the explanation that Nelson Gamble was bankrupt and did not pursue complaints against Jackson Hunter.
In September 2012, the Federal Trade Commission (FTC) brought a civil case against Nelson and the companies, alleging that the defendants misrepresented debt relief services offered to consumers. (See https://www.ftc.gov/enforcement/cases-proceedings/122-3030-x120048/nelson-gamble-associates-llc-et-al). The case was settled by entry of a consent decree in August 2013.
Principal Deputy Assistant Attorney General Mizer commended the Postal Inspection Service team assigned to the Civil Division’s Consumer Protection Branch for their investigative efforts. He thanked the U.S. Attorney’s Office for the Central District of California for their contributions to the case and expressed appreciation to the FTC for referring the case to the Consumer Protection Branch. The case is being prosecuted by trial attorneys Alan Phelps and James Harlow of the Consumer Protection Branch.
For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.
Compton Man Sentenced to over 13 Years in Federal Prison in Sex Trafficking Case Involving Sexual Assault of a Minor GirlRead the Press Release
LOS ANGELES – A Compton man who admitted to sex trafficking a 15-year-old girl, subjecting her to a month of sexual abuse, and advertising the victim as a prostitute was sentenced today to 160 months in federal prison.
Darrius Marques Sutton, also known as “Biz,” 26, was sentenced by United States District Judge Terry J. Hatter Jr., who said he would have imposed a longer sentence had Sutton not been sentenced previously to more than four years in state prison on related pimping charges.
“This defendant’s conduct was horrific and warranted the lengthy sentence imposed by the court today,” said United States Attorney Eileen M. Decker. “He repeatedly sexually assaulted children, and he filmed the assaults – at times laughing during the attacks. His callous behavior and willingness to sell the bodies of his young victims for his own financial gain is abhorrent and demonstrates a complete lack of respect for all women and girls.”
In the federal case, Sutton pleaded guilty in June to one count of sex trafficking of a child.
Over the course of month-long spree in 2011, Sutton “repeatedly engaged in violent sexual assaults on young women, and [he] appears to have taken delight in subjecting his victims to inhumane and humiliating treatment while breaking them into his stable of prostitutes,” prosecutors wrote in a sentencing memorandum filed with the court.
At today’s sentencing hearing, prosecutors said that, over a five-month period, Sutton had posted at least 60 advertisements for prostitution on Backpage.com, some of which offered minor victims.
“It is difficult to imagine sexual assaults more egregious than defendant’s. As defendant admits, he repeatedly raped…a 15-year-old girl, and recorded himself and others doing so – at times while she was unconscious, including on at least one occasion with a vodka bottle,” prosecutors wrote in court papers, which noted a video recorded by Sutton in which he violently punches a young woman in the face, apparently breaking her nose.
Sutton is one of four men who were indicted by a federal grand jury in August 2015. The federal case followed a state court prosecution of the men in which Sutton was convicted of conspiracy to pimp a minor. In the state case, Sutton was sentenced to 52 months in prison.
The three other men named in the indictment are:
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Darius Dajohn Burks, 28, of Los Angeles, who pleaded guilty earlier this year;
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Edwin Donnell Franklin, 29, of Bellflower, who pleaded guilty earlier this year; and
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Leprinceton Dewon Burks, also known as “Dapper P” and “Pete Williams,” 32, of Carson, who is scheduled to go on trial before Judge Hatter on March 28.
This case was investigated by the FBI’s Innocence Lost Task Force and the Los Angeles Police Department Detective Support and Vice Division, Human Trafficking Unit.
This case was prosecuted by Assistant United States Attorney David M. Herzog of the Violent and Organized Crime Section and Assistant United States Attorney Jennie L. Wang of the Cyber and Intellectual Property Crimes Section
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Nurse Who Operated Spa in Laguna Niguel Agrees to Plead Guilty to Illegally Dispensing Botox Not Approved for Use in United StatesRead the Press Release
SANTA ANA, California – A registered nurse who owned and operated a day spa in Laguna Niguel has agreed to plead guilty to a federal charge related to the illegal distribution of Botox that was not approved for use in the United States.
Bridget “Gigi” Goddard, 50, of Dana Point, who owned Pure Indulgence Skin Rejuvenation in Laguna Niguel, has agreed to plead guilty to one count of receipt and delivery of a misbranded drug, a crime that carries a statutory maximum penalty of three years in federal prison.
Federal prosecutors today filed a criminal information against Goddard, as well as a plea agreement in which she agrees to plead guilty to the felony offense.
“Drugs and medical devices are regulated to protect the American public,” said United States Attorney Eileen M. Decker. “Those who circumvent those regulations pose a very real risk to patients who could be subject to unsafe products that can do serious harm.”
All Botox products approved for distribution in the United States by the United States Food and Drug Administration are manufactured by Allergan and must be administered under the supervision of a licensed physician. Goddard admitted in her plea agreement that, over the course of several years, she ordered Botox over the internet from Canadian companies that sold unapproved drugs to customers in the United States. (One of those companies, SB Medical Inc., pleaded guilty in federal court in Alexandria, Virginia, and was ordered to pay a $45 million fine and to forfeit $30 million for smuggle misbranded pharmaceuticals into the United States.) The Botox that Goddard purchased had been manufactured for distribution in foreign nations such as Turkey and was not approved by the FDA for distribution in the United States.
In April 2016, Goddard offered to administer Botox to a person she thought was a Pure Indulgence customer, but who in fact was an undercover agent with the FDA. Goddard told the undercover agent that the undercover agent did not need to be examined by a physician before the Botox injections were administered, and Goddard knowingly misled the agent as to whether the Botox was approved for use in the United States.
“Consumers rely on FDA oversight to ensure that the drugs they take are safe and effective. When criminals attempt to distribute unapproved drugs in the U.S. marketplace, they put the public's health at risk,” said Lisa Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations. “Our office will continue to pursue and bring to justice those who would jeopardize the health and safety of the public.”
Goddard has agreed to make her first appearance in this case in United States District Court in Santa Ana on December 12.
The investigation into Goddard was conducted by FDA’s Office of Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Scott D. Tenley of the Santa Ana branch office.
Man who Oversaw Drug Trafficking Operations of Crips Street Gang Sentenced to 20 Years in Federal Racketeering CaseRead the Press Release
LOS ANGELES – A leading figure in the Five Deuce Broadway Gangster Crips (BGC) street gang has been sentenced to 20 years in federal prison after pleading guilty to racketeering and drug trafficking charges stemming from his role as the primary narcotics supplier to the gang.
Roosevelt Sumpter, also known as “TuTu,” 43, of Los Angeles, was sentenced on Monday to 240 months in prison by United States District Judge S. James Otero. After completing his prison term, Sumpter will be on supervised release for 10 years, and during that time he will be barred from residing in the gang’s claimed South Los Angeles territory.
Sumpter pleaded guilty in July to participating in a racketeering conspiracy, conspiring to distribute crack cocaine, illegally possessing a firearm, and selling crack cocaine near schools.
Sumpter acted as a “central drug supplier” to BGC, managed the operation of the gang’s “stash houses,” and supplied these locations with crack cocaine that was given to other BGC members for street-level sales, according to a sentencing memorandum filed by prosecutors. When he pleaded guilty, Sumpter admitted unlawfully possessing firearms, including a sawed-off shotgun, in connection with his drug trafficking on three separate occasions.
“In addition to being a prolific supplier of narcotics himself, this defendant employed other BGC gang members to run stash houses and directed them to transport drugs to other sellers,” said United States Attorney Eileen M. Decker. “Given his longtime involvement with the gang, his strong presence in the gang’s drug activities and because he was often armed, justice has been served with the imposition of the two-decade prison sentence.”
Sumpter was among 72 defendants charged in a federal racketeering indictment that targeted BGC, a street gang that claims territory in South Los Angeles and controls drug sales in an area just west of the “Skid Row” district of Los Angeles. The indictment outlined two decades of criminal conduct, including murders, robberies, extortion, illegal firearms possession, witness intimidation and narcotics trafficking.
Seventy-one of the defendants named in the indictment have now appeared in federal court to face charges in the indictment (the final defendant is in state custody), which include conspiracy to violate the federal Racketeer Influenced and Corrupt Organizations Act (RICO), violent crimes in aid of racketeering, a series of robberies that targeted bank customers, weapons offenses and various drug trafficking charges. Four other top defendants in the case are scheduled to go on trial January 3.
The two lead defendants in the RICO case – Tyrine Martinez and Tracy Harris – pleaded guilty this past summer to federal charges. Martinez and Harris are scheduled to be sentenced by Judge Otero on December 19, at which time both defendants will face potential life sentences and mandatory minimum prison terms of 15 and 10 years, respectively.
The investigation into BGC was conducted by agents and officers with the Federal Bureau of Investigation and the Los Angeles Police Department. Considerable assistance was provided during this investigation by the California Department of Corrections and Rehabilitation, the Torrance Police Department, the Buena Park Police Department, the El Segundo Police Department, the San Bernardino Police Department and the Los Angeles City Attorney’s Office.
The investigation into BGC, which was called Operation “Gremlin Riderz,” was jointly conducted by the FBI and the LAPD under the auspices of the FBI’s Task Force on Violent Crime in the City of Los Angeles.
This case is being prosecuted by Assistant United States Attorney Mack Jenkins of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Max Shiner and Wilson Park of the Violent and Organized Crime Section.
Inland Empire Brothers Plead Guilty to Federal Charges Related to Cache of Machineguns and Other Illegal Weapons Found at HomeRead the Press Release
LOS ANGELES, California – Two brothers from San Jacinto have pleaded guilty to federal weapons charges related to nearly three dozen machineguns, as well as short-barrel shotguns and silencers, that were found at their residence by authorities conducting an investigation in another matter.
Alfred Arviso, 35, and Nathaniel Arviso, 33, each pleaded guilty yesterday in federal court to one count of illegally possessing machine guns.
The cache of weapons at the Arvisos’ residence was discovered by Riverside County Sheriff’s Department on May 15 during the execution of a search warrant in an unrelated investigation. During the search, law enforcement discovered 33 machineguns (which includes 15 short-barrel rifles), another seven short-barrel rifles that were not automatic weapons, and eight silencers without serial numbers.
“Federal law strictly regulates firearms that have a high potential for causing mass casualties, such as automatic weapons that can fire multiple rounds with one trigger pull,” said United States Attorney Eileen M. Decker. “The cache of dangerous weapons found in this case could have made their way into the hands of criminals, endangering public safety.”
Alfred Arviso, who was remanded into custody yesterday after pleading guilty, is scheduled to be sentenced by United States District Judge S. James Otero on February 27, 2017. Nathaniel Arviso, who remains free on bond, is scheduled to be sentenced on March 6. At sentencing, each brother faces a statutory maximum sentence of 10 years in federal prison.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and Riverside County Sheriff’s Department.
This case is being prosecuted by Assistant United States Attorney Julius J. Nam of the Riverside branch office.
Former Officer with U.S. Citizenship and Immigration Services Sentenced to nearly 3 Years in Federal Prison in Bribery CaseRead the Press Release
LOS ANGELES – A former immigration services officer with U.S. Citizenship and Immigration Services (USCIS) who had the power to approve applications for citizenship has been sentenced to 33 months in federal prison for taking tens of thousands of dollars in bribes.
Daniel Espejo Amos, 68, of Lakewood, was sentenced late Friday afternoon by United States District Judge Michael W. Fitzgerald.
Amos pleaded guilty in April to one count of conspiracy and one count of being a public official who accepted cash bribes. When he pleaded guilty, Amos admitted that he accepted more than $53,000 in bribes from immigration consultants on behalf of immigrants who were not eligible to become naturalized United States citizens.
“This defendant violated his oath to the United States by accepting more than $53,000 in cash bribes in exchange for helping at least 60 aliens to obtain U.S. citizenship – even though he knew the immigrants did not qualify for this benefit,” said United States Attorney Eileen M. Decker. “This defendant’s corruption also undermined our naturalization system and damaged the public’s faith in government, warranting the sentence imposed by the court.”
In a plea agreement filed in this case, Amos admitted accepting bribes in exchange for committing official acts, including falsely certifying that immigrants had met requirements for citizenship that include “passing” the English competency and civics portions of the naturalization interview and examination administered by USCIS. In at least one case, the immigrant’s English-language skills were so poor that Amos gave him copies of test answers so the immigrant could memorize them prior to his naturalization interview.
The case against Amos is part of an investigation by the U.S. Department of Homeland Security’s Homeland Security Investigations (HSI); the U.S. Department of Homeland Security, Office of the Inspector General; and the Federal Bureau of Investigation.
“As the largest investigative arm of the Department of Homeland Security, one of HSI’s top enforcement priorities is targeting the criminals and criminal organizations that undermine the integrity of our nation’s legal immigration system,” said Joseph Macias, special agent in charge for HSI Los Angeles. “We will continue to work with our counterparts to investigate those who misuse their positions of authority to manipulate and exploit that system for their own personal financial gain."
John Roth, Department of Homeland Security Inspector General, stated that “The Office of Inspector General is committed to working with our law enforcement partners to aggressively investigate all allegations of corruption by DHS employees, ensuring the integrity of DHS programs, personnel, and operations.”
This case was prosecuted by Assistant United States Attorney Elisa Fernandez of the Public Corruption and Civil Rights Section.
Federal Racketeering Indictment Targets Wilmington Street GangRead the Press Release
LOS ANGELES – Authorities have arrested 17 members and associates of the Wilmas street gang who are named in a federal racketeering indictment that alleges acts of murder, attempted murder, narcotics trafficking, robbery and witness intimidation – as well as a series of armed attacks on law enforcement officers dating back to 2008.
The 17 people arrested this morning and late Tuesday are among 29 defendants named in a 111-page indictment that alleges violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. The arrests were made by officers with the Los Angeles Police Department, special agents with the Drug Enforcement Administration and other law enforcement authorities, including the United States Marshals Service and the FBI.
In addition to those arrested during the Operation “Tidal Wave,” 10 defendants were already in custody on unrelated charges. Authorities are continuing to search for two defendants.
During the course of the investigation, law enforcement seized nearly eight pounds of methamphetamine and 10 firearms, including one linked to a shooting.
“This federal indictment seeks to dismantle the leadership of the Wilmas street gang, a particularly violent street gang that regularly targets members of the community and law enforcement officers for murder,” said United States Attorney Eileen M. Decker. “The devastating impact that this gang has had on the community cannot be overstated, but today’s takedown will help to restore order across Wilmington and ensure that those responsible for the violence and other criminal acts will be taken off the streets for years.”
Operation Tidal Wave targeted the Wilmas gang, which has operated in the Wilmington District of Los Angeles since the 1950s and is affiliated with the Mexican Mafia. As a “surenos” gang, the Wilmas gang “is loyal to, supports and contributes to the Mexican Mafia,” according to the indictment, which outlines how leaders of the prison gang issues orders to kill rival gang members and members of law enforcement.
The federal indictment unsealed this morning outlines a criminal enterprise that controls the drug trade in Wilmington, collects “taxes” from drug dealers for the benefit of Mexican Mafia members, maintains a supply of often-illegal firearms, and takes retribution against people who may be cooperating with law enforcement. Wilmas gang members murdered two 16-year-old victims on February 26, 2012, according to the indictment.
“The Wilmas gang is also a racist organization and has been historically antagonistic to the presence of African-Americans in Wilmas gang territory,” the indictment alleges. “Wilmas gang members have frequently targeted African-Americans who enter or attempt to reside within the area claimed by the Wilmas gang.”
Operation Tidal Wave was conducted under the auspices of the Los Angeles High Intensity Drug Trafficking Area (HIDTA) Task Force, which is coordinated by the Drug Enforcement Administration.
“This joint investigation targeted a very violent and ruthless criminal gang that has terrorized the citizens of Wilmington for too long,” said DEA Special Agent in Charge Steve Comer. “The HIDTA Task Force is dedicated to dismantling the most prolific, local area drug trafficking organizations and today’s actions demonstrate that commitment – we’re allied with our law enforcement partners to make our communities safer.”
The 31-count indictment alleges a conspiracy to violate RICO; numerous criminal offenses that violated the RICO statute, including murder, distribution of methamphetamine, extortion, and witness tampering; violent crimes in aid of racketeering, conspiracy to trafficking narcotics, possession with the intent to distribute methamphetamine and one defendant is accused of being a felon in possession of a shotgun.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Most of the 29 defendants named in the indictment face potential life sentences if they are convicted, and most potentially face mandatory minimum sentences of 10 years in federal prison.
This case is being prosecuted by Assistant United States Attorney Christopher Brunwin of the Violent and Organized Crime Section.
Lead Defendant in Case Targeting Synthetic Drugs Pleads Guilty to Smuggling, Drug Trafficking and Money Laundering ChargesRead the Press Release
SANTA ANA, California – The lead defendant in an indictment that outlined a wide-reaching conspiracy to smuggle, manufacture and distribute more than $12 million worth of synthetic, or analogue, drugs has pleaded guilty in federal court.
Sean Libbert, 41, of Newport Beach, pleaded guilty yesterday afternoon to a series of charges related to a scheme to distribute drugs commonly called “spice” or “bath salts.” Some of the drugs in this case nearly killed a victim who ingested them, according to the 16-count indictment filed in June 2014 that was the first in this district involving drug analogues.
Libbert pleaded guilty to four felony offenses: conspiracy to manufacture, possess with intent to distribute, and distribute controlled substance analogues; conspiracy to smuggle controlled substance analogues into the United States using false statements and fraudulent documents; being a felon in possession of firearms and ammunition; and money laundering.
As part of a plea agreement with the government, Libbert has agreed to serve at least six years in federal prison, and the government has agreed to recommend a sentence of not greater than 20 years. Libbert is scheduled to be sentenced by United States District Judge Cormac J. Carney on March 20, 2017.
“The investigation in this case revealed that this defendant controlled an organization that was one of the largest importers and distributors of dangerous, synthetic drugs in the nation,” said United States Attorney Eileen M. Decker. “Over the course of only 16 months, this organization smuggled well over 600 pounds of chemicals into the U.S., knowing that the drugs would be used to manufacture synthetic marijuana or ‘spice’ that was smoked or taken orally. As the indictment in this cases references, these synthetic drugs poses serious health risks to its users.”
Previously in this case, two other defendants pleaded guilty, including a Chinese national who sold Libbert and his associates synthetic drugs that were smuggled into the United States. Another three defendants charged in a separate case pleaded guilty to conspiring with Libbert to manufacture and distribute controlled substance analogues. These other five defendants are expected to be sentenced by Judge Carney next year.
The nearly three-year investigation into the analogue drug ring was conducted by the Los Angeles HIDTA (High-Intensity Drug Trafficking Area) Southern California Drug Task Force, which includes special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Drug Enforcement Administration and IRS Criminal Investigation.
“The packaging and names associated with analogue drugs might lead some impressionable users to believe these substances are benign, but the reality is they can cause serious health complications and even death,” said Joseph Macias, special agent in charge for HSI Los Angeles. “Couple that with the fact synthetic drugs are often marketed to young people and you have a prescription for disaster. For that reason, HSI is continuing to work closely with its federal and local law enforcement counterparts to target this emerging side of the illicit drug trade.”
As part of the scheme, Libbert incorporated a series of companies, opened up a series of bank accounts and private mailboxes, and used various websites to sell more than $12 million worth of chemicals and analogue substances to people across the United States, including other distributors and individual users.
Libbert and his co-conspirators also manufactured their own synthetic marijuana, which they marketed and sold under the brand “Da Kine Blend.” When he pleaded guilty, Libbert admitted that over a 7½-month period in 2011 he distributed at least 4 kilograms of synthetic cannabinoids, which he knew would be used to manufacture at least 100 kilograms of synthetic marijuana for human consumption.
“Ingesting any synthetic cannabinoid or cathinone is like playing a game of Russian roulette – it can kill you in an instant,” said DEA Special Agent in Charge Steve Comer. “Dismantling the highest level drug manufacturing and distribution organizations in the interest of public health and safety is what DEA is all about, and we’ll continue to target these organizations no matter what facade they operate behind.”
In July 2012, HIDTA investigators executed a series of federal search warrants and seized several luxury vehicles, hundreds of pounds of analogues and firearms –including a rifle, a shotgun, two pistols, and approximately 700 rounds of ammunition, all of which Libbert was prohibited from possessing as a result of three prior felony convictions, including a 2002 drug trafficking conviction.
In addition to the drug and firearms charges, Libbert also pleaded guilty to one count of money laundering. Investigators have seized more than $1.1 million in assets connected to the case, including more than $700,000 in profits from the sale of Libbert’s former San Juan Capistrano home.
“This is an important victory for the American public in federal synthetic drug law enforcement,” stated Acting Special Agent in Charge Anthony J. Orlando of IRS Criminal Investigation. “Not only is Libbert being held accountable for his crime, but he has agreed to the forfeiture of the proceeds associated with his illegal activity through the mechanism of asset forfeiture. IRS Criminal Investigation will continue to financially disrupt and dismantle significant drug trafficking organizations through the seizure and forfeiture of assets associated with the crime."
The case is being prosecuted by Assistant United States Attorney Carol A. Chen of the Organized Crime Drug Enforcement Task Force Section.
San Fernando Valley Man Who Admitted Murdering TSA Officer During 2013 Shooting Spree at LAX Sentenced to Life plus 60 YearsRead the Press Release
LOS ANGELES – A Sun Valley man who admitted a host of criminal charges related to a 2013 shooting spree at Los Angeles International Airport in which he murdered Transportation Security Administration Officer Gerardo Hernandez was sentenced today to spend the rest of his life in federal prison.
Paul Anthony Ciancia, 26, who pleaded guilty to first-degree murder in the fatal shooting of TSA Officer Hernandez on November 1, 2013, was sentenced by United States District Judge Philip S. Gutierrez.
Judge Gutierrez sentenced Ciancia to life in prison, plus an additional 60 years. There is no parole in the federal prison system.
“Today, justice was done on behalf of fallen TSA Officer Gerardo Hernandez, his wounded colleagues, and all those who were terrorized by the wanton violence perpetrated by this defendant,” said Attorney General Loretta E. Lynch. “This sentence reflects appropriate punishment for a heinous crime. It ensures that the defendant can never again harm or murder innocent Americans. And it sends a clear message that the Department of Justice will not tolerate calculated attacks on our nation’s law enforcement officers, and that those who do commit such crimes will be held accountable.”
“The crimes that led to today’s sentence were vicious, horrific and senseless,” said United States Attorney Eileen M. Decker. “After planning a mass murder, this defendant murdered a highly respected law enforcement officer, seriously wounded two other federal officers and a civilian, and terrified hundreds of people who feared for their lives. Those who target law enforcement and our nation’s critical infrastructure will be held accountable. As a result of today’s sentence, Mr. Ciancia will never again have a chance to harm other innocent people.”
According to court documents, in early 2013, Ciancia purchased a semiautomatic rifle, 500 rounds of ammunition and 10 magazines for the rifle. On the morning of November 1, 2013, Ciancia modified two pieces of luggage and zip-tied them together to conceal his loaded rifle.
Later that morning, Ciancia entered Terminal Three at LAX, removed the loaded rifle from his modified luggage and fired at and killed Officer Hernandez, who was checking passengers’ travel documents as part of his duties as a TSA Officer. Ciancia admitted that he then went upstairs to a TSA checkpoint, where he fired his weapon at TSA Officers Tony Leroy Grigsby and James Maurice Speer, as well at a civilian, Brian Ludmer. These three victims sustained serious injuries and required surgery, but they survived the attack.
“The defendant will spend the rest of his life behind bars for targeting airport officers with premeditated murder, but a just sentence cannot replace the loss of Officer Hernandez, nor remove the suffering of his victims, and his victims' families, friends and colleagues,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The collaborative efforts by first responders and investigators on the day of the shooting and thoughout this investigation are commendable and aided prosecutors in ensuring that Mr. Ciancia can never again pose a threat.”
“We are grateful to the FBI and the Department of Justice for their hard work in obtaining justice for Mr. Hernandez, his family, co-workers, and the men and women of DHS,” said Secretary Jeh C. Johnson of the Department of Homeland Security.
Appearing before Judge Gutierrez two months ago, Ciancia pleaded guilty to one count of murder of a federal officer; two counts of attempted murder of a federal officer; four counts of violence at an international airport; one count of discharging of a firearm during a crime of violence causing death; and three counts of discharging a firearm during a crime of violence.
During today’s sentencing hearing, Judge Gutierrez sentenced Ciancia to life in prison for the first-degree murder charge. Judge Gutierrez also imposed life sentences for the two additional charges based on the killing of Officer Hernandez – violence at an international airport that resulted in death and using a firearm to murder and cause death.
The additional 60-year prison term was imposed in relation to the three counts of using a firearm during a crime of violence.
This case is the product of an investigation by members of the Los Angeles Joint Terrorism Task Force (JTTF), which is led by the Federal Bureau of Investigation and includes agents and officers from 45 other local, state and federal agencies.
The following agencies provided considerable assistance during the investigation: the Los Angeles Airport Police; the Los Angeles Police Department; the Los Angeles County Sheriff's Department; the Transportation Security Administration; the Federal Air Marshal Service; the Los Angeles Port Police; the Long Beach Police Department; the Air Force Office of Special Investigations; the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Customs and Border Protection; the United States Secret Service; the Los Angeles Fire Department; Los Angeles International Airport Operations; the United States Marshals Service; the United States Postal Inspection Service; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
This case is being prosecuted by Assistant United States Attorney Patrick R. Fitzgerald, who is chief of the National Security Division; Assistant United States Attorneys Melissa Mills of the Terrorism and Export Crimes Section; Joanna M. Curtis of the Violent and Organized Crime Section; and DOJ Trial Attorney Michael S. Warbel of the Criminal Division’s Capital Case Section.
Pool Cue Maker Sentenced for Helping to Smuggle Elephant IvoryRead the Press Release
LOS ANGELES – A North Hollywood man was sentenced this morning on federal charges related to the attempted illegal exportation from the United States to Taiwan of protected African elephant ivory.
Cesar Ernesto Gutierrez, 75, was sentenced by United States District Judge John F. Walter to two years of probation, which will include four months of home confinement. Judge Walter ordered Gutierrez to immediately pay a criminal fine of $10,000.
Gutierrez pleaded guilty on August 29, 2016 to aiding and abetting the attempted smuggling of African elephant ivory.
According to court documents, Gutierrez is a well-known maker of custom pool cues who operates Ginacue in North Hollywood. Gutierrez manufactured and sold two Taiwanese nationals approximately 41 sections of custom pool cues containing inlays of protected elephant ivory. The two individuals Huang Ching Liu and Wen Shou Wei Chen were subsequently arrested at Los Angeles International Airport when agents with U.S. Customs and Border Protection and U.S. Fish and Wildlife Service discovered the pool cues in their luggage. Liu and Chen were indicted separately. The seized pool cues were purchased from Gutierrez for approximately $75,000 to $85,000.
“The protection of our endangered wildlife is an ongoing international concern, particularly with the devastating impact on African elephants caused by illegal ivory trafficking,” said United States Attorney Eileen M. Decker. “Illegal trafficking of any part of a protected species creates a demand that can lead to the extinction of these vulnerable populations.”
This case was investigated by the United States Fish and Wildlife Service, with assistance from United States Customs and Border Protection. The case was prosecuted by Assistant United States Attorney Amanda M. Bettinelli of the Environmental and Community Safety Crimes Section.
Long Beach Lobbyist Who Admitted Failing to Report Taxable Income from Illegal Marijuana Stores Sentenced to Year and a Day in PrisonRead the Press Release
LOS ANGELES – A Long Beach-based lobbyist, whose clients included illegal marijuana stores in Long Beach, was sentenced today to one year and one day in federal prison for failing to report to the IRS more than $750,000 in income he received over a six-year period.
Carl A. Kemp, 43, of Long Beach, the owner of the public relations firm and a one-time candidate for the Long Beach City Council, was sentenced by United States District Judge Philip S. Gutierrez, who also ordered the defendant to pay $210,661 in restitution to the Internal Revenue Service to cover his back taxes.
Kemp pleaded guilty in July to subscribing to a false tax return for the year 2012. On his federal tax return for that year, Kemp reported that he had no taxable income, when his business took in approximately $180,000.
“For years, this defendant engaged in criminal conduct designed to conceal his receipt of three-quarters of a million dollars – much of which was cash paid by illegal marijuana businesses,” said United States Attorney Eileen M. Decker. “Failure to fully report income on federal tax returns is a felony offense that can bring prison as well as significant monetary penalties.”
In a plea agreement filed in court, Kemp admitted receiving a total of $754,783 in income that he failed to report on his taxes for the years 2007 through 2012.
“For six consecutive years, Mr. Kemp, a well-educated professional with a successful business, elected to circumvent the law and cheat on his taxes,” stated Acting Special Agent in Charge for IRS Criminal Investigation, Anthony J. Orlando. “As the punishment handed down today reflects, no matter what your career or circle of influence, all of us are obligated to comply with our nation’s tax laws.”
The case against Kemp was investigated by IRS Criminal Investigation and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section.
Independent Producer Sentenced to 18 Months in Prison for Stealing Money Generated by Film that Should Have Gone to Partner CompanyRead the Press Release
LOS ANGELES – An independent film producer was sentenced today to 18 months in federal prison for interstate transportation of stolen property related to the theft of nearly $1.5 million that should have gone to his partner in a film production deal.
Julio Caro, 57, of Calabasas, was sentenced today by United States District Judge George H. King for transporting money to New Jersey that had been stolen from an investment company called Yucaipa Corporate Initiatives Fund I, LP.
When he pleaded guilty, Caro admitted that he stole $1,487,529 from Yucaipa over the course of five years
“This defendant stole nearly $1.5 million from a trusted business partner,” said United States Attorney Eileen M. Decker. “He then furthered his criminal activity by moving the money across the country, making it more difficult for the partner to recoup its losses.”
Caro used his company, Broken Rose Productions, Inc., to enter into a limited liability agreement with Yucaipa in early 2005. The resulting LLC, which was called R-Caro Productions, LLC produced several films, including “Homie Spumoni,” which was distributed by Warner Brothers Entertainment. When Warner Brothers sent distribution proceeds to R-Caro, the money should have gone to Yucaipa, which had provided much of the financing for the film. Instead, “Caro stole these funds and used these funds to pay for his personal expenses, including, but not limited to, his mortgage and car lease payments,” according to the court documents.
The case against Caro was investigated by the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.
Assistant United States Attorney to Serve as District Election Officer for Seven Counties during November 8 General ElectionRead the Press Release
LOS ANGELES – United States Attorney Eileen M. Decker announced today that Assistant United States Attorney Mack E. Jenkins will serve as the District Election Officer during tomorrow’s general election and will lead the local efforts in connection with the Justice Department’s nationwide Election Day Program.
As District Election Officer, AUSA Jenkins is responsible for overseeing the handling of complaints of election fraud and voting rights abuses. If complaints are received AUSA will coordinate with the FBI Field Office in Los Angeles and will consult with the Justice Department in Washington.
AUSA Jenkins will serve as District Election Officer for the Central District of California, which includes the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo.
“Every citizen is entitled to cast a ballot without interference or discrimination, and has a right to have that vote counted,” said United States Attorney Decker. “The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”
“The right to vote in the United States is a privilege of our democratic society and every eligible American citizen is entitled to carry it out without unlawful interference,” said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The FBI will play a role in protecting the rights of the American voter by investigating allegations of fraud or discrimination during the election process.”
The Justice Department has an important role in deterring election fraud and discrimination at the polls, and will combat these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and seeks to ensure public confidence in the integrity of the election process, by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on election day.
Federal law protects against crimes such as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.
Federal law also contains special protections for the rights of voters and provides that they can vote free from intimidation or harassment. For example, actions designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice. Additional information about voting rights protected under federal law is available on the Justice Department’s website.
In order to respond to complaints of election fraud or voting rights abuses on November 8 and to ensure that such complaints are directed to the appropriate authorities, AUSA Jenkins and AUSA Carol Chen will be on duty while the polls are open. Members of the public can reach them at the United States Attorney’s Office by calling (213) 894-2400.
In addition, the FBI will have special agents available across the country to receive allegations of election fraud and other election abuses on election day. Agents at the FBI’s Los Angeles Field Office can be reached by the public at (310) 477-6565.
Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington by phone at (800) 253-3931, by fax at (202) 307-3961, by email at [email protected], or by using the complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.
“Ensuring free and fair elections depends in large part on the cooperation of the American electorate,” said United States Attorney Decker. “It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to my Office, the FBI or the Civil Rights Division in Washington.”
Aerospace Parts Manufacturer Pays $2.7 Million to Settle Lawsuit Alleging it Failed to Perform Required Inspections on PartsRead the Press Release
LOS ANGELES – Air Industries Corporation (AIC), a Garden Grove-based aerospace parts company, has paid the United States $2.7 million to resolve allegations that it falsely certified it had performed required inspections on aerospace parts used in military aircraft, spacecraft and missiles used by the Department of Defense.
AIC, which manufactures and distributes bolts, screws and aerospace fasteners, paid the money on September 7, and United States District Judge James V. Selna dismissed the case on September 22. The matter was announced today after Judge Selna this week unsealed the lawsuit that led to the settlement.
The government alleged that, between June 2010 and September 2013, AIC falsely certified it had performed certain non-destructive testing on aerospace parts, including magnetic particle inspections and liquid penetrant inspections. The parts manufactured by AIC were sold to major aerospace contractors, who used the parts in the manufacture of aircraft and other equipment sold to the United States.
“Every company that does business with the United States has a duty and responsibility to honor it contracts, especially in ensuring equipment produced is safe and suitable for use,” said United States Attorney Eileen M. Decker. “The Department of Justice is committed to protecting investments made by taxpayers in contracts with private entities, especially when it comes to the purchase of equipment used in our national defense.”
Chris Hendrickson Special Agent in Charge of the Defense Criminal Investigative Service (DCIS), Western Field Office, said, “This settlement is representative of quality, uncompromising work by DCIS and the U.S. Attorney's Office to ensure the integrity of the Department of Defense procurement process by penalizing government vendors who choose profit over quality and, in some circumstances, safety. DCIS and our partners will steadfastly pursue anyone who attempts to perpetuate schemes to defraud the Department of Defense and comprise our nation's security.”
The settlement resolves allegations initially made in a “whistleblower” lawsuit filed in late 2012 by an employee of AIC. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act also allows the government to intervene and take over the action, as it did in this case. The employee who filed the qui tam action will receive $621,000 of the recovered funds.
The claims resolved by the settlement are allegations and AIC did not admit liability. The whistleblower is still pursuing several employment-based claims against AIC.
The government’s investigation was conducted by the U.S. Department of Defense, Office of the Inspector General and the U.S. Attorney’s Office.
The settlement was handled by Assistant United States Attorney Brian Villarreal of the Civil Division’s Civil Fraud Section.
13 Gang Members, Felons and Their Associates Indicted as Part of ATF-LAPD Investigation Targeting Crime in San Fernando ValleyRead the Press Release
LOS ANGELES – As the result of a seven-month investigation by special agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and officers with the Los Angeles Police Department (LAPD), federal grand juries have issued nine indictments that charge a total of 13 defendants with firearms and narcotics violations.
During an early morning operation today, authorities arrested ten of the federal defendants. Two of the defendants under indictment are currently fugitives and one defendant is already in state custody. This morning’s operation also resulted in the seizure of 13 additional firearms, approximately two and one-half pounds of methamphetamine, approximately a quarter pound of crack cocaine, and approximately quarter pound of heroin.
In addition to the 13 federal defendants, authorities have arrested eight other defendants who are expected to be prosecuted by the Los Angeles County District Attorney’s Office.
From February through July, the joint ATF-LAPD operation called Crime Area Gun Enforcement (CAGE) targeted violent offenders, gang members and previously convicted felons and their associates who were suspected of being involved in illegal firearm possession and sales, as well as narcotics distribution, in the San Fernando Valley. Investigators used confidential informants as part of an undercover operation in which ATF agents purchased contraband. As a result of the CAGE operation, authorities have seized approximately 20 pounds of methamphetamine and 40 weapons, including restricted firearms such as short-barrel rifles and silencers. The investigation also uncovered two locations where AR-15- and AK-47-type rifles were being clandestinely manufactured or illegally sold.
"This operation has removed dangerous drugs from the black market and has shut off a source of illegal firearms that can cause so much violence and damage in our neighborhoods," said United States Attorney Eileen M. Decker. "Criminals who engage in the illegal trafficking of drugs and guns can and should expect to be prosecuted, especially when they have previously been convicted of similar crimes."
"ATF is committed to reducing violent crime," said Eric Harden, Special Agent in Charge of the ATF’s Los Angeles Field Division. "ATF accomplishes this by working with LAPD and identifying and targeting criminal organizations and the persons responsible for perpetrating violence in our communities."
"There is no doubt that removing guns from our streets and arresting criminals who use and carry guns prevents senseless violence in our communities," said LAPD Chief Charlie Beck. "Removing even one gun from the streets means one less Angeleno robbed, shot, or murdered. Removing illegal guns is one of the LAPD’s highest priorities and working with our federal partners will help make our communities safer."
Over the past several weeks, federal grand juries returned nine indictments that charge 13 defendants. Those defendants facing federal charges are:
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Fidel Moreno-Dominguez, 47, of Palmdale, and Walter Wilfredo Lagos, 34, of Palmdale, who are charged with conspiracy to distribute one pound of methamphetamine and distribution of methamphetamine. Moreno-Dominguez is additionally charged with being a felon in possession of a firearm after being convicted of selling narcotics. Lagos is currently a fugitive.
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Robert Steven Carrillo, 31, of Redlands, and Alexander Ramirez Manzo (also known as "Dozer"), 34, of Pacoima, who are charged with conspiracy to engage in the business of dealing in firearms without a license, engaging in the business of dealing in firearms without a license, and possession of unregistered firearms. Manzo additionally is charged with being a felon in possession of a firearm after being convicted of burglary and sale of a controlled substance.
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Brandon C. Torres, 30, of Van Nuys, who is charged with engaging in the business of dealing in firearms without a license, two counts of being a felon in possession of firearms and ammunition after being convicted of possession of a controlled substance, and distribution of approximately one-quarter pound of methamphetamine.
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Antonio Cisneros, also known as "Trippy," 31 of North Hollywood, and Gino Cesar Dresda, 24, of Panorama City, who are charged with distribution of approximately one-quarter pound of methamphetamine. Additionally, Cisneros is charged with possession of a firearm in furtherance of a drug trafficking crime, distribution of a second quarter-pound of methamphetamine, and being a felon in possession of a firearm and ammunition after being convicted of possessing a controlled substance and firearms offenses. Cisneros is currently a fugitive.
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Anival Alvarez, 41, of San Fernando, and Maribel Lopez-Reyes, 30, also of San Fernando, who are charged with for conspiracy to distribute methamphetamine and two counts of distributing approximately one-quarter pound of methamphetamine.
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Luis Angel Torres, 28, of Palmdale, who is charged with engaging in the business of dealing in firearms without a license, and two counts of being a felon in possession of firearms and ammunition after being convicted of possession for sale of a controlled substance.
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Rudy Salazar, 36, of Mission Hills, who is charged with distribution of approximately one-quarter pound of methamphetamine.
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Albert Benjamin Perez, also known as "Dragon," 57, of Granada Hills, who is charged with distribution of methamphetamine.
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Steven Clyde Neaville, 53, of Van Nuys, who is charged with distribution of approximately one-quarter pound of methamphetamine.
Those taken into federal custody this morning were arraigned this afternoon in United States District Court in Los Angeles, and all were ordered detained.
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 13 federal defendants are facing statutory maximum sentences ranging from five years in federal in federal prison to life imprisonment for the charges contained in the indictments. Some of the federal defendants are also facing mandatory minimum sentences of five or 10 years in connection with certain drug distribution charges.
The federal cases brought as part of the CAGE operation are being prosecuted by Assistant United States Attorneys Julian L. André and Karen E. Escalante of the General Crimes Section.
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Australian Man Who Traveled to U.S. to Have Sex with 6-Year-Old Boy Sentenced to 12 Years in Federal PrisonRead the Press Release
LOS ANGELES – An Australian geneticist who pleaded guilty to a federal charge of traveling to Los Angeles to engage in criminal sexual conduct with a 6-year-old boy was sentenced today to 144 months in prison.
Michael Quinn, 33, of Melbourne, was sentenced today by United States District Judge John F. Walter.
“This defendant appeared to be a successful, well-liked professional – but he had a secret, online life in which he made clear his sexual interest in children,” said United States Attorney Eileen M. Decker. “This defendant thought he had arranged to rape a young child, but the vigilance of law enforcement spared any potential victims from being sexual abused.”
Quinn was arrested on May 21 by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) when he arrived at a Los Angeles-area hotel to buy a 6-year-old boy for sex.
According to documents filed in the case, the investigation began in May 2016 after undercover agents observed Quinn on a social networking site that caters to individuals with a sexual interest in children. Quinn admitted that he told undercover agents he was traveling to Los Angeles and wanted to “meet up with a dad who shares his young ones.” Specifically, Quinn told the agents, whom he believed were like-minded people, that he was hoping to meet “other pervs” in the U.S.
Quinn ultimately agreed to pay a human trafficker $250 to provide him with a young boy with whom he could engage in illicit sex. Once Quinn arrived in Los Angeles, he was arrested after paying another undercover agent $260. According to the plea agreement filed in this case, “a dominant purpose of his travel was to anally sodomize someone he knew was a 6-year-old boy.”
“This sentence should serve as a powerful deterrent to online child predators who mistakenly believe the internet and a plane ticket will enable them to act on their dark desires with impunity,” said Joseph Macias, special agent in charge of HSI Los Angeles. “Pedophiles should be on notice, HSI and its law enforcement partners are using all of the resources at our disposal to combat this reprehensible behavior and hold the perpetrators responsible for their crimes.”
This case is a product of Project Safe Childhood, a Department of Justice initiative launched in 2006 to combat the growing epidemic of child sexual exploitation and abuse, and HSI’s Operation Predator, an international initiative to protect children from sexual predators.
The case against Quinn is being prosecuted by Assistant United States Attorney Joey Blanch of the Violent and Organized Crime Section.
Two Los Angeles-Area Men Among Those Charged in Scheme to Smuggle $3 Million in Military Aircraft Parts and Defense Items to IranRead the Press Release
LOS ANGELES – Two Los Angeles-area men have been arrested on federal charges for their alleged role in a scheme to smuggle military aircraft parts and other potential defense items to Iran in violation of the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR).
Zavik Zargarian, 52, of Glendale, and Vache Nayirian, 57, of Lakeview Terrace, were taken into custody Wednesday morning by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). The men are among five defendants charged in a nine-count federal indictment unsealed Wednesday that details a conspiracy to purchase and ship jet fighter aircraft parts worth more than $3 million to Iran.
Additionally, several of the defendants are accused of buying and illegally exporting fluorocarbon rubber O-rings to Iran. The O-rings in question have a variety of possible military applications including use in aircraft hydraulic systems and landing gear.
Also named in the indictment are Zargarian’s Glendale-based company, ZNC Engineering, and two Iranian nationals, Hanri Terminassian, 55, and Hormoz Nowrouz, 56, both of whom are believed to be in Iran.
The charges stem from a lengthy undercover probe spearheaded by HSI, with substantial assistance provided by the Defense Criminal Investigative Service (DCIS) and U.S. Customs and Border Protection (CBP).
“The crimes charged in this indictment are very serious threats to our national security,” said United States Attorney Eileen M. Decker. “As a nation it is vital that we protect our military technology and prevent it from getting into the hands of other countries without proper authorization.”
“Our commitment to prosecuting individuals who engage in the unlawful proliferation and export of items with military applications remains steadfast,” said Acting Assistant Attorney General for National Security Mary B. McCord. “The actions announced today are part of our ongoing effort to enforce export laws that continue to play a critical role in maintaining and protecting U.S. national security.”
According to the indictment, Terminassian originally contacted Zargarian from Iran for assistance with obtaining military aircraft parts from U.S.-based suppliers. Subsequently, Zargarian negotiated on Terminassian’s behalf to purchase the desired items from an undercover HSI special agent who was posing as a parts supplier. The items included parts used in F-14, F-15, F-16 and F-18 fighter jets. Eventually, Terminassian traveled to the U.S. to meet with Zargarian and the undercover special agent to discuss the transaction. The indictment alleges the two men sought to purchase between 10 and 30 units of each item, with the total cost potentially exceeding $3.6 million.
“One of HSI’s top enforcement priorities is preventing sensitive articles like those in this case from falling into the hands of individuals or nations that might seek to harm America or its interests,” said Joseph Macias, special agent in charge for HSI Los Angeles. “The illicit trade of these kinds of items to countries that have repeatedly violated our export laws must be controlled. Given what’s at stake, HSI will continue to work closely with our law enforcement partners to combat this threat and hold the perpetrators accountable for putting the U.S. at risk.”
The indictment also accuses Zargarian and Nayirian of conspiring with Terminassian and Nowrouz to export fluorocarbon rubber O-rings to Iran. The indictment alleges Terminassian contacted Nayirian and Zargarian on behalf of Nowrouz and sought their help to obtain the parts. Terminassian transferred funds for the purchase to Nayirian, who later provided the money to Zargarian. Through his company ZNC Engineering, Zargarian bought the O-rings from a California vendor and provided them to Nayirian. Nayirian then exported the O-rings to addresses in the United Arab Emirates and Kuwait provided by Terminassian, who subsequently arranged for them to be transshipped to Iran. According to the indictment, the defendants exported more than 7,000 O-rings to Iran over the course of the conspiracy.
To reduce the likelihood of detection, the defendants falsely claimed on shipping documents that the O-rings were destined for countries other than Iran and substantially undervalued them to avoid having to file export forms that might prompt further inspection by CBP. As part of the investigation, authorities obtained evidence that the O-rings were delivered to the Iranian Air Force.
Zargarian and Nayirian were arraigned on the indictment in federal court on Wednesday afternoon. Both men entered not guilty pleas and were freed on bond. A trial in this case was set for December 20 before United States District Judge S. James Otero.
If convicted of the charges in the indictment, Zargarian would face a statutory maximum sentence of 115 years in federal prison and a $4,770,000 fine. Nayirian, if he is found guilty of all counts, would face a statutory maximum sentence of 95 years in federal prison and a $3,770,000 fine.
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 U.S. embargo on Iran, which is enforced through the IEEPA and the ITSR, prohibits the export of goods, technology and services to Iran with very limited exceptions.
The prosecution is being handled by Assistant United States Attorney Mark Takla of the Terrorism and Export Crimes Section and DOJ Trial Attorney Christian Ford from the Counterintelligence and Export Control Section of the National Security Division.
Two California Men Among Those Charged in Scheme to Smuggle Military Aircraft Parts and Defense Items to IranRead the Press Release
Zavik Zargarian, 52, of Glendale, California, and Vache Nayirian, 57, of Lakeview Terrace, California, were arrested Wednesday morning on federal charges for their alleged role in a scheme to smuggle millions of dollars’ worth of military aircraft parts and other potential defense items to Iran in violation of the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR).
Acting Assistant Attorney General for National Security Mary B. McCord, U.S. Attorney Eileen M. Decker for the Central District of California and Special Agent in Charge Joseph Macias for Homeland Security Investigations (HSI) in Los Angeles made the announcement
The defendants were taken into custody by special agents of U.S. Immigration and Customs Enforcement’s HSI. The men are among five defendants charged in a nine-count federal indictment unsealed Wednesday that alleges a conspiracy to purchase and ship more than $3 million dollars’ worth of jet fighter aircraft parts to Iran. Additionally, several of the defendants are accused of buying and illegally exporting fluorocarbon rubber O-rings to Iran. The O-rings in question have a variety of possible military applications, including use in aircraft hydraulic systems and landing gear. Also named in the indictment are Zargarian’s Glendale-based company, ZNC Engineering, and two Iranian nationals, Hanri Terminassian, 55, and Hormoz Nowrouz, 56, both of whom are believed to be in Iran.
The charges stem from a lengthy undercover probe spearheaded by HSI, with substantial assistance provided by the Defense Criminal Investigative Service and U.S. Customs and Border Protection (CBP).
“Our commitment to prosecuting individuals who engage in the unlawful proliferation and export of items with military applications remains steadfast,” said Acting Assistant Attorney General McCord. “The actions announced today are part of our ongoing effort to enforce export laws that continue to play a critical role in maintaining and protecting U.S. national security.”
"The crimes charged in this indictment are very serious threats to our national security," said U.S. Attorney Decker. "As a nation it is vital that we protect our military technology and prevent it from getting into the hands of other countries without proper authorization."
According to the indictment, Terminassian originally contacted Zargarian from Iran for assistance with obtaining military aircraft parts from U.S.-based suppliers. Subsequently, Zargarian negotiated on Terminassian’s behalf to purchase the desired items from an undercover HSI special agent who was posing as a parts supplier. The items included parts used in F-14, F-15, F-16 and F-18 fighter jets. Eventually, Terminassian traveled to the U.S. to meet with Zargarian and the undercover special agent to discuss the transaction. The indictment alleges the two men sought to purchase between 10 and 30 units of each item, with the total cost potentially exceeding $3.6 million.
“One of HSI’s top enforcement priorities is preventing sensitive articles like those in this case from falling into the hands of individuals or nations that might seek to harm America or its interests,” said Special Agent in Charge Macias. “The illicit trade of these kinds of items to countries that have repeatedly violated our export laws must be controlled. Given what’s at stake, HSI will continue to work closely with our law enforcement partners to combat this threat and hold the perpetrators accountable for putting the U.S. at risk.”
The indictment also accuses Zargarian and Nayirian of conspiring with Terminassian and Nowrouz to export fluorocarbon rubber O-rings to Iran. The indictment alleges Terminassian contacted Nayirian and Zargarian on behalf of Nowrouz and sought their help to obtain the parts. Terminassian transferred funds for the purchase to Nayirian, who later provided the money to Zargarian. Through his company ZNC Engineering, Zargarian bought the O-rings from a California vendor and provided them to Nayirian. Nayirian then exported the O-rings to addresses in the United Arab Emirates and Kuwait provided by Terminassian, who subsequently arranged for them to be transshipped to Iran. According to the indictment, the defendants exported more than 7,000 O-rings to Iran over the course of the conspiracy.
To reduce the likelihood of detection, the defendants falsely claimed on shipping documents that the O-rings were destined for countries other than Iran and substantially undervalued them to avoid having to file export forms that might prompt further inspection by CBP. As part of their probe, investigators obtained evidence that the O-rings were intended for the Iranian Air Force.
Zargarian and Nayirian were arraigned on the indictment in federal court on Wednesday afternoon. Both men entered not guilty pleas, and a trial was set for December 20 before U.S. District Judge S. James Otero.
Defendant Zargarian faces a statutory maximum sentence of 115 years in federal prison and a $4,770,000 fine. Defendant Nayirian faces a statutory maximum sentence of 95 years in federal prison and a $3,770,000 fine. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of a defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors. 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 U.S. embargo on Iran, which is enforced through the IEEPA and the ITSR, prohibits the export of goods, technology, and services to Iran with very limited exceptions.
The prosecution is being handled by Assistant U.S. Attorney Mark Takla for the Central District of California and Trial Attorney Christian Ford of the National Security Division’s Counterintelligence and Export Control Section.
Four Charged after Ton of Marijuana Seized from Boat in Long BeachRead the Press Release
LOS ANGELES – Four Southern California men were charged yesterday with a federal drug trafficking offense in relation to the seizure of approximately one ton of marijuana that was discovered Tuesday on a 30-foot fishing boat in Long Beach. The interdiction represents the third major local maritime smuggling incident in the last month and brings the total amount of marijuana seized to over three tons.
Omar Quintero, 28, of Los Angeles, Miguel Angel Quintero Jr., 38, also of Los Angeles; Eliasib Ventura, 34, of Alhambra; and Jonathan Ventura, 31, of Pomona, were taken into custody Tuesday afternoon and were named in a one-count criminal complaint filed yesterday in United States District court. The four defendants made their initial appearances late Wednesday before United States Magistrate Judge Alka Sagar, who ordered the detention of three of the men and ordered the release of Omar Quintero on a $50,000 bond. All four defendants are scheduled to be arraigned next month.
The four men were arrested Tuesday afternoon after officers with the Long Beach Police Department’s Port Police Division alerted Los Angeles Border Enforcement Security Task Force (LA BEST) investigators that they had spotted a truck that was the subject of an LA BEST lookout. The truck was hooked to a fishing boat on a trailer at the South Shores launch ramp in Long Beach. LA BEST investigators, including special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), responded to the launch ramp area, searched the vessel and found bundles of marijuana inside, according to court documents.
If the four defendants are convicted of conspiracy with the intent to distribute marijuana, each would face a statutory maximum sentence of 40 years in federal prison.
“As drug traffickers continue to use our waters for smuggling, law enforcement will continue to interdict them,” said United States Attorney Eileen M. Decker. “These arrests and seizures demonstrate the commitment and cooperation across all levels of law enforcement to stemming the flow of drugs into the United States, by whatever means.”
Tuesday’s arrests and seizure came just one day after HSI special agents recovered 44 bundles of marijuana weighing approximately 3,000 pounds on Santa Rosa Island in Channel Island National Park. LA BEST investigators believe the marijuana may be related to an abandoned Mexican panga discovered by Santa Barbara County Sheriff’s deputies on Gaviota Beach in Santa Barbara Sunday afternoon.
The third recent maritime marijuana interdiction occurred on September 23 after lifeguards with the Long Beach Fire Department on marine patrol spotted a pleasure craft in distress. The lifeguards made contact with the 20-foot vessel and observed suspicious activity on board. The vessel was towed to the launch ramp at Davies Landing, where it was met by officers from the Long Beach Police Department. An inspection of the boat turned up numerous packages of marijuana weighing more than 1,100 pounds. HSI special agents and LA BEST officers arrested Fernando Rodriguez-Fonseca, 39, and Enrique Mendoza-Rodriguez, 47, both Mexican nationals, at the scene for trafficking in marijuana. Evidence indicates Rodriguez-Fonseca and Mendoza-Rodriguez had sailed from the area of Ensenada, Mexico, to Long Beach.
A federal grand jury returned an indictment on October 11 that charges Rodriguez-Fonseca and Mendoza-Rodriguez with conspiracy and possession with the intent to distribute marijuana. Both defendants were arraigned on the indictment on Monday, when they pleaded not guilty and were ordered to stand trial on December 6 in United Stated District Court. If they are convicted of the two charges in the indictment each defendant would face a statutory maximum sentence of 40 years in federal prison.
“This sudden surge in local maritime smuggling activity is definitely a cause for concern,” said Joseph Macias, special agent in charge for HSI Los Angeles. “By using pleasure craft to ferry contraband, smugglers believe they can more easily blend in with legitimate boating traffic along the Southern California coast, which is all the more reason we need the public to remain vigilant and contact law enforcement if they see anything suspicious.”
Both a criminal complaint and an indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The case against the four defendants charged this week is being prosecuted by Assistant United States Attorney Karen E. Escalante of the General Crimes Section. The two-defendant case stemming from the September seizure is being prosecuted by Special Assistant United States Attorney Rebecca Shults of the General Crimes Section.
LA BEST received substantial assistance with these cases from the Long Beach Police Department; the Long Beach Fire Department; the Santa Barbara County Sheriff’s Department; the Los Angeles County Sheriff’s Department; the United States Coast Guard; the National Park Service; U.S. Customs and Border Protection (CBP) Air and Marine Operations; and the Orange County Sheriff’s Department.
LA BEST is tasked with identifying, targeting, and reducing security vulnerabilities affecting the Los Angeles/Long Beach seaport complex, the Southern California coastline, and the waterways and transportation infrastructure that tie into them. The Task Force is made up of personnel from nine federal, state and local law enforcement agencies, including HSI, U.S. Customs and Border Protection, the U.S. Coast Guard Criminal Investigations Service, the Drug Enforcement Administration, the Los Angeles Sheriff’s Department, the Los Angeles Police Department, the Los Angeles Port Police, the Long Beach Police Department, and the Orange County Sheriff’s Department.
Pennsylvania Man Sentenced Today to 18 Months in Federal Prison for Hacking Apple and Google E-Mail Accounts Belonging to More Than 100 People, Including Many CelebritiesRead the Press Release
LOS ANGELES – A Pennsylvania man was sentenced today on felony computer hacking charges related to his illegal access of over 100 Apple and Google e-mail accounts, including those belonging to members of the entertainment industry in Los Angeles.
Ryan Collins, 36, of Lancaster, Pennsylvania, was sentenced in United States District Court in Harrisburg, Pennsylvania to 18 months in federal prison for a felony violation of the Computer Fraud and Abuse Act. He was taken into custody immediately after sentencing.
Collins pled guilty in May to one count of unauthorized access to a protected computer to obtain information. Collins was originally charged in Los Angeles, but the parties agreed to transfer the case to Harrisburg in the Middle District of Pennsylvania, near Collins’ home, for the entry of his guilty plea and sentencing.
The case against Collins stems from the investigation into the leaks of photographs of numerous female celebrities in September 2014, known as “Celebgate.” Investigators have not uncovered any evidence linking Collins to the actual leaks or that Collins shared or uploaded the information he obtained, however.
“Hackers violate federal law whenever they access private information stored online and in digital devices,” said Eileen M. Decker, United States Attorney for the Central District of California. “Today people store important private information online and in their digital devices, which is why my office is deeply committed to holding hackers accountable, even when they do not sell or distribute the stolen data.”
From November 2012 until the beginning of September 2014, Collins engaged in a sophisticated phishing scheme to obtain usernames and passwords for his victims. He sent e-mails to victims that appeared to be from Apple or Google and asked victims to provide their usernames and passwords.
When the victims responded, Collins then had access to the victims’ e-mail accounts. After illegally accessing the e-mail accounts, Collins obtained personal information including nude photographs and videos. In some instances, Collins would use a software program to download the entire contents of the victims’ Apple iCloud backups. In addition, Collins ran a modeling scam in which he tricked his victims into sending him nude photographs.
Investigators identified over 600 victims, many of whom were members of the entertainment industry in Los Angeles. By illegally accessing the e-mail accounts, Collins accessed at least 50 iCloud accounts and 72 Gmail accounts, many of which belonged to female celebrities.
"The defendant intruded into the online accounts of hundreds of victims and in doing so, intruded upon their lives, causing lasting distress," said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. "The prison sentence received by Mr. Collins is proof that hacking into the accounts of others and stealing private information or images is a crime with serious consequences."
The case against Ryan Collins was investigated by FBI agents based in Los Angeles, and the plea agreement was negotiated by Assistant United States Attorneys Ryan White and Vicki Chou in the United States Attorney’s Office in Los Angeles. The United States Attorney’s Office for the Middle District of Pennsylvania assisted in the prosecution by handling the guilty plea and sentencing.
Former CEO of Hollywood Payroll Company Convicted for Tax Fraud ConspiracyRead the Press Release
RIVERSIDE, California – The former CEO of Axium International, Inc., a leading Hollywood payroll services company until its 2008 collapse, was convicted late yesterday afternoon of tax evasion, conspiracy to defraud the IRS, and filing a false tax return.
John Visconti, 74, of Beverly Hills, was convicted by a federal jury following a one-week trial. United States District Judge Jesus G. Bernal, who presided over Visconti’s trial, set sentencing for Visconti on January 23, 2017.
Axium was one of the largest payroll services companies serving the entertainment industry, and its clients included a list of high profile studios, Fortune 500 companies, television and cable companies, and media outlets. At its height, Axium’s gross revenues were well over $1 billion per year.
As the payroll services provider and employer of record for its client entities, Axium regularly submitted payroll tax returns to the IRS and to the taxing authorities of several states. In several instances, those tax returns generated refunds in six-figure dollar amounts. Axium collapsed in 2008, after revelations that its tax delinquencies exceeded $100 million and that, as a result, Axium’s lender foreclosed on its bank accounts. Axium’s tax delinquencies resulted in the IRS assessing a recovery penalty against Visconti of $15 million.
According to the evidence at trial, Visconti and Axium’s former chief operating officer, Ronald Garber, 62, of Santa Monica, used a variety of elaborate mechanisms to divert approximately $5.1 million from Axium during the period 2005-2007, and Visconti took an additional $1.9 million in corporate loans that he did not repay. In one of the schemes, Visconti diverted tax refund checks payable to Axium and its subsidiaries into “shadow bank accounts,” accounts that were in the names of Axium companies but controlled by Visconti and Garber, off the corporate books and records, and not disclosed to the Axium accounting department. Garber and Visconti also diverted over half a million from Axium through a scheme involving a sham construction company that invoiced Axium for purported services. The two men also conspired to have thousands of dollars in cash from Axium delivered to them on a weekly basis.
The various schemes presented during the trial resulted in the diversion of millions of dollars from Axium, and Visconti reported none of the funds pocketed by him on his federal income tax returns. Visconti in several instances arranged for his “cut” to be paid to bank accounts held in the names of entities that Visconti controlled.
“This defendant and his co-conspirator stole millions from Axium over the course of many years and failed to pay taxes on those amounts,” said United States Attorney Eileen M. Decker. “His conduct victimized not only the employees of Axium who lost their livelihoods when the business collapsed, but all American taxpayers who are paying their fair share.”
At the time of sentencing, Visconti faces a maximum sentence of 13 years of imprisonment and a maximum fine of $750,000.
Ronald Garber pled guilty previously to two counts of subscription to a false tax return and is scheduled to be sentenced by Judge Bernal on January 23, 2017. Another former Axium associate, Christina Futak, 60, of Orange, California, pled guilty to tax evasion and is scheduled to be sentenced on December 19, 2016. Futak, a former tax professional, also stipulated to the entry of a civil order enjoining her from engaging in the business of tax preparation.
“Axium was a prominent payroll services business that had millions of dollars of client funds under its control. But instead of safeguarding that money and meeting their legal obligations to their clients and the IRS, Visconti and Garber put their energy into siphoning money from the company for their own personal use,” stated Acting Special Agent in Charge Anthony J. Orlando of IRS Criminal Investigation. “Taxpayers and businesses can be assured that IRS Criminal Investigation will vigorously pursue anyone who collects taxes and fails to timely remit those taxes.”
The Chapter 11 bankruptcy case for Axium, initially filed in January 2008, remains an active case proceeding in which thousands of documents have been filed.
The investigation into Axium was conducted by IRS Criminal Investigation, and the case is being prosecuted by Assistant United States Attorney Angela J. Davis of the Major Frauds Section.
San Jacinto Man Affiliated with Riverside Gang Sentenced to 10 Years in Federal Prison for Methamphetamine TraffickingRead the Press Release
LOS ANGELES – A San Jacinto man affiliated with the Riverside San Jacinto First Street gang was sentenced to a decade in prison yesterday for his role in methamphetamine trafficking.
Luis Miguel Castro, aka “Fat Boy,” 27, was sentenced by United States District Judge Dale S. Fischer, who found that Castro was affiliated with the gang.
Castro pled guilty earlier this year to possession with the intent to distribute three large plastic bags containing over a half-pound of methamphetamine, approximately 1,080 days of daily personal use.
“Criminal street gangs continue to sell dangerous drugs as a major source of revenue, so the Department of Justice will continue to attack these gangs by seeking imprisonment for drug-traffickers affiliated with them,” said United States Attorney Eileen M. Decker. “The convictions and sentences in this case demonstrate how cooperation between state and federal law enforcement can bring positive results for a community.”
In its sentencing memorandum, prosecutors said, “Methamphetamine is a highly addictive and harmful controlled substance that wreaks havoc on communities across the country.” Prosecutors also argued that Castro was a member of the San Jacinto First Street gang.
Castro was the lead defendant in the indictment which also charged four other defendants with distribution of methamphetamine. Three defendants were previously convicted in this case and are currently serving federal prison sentences:
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Roberto Alvarado, 30, San Jacinto, was sentenced last week to 63 months in custody for possession with intent distribute methamphetamine;
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Terri Lynne Valenzuela, 50, San Jacinto, was sentenced in June to 78 months in custody for conspiracy to distribute methamphetamine; and
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Victor Chavez, 26, San Jacinto, was sentenced in February to five years in custody, consecutive to his state court sentences, for conspiracy to distribute methamphetamine.
As a condition of their sentences, these defendants were prohibited from associating with known members of the San Jacinto First Street gang.
“In conjunction with our law enforcement partners, DEA continues to target and combat the violent criminal street gangs engaged in the distribution of narcotics in our local communities,” said DEA Special Agent in Charge Steve Comer. “The San Jacinto First Street gang, a Riverside County based organization with a history of murder, home invasions, weapons violations and narcotics sales, has been decimated as a result of recent efforts by DEA and the Riverside County Sheriff’s Office.”
In a trial earlier this year, the fifth defendant charged in the indictment, Juan Carillo, was acquitted of both charges against him.
The case against Castro was investigated by the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Riverside County Sheriff’s Department. This case was prosecuted by Assistant United States Attorneys Jay Robinson of the Terrorism and Export Crimes Section and Sandhya Ramadas of the Organized Crime and Drug Enforcement Task Force Section.
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Santa Barbara Criminal Defense Attorney Pleads Guilty to Willfully Failing to File Tax ReturnsRead the Press Release
LOS ANGELES – A Santa Barbara-based criminal defense attorney has pled guilty to three counts of willfully failing to file tax returns and has also admitted, in his plea agreement, to willfully failing to pay his taxes for those three years as well as several additional years, costing the IRS $679,958.
Darryl W. Genis, 60, pleaded guilty this morning to willfully failing to file tax returns for his law practice for the years 2009, 2010, and 2011, federal misdemeanors.
Genis admitted that he made enough money in his law practice to require that he file tax returns in those years, but that he knowingly and intentionally chose to not file his tax returns despite his legal obligation to do so. Genis also admitted that he did not pay the full amount of taxes that he owed for the years 2005-2012.
“As an attorney this defendant had a heightened responsibility to follow the law, and instead he cheated the IRS and every law-abiding taxpayer in the country,” said United States Attorney Eileen M. Decker. “Today’s guilty pleas will deprive the defendant of the fruits of his crimes and send a message that everyone must pay their taxes.”
As part of his plea agreement, Genis agreed to pay restitution to the IRS in the amount of $679,958, representing unpaid taxes for the years 2005 through 2012. Genis also has agreed to the IRS’s assessment of the civil penalties applicable to all 8 tax years in issue.
“This case is a reminder that no one is above the law,” stated Acting Special Agent in Charge Anthony J. Orlando with IRS Criminal Investigation. “Each of us is responsible for filing a tax return when required and for paying the correct amount of tax due. Mr. Genis chose to ignore his duty to file and pay taxes and will now face severe consequences, which may include imprisonment and substantial fines.”
Genis’ sentencing is scheduled for February 13, 2017, at which time he will face a statutory maximum sentence of three years of imprisonment.
The investigation of Genis was conducted by IRS Criminal Investigation in Camarillo, and the prosecution is being handled by Assistant United States Attorneys Valerie Makarewicz and Benjamin Tompkins of the Tax Division.
Orange County Man Pleads Guilty to Flying Private Jet with Passengers Onboard Without Having Properly Issued FAA LicenseRead the Press Release
LOS ANGELES – An Irvine man pleaded guilty today in federal court to charges of illegally flying on two separate occasions turbo-jet powered aircraft with passengers onboard without having a valid license.
Arnold Gerald Leto III, 36, pleaded guilty to a two-count indictment that charged Leto with violations of a federal statute that prohibits the knowing piloting of an aircraft without having the requisite “airman certificate.”
According to his plea agreement, in January 2015, Leto piloted a Cessna Citation aircraft from Santa Monica to Phoenix, and, in April 2016, Leto piloted a Falcon 10 turbo-jet aircraft from Van Nuys Airport to Las Vegas. On both of those occasions, Leto piloted the aircraft with passengers onboard knowing that he did not have the requisite airman certificate to pilot that aircraft.
“Federal laws regarding the operation of passenger aircraft protect the public,” said United States Attorney Eileen M. Decker. “Today’s guilty pleas demonstrate that the defendant willfully disregarded the rules and regulations of the FAA and operated jet aircraft, thereby endangering the passengers on board and the safety of the communities of Santa Monica, Van Nuys, Las Vegas, Phoenix, and everywhere in between.”
Earlier this year, the FAA, after finding various violations of Federal aviation regulations, revoked all of Leto’s airman certificates.
“As evidenced by the guilty plea entered into today by Mr. Arnold Leto related to operating an aircraft without an airman’s certificate, we remain steadfast in our commitment to ensuring the safety of the nation’s air transportation system,” said William Swallow, DOT OIG regional Special Agent-in-Charge. “Working with the Federal Aviation Administration and our prosecutorial partners, we will continue to prevent and detect violations of federal laws and regulations designed to ensure public safety, and punish those who would seek to compromise that safety.”
Sentencing is set before United States District Judge Dale S. Fischer on February 6, 2017. At that time Leto faces a statutory maximum sentence of six years in federal prison.
This case was investigated by the Department of Transportation – Office of Inspector General, with assistance by the Federal Aviation Administration. The prosecution is being handled by Assistant United States Attorney Dennis Mitchell of the Environmental and Community Safety Crimes Section.
Licensed Occupational Therapist Pleads Guilty to $2.6 Million Medicare Fraud ConspiracyRead the Press Release
A licensed occupational therapist pleaded guilty today in Los Angeles for his role in a $2.6 million Medicare fraud scheme that involved billing for occupational therapy services that were not provided.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California and Special Agent in Charge Christian Schrank of the U.S. Department of Health and Human Services-Office of the Inspector General’s (HHS-OIG) Los Angeles Region made the announcement.
Keith Canlapan, 38, of West Covina, California, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge George H. Wu of the Central District of California. Sentencing is scheduled for Feb. 16, 2017, before Judge Wu.
As part of his guilty plea, Canlapan admitted that he was a licensed occupational therapist employed with JH Physical Therapy, an occupational therapy clinic located in Walnut, California. Canlapan further admitted that through JH Physical Therapy, he billed Medicare for occupational therapy services when no such services were provided to the Medicare beneficiaries. Instead, the Medicare beneficiaries received massage and acupuncture services, which are not reimbursable under Medicare rules, he admitted. In fact, on dates that Canlapan purportedly provided occupational services to Medicare beneficiaries at JH Physical Therapy, Canlapan was admittedly not present at JH Physical and instead was either out of the country or at his other places of employment on some of those dates.
Between approximately October 2009 and approximately December 2012, Canlapan, through JH Physical Therapy, billed Medicare $2,669,618 in false and fraudulent claims, of which Medicare paid $1,860,786, he admitted.
Canlapan was charged in an indictment returned on June 16, 2016, along with co-defendants Simon Hong, 54, and Grace Hong, 50, husband and wife, both of Brea, California. Simon Hong is the owner and Grace Hong is the co-operator of JH Physical Therapy, and they are charged with one count of conspiracy to commit health care fraud and three counts of health care fraud. Both are pending trial, which is scheduled for Jan. 17, 2017. An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Co-conspirator Roderick Belmonte Concepcion, a licensed occupational therapist, was also previously indicted in a separate related case and pleaded guilty in April 2016. His sentencing is scheduled for Jan. 23, 2017.
The case was investigated by the Los Angeles Region of HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The case is being prosecuted by Trial Attorney Blanca Quintero of the Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,900 defendants who collectively have billed the Medicare program for over $10 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Imposter Attorney, 2 Others Arrested in Immigration Fraud ScamRead the Press Release
LOS ANGELES — An Inland Empire man who allegedly posed as an immigration attorney and two female accomplices face a federal indictment charging them with operating an immigration fraud scheme in which they created phony employment visas and other bogus documents for foreign nationals who were seeking a way to remain in the United States legally.
Alexander Smirnoff, who also went by the name “Alex Scott,” 48, and his “legal assistants” – Ekaterina Vladimirovna Zamurueva, 28, and Anna Kirillovna Solodovnikova, 29 – were arrested late last week by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) at the residence they share in Corona.
The three defendants were charged in a 16-count indictment returned by a federal grand jury on August 16. The indictment, which was unsealed following the defendants’ arrests, charges them with conspiracy, visa fraud, wire fraud, aggravated identity theft and identification fraud.
The trio was arraigned on the indictment Friday afternoon in United States District Court in Los Angeles. At the arraignment, United States Magistrate Judge Karen L. Stevenson ordered Smirnoff released on a $50,000 appearance bond subject to electronic monitoring and restriction to his residence and both Zamurueva and Soldovnikova detained without bail. Trial in the matter was scheduled for December 13.
According to court documents, Smirnoff and the two women told prospective clients they operated a consulting firm called ABC Flex, which purported to offer “legal support” to foreign nationals wanting to obtain immigration benefits that would enable them to stay in the U.S. For fees as high as $8,000, the services offered by the defendants allegedly included creating phony employment visas, which they told clients were genuine.
Investigators determined that the recipients of those “visas,” many of whom originally came to the U.S. as students, did not realize the documentation was fake until HSI special agents contacted them for overstaying their original expired student visas. In one instance, a foreign national ABC Flex client did not become aware her documentation was forged until she was denied entry upon returning to the U.S. from a trip to Nepal to teach English. She told investigators she frantically contacted the defendants, who said they would remedy the situation, but then stopped responding to her inquiries.
“The indictment in this case charges the defendants with victimizing both the United States and dozens of immigrants who thought they were properly obtaining authorization to remain in the United States legally,” said United States Attorney Eileen M. Decker. “The crimes charged in the indictment undermine our immigration system and harm individual victims both by stealing their hard-earned money and by placing them in very serious immigration situations.”
The indictment alleges that as part of the scheme the defendants furnished their foreign national clients with forged letters purportedly issued by U.S. Citizenship and Immigration Services (USCIS) and I-94 Arrival/Departure Records that falsely appeared to give the recipients permission to remain in the U.S. legally. The documents bore the Department of Homeland Security seal and appeared to be on official USCIS letterhead.
Additionally, the indictment alleges the defendants provided some of their clients with what they purported were valid Social Security numbers, when in fact the numbers either belonged to someone else or were invalid.
“As this case makes clear, HSI will move aggressively to target those who hold themselves out as legitimate immigration attorneys and greedily exploit their clients’ trust,” said Edward Owens, acting special agent in charge for HSI Los Angeles. “In this instance, as is often the case, most of the victims didn’t realize their trust was misplaced until it was too late.”
To date, investigators have located and interviewed approximately a dozen individuals who sought immigration services from the defendants, but authorities believe there may be more than 100 still unidentified, unwitting victims. Investigators are asking anyone who may have information related to the case to call HSI’s 24-hour tip line or contact the investigators using HSI’s online tip form.
HSI has received significant assistance with the case from officers assigned to U.S. Citizenship and Immigration Services (USCIS) Fraud Detection and National Security Directorate (FDNS). FDNS’ mission is to detect and deter immigration benefit fraud, which enhances the overall integrity and security of the nation’s legal immigration system. The Los Angeles Sheriff’s Department’s High-Tech Task Force Identity Theft Detail also provided substantial support for the investigation.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If they are convicted of the charges in the indictment, each defendant would face a statutory maximum sentence of 189 years in federal prison and a mandatory minimum sentence of two years in federal prison.
This case is being prosecuted by Special Assistant United States Attorney Anwer Khan.
Bank Loan Officer Who Demanded Kickbacks as Part of Multi-Million Dollar Mortgage Fraud Scheme Sentenced to Federal PrisonRead the Press Release
LOS ANGELES – A former loan officer at Broadway Federal Bank who took more than $350,000 in kickbacks in exchange for considering mortgage applications submitted by churches in relation to a fraud scheme that resulted in losses of at least $4.2 million was sentenced today to 18 months in federal prison.
Paul Ryan, 49, of Torrance, was sentenced this morning by United States District Judge S. James Otero. In addition to the prison term, Judge Otero ordered Ryan to pay $353,925 in restitution to Broadway Federal Bank.
Ryan pleaded guilty in 2014 to one count of receiving bribes and rewards as a bank employee. During the time Ryan worked at the bank, from early 2007 until March 2010, the bank paid rebates to brokers who brought loans applications to the bank. Ryan “demanded from the brokers that all or part of that rebate amount be paid to him...intending to be rewarded and influenced in his processing and approval of these church loans,” according to the sentencing memorandum filed with the court.
Ryan worked with brokers and provided a template for presenting financial information for the churches that ensured the loan applications would be approved. Based on the false information concerning the financial status of the churches, Broadway Federal Bank issued loans to the churches.
“This bank insider accepted hundreds of thousands of dollars in a scheme that led his employer to suffer millions of dollars in losses,” said United States Attorney Eileen M. Decker. “After investigators began looking into the scheme, Ryan encouraged another bank employee to lie about the fraudulent loan applications, which further complicated but did not deter this investigation.”
One of the brokers who paid kickbacks – Chester Peggese, 59, of Los Angeles – was sentenced in February to one year and one day in federal prison and was ordered to pay $4.2 million in restitution to Broadway Federal Bank.
According to court documents, Peggese acted as a “consultant” who targeted Los Angeles-area churches with promises of new mortgages to purchase property or refinanced mortgages from Broadway Federal Bank. Between 2007 and 2009, Peggese met with representatives of churches and obtained financial information required for the loan applications. Others involved in the scheme altered the financial information to make it appear the churches were more financially sound than they actually were, and Peggese caused these false loan applications to be submitted to Broadway Federal Bank.
“Banker Paul Ryan abused his position of trust and caused losses at TARP recipient Broadway Federal Bank by knowingly allowing borrowers to use inflated financial information in loan applications,” said Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP). “In this mortgage scheme aimed at predominately African-American churches, he demanded more than $350,000 in bribes from brokers. When investigators closed in Ryan tried to cover up his crimes by telling a conspirator to lie on his behalf. Broadway Federal, which received and has not yet paid back $15 million in TARP funds, suffered more than $5 million in losses as a result of this scheme. SIGTARP stands united with our law enforcement partners to bring justice to bank officials and their conspirators who commit crime.”
The investigation into Ryan and Peggese was conducted by the Federal Bureau of Investigation, IRS Criminal Investigation, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Federal Deposit Insurance Corporation’s Office of Inspector General.
The cases were prosecuted by Assistant United States Attorney Jill Feeney of the Major Frauds Section.
Southern California Man Convicted of Tax Evasion and Lying to IRS After Fraudulently Applying for a Passport While Attempting to FleeRead the Press Release
SANTA ANA, California – A former resident of Orange County who now lives in northern San Diego County has been found guilty of tax evasion and lying to the IRS after applying for a passport in a false name as he attempted to flee from the prosecution.
Louis Joseph Vadino, 75, currently of Ramona and formerly of Lake Forest, was convicted yesterday by a federal jury after a five-day trial. He had previously pleaded guilty to failing to appear for court, conspiracy, two counts of passport fraud, and two counts of aggravated identity theft.
From 2002 to 2006, the IRS was actively attempting to audit and assess Vadino’s taxes owed. Vadino had purchased five residential properties in Lake Forest between 1999 and 2002 under the name of a shell company. Vadino, his three adult daughters, and his mother resided in these homes. In the fall of 2006, Vadino directed his daughter to obtain refinance loans on three of the Lake Forest properties and sold a fourth Lake Forest property, resulting in $2.1 million in loan and sale proceeds being wire transferred to a bank account in Greece controlled by Vadino.
From 2006 to 2011, defendant took steps to evade his 1999 taxes, including concealing and attempting to conceal the nature and extent of his assets and the location thereof, lying to Special Agents of the IRS’s Criminal Investigation Division, placing funds and property in the names of others, and using offshore accounts to place funds and property beyond the reach of the IRS.
When scheduled to go to trial in the case, Vadino cut off his ankle bracelet and absconded. In October 2014, he applied for a U.S. passport using another person’s identity. Vadino was captured in December 2014 and has been in custody since then.
“This defendant went to great lengths to hide income from the IRS and to attempt to escape justice,” said United States Attorney Eileen M. Decker. “This case demonstrates the dedication of the IRS and the Department of Justice to ensuring that tax evaders face serious consequences for their actions.”
After the jury returned its verdicts, United States District Judge Andrew Guilford set Vadino’s sentencing for February 6, 2017, at which time Vadino will face a statutory maximum sentence of 44 years in prison and a mandatory minimum sentence of two years in prison.
“As the jury’s verdict shows, this was a well-hidden, but ultimately transparent scheme to defraud the United States government,” stated Acting Special Agent in Charge Anthony J. Orlando for IRS Criminal Investigation. “Mr. Vadino hid assets from the IRS by placing funds and property in the names of family members and shell corporations, and funneling loan proceeds from those properties to an offshore bank account. Using intricate schemes and offshore bank accounts to commit tax evasion is a dangerous shell game played by swindlers like Mr. Vadino. Unfortunately for them, they don’t realize the odds are heavily stacked against them.”
Steven Ness, 44, of Long Beach, was also charged in the case with counts related to assisting Vadino in his attempt to obtain the passport with Ness’s father’s identity. The case against Ness is pending.
The investigation into Vadino and Ness was conducted by IRS Criminal Investigation, and the case is being prosecuted by Assistant United States Attorneys Greg Staples and Daniel Ahn of the Santa Ana Branch.
Southern California Man Convicted of Tax Evasion and Lying to IRS After Fraudulently Applying for a Passport While Attempting to FleeRead the Press Release
SANTA ANA, California – A former resident of Orange County who now lives in northern San Diego County has been found guilty of tax evasion and lying to the IRS after applying for a passport in a false name as he attempted to flee from the prosecution.
Louis Joseph Vadino, 75, currently of Ramona and formerly of Lake Forest, was convicted yesterday by a federal jury after a five-day trial. He had previously pleaded guilty to failing to appear for court, conspiracy, two counts of passport fraud, and two counts of aggravated identity theft.
From 2002 to 2006, the IRS was actively attempting to audit and assess Vadino’s taxes owed. Vadino had purchased five residential properties in Lake Forest between 1999 and 2002 under the name of a shell company. Vadino, his three adult daughters, and his mother resided in these homes. In the fall of 2006, Vadino directed his daughter to obtain refinance loans on three of the Lake Forest properties and sold a fourth Lake Forest property, resulting in $2.1 million in loan and sale proceeds being wire transferred to a bank account in Greece controlled by Vadino.
From 2006 to 2011, defendant took steps to evade his 1999 taxes, including concealing and attempting to conceal the nature and extent of his assets and the location thereof, lying to Special Agents of the IRS’s Criminal Investigation Division, placing funds and property in the names of others, and using offshore accounts to place funds and property beyond the reach of the IRS.
When scheduled to go to trial in the case, Vadino cut off his ankle bracelet and absconded. In October 2014, he applied for a U.S. passport using another person’s identity. Vadino was captured in December 2014 and has been in custody since then.
“This defendant went to great lengths to hide income from the IRS and to attempt to escape justice,” said United States Attorney Eileen M. Decker. “This case demonstrates the dedication of the IRS and the Department of Justice to ensuring that tax evaders face serious consequences for their actions.”
After the jury returned its verdicts, United States District Judge Andrew Guilford set Vadino’s sentencing for February 6, 2017, at which time Vadino will face a statutory maximum sentence of 44 years in prison and a mandatory minimum sentence of two years in prison.
“As the jury’s verdict shows, this was a well-hidden, but ultimately transparent scheme to defraud the United States government,” stated Acting Special Agent in Charge Anthony J. Orlando for IRS Criminal Investigation. “Mr. Vadino hid assets from the IRS by placing funds and property in the names of family members and shell corporations, and funneling loan proceeds from those properties to an offshore bank account. Using intricate schemes and offshore bank accounts to commit tax evasion is a dangerous shell game played by swindlers like Mr. Vadino. Unfortunately for them, they don’t realize the odds are heavily stacked against them.”
Steven Ness, 44, of Long Beach, was also charged in the case with counts related to assisting Vadino in his attempt to obtain the passport with Ness’s father’s identity. The case against Ness is pending.
The investigation into Vadino and Ness was conducted by IRS Criminal Investigation, and the case is being prosecuted by Assistant United States Attorneys Greg Staples and Daniel Ahn of the Santa Ana Branch.
Former State Senator Ronald Calderon Sentenced to 42 Months in Federal Prison for Receiving over 150,000 Dollars in BribesRead the Press Release
LOS ANGELES – Former California State Senator Ronald S. Calderon was sentenced today to 3½ years in federal prison after pleading guilty to a federal corruption charge and admitting that he accepted tens of thousands of dollars in bribes in exchange for performing official acts as a legislator.
Ron Calderon, 59, of Montebello, received the 42-month sentenced this afternoon from United States District Judge Christina A. Snyder, who also ordered the defendant to serve 150 hours of community service.
Ron Calderon pleaded guilty in June to one count of mail fraud through the deprivation of honest services. In a plea agreement filed in this case, Ron Calderon admitted accepting bribe payments from the owner of a Long Beach hospital who wanted a law to remain in effect so he could continue to reap tens of millions of dollars in illicit profits from a health care fraud scheme. Ron Calderon also admitted taking bribes from undercover FBI agents who were posing as independent filmmakers who wanted changes to California’s Film Tax Credit program.
Ron Calderon’s brother, Thomas M. Calderon, 62, also of Montebello, a former member of the California State Assembly who became a political consultant, was sentenced last month to 10 months in custody for his conviction on a money laundering charge for allowing bribe money earmarked for his brother to be funneled through his company.
“Former Senator Calderon repeatedly violated the trust of the voters by taking nearly $160,000 in bribes in exchange for abusing his position as an elected official,” said United States Attorney Eileen M. Decker. “The Calderons are now being punished for their roles in a bribery scheme that involved multiple forms of payments, as well as the attempted concealment of the scheme through money laundering and lies made to residents of his district. Politicians who violate their oaths by selling their offices will be discovered and will be prosecuted.”
“Mr. Calderon used the power of the state Senate to dole out favors in exchange for bribe payments and a flashy lifestyle, rather than governing honestly for the people of California,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “I’m proud of the agents and prosecutors who made this case a success using innovative techniques to uncover a variety of schemes and abject corruption by a state official.”
“At the heart of this case are two brothers – one a politician, the other the facilitator – who thought they were above the law and could exchange political favors for bribery payments,” stated IRS Criminal Investigation’s Acting Special Agent in Charge, Anthony J. Orlando. “Regardless of circumstances, no one is granted an exemption to commit crimes with impunity. As today’s sentence shows, the government will hold accountable those who use fraud and deceit to line their pockets with money, especially when those individuals are serving the California public.”
Ron Calderon admitted participating in a bribery scheme involving two areas of legislation and the hiring of a staffer who was also an undercover FBI agent.
In the first part of the bribery scheme, Ron Calderon took bribes from Michael Drobot, the former owner of Pacific Hospital in Long Beach, which was a major provider of spinal surgeries that were often paid by workers’ compensation programs. The spinal surgeries are at the center of a massive healthcare fraud scheme that Drobot orchestrated and to which he previously pleaded guilty. Ron Calderon was not charged in the healthcare fraud scheme that led to well over $500 million in fraudulent billings. Drobot, who was described in court papers filed by prosecutors as “a greedy fraudster robbing taxpayer-funded federal programs,” was a client of Tom Calderon’s political consulting firm.
California law known as the “spinal pass-through” legislation allowed a hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries. As Drobot admitted in court, his hospital exploited this law, typically by using hardware that had been purchased at highly-inflated prices from companies that Drobot controlled and passing this cost along to insurance providers.
Drobot bribed Ron Calderon so that he would use his public office to preserve this law that helped Drobot maintain a long-running and lucrative healthcare fraud scheme, which included Ron Calderon asking a fellow senator to introduce legislation favorable to Drobot and attempting to recruit other senators to support Drobot. The payments from Drobot came in the form of summer employment for Ron Calderon’s son, who was hired as a summer file clerk at Pacific Hospital and received a total of $30,000 over the course of three years, despite the son doing little actual work at the hospital.
In another part of the bribery scheme, Ron Calderon accepted bribes from people he thought were associated with an independent film studio, but who were in fact undercover FBI agents. In exchange for the payments – including $30,000 in payments to Ron Calderon’s daughter for services she never provided – Ron Calderon agreed to support an expansion of a state law that gave tax credits to studios that produced independent films in California. The Film Tax Credit applied to productions of at least $1 million, but, in exchange for bribes, Ron Calderon agreed to support new legislation to reduce this threshold to $750,000, according to the plea agreement.
Ron Calderon took several official actions with respect to reducing the threshold for the Film Tax Credit. Ron Calderon signed a letter on his official Senate letterhead indicating that he would propose legislation lowering the threshold, introduced a “spot bill” he told an undercover agent would be used to propose such legislation, and promised that he would vote in favor of that proposed legislation.
In addition to the payments to his daughter for work she did not do, Ron Calderon had one of the undercover agents make a $5,000 payment toward his son’s college tuition and a $25,000 payment to Californians for Diversity, a non-profit entity that Ron Calderon and his brother used to improperly pay themselves.
In a sentencing memorandum filed with the court, prosecutors write that Ron Calderon “sold his vote not just to help pay for the expenses of living beyond his means, but for the more banal and predictable aims of corruption -– fancy luxuries, fancy parties, and fancy people.”
The memorandum further argues that a significant term of imprisonment was necessary to send a message to other political officials and the electorate because, without such a sentence, “the trust already eroded by individual detections of corrupt politicians will spread like cancer and threaten the fundamentals of a trusted democracy. It is not hyperbole to insist that nothing less is at stake in defendant’s sentencing.”
As part of the agreement with the undercover agents, Ron Calderon performed official acts that led to the hiring of another undercover agent as a staffer in his district office at an annual salary of $45,105.
Ron Calderon “knowingly concealed his bribery scheme from the public by submitting a false Statement of Economic Interest, California Form 700, to the California Fair Political Practices Commission, which failed to disclose the money and other financial benefits defendant he had received from Drobot” and the undercover agents, Ron Calderon admitted in his plea agreement.
Tom Calderon pleaded guilty to money laundering and admitted that he agreed to conceal bribe payments for his brother from the two undercover FBI agents by having the money go through his company, the Calderon Group. Tom Calderon allowed payments to be made to the Calderon Group “to conceal and disguise the fact that the money represented the proceeds of bribery,” according to his plea agreement.
The investigation into the Calderons was conducted by the Federal Bureau of Investigation and IRS Criminal Investigation. The case was prosecuted by Assistant United States Attorney Mack E. Jenkins of the Public Corruption and Civil Rights Section.
Brea Man Who Operated Physical Therapy Clinics Convicted in Scheme that Stole Millions from Medicare ProgramRead the Press Release
SANTA ANA, California – A Brea man who operated rehabilitation clinics in Walnut, Torrance and Los Angeles has been convicted by a federal jury of defrauding Medicare out of millions of dollars.
Simon Hong (who is also known as Seong Wook Hong), 54, was convicted Wednesday of eight counts of healthcare fraud, nine counts of illegal kickbacks related to healthcare referrals and two counts of aggravated identity theft.
The scheme revolved around clinics operated by Hong’s companies called Hong’s Medical Management, Inc., CMH Practice Solution, and HK Practice and Solution, Inc. According to the evidence presented at trial, Hong conspired with others to submit false claims to Medicare. As part of the scheme, Hong recruited Medicare beneficiaries and provided uncovered services like massage and acupuncture for them. Even though the beneficiaries did not receive actual physical therapy, the co-conspirators billed Medicare for physical therapy, and then funneled 56 percent of the reimbursement funds back to Hong.
Through this scheme Hong and his co-conspirators billed Medicare from the spring of 2009 until November 2013 and received approximately $2,929,775 in reimbursements, of which Hong received approximately $1,640,674.
After the jury returned its verdicts, United States District Judge David O. Carter set Hong’s sentencing hearing for January 9, 2017, at which time Hong will face a statutory maximum sentence of 129 years in prison and a mandatory minimum sentence of two years in prison.
“Schemes that steal money from the Medicare program harm taxpayers and raise healthcare costs,” said United States Attorney Eileen M. Decker. “This case is a prime example of the Department of Justice’s focus on protecting the assets of the Medicare program and the health of Americans who participate in it.”
Hong is one of 10 defendants who were charged in 2015 and early 2016 for healthcare fraud related to physical therapy. Eight others have pled guilty, and one, David Y. Kim, 54, of Los Angeles, remains a fugitive. Those previously convicted in the investigation are:
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Joseff Sales, 39, of Buena park, pleaded guilty last January to one count of healthcare fraud and one count of illegal kickbacks;
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Danniel Goyena, 39, of Buena Park, pleaded guilty last December to two counts of healthcare fraud;
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Marlon Sonco, 39, of Sylmar, pleaded guilty in June 2015 to conspiracy;
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Eddieson Legaspi, 40, of Lomita, an employee of Rehab Dynamics, pleaded guilty in August 2015 to conspiracy to commit healthcare fraud;
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Ohun Kwon, 50, of Fullerton, the owner/operator of E.K. Medical Management, which referred patients to Rehab Dynamics, pleaded guilty in August 2015 to conspiracy to commit healthcare fraud and was sentenced last week to 27 months in federal prison;
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Leovigildo Sayat, 39, of Torrance, an employee of RSG Rehab, pleaded guilty in October 2015 to conspiracy to commit health care fraud;
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Byong Chun “David” Min, 68, of Irvine, co-owner/operator of Glory Rehab Team, which operated as Dream Hospital in Orange County, pleaded guilty in May to healthcare fraud and illegal kickbacks; and
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Jason S. Min, 35, of Irvine, David Min’s son, who was the other owner/operator of Glory Rehab, pleaded guilty last month to Obstruction of Justice.
“Mr. Hong exploited the Medicare system to generate millions in fraudulent proceeds at the expense of honest taxpayers,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case should serve as a warning to others involved in health care fraud as Mr. Hong faces significant prison time after being found guilty by a jury at trial.”
“Medicare provides legitimate health care services for millions of older Americans,” said Christian J. Schrank, HHS OIG Special Agent in Charge of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG). “Fraudulently billing the program for therapies never provided could cost Mr. Hong years in prison. As this conviction shows, not just providers, but business owners who are partners in these schemes, will pay a price. Together with our law enforcement partners, we will pursue all those involved in stealing from the Medicare trust funds.”
The investigation in these cases was conducted by the FBI and HHS-OIG. This case is being prosecuted by Assistant United States Attorneys Byron J. McLain and Sarah Heidel of the Major Frauds Section.
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Alleged Architect of $30 Million Mortgage Relief Fraud Scheme and Four Others Indicted in Conspiracy to Defraud Banks and HomeownersRead the Press Release
The alleged architect of a $30 million mortgage relief fraud scheme and four other former employees of a purported mortgage relief company were charged in an indictment unsealed today for their alleged participation in a conspiracy to defraud banks and homeowners.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Division, Acting Special Agent in Charge Charge Anthony J. Orlando of the Internal Revenue Service-Criminal Investigation (IRS-CI) Los Angeles Field Office, Special Agent in Charge Leslie P. DeMarco of the Federal Housing Finance Agency-Office of Inspector General’s (FHFA-OIG) Western Region and Sheriff Jim McDonnell of the Los Angeles County Sheriff’s Department made the announcement.
Yun Soon Matsuba, aka Dorothy Matsuba, 65; Thomas Matsuba, 64; Jane Matsuba Garcia, 40; and Jamie Matsuba, 31, all of Chatsworth, California, and Young Park, 53, of Koreatown, California, were each charged with one count of conspiracy to commit wire fraud, make false statements and commit identity theft. In addition, the 18-count indictment charges Dorothy Matsuba with five counts of wire fraud, five counts of making false statements and six counts of aggravated identity theft; Jane Matsuba Garcia with one count of wire fraud, two counts of making false statements and one count of aggravated identify theft; and Jamie Matsuba with one count of making a false statement.
Dorothy Matsuba, Thomas Matsuba, Jane Matsuba Garcia and Jamie Matsuba were all arrested this morning; Park remains a fugitive. Thomas Matsuba is Dorothy Matsuba’s husband and Jane Matsuba Garcia and Jamie Matsuba are Dorothy Matsuba’s daughters. Young Park is Dorothy Matsuba’s brother.
The indictment alleges that from 2005 to 2014, the defendants operated an interlocking web of companies, primarily under the names of Ownership Management Service LLC and Trust Holding Service LLC, which purported to help homeowners obtain relief from high mortgage debt through short sales, in which lenders agree to sell a mortgaged property for less than the amount owed on the mortgage. In a scheme to defraud both the banks and the homeowners the defendants allegedly convinced homeowners to deed their property to trusts set up and controlled by the Matsubas and also promised to pay their mortgages while negotiating with banks to short sell those properties. In the interim, the homeowners either remained in their properties or were relocated to another Matsuba-controlled property. Instead of performing short sales as promised, Dorothy Matsuba and the other defendants failed to make mortgage payments and submitted false and fraudulent short sale purchase offers to the banks in an effort to delay foreclosure and maximize the time period over which the Matsubas could collect rent from the homeowners and other third parties placed in the properties by the Matsubas, the indictment alleges. The Matsubas also routinely forged signatures, used false and stolen identities and filed fraudulent bankruptcy petitions—all in a scheme to delay foreclosure and maximize their profits at the expense of the homeowners and banks, the indictment alleges.
The scheme allegedly netted the defendants more than $30 million in rent during the conspiracy period.
An indictment is merely an allegation and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The FBI’s Los Angeles Division, IRS-CI’s Los Angeles Field Office, FHFA-OIG’s Western Region and the Los Angeles County Sheriff’s Department’s Real Estate Fraud Unit investigated the case. Trial Attorney Niall O’Donnell and Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section are prosecuting the case. Senior Trial Attorney Nicholas Acker previously worked on the investigation.
Alleged Architect of $30 Million Mortgage Relief Fraud Scheme and Four Other Los Angeles Residents Indicted in Conspiracy to Defraud Banks and HomeownersRead the Press Release
WASHINGTON – The alleged architect of a $30 million mortgage relief fraud scheme and four other former employees of a purported mortgage relief company were charged in an indictment unsealed today for their alleged participation in a conspiracy to defraud banks and homeowners.
Yun Soon Matsuba, aka Dorothy Matsuba, 65; Thomas Matsuba, 64; Jane Matsuba Garcia, 40; and Jamie Matsuba, 31, all of Chatsworth, and Young Park, 53, of Koreatown, were each charged with one count of conspiracy to commit wire fraud, make false statements and commit identity theft. In addition, the 18-count indictment charges Dorothy Matsuba with five counts of wire fraud, five counts of making false statements and six counts of aggravated identity theft; Jane Matsuba Garcia with one count of wire fraud, two counts of making false statements and one count of aggravated identify theft; and Jamie Matsuba with one count of making a false statement.
Dorothy Matsuba, Thomas Matsuba, Jane Matsuba Garcia and Jamie Matsuba were all arrested this morning and are making court appearances this afternoon; Park remains a fugitive. Thomas Matsuba is Dorothy Matsuba’s husband and Jane Matsuba Garcia and Jamie Matsuba are Dorothy Matsuba’s daughters. Young Park is Dorothy Matsuba’s brother.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Division, Acting Special Agent in Charge Anthony J. Orlando of IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office, Special Agent in Charge Leslie P. DeMarco of the Federal Housing Finance Agency-Office of Inspector General’s (FHFA-OIG) Western Region and Sheriff Jim McDonnell of the Los Angeles County Sheriff’s Department made the announcement.
“These defendants are charged with preying upon distressed homeowners with false promises of keeping their homes,” said United States Attorney Eileen M. Decker. “Instead, the defendants callously pocketed tens of millions of dollars for themselves while hastening foreclosure of the victim homeowners’ properties.”
“Today’s arrests illustrate the FBI’s commitment to combat fraud targeting homeowners, as in the case of the Matsuba family, whose members are charged in a scheme that targeted emotionally distraught victims, many of whom were losing their jobs and facing the loss of their homes,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “In addition to giving false hope to their victims, the defendants enriched themselves while victims lost their homes and had their credit destroyed.”
The indictment alleges that from 2005 to 2014, the defendants operated an interlocking web of companies, primarily under the names of Ownership Management Service LLC and Trust Holding Service LLC, which purported to help homeowners obtain relief from high mortgage debt through short sales, in which lenders agree to sell a mortgaged property for less than the amount owed on the mortgage. In a scheme to defraud both the banks and the homeowners the defendants allegedly convinced homeowners to deed their property to trusts set up and controlled by the Matsubas and also promised to pay their mortgages while negotiating with banks to short sell those properties. In the interim, the homeowners either remained in their properties or were relocated to another Matsuba-controlled property. Instead of performing short sales as promised, Dorothy Matsuba and the other defendants failed to make mortgage payments and submitted false and fraudulent short sale purchase offers to the banks in an effort to delay foreclosure and maximize the time period over which the Matsubas could collect rent from the homeowners and other third parties placed in the properties by the Matsubas, the indictment alleges. The Matsubas also routinely forged signatures, used false and stolen identities and filed fraudulent bankruptcy petitions—all in a scheme to delay foreclosure and maximize their profits at the expense of the homeowners and banks, the indictment alleges.
The scheme allegedly netted the defendants more than $30 million in rent during the conspiracy period.
An indictment is merely an allegation and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The FBI’s Los Angeles Division, IRS-CI’s Los Angeles Field Office, FHFA-OIG’s Western Region and the Los Angeles County Sheriff’s Department’s Real Estate Fraud Unit investigated the case. Trial Attorney Niall O’Donnell and Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section are prosecuting the case. Senior Trial Attorney Nicholas Acker previously worked on the investigation.
Second Orange County Man Who Participated in Conspiracy to Provide Support to ISIL Sentenced to 30 Years in Federal PrisonRead the Press Release
SANTA ANA, California – An Orange County man was sentenced this afternoon to 30 years in federal prison for conspiring with another man to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization.
Muhanad Elfatih M.A. Badawi, 25, of Anaheim, was sentenced by United States District Judge David O. Carter, who called the defendant “extraordinarily dangerous.”
At the conclusion of a trial in June, Badawi was found guilty of conspiring with another man to provide material support to a foreign terrorist organization, as well as aiding and abetting his codefendant’s attempt to provide support to ISIL, and federal financial aid fraud designed to generate funds for the scheme.
Three weeks ago, Judge Carter sentenced Badawi’s codefendant – Nader Elhuzayel, 25, also of Anaheim – to 30 years in prison.
“Defendant Badawi was a radicalizer, recruiter and facilitator, and like codefendant Elhuzauyel, defendant Badawi aspired to die a martyr fighting jihad for ISIL,” prosecutors wrote in a sentencing memorandum filed with the court.
“The lengthy sentence imposed today results from the defendant’s acceptance of ISIL’s murderous ideology and his participation in a scheme designed to betray the United States,” said United States Attorney Eileen M. Decker. “Badawi and Elhuzayel wanted to fight for ISIL, desired to become so-called martyrs, and supported ISIL’s terrorist activities. Prosecutions such as this are critically important to our national security.”
The evidence at trial showed Badawi and Elhuzayel used social media to discuss ISIL and terrorist attacks, repeatedly expressed support for ISIL, and made arrangements for Elhuzayel to leave the United States to join the terrorist organization. In recorded conversations, Elhuzayel and Badawi discussed how “it would be a blessing to fight for the cause of Allah, and to die in the battlefield,” and they referred to ISIL as “we.” Badawi maintained a Facebook account, on which he made posts that supported ISIL and violence aimed at non-Muslims. Badawi used social media to communicate with ISIL supporters to distribute pro-ISIL propaganda.
According to the trial exhibits, on October 21, 2014, defendant Badawi made a video of defendant Elhuzayel swearing allegiance to the leader of ISIS and pledging to travel to join ISIS to be a fighter for the organization.
Badawi and Elhuzayel were arrested on May 21, 2015, as Elhuzayel attempted to board a plane at Los Angeles International Airport to travel to Turkey to join ISIL. Badawi had purchased Elhuzayel’s one-way ticket on Turkish Airlines for Elhuzayel to travel to Israel, with a layover in Istanbul. In an interview with the FBI, Elhuzayel admitted that he intended to deplane in Turkey and seek contacts to facilitate joining ISIL.
“The defendant, like his co-conspirator, pledged his allegiance to a terrorist organization instead of the United States, as he attempted to recruit and radicalize others to support the group, which calls for the murder of Americans,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Office. “The investigative efforts by Joint Terrorism Task Force partners are commendable and the significant sentence the defendant received illustrates the gravity of this crime and the threat the defendants posed to the United States.”
Badawi and Elhuzayel have been held in federal custody without bond since their arrests.
“With this sentence, Muhanad Badawi is being held accountable for conspiring to provide material support to ISIL and other federal offenses,” said Acting Assistant Attorney General for National Security Mary B. McCord. “The National Security Division’s highest priority is countering terrorist threats, and we will continue to work to stem the flow of foreign fighters abroad and bring to justice those who conspire to provide material support to designated foreign terrorist organizations.”
The investigation in this case was conducted by the FBI’s Joint Terrorism Task Force in Orange County, which includes the Anaheim Police Department, the California Highway Patrol, the Orange County Sheriff’s Department, the Orange County Intelligence Assessment Center, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Secret Service, IRS Criminal Investigation, the City of Orange Police Department, the Irvine Police Department, the Naval Criminal Investigative Service, the Orange County Regional Computer Forensics Laboratory, the United States Attorney’s Office, and the Federal Bureau of Investigation.
The Department of Education’s Office of Inspector General provided significant assistance in the investigation and at trial.
This case was prosecuted by Assistant United States Attorneys Judith A. Heinz and Deirdre Z. Eliot of the Terrorism and Export Crimes Section, and Julius J. Nam of the General Crimes Section. Trial Attorney Michael Dittoe of the Justice Department’s Counterterrorism Section provided substantial assistance.
Second California Man Who Participated in Conspiracy to Provide Support to ISIL Sentenced to 30 Years in Federal PrisonRead the Press Release
Muhanad Elfatih M.A. Badawi, 25, of Anaheim, California, was sentenced to 30 years in federal prison for conspiring with another man to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization.
The announcement was made by Acting Assistant Attorney General for National Security Mary B. McCord, U.S. Attorney Eileen M. Decker of the Central District of California and Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Office. The sentence was issued by U.S. District Judge David O. Carter.
At the conclusion of a trial in June, Badawi was found guilty of conspiring with another man to provide material support to a foreign terrorist organization, as well as aiding and abetting his codefendant’s attempt to provide support to ISIL, and for federal financial aid fraud designed to generate funds for the scheme.
Three weeks ago, Judge Carter sentenced Badawi’s codefendant – Nader Elhuzayel, 25, also of Anaheim, California – to 30 years in prison.
“Defendant Badawi was a radicalizer, recruiter and facilitator, and like codefendant Elhuzauyel, defendant Badawi aspired to die a martyr fighting jihad for ISIL,” prosecutors wrote in a sentencing memorandum filed with the court.
“With this sentence, Muhanad Badawi is being held accountable for conspiring to provide material support to ISIL and other federal offenses,” said Acting Assistant Attorney General McCord. “The National Security Division’s highest priority is countering terrorist threats, and we will continue to work to stem the flow of foreign fighters abroad and bring to justice those who conspire to provide material support to designated foreign terrorist organizations.”
“The lengthy sentence imposed today results from the defendant’s acceptance of ISIL’s murderous ideology and his participation in a scheme designed to betray the United States,” said U.S. Attorney Decker. “Badawi and Elhuzayel wanted to fight for ISIL, desired to become so-called martyrs, and supported ISIL’s terrorist activities. Prosecutions such as this are critically important to our national security.”
“The defendant, like his co-conspirator, pledged his allegiance to a terrorist organization instead of the United States, as he attempted to recruit and radicalize others to support the group, which calls for the murder of Americans,” said Assistant Director in Charge Fike. “The investigative efforts by Joint Terrorism Task Force partners are commendable and the significant sentence the defendant received illustrates the gravity of this crime and the threat the defendants posed to the United States.”
The evidence at trial showed Elhuzayel and Badawi used social media to discuss ISIL and terrorist attacks, repeatedly expressed support for ISIL and made arrangements for Elhuzayel to leave the U.S. to join the terrorist organization. In recorded conversations, Elhuzayel and Badawi discussed how “it would be a blessing to fight for the cause of Allah, and to die in the battlefield,” and they referred to ISIL as “we.” Badawi maintained a Facebook account on which he made posts that supported ISIL and violence aimed at non-Muslims. Badawi used social media to communicate with ISIL supporters to distribute pro-ISIL propaganda.
According to the trial exhibits, on Oct. 21, 2014, Badawi made a video of Elhuzayel swearing allegiance to the leader of ISIS and pledging to travel to join ISIS to be a fighter for the organization.
Badawi and Elhuzayel were arrested on May 21, 2015, as Elhuzayel attempted to board a plane at Los Angeles International Airport in California to travel to Turkey to join ISIL. Badawi purchased Elhuzayel’s one-way ticket on Turkish Airlines for Elhuzayel to travel to Israel, with a layover in Istanbul, Turkey. In an interview with the FBI, Elhuzayel admitted that he intended to deplane in Turkey and seek contacts to facilitate joining ISIL.
Badawi and Elhuzayel have been held in federal custody without bond since their arrests.
The investigation in this case was conducted by the FBI’s Joint Terrorism Task Force in Orange County, which includes the Anaheim Police Department, the California Highway Patrol, the Orange County Sheriff’s Department, the Orange County Intelligence Assessment Center, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Secret Service, IRS Criminal Investigation, the City of Orange Police Department, the Irvine Police Department, the Naval Criminal Investigative Service, the Orange County Regional Computer Forensics Laboratory, the U.S. Attorney’s Office and the FBI. The Department of Education’s Office of Inspector General provided significant assistance in the investigation and at trial.
This case was prosecuted by Assistant U.S. Attorneys Judith A. Heinz and Deirdre Z. Eliot of the Terrorism and Export Crimes Section, and Julius J. Nam of the General Crimes Section. Trial Attorney Michael Dittoe of the National Security Division’s Counterterrorism Section provided substantial assistance.
United States Attorney’s Office Hosts Cyber Security SummitRead the Press Release
LOS ANGELES – The United States Attorney’s Office is hosting a Cyber Security Summit at the USC Radisson Hotel today in Los Angeles. The event, which is part of Cyber Security Awareness Month, is being held in partnership with the Federal Bureau of Investigation, the University of Southern California, the Lares Institute, and the National Cyber-Forensics & Training Alliance.
Top officials from utilities/critical infrastructure, local government, banking, the motion picture industry, the software industry, universities and law enforcement are attending the Summit. The Summit is offering information on new and developing cyber threats, preventing cyber attacks, and recognizing and remediating attacks when they occur. Attendees are participating in “table top” exercises in which participants analyze a cyber attack, reflect on preparedness, and discuss the benefits of sharing data with law enforcement.
“Reports of hacking and cyber intrusions have become an everyday occurrence. Many in the cyber security arena believe there are two kinds of companies – those that have been the victims of computer intrusions, and those who don’t know they have been victims,” said United States Attorney Eileen M. Decker. “The Cyber Security Summit brings together the public, private, and non-profit sectors, to include officials from every level of government, academic and consultant experts, corporate general counsel, and chief information security officers. Our goal is to share information, foster relationships, and protect American business interests from both domestic and foreign threats.”
The Summit features speakers that include United States Attorney Eileen M. Decker and USC Chief Counsel Carol Mauch Amir. The FBI is providing a current threat briefing to the attendees to inform them of the most recent types of cyber attacks and defenses to those types of attacks. The perspective of the business community is represented by executives from Ernst & Young, Target Corporation, IBM and Sony Pictures Entertainment.
“Cyber security is a shared responsibility among the public and private sectors, as well as an individual responsibility for all of us who use Internet-connected devices," said Deirdre Fike, the Assistant Director in Charge of the FBI's Field Office. "As organizations, large and small, contend with cyber intrusions, ransomware, e-mail compromise schemes and myriad cyber challenges to their security, this summit will afford both government and private business stakeholders an opportunity to meet in person to discuss our collective cyber security needs.”
“This event is a valuable opportunity for information security professionals in the public and private sectors to openly discuss methods of planning for and responding to cyber incidents in a non-crisis setting,” said Matthew LaVigna, Director of Operations and CEO for the National Cyber-Forensics & Training Alliance. “Neither private industry nor the government should be expected to address this threat alone. Events like this will help to establish trusted relationships and lead to future collaborative efforts.”
Moreno Valley Man Sentenced to Nearly 20 Years in Prison for Advertising, Distributing, and Possessing Pornographic Images of Toddlers and Infants in Online ChatroomRead the Press Release
LOS ANGELES – A Moreno Valley man has been sentenced to nearly two decades in federal prison for advertising child pornography in a members-only online chatroom for people with a sexual interest in infants and toddlers.
Angelo Harper Jr., 21, was sentenced on Monday to 235 months in prison and lifetime supervised release by United States District Judge R. Gary Klausner. Harper was convicted of advertising child pornography after a trial in July. Harper also pleaded guilty in July to distributing child pornography and possession of child pornography.
The evidence presented at trial showed that Harper used the Kik Messenger social media platform to access a chatroom for those interested in nepiophilia, which is a sexual interest in infants and toddlers. Last year, an agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations entered the chatroom using an undercover Kik account, and accessed several postings about child pornography – made by an individual later identified as Harper – which included images depicting child pornography and a link to an explicit video. At one point, Harper wrote: “I have tons of pics and vids of little boys and girls. Pm me for chat and trade of kids under 6 [winking face emoji].”
“Pedophiles who use technology to share child pornography re-victimize each child and perpetuate the market for this criminal behavior,” said United States Attorney Eileen M. Decker. “This case highlights the fact that defendants like this one will not escape prosecution by hiding in the dark corners of the Internet.”
As a result of the investigation, HSI agents seized numerous digital devices from Harper that contained child pornography, and Harper admitted to using Kik to transmit child pornography. In total federal agents seized approximately 9,000 images of child pornography and over 500 videos.
“This lengthy sentence should serve as a sobering warning about the consequences facing those who use the internet to traffic in child pornography and sexually exploit their innocent, helpless victims,” said Edward Owens, acting special agent in charge for Homeland Security Investigations (HSI) in Los Angeles. “The perversion of the perpetrators involved in these egregious crimes is frankly appalling and must be punished to the fullest extent of the law.”
The investigation into Harper was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
This case was prosecuted by Assistant United States Attorneys George E. Pence and A. Carley Palmer of the General Crimes Section.
Member of Dockworkers Union Guilty in Scheme that Bilked Health Care Plan by Fraudulently Billing for Chiropractic ServicesRead the Press Release
LOS ANGELES – A member of the International Longshore and Warehouse Union (ILWU), Local 13, was convicted by a federal jury on federal fraud charges for causing two medical clinics to bill the union’s health care plan for chiropractic services that were not provided or were not medically necessary.
David Gomez, 52, of San Pedro, was convicted late Friday by a jury in Los Angeles of 20 counts of mail fraud. After the verdicts were returned, United States District Judge R. Gary Klausner ordered Gomez taken into custody.
The ILWU represents dockworkers at the ports of Los Angeles and Long Beach. Members of the union receive benefits, including health care benefits, through the ILWU-Pacific Maritime Association Welfare Plan.
According to the evidence presented at trial, Gomez and his co-defendant, Sergio Amador, opened a clinic in Long Beach in 2009 that operated under the name Port Medical and provided medical and chiropractic care. The next year, they opened a second clinic operating under the same name in San Pedro.
Gomez and Amador also created medical management companies that they used to receive funds generated by the medical clinics, which they then used to pay themselves and to pay incentives to ILWU members to use, and encourage other ILWU members, to use the Port Medical clinics. These incentives were often paid as “sponsorships” of basketball or softball teams, with the understanding that the ILWU member receiving the “sponsorship” would visit, and encourage other team members to visit, Port Medical.
According to the evidence presented at trial, Port Medical chart entries were falsified to indicate that ILWU members and their dependents, including children as young as 5 years old, had received repeated chiropractic services, including multiple sessions of massage therapy, that they had not. To accomplish this, ILWU members were asked to sign their names on multiple sign-in stickers that were used to create the fabricated chart entries, or their signatures on stickers affixed to the chart entries were simply forged.
Other evidence at trial related to instructions provided to Port Medical massage therapists on how to craft chart entries to maximize billing and make services appear to be medically necessary, a requirement for them to be covered by the ILWU-PMA Welfare Plan. Included were instructions to massage therapists never to write that a patient had indicated “no complaints,” and to make sure not to copy or write chart entries “exactly the same each time, change things up a little!!!”
“This defendant stole money intended to protect and promote the health of unionized dockworkers,” said United States Attorney Eileen M. Decker. “In taking these funds from the Welfare Plan for his personal profit, this defendant undermined the continuing efforts of the ILWU and PMA to provide comprehensive medical benefits to his fellow union members and their families.”
Over the life of the fraudulent scheme, the medical management companies controlled by Amador and Gomez received at least $3 million that derived from funds paid by the Welfare Plan to Port Medical.
“This case is particularly egregious since defendant Gomez was a longshoreman and a longtime member of the ILWU who was operating a healthcare clinic in close proximity to the port - all ingredients for the perfect recipe to defraud the ILWU-PMA health insurance plan,” said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The FBI and our partners will continue to vigorously address health care fraud, a major crime issue which affects patients and consumers, and society as a whole in terms of its economic impact.”
Gomez’s sentencing was set for January 9, 2017. At the time of sentencing, Gomez will face a statutory maximum sentence of 20 years in prison on each of the 20 counts of conviction.
“David Gomez conspired with others to victimize the union health plan and its participants by billing for services not rendered, services not medically necessary and services that did not address specific conditions of patients. In an age of rising medical care costs the Office of Inspector General will continue to work with our law enforcement partners to combat fraud involving union affiliated health and welfare plans,” said Special Agent in-Charge Abel Salinas of the Los Angeles Regional Office, U.S. Department of Labor, Office of Inspector General.
“This was a major scheme to defraud a Southern California dockworkers medical plan that provides crucial services to thousands of hardworking men and women,” said Crisanta Johnson, Regional Director for the Department of Labor's Employee Benefits and Security Administration. “It's unconscionable that the defendants would game such a sacred program to line their own pockets.”
Amador pled guilty earlier this year to 20 counts of mail fraud and is scheduled to be sentenced on December 1.
The case against Gomez and Amador was investigated by the U.S. Department of Labor – Office of Inspector General, Office of Investigations; the U.S. Department of Labor – Employee Benefits Security Administration; and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney George S. Cardona, Chief of the Major Frauds Section.