Central District of California
Press releases recorded for this federal judicial district.
Defense Contractor Employee Indicted by Grand Jury for Selling Satellite Secrets to Undercover Agent Posing as a Foreign SpyRead the Press Release
Update:
Today, a federal grand jury in Los Angeles returned a two-count indictment that charges Gregory Allen Justice with economic espionage and violating the Arms Export Control Act for his attempts to sell sensitive satellite information to a person he believed to be a foreign intelligence agent.
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.
Justice is scheduled to be arraigned on the indictment on July 27.
If he is convicted of both counts in the indictment, Justice would face a statutory maximum penalty of 35 years in federal prison.
Original News Release:
Defense Contractor Employee from Culver City Arrested for Selling Satellite Secrets to Undercover Agent Posing as a Foreign Spy
LOS ANGELES – A Culver City man was arrested yesterday on federal charges of economic espionage and violations of the Arms Export Control Act for his attempts to sell sensitive satellite information to a person he believed to be a foreign intelligence agent.
U.S. Attorney Eileen M. Decker of the Central District of California, Assistant Attorney General for National Security John P. Carlin, Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Field Office and Special Agent John Rayho of the U.S. Air Force Office of Special Investigations (AFOSI) Detachment Commander at Los Angeles Air Force Base made the announcement.
Gregory Allen Justice, 49, who worked for a cleared defense contractor as an engineer on military and commercial satellites during his alleged crimes, was arrested by FBI special agents and made his initial appearance yesterday afternoon in U.S. District Court for the Central District of California where the judge ordered him detained pending trial.
“Our nation’s security depends on the honesty and integrity of those entrusted with our technological secrets,” said U.S. Attorney Decker. “In this case, the defendant sought to undermine our national security by attempting to sell proprietary and controlled information about satellites to a foreign government’s intelligence service. Fortunately, law enforcement agents were able to timely and effectively intervene to protect this critical technology.”
“Mr. Justice allegedly placed his own interests of greed over our national security by providing information on sensitive U.S. technologies to a person whom he believed was a foreign agent,” said Assistant Attorney General Carlin. “In the wrong hands, this information could be used to harm the United States and its allies. The National Security Division will continue to relentlessly identify, pursue and prosecute offenders that threaten our national security. I would like to thank the FBI and the Air Force Office of Special Investigations for their efforts in protecting our nation’s most sensitive information.”
“The enforcement of U.S. laws that prohibit the acquisition of specified economic information and defense-related items is vital to national security and can prove to be a challenging mission when set against the backdrop of legitimate international trade, vast amounts of which occur every day in the United States,” said Assistant Director in Charge Fike. “The cooperative effort among the FBI and Air Force OSI was critical in bringing this case forward for prosecution by the U.S. Department of Justice.”
“This investigation exemplifies the crucial law enforcement alliance the Air Force Office of Special Investigations enjoys with our DOJ counterparts,” said Special Agent Rayho. “We remain diligent in our mission to protect the vital technologies our national defense forces rely on.”
According to the affidavit in support of the criminal complaint, Justice stole proprietary trade secret materials from his employer and provided them to a person whom he believed to be a representative of a foreign intelligence service, but who was in fact an FBI undercover agent. In addition to their proprietary nature, the documents contained technical data covered by the U.S. Munitions List and therefore controlled for export from the United States under the International Traffic in Arms Regulations, according to the allegations. In exchange for providing these materials, Justice allegedly sought and received cash payments.
A criminal complaint contains allegations that a defendant has committed a crime. The defendant is presumed to be innocent until and unless proven guilty in court.
If convicted, Justice faces a statutory maximum penalty of 15 years in federal prison for the economic espionage charge and a statutory maximum penalty of 20 years in federal prison for violating the Arms Export Control Act. The FBI and AFOSI investigated the case. Attorneys from the U.S. Attorney’s Office of the Central District of California and the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
Arizona Man Who Photographed Sexual Abuse of Young Boys while Working in China Sentenced to 25 Years in Federal PrisonRead the Press Release
LOS ANGELES – An Arizona man who admitted molesting four young boys in China and documenting the abuse with hundreds of photographs and videos has been sentenced to 25 years in federal prison.
Kelly James Morrow, 49, who had been living in China when he was arrested last June and claims a domestic residence in Surprise, Arizona, was sentenced yesterday by United States District Judge S. James Otero.
Morrow pleaded guilty in April to two charges – sexual exploitation of children outside the United States and possession of child pornography.
“This defendant is a sexual predator who not only abused young boys – he also documented his physical and mental abuse by taking thousands of pictures of his victims,” said United States Attorney Eileen M. Decker. “Just as Morrow’s photographs continued to victimize boys that he molested, his massive collection of child pornography victimized every one of the hundreds of child abuse victims depicted in those images.”
Morrow was arrested in June 2015, about a week after arriving at Los Angeles International Airport on a flight from Singapore. A search of his computer equipment and digital media revealed a collection of more than 60,000 images and videos depicting child pornography. In addition to the images Morrow produced in China while working on golf course projects, Morrow admitted in a plea agreement filed in court that he took a nude photograph of a young boy in Lincoln, Nebraska in late 2014.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). The National Center for Missing and Exploited Children provided the initial lead that led to the investigation.
“This case serves as a strong reminder that any abuse of children by American citizens is a crime that will be prosecuted to the fullest extent of the law,” said Joseph Macias, special agent in charge for HSI Los Angeles. “As this case shows, HSI is using all of its law enforcement authorities to combat this heinous behavior both here and abroad. We owe it to the children who are the victims in these cases, many of whom will bear the emotional scars of this trauma for the rest of their lives.”
The case against Morrow was prosecuted by Assistant United States Attorney Robyn K. Bacon.
Gardena Gang Member and Longtime Pimp Sentenced to 40 Years in Federal Prison for Sex Trafficking of ChildrenRead the Press Release
LOS ANGELES – A Gardena man who was found guilty of sex trafficking seven girls, most of whom had been coerced or forced to work as prostitutes, was sentenced today to 40 years in federal prison.
Laron Darrell Carter, also known as “Birdd” and variations of that moniker, 39, received the sentence from United States District Judge Virginia A. Phillips, who also ordered the defendant to pay $631,248 in restitution to six of his victims.
Following a five-day trial in April, a jury convicted Carter of seven counts of sex trafficking of a minor by force, fraud or coercion, and seven counts of transporting a child to engage in prostitution.
The evidence at trial showed that Carter, a Crip gang member, trafficked girls as young as 13 and subjected some of them to beatings, which included victims being punched in the face and whipped with a belt.
Carter’s “conduct in this case spanned a decade as he prostituted the seven minor victims from 2003 to 2013” and transported them from California to Arizona, Texas, Georgia, Washington DC and Nevada, prosecutors wrote in a sentencing memorandum filed with the court.
“This defendant appeared to relish his role exploiting young children, but now he will pay a heavy price for the immeasurable damage he caused to his young victims,” said United States Attorney Eileen M. Decker. “Mr. Carter was able to seduce child victims into prostitution by tricking them into thinking he was their boyfriend, but he turned violent when the girls tried to leave or violated his ‘rules.’ No person, and particularly no child, should ever be subject to this type of exploitation and abuse.”
The case against Carter stemmed from the rescue of a 16-year-old girl in 2013. The victim told investigators from the Los Angeles County Sheriff's Department and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) that she had been recruited by Carter to travel from Minneapolis to Los Angeles. When she arrived in Southern California, Carter forced her into prostitution. As part of his activities, Carter took this victim to a hotel in El Segundo and advertised her services on backpage.com. The victim “ran away at one point, but she found herself lost with no money and returned,” according to court documents. “When she returned, defendant beat her and whipped her with a belt for leaving.”
After this victim was rescued, investigators located six other girls – one of whom was only 13 – who had been coerced or physically forced into prostitution by Carter between 2003 and 2010.
“Above all, this sentence assures no more girls will fall prey to this brazen and manipulative sexual predator for decades to come,” said Joseph Macias, special agent in charge of HSI Los Angeles. “But the outcome of this case should also serve as a sobering warning to those engaged in the sex trafficking of minors about the severe consequences for those who commit such crimes. HSI will continue to work tirelessly with its federal and local counterparts to identify these dangerous offenders and bring them to justice. Our efforts are vital to protecting young people from the fear and suffering these predators inflict on their victims.”
During the trial earlier this year, the jury saw Facebook postings in which Carter described himself as a “cross country pimp” who worked for “Pimpin International.” The jury also saw photos of tattoos with the “Birdd” moniker that victims were forced to get.
The case against Carter was prosecuted by Assistant United States Attorneys Jeff Mitchell and Jeffrey M. Chemerinsky of the Violent and Organized Crime Section.
Independent Producer Charged with Stealing Money Generated by Feature Film that Should Have Gone to Partner CompanyRead the Press Release
LOS ANGELES – An independent film producer has been charged with 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, 56, of Calabasas, was charged on Tuesday with moving money to New Jersey that had been stolen from an investment company called Yucaipa Corporate Initiatives Fund I, LP.
When he was charged, prosecutors also filed a plea agreement in which Caro agreed to plead guilty to the felony offense and admitted that he stole a total of $1,487,529 from Yucaipa over five years.
“This defendant exploited his position of trust by stealing money from a business he had been partners with for years,” said United States Attorney Eileen M. Decker. “Mr. Caro then engaged in another crime by moving the pilfered money across the country.”
Caro has agreed to surrender to federal authorities and make his first appearance in United States District Court on July 27.
Caro, through his company, Broken Rose Productions, Inc. entered into a limited liability agreement with Yucaipa in early 2005. The resulting LLC, which was called R-Caro Productions, LLC produced two 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 plea agreement.
“Mr. Caro violated both the law and his partner’s trust when he embezzled royalty payments and transferred the stolen funds to the East Coast,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case should serve as a warning to those who evade detection by crossing state lines.”
The charge of interstate transportation of stolen property carries a statutory maximum penalty of 10 years in federal prison.
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.
United States Files Lawsuit to Recover Monetary Damages Associated with 2013 Mountain Fire in San Bernardino National ForestRead the Press Release
LOS ANGELES – A federal lawsuit filed today seeks nearly $25 million in damages from the owner of a Mountain Center residence and the property’s caretakers for alleged negligence that led to the 2013 Mountain Fire, which burned for more than two weeks and scorched over 27,500 acres, more than half of which was in the San Bernardino National Forest.
The civil complaint alleges negligence and violations of California law as being the cause of the fire that started on July 15, 2013, and burned a large swath of the San Jacinto Mountains, for a time threatening the town of Idyllwild and forcing over 5,000 residents to evacuate. An investigation determined that the fire started when an electrical discharge inside of an improperly maintained electrical junction box “shot sparks and hot material out of the box and onto dry ground vegetation below,” according to the lawsuit.
The Mountain Fire started on property known as Gibraltar West that is owned by Tarek M. Al-Shawaf, who is the lead defendant in the lawsuit. The complaint also names as defendants James D. Nowlin and Donna L. Nowlin, who were the caretakers employed by Al-Shawaf.
The defendants had a duty “to properly inspect and maintain their electrical equipment, electrical wires, and electrical junction boxes to ensure that they were safe, properly secured, and clear from dangerous conditions,” the complaint alleges.
“Property owners and their agents have a responsibility to ensure that property under their control is maintained in a safe fashion,” said United States Attorney Eileen M. Decker. “In addition to endangering countless lives, including those of firefighters who battle these large-scale blazes, the failure to properly manage the property and the electrical equipment on the property in this case cost taxpayers approximately $24 million dollars.”
The United States Forest Service expended considerable resources to suppress the Mountain Fire, including deploying more than 3,000 firefighters, 250 fire engines, 20 helicopters and 10 airplanes. The complaint specifically alleges that the Forest Service spent more than $15 million to fight the fire, that the fire caused more than $9 million in damages to natural resources, and that more than $300,000 had to be spent to perform emergency rehabilitation. “The damages to the United States include, but are not limited to: mitigation, rehabilitation, and reforestation of burned areas; loss of and damage to timber, habitat, wildlife, watershed, earth, scenery, and environment; aesthetic values; loss of use and recreation; soil damage; and erosion,” according to the lawsuit.
The federal lawsuit comes after the Forest Service made demands that Al-Shawaf and the Nowlins pay for the costs and damages associated with the fire. The defendants have not paid any of the money demanded by the government.
While the lawsuit alleges that the Forest Services suffered losses of nearly $25 million, the defendants could also be ordered to pay intangible environmental damages for harm caused to the San Bernardino National Forest, as well as interest and penalties.
This matter was investigated by the United States Forest Service and the California Department of Forestry and Fire Prevention.
This case is being handled by Assistant United States Attorney Garrett Coyle of the Civil Division.
ATF-Led Investigation Leads to Arrest of 6 Accused of Illegal Firearms and Narcotic Sales in and around ComptonRead the Press Release
LOS ANGELES – Agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives and other law enforcement authorities this morning arrested six people charged in three federal indictments that allege illegal firearms sales and drug distribution.
The arrests stem from an ATF-led investigation targeting the sale of guns in and around Compton and Mona Park in Willowbrook. During the course of the year-long investigation, authorities took more than 100 illegally trafficked firearms off the streets.
Those taken into custody today face various federal charges, including conspiracy, illegal firearm sales, being a felon in possession of a firearm, and trafficking in crack cocaine and PCP. Two other defendants named in the indictments are fugitives who are being sought by authorities. (A fourth grand jury indictment charges one defendant who also remains a fugitive, and that indictment will remain under seal until that defendant is taken into custody.)
“The illegal firearms trade fuels violence on the streets,” said United States Attorney Eileen M. Decker. “If individuals prohibited from purchasing firearms can readily obtain them in an underground market, the challenge of reducing gun violence in our communities is much greater. As we work to stem violent crime in and around Compton, we will, therefore, target those who are sources of the firearms and narcotics that sustain these underground markets.”
“Today’s arrests are an example of ATF’s commitment to working with our law enforcement partners to combat violent crime and firearms trafficking,” said ATF Special Agent in Charge Eric D. Harden. “The large number of firearms seized during this investigation represents a significant blow to criminal networks operating in and around Compton.”
The eight defendants are charged across three indictments that were recently returned by a federal grand jury. Those named in the four indictments unsealed this afternoon are:
In addition to the six arrested on federal charges, another three defendants were taken into custody this week on state charges.
Those arrested this morning are being arraigned this afternoon in United States District Court in downtown Los Angeles.
1. Jamie Maurice Thomas, 37, of South Los Angeles, who is a fugitive; Francisco Juantonio Hilt, also known as “Freebo,” 39, of Compton; and Sean Ronaldo Alexander, 37, of South Los Angeles, who are all charged with conspiracy, engaging in the business of dealing in firearms without a license, being a felon in possession of firearms and ammunition, and sale of a firearm to a prohibited person;
2. Tavon Dejuan Pickett, aka “Bucket,” 29, of Compton; RobertEnnis Goree, 41, of South Los Angeles, who remains a fugitive; and Leonard Smith, aka “Smoke,” 35, of South Los Angeles , who are charged with conspiracy; engaging in the business of dealing in firearms without a license; being a felon in possession of firearms; and
3. Gerald Tynes, aka “Milkman,” 59, of South Los Angeles, and Lekori Lee Terrance, aka “Slim,” 33, of Bellflower, who are charged with: conspiracy, engaging in the business of dealing in firearms without a license, felon in possession of firearms and ammunition, distribution of crack cocaine, distribution of crack cocaine within 1,000 feet of a school and distribution of PCP.
If convicted of all counts against them, the defendants would face statutory maximum sentences ranging from 20 years in federal prison for Terrance to as much as 310 years for Tynes.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
The investigation that led to today’s arrests was conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Los Angeles Police Department; the Long Beach Police Department; and the Los Angeles County Sheriff’s Department. The Federal Bureau of Investigation, the United States Marshals Task Force, and California Department of Children and Family Services Multi-Agency Response Team (MART) participated in today’s enforcement activity.
The cases announced today are being prosecuted by Assistant United States Attorney Susan J. DeWitt of the Violent and Organize Crime Section.
Chinese National Who Conspired to Hack into U.S. Defense Contractors’ Systems Sentenced to 46 Months in Federal PrisonRead the Press Release
A Chinese national who admitted to participating in a years-long conspiracy that involved Chinese military officers hacking into the computer networks of major U.S. defense contractors in order to steal military technical data was sentenced today to 46 months in federal prison.
Today’s sentencing was announced by Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Eileen M. Decker of the Central District of California.
“Su Bin’s sentence is a just punishment for his admitted role in a conspiracy with hackers from the People's Liberation Army Air Force to illegally access and steal sensitive U.S. military information,” said Assistant Attorney General Carlin. “Su assisted the Chinese military hackers in their efforts to illegally access and steal designs for cutting-edge military aircraft that are indispensable to our national defense. These activities have serious consequences for the national security of our country and the safety of the men and women of our armed services. This prison sentence reinforces our commitment to ensure that hackers, regardless of state affiliation, are held accountable for their criminal conduct.”
“Protecting our national security interests, including sensitive military information, is the Justice Department’s highest priority,” said U.S. Attorney Decker. “Over the course of years, this defendant sought to undermine the national security of the United States by seeking out information that would benefit a foreign government and providing that country with information it had never before seen. The outstanding efforts of the prosecutors and investigators who developed this case demonstrate our commitment to protecting our nation’s security from all threats. As this case shows, criminals can be held accountable no matter where they are located in the world.”
Su Bin, who is also known as Stephen Su and Stephen Subin, 51, a citizen and resident of the People’s Republic of China, was sentenced today by U.S. District Judge Christina A. Snyder of the Central District of California.
Su told his co-conspirators – military officers in China – whom to target, which files to steal and why the information they stole was significant. During the course of the conspiracy, Su and his co-conspirators stole sensitive military and export-controlled data and sent the stolen information to China.
On March 23, Su pleaded guilty to one count of conspiring to gain unauthorized access to a protected computer and to violate the Arms Export Control Act by exporting defense articles on the U.S. Munitions List contained in the International Traffic in Arms Regulations. Su admitted that he conspired with two persons in China from October 2008 to March 2014 to gain unauthorized access to protected computer networks in the United States – including computers belonging to the Boeing Company in Orange County, California – to obtain sensitive military information and to export that information illegally from the United States to China.
A criminal complaint filed in 2014 and subsequent indictments filed in Los Angeles charged Su, a China-based businessman in the aviation and aerospace fields, for his role in the criminal conspiracy to steal military technical data, including data relating to the C-17 strategic transport aircraft and certain fighter jets produced for the U.S. military. Su was initially arrested in Canada in July 2014 on a warrant issued in relation to this case. Su ultimately waived extradition and consented to be conveyed to the United States in February 2016.
Su admitted that as part of the conspiracy, he sent e-mails to his co-conspirators with guidance regarding what persons, companies and technologies to target during their computer intrusions. One of Su’s co-conspirators gained access to information located on computers of U.S. companies, and he emailed Su directory file listings and folders showing the data that the co-conspirator had been able to access. Su then directed his co-conspirator as to which files and folders his co-conspirator should steal. Once the co-conspirator stole the data, using techniques to avoid detection when hacking the victim computers, Su translated the contents of certain stolen data from English into Chinese. In addition, acoording to Su's admissions and the sentencing documents, Su and his co-conspirators each wrote, revised and emailed reports addressed to the Second Department, General Staff Headquarters, Chinese People’s Liberation Army about the information and technology they had acquired by their hacking activities, including its value, to the final beneficiaries of their hacking activities. Su also admitted that he engaged in the crime for the purpose of financial gain and specifically sought to profit from selling the data the he and his conspirators illegally acquired.
The case was investigated by the FBI’s Los Angeles Field Office’s Cyber Division with assistance from the U.S. Air Force Office of Special Investigations. This case was prosecuted by the U.S. Attorney’s Office of the Central District of California’s Terrorism and Export Crimes Section and Trial Attorney Casey Arrowood and Senior Trial Attorney Robert E. Wallace of the National Security Division’s Counterintelligence and Export Control Section, with support from the Justice Department’s Office of International Affairs.
Chinese National Who Conspired to Hack into U.S. Defense Contractors’ Computer Systems Sentenced to 46 Months in PrisonRead the Press Release
LOS ANGELES – A Chinese national who admitted to participating in a years-long conspiracy that involved Chinese military officers hacking into the computer networks of major U.S. defense contractors in order to steal military technical data was sentenced today to 46 months in federal prison.
Su Bin, who is also known as Stephen Su and Stephen Subin, 51, a citizen and resident of the People’s Republic of China, was sentenced this afternoon by United States District Judge Christina A. Snyder, who also ordered the defendant to pay a $10,000 fine.
Su told his co-conspirators – military officers in China – whom to target, which files to steal and why the information they stole was significant. During the course of the conspiracy, Su and his co-conspirators stole sensitive military and export-controlled data and sent the stolen information to China.
“Protecting our national security interests, including sensitive military information, is the Justice Department’s highest priority,” said United States Attorney Eileen M. Decker. “Over the course of years, this defendant sought to undermine the national security of the United States by seeking out information that would benefit a foreign government and providing that country with information it had never before seen. The outstanding efforts of the prosecutors and investigators who developed this case demonstrate our commitment to protecting our nation’s security from all threats. As this case shows, criminals can be held accountable no matter where they are located in the world.”
On March 23, Su pleaded guilty to one count of conspiring to gain unauthorized access to a protected computer and to violate the Arms Export Control Act by exporting defense articles on the U.S. Munitions List contained in the International Traffic in Arms Regulations. Su admitted that he conspired with two persons in China from October 2008 to March 2014 to gain unauthorized access to protected computer networks in the United States – including computers belonging to the Boeing Company in Orange County, California – to obtain sensitive military information and to export that information illegally from the United States to China.
“Su Bin’s sentence is a just punishment for his admitted role in a conspiracy with hackers from the People's Liberation Army Air Force to illegally access and steal sensitive U.S. military information,” said Assistant Attorney General for National Security John P. Carlin. “Su assisted the Chinese military hackers in their efforts to illegally access and steal designs for cutting-edge military aircraft that are indispensable to our national defense. These activities have serious consequences for the national security of our country and the safety of the men and women of our armed services. This prison sentence reinforces our commitment to ensure that hackers, regardless of state affiliation, are held accountable for their criminal conduct.”
A criminal complaint filed in 2014 and subsequent indictments filed in Los Angeles charged Su, a China-based businessman in the aviation and aerospace fields, for his role in the criminal conspiracy to steal military technical data, including data relating to the C-17 strategic transport aircraft and certain fighter jets produced for the U.S. military. Su was initially arrested in Canada in July 2014 on a warrant issued in relation to this case. Su ultimately waived extradition and consented to be conveyed to the United States in February 2016.
Su admitted that as part of the conspiracy, he sent e-mails to his co-conspirators with guidance regarding what persons, companies and technologies to target during their computer intrusions. One of Su’s co-conspirators gained access to information located on computers of U.S. companies, and he emailed Su directory file listings and folders showing the data that the co-conspirator had been able to access. Su then directed his co-conspirator as to which files and folders his co-conspirator should steal. Once the co-conspirator stole the data, using techniques to avoid detection when hacking the victim computers, Su translated the contents of certain stolen data from English into Chinese. In addition, according to Su's admissions and the sentencing documents, Su and his co-conspirators each wrote, revised and emailed reports addressed to the Second Department, General Staff Headquarters, Chinese People’s Liberation Army about the information and technology they had acquired by their hacking activities, including its value, to the final beneficiaries of their hacking activities. Su also admitted that he engaged in the crime for the purpose of financial gain and specifically sought to profit from selling the data the he and his conspirators illegally acquired.
The case was investigated by the FBI’s Los Angeles Field Office’s Cyber Division with assistance from the U.S. Air Force Office of Special Investigations.
This case was prosecuted by the Terrorism and Export Crimes Section of the United States Attorney’s Office in Los Angeles and the National Security Division’s Counterintelligence and Export Control Section of the Department of Justice, with support from the Justice Department’s Office of International Affairs.
Residents of Three States Charged with Unlawful Sale of Dietary SupplementsRead the Press Release
WASHINGTON – As part of the federal government’s ongoing efforts to address unlawful dietary supplements, the Department of Justice announced today criminal cases against three individuals for violations of the federal Food, Drug and Cosmetic Act (FDCA) related to purported disease cures. Each of the three individuals was also the subject of a civil case brought by the department, which they have now agreed to settle by entry of consent decrees of permanent injunction.
Each of the individuals and companies is alleged to have marketed and sold products as treatments for serious diseases including herpes, cancer, Alzheimer’s and AIDS, without obtaining approval from the U.S. Food and Drug Administration (FDA) to distribute such products as drugs.
“These enforcement actions highlight the department’s continued focus on unlawful dietary supplements, including unsupported cures for serious diseases such as cancer, Alzheimer’s, and herpes,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Consumers desperate for help, including Americans facing serious illnesses, sometimes turn to untested substances and forgo proven therapies. The Department of Justice is committed to seeking out those firms that risk public health in favor of profit.”
Clifford Woods and Clifford Woods LLC
The Justice Department also announced today that in June, Clifford Woods, of Los Angeles, pleaded guilty to a criminal charge for distribution of an unapproved new drug and agreed to entry of a consent decree. On May 9, Woods pleaded guilty in U.S. District Court for the Central District of California to a one-count information alleging that he promoted and distributed the product Taheebo Life Tea as a treatment for cancer, despite the fact that the product had not been approved as a drug by the FDA.
“Mr. Woods preyed upon the hopes of people suffering from cancer and other serious diseases,” said the United States Attorney for the Central District of California, Eileen M. Decker. “In addition to giving these desperate patients false hope, the unlawful sale of dietary supplements poses a risk to public safety because their contents are unregulated.”
Woods, along with his company, Clifford Woods LLC, also agreed to a consent decree of permanent injunction to prohibit them from selling products as cures for a variety of diseases. The consent decree, which was entered by the Court on June 27, resolves a civil complaint that the department filed against Woods and Clifford Woods LLC in the Central District of California. The civil complaint alleged that the defendants, doing business as Vibrant Life, sold products that they promoted as treatments for cancer, type 2 diabetes, Alzheimer’s disease, HIV infection and AIDS. For instance, the complaint alleged that the defendants promoted certain products “as a treatment for cancer,” as having “shown results in tumor reduction,” and as being able to “change a cancer cell into a non-malignant cell.” The complaint further alleged that the defendants defrauded consumers by promoting certain products to cure, mitigate, treat, or prevent a disease despite the absence of well-controlled clinical studies or other credible scientific substantiation to support those claims.
Guy Lyman and Flor Nutraceuticals LLC
Today, the United States filed a criminal information in the U.S. District Court for the Eastern District of Louisiana, charging Guy Lyman of New Orleans, Louisiana, with one misdemeanor count of introduction of an unapproved new drug into interstate commerce in violation of the FDCA. The information alleges that Lyman distributed the product Herpaflor as a herpes treatment, without receiving approval from FDA to distribute Herpaflor.
The United States simultaneously filed a civil complaint against Lyman and his company, Flor Nutraceuticals LLC, in the Eastern District of Louisiana. The civil complaint alleges that the defendants sold liquid and tablet drug and dietary supplement products named Herpaflor, which they intended as herpes treatments, but that the products were not approved by FDA. Lyman and Flor Nutraceuticals agreed to a consent decree of permanent injunction to prohibit the sale of Herpaflor as a treatment for herpes. The consent decree, which is subject to court approval, was also filed today.
James Hill
Today, the United States also filed a criminal information in the U.S. District Court for the Middle District of Florida, charging James Hill of Ocala, Florida, with one misdemeanor count of distributing an unapproved new drug in violation of the FDCA. The information alleges that Hill distributed the unapproved new drug Viruxo Immune Support (Viruxo) as a treatment for herpes.
The Justice Department previously announced the entry of a consent decree of permanent injunction against Hill on Feb. 26, to resolve a civil complaint filed against him in the Middle District of Florida. The injunction prohibits Hill from selling Viruxo as a herpes treatment.
Principal Deputy Assistant Attorney General Mizer thanked the Postal Inspection Service for its thorough investigation of these cases. The government is represented in the three criminal cases by Trial Attorney Ann Entwistle and in the three civil cases by Trial Attorney Daniel Zytnick, both of the Civil Division’s Consumer Protection Branch. The government is also represented in the civil case against Hill by Assistant U.S. Attorney Lacy R. Harwell Jr. of the U.S. Attorney’s Office for the Middle District of Florida. Deputy Chief Counsel Perham Gorji and Senior Counsel Claudia J. Zuckerman of the Department of Health and Human Services’ Office of General Counsel – Food and Drug Division provided assistance in these cases. Further assistance was provided by the U.S. Attorney’s Offices for the Eastern District of Louisiana, Middle District of Florida, and Central District of California.
For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.
Southern California Man Pleads Guilty for His Role as Sales Manager in Fraudulent Mortgage Modification SchemeRead the Press Release
WASHINGTON – The Department of Justice announced that an Orange County, California, man pleaded guilty in U.S. District Court in Santa Ana, California, for his role as the sales manager of a multi-million dollar fraudulent mortgage modification scheme.
Charles Wayne Farris, 55, of Aliso Viejo, California, pleaded guilty before U.S. District Court Judge David O. Carter for the Central District of California to one count of conspiracy to commit mail and wire fraud.
“This defendant managed an entire team of people whose sole job was to lure struggling home owners into the fraud scheme,” said U.S. Attorney Eileen Decker of the Central District of California. “It is because of Mr. Farris that so many people were victimized for so much money.”
“This defendant supervised dozens of telemarketers who used lies and false promises to take money from struggling homeowners for a worthless service,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will continue to prosecute all kinds of mass-marketing and telemarketing fraud schemes, especially those that prey on vulnerable victims.”
Farris admitted that, between October 2008 and June 2009, he participated in a scheme to induce homeowners to pay between $3,500 and $5,500 for the services of the Rodis Law Group (RLG) and a successor entity, America’s Law Group (ALG). RLG and ALG advertised on radio stations nationwide, urging struggling homeowners to call a toll-free number and stating that the companies consisted of “a team of experienced attorneys” who were “highly skilled in negotiating lower interest rates and even lowering your principal balance.” In fact, RLG and ALG were telemarketing operations that never had teams of experienced attorneys. During much of the scheme, Ronald Rodis was the only attorney at RLG.
Farris supervised a sales force of dozens of telemarketers who fielded calls from struggling homeowners. At Farris’s direction and using scripts that he created, the telemarketers made numerous misrepresentations regarding the companies’ ability to negotiate loan modifications from the homeowners’ mortgage lenders. For example, the telemarketers stated that RLG and ALG had been in business for 11 years when in fact the company had only opened in October 2008. They falsely stated that RLG and ALG routinely obtained positive results for homeowners, including lower monthly payments, reductions in principal balance and lower interest rates. In fact, positive results were rarely achieved for any RLG or ALG clients. Telemarketers also falsely reiterated that homeowners would have a team of attorneys and real estate professionals assigned to their case.
“The defendants in this case preyed upon vulnerable homeowners facing the loss of their home and callously took advantage of what hope they had left,” said Assistant Director in Charge Deirdre L. Fike of the FBI’s Los Angeles Field Office. “Paid advertisements can lend a veneer of credibility to any scam, and I would encourage anyone considering paying fees up front for services to be skeptical before handing over hard earned money.”
In a plea agreement filed in federal court, Farris admitted that the RLG and ALG schemes fraudulently obtained approximately $9 million from more than 1,500 victims. His sentencing is on April 17, 2017.
Farris was charged along with two co-defendants, Bryan D’Antonio and Ronald Rodis. Rodis pleaded guilty to one count of conspiracy to commit mail and wire fraud on June 27. D’Antonio is charged with 23 felony counts. He is charged with nine counts of wire fraud and one count of conspiracy to commit wire fraud. Each of these counts carries a statutory maximum penalty of 20 years in prison. In addition, D’Antonio is charged with 13 counts of criminal contempt for violating a 2001 federal court order, which permanently banned D’Antonio from participating in future telemarketing operations. Criminal contempt of court has no statutory maximum penalty. D’Antonio is scheduled for trial beginning Sept. 20.
This case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Joseph T. McNally of the Central District of California and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch.
For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca.
Salesman Pleads Guilty to Defrauding Consumers Through Debt Relief FirmsRead the Press Release
WASHINGTON – A Newport Beach, California, man pleaded guilty today for his role as a salesman at fraudulent debt relief firms that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees, the Justice Department and U.S. Postal Inspection Service announced.
John Vartanian, 57, pleaded guilty to one count of an indictment alleging conspiracy to commit mail fraud and wire fraud in connection with companies known as Nelson Gamble & Associates (Nelson Gamble) and Jackson Hunter Morris & Knight LLP (Jackson Hunter). According to the indictment, the conspirators portrayed the debt relief companies as law firms and attorney-based companies that 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.
“This defendant preyed upon victims that were already burdened by significant debt,” said U.S. Attorney Eileen M. Decker for the Central District of California. “He gave them false hope while stealing the money that could have been used to reduce their obligations.”
“These scams take advantage of vulnerable consumers trying to climb out of 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 prosecute fraudulent debt relief schemes.”
“We are gratified with today’s plea, not only on behalf of our postal inspectors who exposed these conspirators for the scammers they were, but for the many unsuspecting victims who were seeking to climb out from their debts but instead were thrown into even deeper financial holes,” said Inspector in Charge Regina L. Faulkerson of Criminal Investigations, U.S. Postal Inspection Service. “People who rely on the U.S. mail expect what they receive will be truthful, honest communication – free from false statements and from attempts to further victimize them. I appreciate the work of the Consumer Protection Branch in bringing the last of these fraudulent credit repair conspirators to justice.”
The scheme ran from February 2010 to September 2012. Vartanian admitted that he did not tell customers during sales calls that the companies charged significant up-front fees. Additionally, he admitted that he falsely told customers that the companies were backed by a law group and that money would be refunded if customers were not satisfied. When his co-conspirators changed the name of the company from Nelson Gamble to Jackson Hunter in 2011 because of customer complaints, Vartanian continued to make the same pitch without disclosing that the new company was essentially the same as the old company. In speaking with unhappy customers, the conspirators at Jackson Hunter blamed past problems on Nelson Gamble and denied requests for refunds of money paid to Nelson Gamble.
Vartanian faces a statutory maximum sentence of 20 years in prison. The court set a sentencing date of Oct. 17 before U.S. District Judge Dale S. Fischer in Los Angeles. Four other defendants previously pleaded guilty in connection with the same scheme: Jeremy Nelson of Laguna Nigel, California, Elias Ponce of Santa Ana, California, Christopher Harati of Anaheim, California, and Athena Maldonado of Lake Forest, California. The defendants have not yet been sentenced.
In September 2012, the Federal Trade Commission 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 and thanked the U.S. Attorney’s Office for the Central District of California for their contributions to the case. 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.
President and CEO of Long Beach Substance Abuse Treatment Provider and Three Others Indicted for $50 Million Student Substance Abuse Counseling FraudRead the Press Release
LOS ANGELES – Four people have been charged in a superseding indictment unsealed today for allegedly participating in a scheme that submitted more than $50 million in fraudulent claims to California’s Drug Medi-Cal program for alcohol and drug treatment services for high school and middle school students that, in many instances, were not provided at all or were provided to students who did not actually have substance abuse problems.
Two of the defendants who worked at the Long Beach-based Atlantic Health Services (formerly known as Atlantic Recovery Services, or ARS), including President and Chief Executive Officer, Richard Mark Ciampa, were arrested this morning by federal authorities.
The superseding indictment, which charges the defendants with health care fraud and aggravated identity theft and charges Ciampa with money laundering, alleges that ARS was paid more than $46 million after it submitted false and fraudulent claims for group and individual substance abuse counseling services.
“These defendants stole tens of millions of dollars earmarked for helping children with substance abuse problems,” said United States Attorney Eileen M. Decker. “This fraud not only harmed taxpayers, but also placed some of the most vulnerable in our society at greater risk.”
The defendants named in the indictment are:
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Richard Mark Ciampa, 62, of Long Beach, the President and CEO of ARS who ultimately was responsible for the claims billed to Medi-Cal and received the bulk of ARS’ earnings;
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Gregory Hearns, 60, of Long Beach, the Billing Supervisor for ARS who compiled the monthly billing and arranged for its submission to Medi-Cal;
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LaLonnie Egans, 58, of Bellflower, who managed counselors at three schools;
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Tina Lynn St. Julian, 52, of Compton, who worked as a counselor at two schools.
Egans and St. Julian were named as defendants in the original indictment and are expected to be arraigned on the superseding indictment in the coming weeks. Ciampa and Hearns were arraigned on the superseding indictment this afternoon in United States District Court.
“Medical professionals who seek to enrich themselves through Medi-Cal fraud undermine this taxpayer-funded program and drive up health care costs for everyone,” said Acting Special Agent in Charge Anthony J. Orlando for IRS Criminal Investigation. “Today’s arrests should send a clear message to all health care providers that health care fraud is a federal crime that carries serious consequences and will not be tolerated.”
ARS received contracts to provide substance abuse treatment services through the Drug Medi-Cal program to students in schools in Los Angeles County. The schools included various sites operated by Soledad Enrichment Action, and public schools in Montebello, Bell Gardens, Lakewood, and the Antelope Valley.
The superseding indictment alleges that, during a 10-year period through April 2013, when ARS was shut down following a suspension of payments, ARS submitted bogus claims for payment to the Drug Medi-Cal program. Ciampa and Hearns are alleged to have caused the submission of these false claims and created an environment for rampant fraud by constantly warning ARS managers and counselors that they would lose their jobs if they did not increase the billing. Ciampa also directed managers and counselors to bill for two crisis intervention sessions per student per month, even though crisis interventions were to be billed only if the student had relapsed or faced an imminent threat of relapse, neither of which could be planned in advance. The claims are also alleged to have been false and fraudulent for a number of other reasons, including:
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ARS billed for services provided to students who did not have substance abuse disorders and therefore did not qualify to receive Drug Medi-Cal services;
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ARS billed for counseling sessions that were not conducted at all;
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ARS billed for counseling services that were not conducted in accordance with Drug Medi-Cal regulations regarding length, number of students, content, and setting;
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ARS personnel falsified documents, including treatment plans, group counseling sign-in sheets, progress notes, and update logs (which listed the dates and times of counseling sessions); and
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ARS personnel forged student signatures on documents.
Ciampa also is alleged to have conducted or caused others to conduct six monetary transactions involving monies ARS received as reimbursement from Medi-Cal for ARS’ fraudulent claims. These transactions include intra-bank transfers and wire transfers among ARS bank accounts that Ciampa controlled; a transfer to Ciampa’s personal account; a transfer to another individual associated with ARS; and purchase of a cashier’s check for Ciampa’s down payment on two Long Beach properties. The superseding indictment also includes forfeiture allegations pertaining to these Long Beach properties and other property connected to health care fraud funds and money laundering.
“It is outrageous for health care executives and counselors to risk stigmatizing students as substance abusers, as alleged in this case, just to enrich themselves at taxpayer expense,” said Special Agent in Charge Christian Schrank for the Office of the Inspector General of the U.S. Department of Health and Human Services. "Our agency will work closely with our State and other Federal law enforcement partners to guard these precious Medi-Cal dollars against fraud."
Previously, at least 17 other defendants have pleaded guilty to health care fraud charges or signed plea agreements stemming from the ARS scheme. Those are the former ARS Program Manager, Lori Renee Miller, 54, of Lakewood; former ARS managers Angela Frances Micklo, 57, of Palmdale; Maribel Navarro, 49, of Pico Rivera; Carrenda Jeffery, 65, of the Mid-City District of Los Angeles; Cathy Fernandez, 54, of Downey; Erin Hoover, 38, of Long Beach; Elizabeth Black, 51, of Long Beach; Helsa Casillas, 45, of El Sereno; and Sandra Lopez, 42, of Huntington Park; and former ARS counselors Shyrie Womack, 33, of Bellflower; Tamara Diaz, 46, of East Los Angeles; Margarita Lopez, 41, of Paramount; Irma Talavera, 27, of Paramount; Laura Vasquez, 53, of Pico Rivera; Cindy Leticia Ortiz, 30, of Norwalk; and Arthur Dominguez, 64, of Glendale.
Another defendant – Dr. Leland Whitson, 76, of Redondo Beach, the former Medical/Clinical Director of ARS – previously pleaded guilty to making a false statement affecting a health care program.
The defendants who have already pleaded guilty are scheduled to be sentenced by United States District Judge Philip S. Gutierrez.
If convicted, Ciampa faces a statutory maximum sentence of 194 years in federal prison; Hearns faces a statutory maximum sentence of 134 years in federal prison; Egans faces a statutory maximum sentence of 32 years in federal prison; and St. Julian faces a statutory maximum sentence of 42 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The cases against these defendants are the result of an investigation by the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS-Criminal Investigation.
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Oxnard Tax Return Preparer Convicted in $53 Million Tax Fraud SchemeRead the Press Release
LOS ANGELES – An Oxnard-based tax return preparer was convicted yesterday afternoon of conspiracy to file false tax refund claims and for having signed tax returns claiming more than $53 million in fraudulent tax refunds. Before the IRS was able to identify and stop the scheme, it had already paid out more than $23 million of refunds to the defendant and his co-conspirators.
Rodrigo Pablo “Paul” Lozano, also known as “El Profe,” 61, was convicted Thursday after a two-week jury trial.
According to the evidence presented in the trial, Lozano’s scheme was based on his applying for Individual Tax Identification Numbers (“ITINs”), which are issued in lieu of a social security number to undocumented workers in the United States to allow them to file tax returns. The evidence demonstrated that co-conspirators provided Lozano with fake identification documents, such as Matricula cards supposedly issued by the Mexican government and birth certificates, which Lozano used to obtain ITINs in the names shown on the fake identification documents. Lozano would then use the ITINs to file three years’ of income tax returns based on wage and withholding information contained in fake W-2s, and listed 3 or 4 fictitious dependents in whose names Lozano also applied for ITINs. All of the scheme’s tax returns requested refunds, with most in the $3,000 to $4,000 range, which they requested by claiming the Additional Child Tax Credit (“ACTC”). The number of dependents and wage amounts on the tax returns were falsified to maximize the amount of the ACTC.
“As a tax preparer by trade, this defendant had a greater duty to ensure that the tax returns he filed were accurate,” said United States Attorney Eileen M. Decker. “Instead, by filing for fraudulent returns, Mr. Lozano cheated the IRS and indirectly stole from every law-abiding taxpayer.”
Lozano submitted more than 12,000 false tax returns in an 18-month period in 2011 and 2012. During that time, his employees told him at least five times that the identity and W-2 documents looked suspicious, and the IRS sent hundreds of warning notices to Lozano stating that the tax returns and W-2s were invalid. Despite the repeated warnings, Lozano continued to direct his employees to file the fraudulent tax returns.
Lozano would divide up the tax refunds with his co-conspirators, including having employees count out tens of thousands of dollars in cash in a bathroom located next to his office space. Lozano operated his tax-return business, which he called Ayuda (“help” in Spanish), by renting space from businesses that catered to Hispanic clients, such as a meat market on Hueneme Road in Oxnard. He went by the name “El Profe,” as he was a teacher before he began preparing tax returns.
“Yesterday’s guilty verdict is an important victory for America’s return preparers who play by the rules and have no tolerance for those who make up their own rules,” stated Acting Special Agent in Charge Anthony J. Orlando for IRS Criminal Investigation. “This conviction is a powerful reminder that there is no such thing as free money and there are no rewards or incentives for creativity when it comes to filing fraudulent tax returns.”
The investigation of Lozano was conducted by IRS Criminal Investigation in Camarillo.
Defense Contractor Employee from Culver City Arrested for Selling Satellite Secrets to Undercover Agent Posing as a Foreign SpyRead the Press Release
LOS ANGELES – A Culver City, California, man was arrested yesterday on federal charges of economic espionage and violations of the Arms Export Control Act for his attempts to sell sensitive satellite information to a person he believed to be a foreign intelligence agent.
U.S. Attorney Eileen M. Decker of the Central District of California, Assistant Attorney General for National Security John P. Carlin, Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Field Office and Special Agent John Rayho of the U.S. Air Force Office of Special Investigations (AFOSI) Detachment Commander at Los Angeles Air Force Base made the announcement.
Gregory Allen Justice, 49, who worked for a cleared defense contractor as an engineer on military and commercial satellites during his alleged crimes, was arrested by FBI special agents and made his initial appearance yesterday afternoon in U.S. District Court for the Central District of California where the judge ordered him detained pending trial.
“Our nation’s security depends on the honesty and integrity of those entrusted with our technological secrets,” said U.S. Attorney Decker. “In this case, the defendant sought to undermine our national security by attempting to sell proprietary and controlled information about satellites to a foreign government’s intelligence service. Fortunately, law enforcement agents were able to timely and effectively intervene to protect this critical technology.”
“Mr. Justice allegedly placed his own interests of greed over our national security by providing information on sensitive U.S. technologies to a person whom he believed was a foreign agent,” said Assistant Attorney General Carlin. “In the wrong hands, this information could be used to harm the United States and its allies. The National Security Division will continue to relentlessly identify, pursue and prosecute offenders that threaten our national security. I would like to thank the FBI and the Air Force Office of Special Investigations for their efforts in protecting our nation’s most sensitive information.”
“The enforcement of U.S. laws that prohibit the acquisition of specified economic information and defense-related items is vital to national security and can prove to be a challenging mission when set against the backdrop of legitimate international trade, vast amounts of which occur every day in the United States,” said Assistant Director in Charge Fike. “The cooperative effort among the FBI and Air Force OSI was critical in bringing this case forward for prosecution by the U.S. Department of Justice.”
“This investigation exemplifies the crucial law enforcement alliance the Air Force Office of Special Investigations enjoys with our DOJ counterparts,” said Special Agent Rayho. “We remain diligent in our mission to protect the vital technologies our national defense forces rely on.”
According to the affidavit in support of the criminal complaint, Justice stole proprietary trade secret materials from his employer and provided them to a person whom he believed to be a representative of a foreign intelligence service, but who was in fact an FBI undercover agent. In addition to their proprietary nature, the documents contained technical data covered by the U.S. Munitions List and therefore controlled for export from the United States under the International Traffic in Arms Regulations, according to the allegations. In exchange for providing these materials, Justice allegedly sought and received cash payments.
A criminal complaint contains allegations that a defendant has committed a crime. The defendant is presumed to be innocent until and unless proven guilty in court.
If convicted, Justice faces a statutory maximum penalty of 15 years in federal prison for the economic espionage charge and a statutory maximum penalty of 20 years in federal prison for violating the Arms Export Control Act.
The FBI and AFOSI investigated the case. Attorneys from the U.S. Attorney’s Office of the Central District of California and the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
Defense Contractor Employee Arrested for Selling Satellite Secrets to Undercover Agent Posing as Foreign SpyRead the Press Release
A Culver City, California, man was arrested yesterday on federal charges of economic espionage and violations of the Arms Export Control Act for his attempts to sell sensitive satellite information to a person he believed to be a foreign intelligence agent.
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Eileen M. Decker of the Central District of California, Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Field Office and Special Agent John Rayho of the U.S. Air Force Office of Special Investigations (AFOSI) Detachment Commander at Los Angeles Air Force Base made the announcement.
Gregory Allen Justice, 49, who worked for a cleared defense contractor as an engineer on military and commercial satellites during his alleged crimes, was arrested yesterday by FBI special agents and made his initial appearance yesterday afternoon in U.S. District Court for the Central District of California. The judge ordered him detained pending trial.
“Mr. Justice allegedly placed his own interests of greed over our national security by providing information on sensitive U.S. technologies to a person whom he believed was a foreign agent,” said Assistant Attorney General Carlin. “In the wrong hands, this information could be used to harm the United States and its allies. The National Security Division will continue to relentlessly identify, pursue and prosecute offenders that threaten our national security. I would like to thank the FBI and the Air Force Office of Special Investigations for their efforts in protecting our nation’s most sensitive information.”
“Our nation’s security depends on the honesty and integrity of those entrusted with our technological secrets,” said U.S. Attorney Decker. “In this case, the defendant sought to undermine our national security by attempting to sell proprietary and controlled information about satellites to a foreign government’s intelligence service. Fortunately, law enforcement agents were able to timely and effectively intervene to protect this critical technology.”
“The enforcement of U.S. laws that prohibit the acquisition of specified economic information and defense-related items is vital to national security and can prove to be a challenging mission when set against the backdrop of legitimate international trade, vast amounts of which occur every day in the United States,” said Assistant Director in Charge Fike. “The cooperative effort among the FBI and Air Force OSI was critical in bringing this case forward for prosecution by the U.S. Department of Justice.”
“This investigation exemplifies the crucial law enforcement alliance the Air Force Office of Special Investigations enjoys with our DOJ counterparts,” said Special Agent Rayho. “We remain diligent in our mission to protect the vital technologies our national defense forces rely on.”
According to the affidavit in support of the criminal complaint, Justice stole proprietary trade secret materials from his employer and provided them to a person whom he believed to be a representative of a foreign intelligence service, but who was in fact an FBI undercover agent. In addition to their proprietary nature, the documents contained technical data covered by the U.S. Munitions List and therefore controlled for export from the United States under the International Traffic in Arms Regulations, according to the allegations. In exchange for providing these materials, Justice allegedly sought and received cash payments.
A criminal complaint contains allegations that a defendant has committed a crime. The defendant is presumed to be innocent until and unless proven guilty in court.
If convicted, Justice faces a statutory maximum penalty of 15 years in federal prison for the economic espionage charge and a statutory maximum penalty of 20 years in federal prison for violating the Arms Export Control Act.
The FBI and AFOSI investigated the case. Attorneys from the U.S. Attorney’s Office of the Central District of California and the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
Seven Los Angeles Men Charged for Firebombing African-American ResidencesRead the Press Release
LOS ANGELES – Seven Los Angeles men were charged in a 10-count indictment unsealed today with participating in the 2014 firebombing of residences of African Americans living in the Boyle Heights section of Los Angeles. The defendants were also charged for their roles in a racketeering enterprise that used violence and intimidation to control the perceived territory of the Big Hazard street gang.
On June 22, 2016, a federal grand jury returned an indictment under seal charging the defendants, all of whom are members and associates of the Big Hazard or Hazard Grande (Hazard) street gang, with a variety of violations stemming from the racketeering enterprise and related to the alleged firebombing that occurred on May 12, 2014, which was intended to drive African Americans from the Ramona Gardens Housing Development (RGHD). The RGHD is a federally and city funded housing development that is occupied primarily by Hispanic residents and located in Boyle Heights.
Carlos Hernandez, aka Creeper and Rider, 31; Jose Saucedo, aka Lil’ Moe, 22; Francisco Farias, aka Bones, 25; Joseue Garibay, aka Malo, 23; Edwin Felix, aka Boogie, 23; Jonathan Portillo, aka Pelon, 21; and Joel Matthew Monarrez, aka Gallo, 21, were charged with conspiracy to violate civil rights; conspiracy to use fire and carry explosives to commit another federal felony; attempted arson of federal property; using fire and carrying explosives to commit another federal felony; aiding and abetting; violent crime in aid of racketeering and interference with housing rights. Hernandez and Farias were also charged with possessing, using, carrying a firearm during a crime of violence, and Felix was also charged with making a false statement to the FBI.
“The defendants used firebombs to drive the victims from their homes because of their race,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “This is a hate crime. Such violence and intimidation have no place in our society.”
The Firebombing
The indictment alleges that, in early May, Hernandez led a Hazard meeting at a location in the gang’s territory near the RGHD which was attended by the other defendants. During the meeting, Hernandez allegedly told the group that they were going to use Molotov cocktails to firebomb residential units in the RGHD that were occupied by African-American families. According to the indictment, Hernandez allegedly told the defendants during the meeting that the purpose of the firebombing was to “get the n****** out of the neighborhood,” or words to that effect.
“Crimes targeting innocent people based on the color of their skin are among the most heinous crimes a community can suffer,” said U.S. Attorney Eileen M. Decker of the Central District of California. “In this case, the crime was particularly disturbing since the targets of the criminal conduct included children. As the indictment unsealed today demonstrates, criminals that fuel racial animosity will face severe consequences. All of our communities are made safer by removing these defendants, for whom violence and intimidation are tools of their trade, from the streets.”
On Mother’s Day, May 11, 2014, Hernandez instructed the other defendants to meet at a location in Hazard territory to prepare for the attack. At the meeting, Hernandez distributed materials to be used during the firebombings, including disguises, gloves and other materials, according to the indictment.
The indictment alleges that Hernandez instructed the other defendants to split into groups, break victims’ windows in order to make clean entries, then ignite the firebombs and throw them into the victims’ residences in order to maximize damage. The defendants also took precautions in order to avoid detection by law enforcement.
“This investigation resulted in one of the largest civil rights indictments in local history thanks to the tireless efforts put forth by agents working with detectives to build this case over the past two years," said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. "The FBI is committed to seeking justice for the victims whose homes were barbarically firebombed as they put their children to bed, or anyone whose Constitutionally-protected right to happiness is threatened based on the color of their skin.”
Evidence gathered by investigators indicates this attack was motivated by hatred stemming from racial bias. Most of the victims of the firebombing were African-American families who were at home with their children, many of whom were minors.
“Hate crimes and arson are among the most heinous offenses that affect our community,” said Fire Chief Ralph M. Terrazas of the Los Angeles Fire Department (LAFD). “The LAFD greatly appreciates the tireless and collaborative efforts of the U.S. Attorney, FBI, ATF, LAPD and our own arson investigators, all of which assisted in the apprehension of the individuals accused in this case. We are hopeful that the U.S. Attorney will achieve a successful prosecution.”
The Racketeering Conspiracy
According to the indictment, the defendants were members and associates of the Hazard street gang, a criminal organization whose members engaged in, among other things, robbery, extortion, witness intimidation, trafficking and conspiracy to traffic in controlled substances.
The indictment further alleges that Hazard gang members promote the reputation of the criminal enterprise among other Hispanic gangs in Southern California and inside of state and federal prisons by carrying out Hazard leaders’ orders against rival gang members and perceived enemies. Further, Hazard members maintain control and authority over its territory, often through threats, intimidation, civil rights crimes and other acts of violence, including murder.
Hazard members are known to retaliate against rival gang members who challenge Hazard’s authority or who fail to pay debts owed to Hazard members and associates. The indictment further alleges Hazard members expose and punish fellow Hazard members who violate the gang’s rules, as well as expose and punish potential witnesses to crimes by Hazard members and associates who are suspected of cooperating with law enforcement or disrespecting Hazard members. The indictment further alleges that Hazard members impose unwritten rules regarding the control of its territory, including that African-American residents reside in RGHD at the pleasure of the gang and that they face retaliation and/or expulsion from RGHD if they offend Hazard members.
“I am very proud of the partnerships between our agencies that enabled us to investigate and apprehend these violent offenders who preyed upon our community in a manner that will not be tolerated,” said Chief Charlie Beck of the Los Angeles Police Department (LAPD).
“In a civil society, we cannot accept violence fueled by hatred, especially violence that seeks to deprive the freedoms we expect everyone has the right to enjoy,” said Special Agent in Charge Eric D. Harden of the ATF. “These arrests will hopefully bring peace of mind to both the residents of Ramona Gardens and the city of Los Angeles, and demonstrate that law enforcement is united against hate.”
The indictment alleges that the defendants and others conspired to injure, oppress, threaten and intimidate African American residents in violation of their constitutional rights, including the right to occupy a dwelling free from injury, intimidation and interference based on race and color. The indictment alleges Hazard members would spray paint or “tag” gang monikers and symbols on businesses and residences, obtain and possess guns and other dangerous weapons in order to enforce the authority of the Hazard gang, intimidate rivals and residents and attack rivals and African Americans, among other things.
The defendants and others allegedly met to discuss ways to threaten, intimidate, and attack African Americans in their residences, on the streets and elsewhere, to deter them from living in Ramona Gardens because of their race and color. Saucedo would confront African-American residents, including mixed-race children, and individually or collectively threaten them by telling them they were not welcome in Hazard gang territory, namely, RGHD, and that they risked harm if they remained as residents.
If convicted of all counts listed in the indictment, Saucedo, Garibay, Portillo and Monarrez face a maximum sentence of 110 years in prison. Hernandez and Farias face a maximum sentence of life in prison, and Felix faces a maximum penalty of 115 years in prison. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors.
An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty.
The investigation was conducted by agents and detectives with the LAPD’s Hollenbeck Division; the LAFD; the ATF; and the FBI Los Angeles Division’s Civil Rights Squad. The case is being prosecuted by Assistant U.S. Attorneys Mack E. Jenkins and Douglas M. Miller of the Central District of California and Trial Attorneys Patricia Sumner and Julia Gegenheimer of the Civil Rights Division’s Criminal Section.
Seven Los Angeles Men Charged for Firebombing African-American ResidencesRead the Press Release
Seven Los Angeles men were charged in a 10-count indictment unsealed today with participating in the 2014 firebombing of residences of African Americans living in the Boyle Heights section of Los Angeles. The defendants were also charged for their roles in a racketeering enterprise that used violence and intimidation to control the perceived territory of the Big Hazard street gang.
On June 22, 2016, a federal grand jury returned an indictment under seal charging the defendants, all of whom are members and associates of the Big Hazard or Hazard Grande (Hazard) street gang, with a variety of violations stemming from the racketeering enterprise and related to the alleged firebombing that occurred on May 12, 2014, which was intended to drive African Americans from the Ramona Gardens Housing Development (RGHD). The RGHD is a federally and city funded housing development that is occupied primarily by Hispanic residents and located in Boyle Heights.
Carlos Hernandez, aka Creeper and Rider, 31; Jose Saucedo, aka Lil’ Moe, 22; Francisco Farias, aka Bones, 25; Joseue Garibay, aka Malo, 23; Edwin Felix, aka Boogie, 23; Jonathan Portillo, aka Pelon, 21; and Joel Matthew Monarrez, aka Gallo, 21, were charged with conspiracy to violate civil rights; conspiracy to use fire and carry explosives to commit another federal felony; attempted arson of federal property; using fire and carrying explosives to commit another federal felony; aiding and abetting; violent crime in aid of racketeering and interference with housing rights. Hernandez and Farias were also charged with possessing, using, carrying a firearm during a crime of violence, and Felix was also charged with making a false statement to the FBI.
“The defendants used firebombs to drive the victims from their homes because of their race,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “This is a hate crime. Such violence and intimidation have no place in our society.”
The Firebombing
The indictment alleges that, in early May, Hernandez led a Hazard meeting at a location in the gang’s territory near the RGHD which was attended by the other defendants. During the meeting, Hernandez allegedly told the group that they were going to use Molotov cocktails to firebomb residential units in the RGHD that were occupied by African-American families. According to the indictment, Hernandez allegedly told the defendants during the meeting that the purpose of the firebombing was to “get the n****** out of the neighborhood,” or words to that effect.
“Crimes targeting innocent people based on the color of their skin are among the most heinous crimes a community can suffer,” said U.S. Attorney Eileen M. Decker of the Central District of California. “In this case, the crime was particularly disturbing since the targets of the criminal conduct included children. As the indictment unsealed today demonstrates, criminals that fuel racial animosity will face severe consequences. All of our communities are made safer by removing these defendants, for whom violence and intimidation are tools of their trade, from the streets.”
On Mother’s Day, May 11, 2014, Hernandez instructed the other defendants to meet at a location in Hazard territory to prepare for the attack. At the meeting, Hernandez distributed materials to be used during the firebombings, including disguises, gloves and other materials, according to the indictment.
The indictment alleges that Hernandez instructed the other defendants to split into groups, break victims’ windows in order to make clean entries, then ignite the firebombs and throw them into the victims’ residences in order to maximize damage. The defendants also took precautions in order to avoid detection by law enforcement.
“This investigation resulted in one of the largest civil rights indictments in local history thanks to the tireless efforts put forth by agents working with detectives to build this case over the past two years,” said Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Division. “The FBI is committed to seeking justice for the victims whose homes were barbarically firebombed as they put their children to bed, or anyone whose Constitutionally-protected right to happiness is threatened based on the color of their skin.”
Evidence gathered by investigators indicates this attack was motivated by hatred stemming from racial bias. Most of the victims of the firebombing were African-American families who were at home with their children, many of whom were minors.
“Hate crimes and arson are among the most heinous offenses that affect our community,” said Fire Chief Ralph M. Terrazas of the Los Angeles Fire Department (LAFD). “The LAFD greatly appreciates the tireless and collaborative efforts of the U.S. Attorney, FBI, ATF, LAPD and our own arson investigators, all of which assisted in the apprehension of the individuals accused in this case. We are hopeful that the U.S. Attorney will achieve a successful prosecution.”
The Racketeering Conspiracy
According to the indictment, the defendants were members and associates of the Hazard street gang, a criminal organization whose members engaged in, among other things, robbery, extortion, witness intimidation, trafficking and conspiracy to traffic in controlled substances.
The indictment further alleges that Hazard gang members promote the reputation of the criminal enterprise among other Hispanic gangs in Southern California and inside of state and federal prisons by carrying out Hazard leaders’ orders against rival gang members and perceived enemies. Further, Hazard members maintain control and authority over its territory, often through threats, intimidation, civil rights crimes and other acts of violence, including murder.
Hazard members are known to retaliate against rival gang members who challenge Hazard’s authority or who fail to pay debts owed to Hazard members and associates. The indictment further alleges Hazard members expose and punish fellow Hazard members who violate the gang’s rules, as well as expose and punish potential witnesses to crimes by Hazard members and associates who are suspected of cooperating with law enforcement or disrespecting Hazard members. The indictment further alleges that Hazard members impose unwritten rules regarding the control of its territory, including that African-American residents reside in RGHD at the pleasure of the gang and that they face retaliation and/or expulsion from RGHD if they offend Hazard members.
“I am very proud of the partnerships between our agencies that enabled us to investigate and apprehend these violent offenders who preyed upon our community in a manner that will not be tolerated,” said Chief Charlie Beck of the Los Angeles Police Department (LAPD).
“In a civil society, we cannot accept violence fueled by hatred, especially violence that seeks to deprive the freedoms we expect everyone has the right to enjoy,” said Special Agent in Charge Eric D. Harden of the ATF. “These arrests will hopefully bring peace of mind to both the residents of Ramona Gardens and the city of Los Angeles, and demonstrate that law enforcement is united against hate.”
The indictment alleges that the defendants and others conspired to injure, oppress, threaten and intimidate African American residents in violation of their constitutional rights, including the right to occupy a dwelling free from injury, intimidation and interference based on race and color. The indictment alleges Hazard members would spray paint or “tag” gang monikers and symbols on businesses and residences, obtain and possess guns and other dangerous weapons in order to enforce the authority of the Hazard gang, intimidate rivals and residents and attack rivals and African Americans, among other things.
The defendants and others allegedly met to discuss ways to threaten, intimidate, and attack African Americans in their residences, on the streets and elsewhere, to deter them from living in Ramona Gardens because of their race and color. Saucedo would confront African-American residents, including mixed-race children, and individually or collectively threaten them by telling them they were not welcome in Hazard gang territory, namely, RGHD, and that they risked harm if they remained as residents.
If convicted of all counts listed in the indictment, Saucedo, Garibay, Portillo and Monarrez face a maximum sentence of 110 years in prison. Hernandez and Farias face a maximum sentence of life in prison, and Felix faces a maximum penalty of 115 years in prison. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors.
An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty.
The investigation was conducted by agents and detectives with the LAPD’s Hollenbeck Division; the LAFD; the ATF; and the FBI Los Angeles Division’s Civil Rights Squad. The case is being prosecuted by Assistant U.S. Attorneys Mack E. Jenkins and Douglas M. Miller of the Central District of California and Trial Attorneys Patricia Sumner and Julia Gegenheimer of the Civil Rights Division’s Criminal Section.
Hernandez et al Indictment
Information Technology Companies to Pay $5.8 Million for Misrepresentations Relating to Small Business Status and Contract Fee PaymentsRead the Press Release
WASHINGTON – En Pointe Gov. Inc., En Pointe Technologies Inc., En Pointe Technologies Sales Inc., Dominguez East Holdings LLC and Din Global Corp., all of Gardena, California, have agreed to resolve allegations that they violated the False Claims Act by falsely certifying that En Pointe Gov. Inc. was a small business in order to obtain contracts set aside for small businesses and underreporting sales under a General Services Administration (GSA) contract to avoid the payment of fees, the Department of Justice announced today. Under the settlement agreement, the companies have agreed to pay slightly more than $5.8 million. En Pointe Gov. Inc. is now known as Modern Gov IT Inc.; En Pointe Technologies Sales Inc. is now known as Collab9 Inc.; and En Pointe Technologies Inc. is now known as Dinco Inc.
“Contractors who misrepresent their eligibility for government contracts, or fail to pay amounts owed under those contracts, undermine the integrity of the procurement process,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Justice Department will take action to fully protect taxpayer funds.”
“These companies defrauded the government in two ways, each of which cost taxpayers,” said U.S. Attorney Eileen M. Decker for the Central District of California. “Small businesses, in some cases, are eligible to receive a preference when government contracts are issued. Large companies that fraudulently solicit and obtain contracts under small business set-aside programs, like the companies in this case, not only abuse the system but also harm legitimate small businesses by taking those contracts away from them.”
The government alleged that, between 2011 and 2014, the defendants were liable for false representations that En Pointe Gov. Inc. met Small Business Administration (SBA) requirements to obtain work that was only available to small businesses. In particular, the government alleged that En Pointe Gov Inc.’s affiliation with the other defendants rendered it a non-small business and, thus, ineligible for the small business set-aside contracts it obtained.
The government also alleged that defendants caused En Pointe Gov. Inc. to file false quarterly reports with the GSA between 2008 and 2015 underreporting sales made under a GSA schedule contract that allowed other federal agencies to purchase from En Pointe. Under the terms of the contract, En Pointe was supposed to return to GSA a percentage of its sales receipts. By allegedly misrepresenting the amount of its sales, En Pointe underpaid the fees that it owed to GSA.
“GSA contractors must be forthright in their dealings with the United States,” said GSA Inspector General Carol Fortine Ochoa.
“Federal contracts set aside for small businesses are intended to grow the economic base of the nation,” said SBA Inspector General Peggy E. Gustafson. “The Office of Inspector General will aggressively investigate such misrepresentations to ensure only eligible businesses are awarded these contracts. I want to thank the U.S. Department of Justice for its dedication to pursuing justice in this case.”
“This case represents the cooperative effort of SBA and the Department of Justice to uncover and remedy fraud in federal contracting with small businesses,” said SBA General Counsel Melvin F. Williams, Jr. “Uncovering and pursuing fraud cases is one of SBA’s highest priorities.”
The settlements resolve allegations filed in a lawsuit by Minburn Technology Group, LLC (Minburn), a Virginia company that sells information technology products and services, and Anthony Colangelo, Minburn’s managing member. The lawsuit was filed under the qui tam, or whistleblower, 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. Minburn and Mr. Colangelo will receive approximately $1.4 million.
This settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California and the GSA and SBA Inspector General Offices.
The case is captioned United States ex rel. Colangelo et al. v. En Pointe Gov., Inc., et al., CV14-5865-RGK (JPRx) (C.D. Cal.). The claims resolved by the settlements are allegations only and there has been no determination of liability.
Four Members and Associates of the Florencia 13 Gang ConvictedRead the Press Release
LOS ANGELES – A federal jury late Tuesday convicted three men and one woman from Los Angeles County of conspiring to participate in the racketeering activities of the Florencia 13 criminal street gang (F13 Gang), as well as of related drug trafficking and firearms offenses.
Jose Dorado, 34, Tannous Fazah, 26, Jose Sanchez, 40, all of Huntington Park, and Giselle Casado, 33, of Downey, were convicted late yesterday in United States District Court following a 13-day trial. All four defendants were found guilty of both Racketeer Influenced and Corrupt Organizations (RICO) Conspiracy and Drug Trafficking Conspiracy, the latter being based on the F13 Gang’s street sales of illegal narcotics and coordinated operations to smuggle drugs into the Los Angeles County Jail (LACJ).
After the jury returned its verdicts, United States District Judge Beverly Reid O’Connell scheduled sentencing hearings for October 24, 2016.
“These defendants beat and shot a young man to death and increased the flow of illegal drugs into our community,” said United States Attorney Eileen M. Decker. “The verdicts remove these violent defendants from our community and deal an important blow against the Florencia 13 gang’s campaign of drugs and violence.”
Dorado and Fazah alone were found guilty of conspiring to commit a Violent Crime in Aid of Racketeering (VICAR) for a gang-related beating in Huntington Park that ultimately led to the shooting death of the victim. Dorado and Fazah also were found guilty of possessing a controlled substance with the intent to distribute it (heroin and methamphetamine, respectively) and of each being a felon in possession of a firearm and ammunition. Additionally, Sanchez was found guilty of possessing a firearm in furtherance of a drug trafficking crime, based on his possession of a handgun at one of the illegal gambling establishments run by the gang known as “casitas.”
Dorado and Casado were arrested on August 6, 2013 as part of a large-scale takedown of more than 20 members and associates of the F13 Gang. Fazah and Sanchez were later transferred to the United States District Court from state custody, where they had been incarcerated on separate felony state charges.
“This multi-agency law enforcement effort exhibits the positive community impact of focused, diligent and dedicated investigative work,” said ATF Special Agent in Charge Eric D. Harden. “ATF remains steadfast in its stance to disrupt organized gang activity and seek prosecution of anyone who chooses to offend at will, denying law abiding citizens a community or workplace free from violence.”
As demonstrated at trial, Dorado, Fazah, and Sanchez were F13 Gang “soldiers” who engaged in narcotics trafficking, violence, and/or firearms possession in furtherance of the gang. For her part, Casado was shown to be a “secretary” who assisted the extortionate tax collections and drug trafficking activities of the gang’s two “shot callers” on the streets; and she also repeatedly visited the operational leader of the gang – Mexican Mafia member Leonel Laredo, aka “Wizard” – imprisoned at Pelican Bay State Prison in Crescent City, California, to relay gang-related messages.
“The Los Angeles Sheriff's Department and Operation Safe Street Bureau were pleased to hear that the collaborative efforts between the Federal Government and the LASD resulted in these significant convictions,” said Captain Matt Burson, Sheriff's Operation Safe Streets Bureau. “Although these violent criminal street gangs continue to exist today, joint law enforcement endeavors such as this are proven to be effective and further collaboration with our Federal partners is welcomed.”
The evidence at trial showed, among other things, that Dorado and Fazah received an order from an incarcerated, senior F13 Gang member to violently discipline a junior member of the gang. That order, which was communicated during a recorded call over the LACJ inmate telephone system, included instructions both to beat the victim severely and to kill him. That night, Fazah, Dorado, and other F13 Gang members lured the victim into an alley and attacked him. At the conclusion of the brutal beating that ensued, Fazah brandished a handgun and shot the victim in the face, killing him. Dorado then reported back to the incarcerated F13 Gang member who issued the order: “That’s a done deal. You don’t gotta worry about that punk no more.”
Dorado was also involved in the F13 Gang’s efforts to smuggle illegal narcotics into local jails. As revealed by a series of inmate telephone recordings, he participated in the attempt to have a co-conspirator smuggle heroin, marijuana, and methamphetamine through the Los Angeles Metropolitan Courthouse on Hill Street.
The evidence further showed that Sanchez participated in the F13 Gang’s drug trafficking activities at the gang’s casitas. Sanchez also served as armed security and carried a firearm to protect the casita’s drug operations.
Chief Cosme Lozano of the Huntington Park Police Department said: “We are extremely pleased with the outcome of this investigation and the conviction of the suspects. These violent gang members belong in prison, not in our communities. This case is an example of what can be accomplished when local, state, and federal agencies collaborate to investigate, arrest, and successfully prosecute these violent criminals.”
At the time of sentencing, all defendants will face a statutory maximum sentence of life imprisonment on the RICO Conspiracy and Drug Trafficking Conspiracy counts, as well as mandatory minimum prison terms of 10 years based on the amounts of methamphetamine at issue. Sanchez will face an additional five-year mandatory, consecutive term of imprisonment due to his conviction for possession of a firearm in furtherance of a drug trafficking crime.
Dorado, Fazah, and Sanchez have all been held without bond since entering federal custody. Casado had been released on bond since her arrest in August 2013; however, after the verdicts Judge O’Connell ordered her remanded to the custody of the U.S. Marshals’ Service.
The investigation in this case was conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Los Angeles County Sheriff’s Department, the California Department of Corrections and Rehabilitation, the Huntington Park Police Department, and the Los Angeles Police Department. The case is being prosecuted by Assistant United States Attorneys Terrence P. Mann, Sheila Nagaraj and Victoria Degtyareva.
Former Glendale Resident Who Provided “Technical Support” to Identity Theft Ring Sentenced to over 12 Years in PrisonRead the Press Release
LOS ANGELES – A man who formerly resided in Glendale has been sentenced to more than 12 years in federal prison for his role of providing “technical support” to a credit card fraud ring that caused an estimated loss of more than $3,000,000 during his participation and for applying for a passport in a false identity in an effort to flee prosecution.
Mario Humberto Monge, 52, who was already in custody, was sentenced this morning by United States District Judge Percy Anderson to 145 months in prison and ordered to pay over $358,000 in restitution. Judge Anderson said there was a high likelihood this defendant would reoffend because he was previously convicted of virtually the same conduct and that society needed to be protected from him.
“Sophisticated identity theft rings like the one involved here could not function without technical skills,” said United States Attorney Eileen M. Decker. “Mr. Monge’s use of his electrical engineering knowledge to maintain the skimmers and other technology used by this ring enabled an estimated $3 million in losses suffered by approximately 44 victim financial institutions.”
According to the documents in the case, other members of the identity theft ring led authorities to Monge’s Glendale residence. In February of 2015, law enforcement executed search warrants at several locations related to the ring, including Monge’s residence. At that time, authorities seized a large amount of cash, currency counting machine, gas pump skimmer, skimmer electronic parts, a gas pump lock and key, and approximately 428 confirmed re-encoded credit/debit cards. At the time, Monge stated to authorities that his role was to provide “technical support/repairman” to the fraud ring because of his engineering background.
After authorities searched his residence, Monge applied for passports in false names as part of a plan to flee the country. Authorities searched his residence again in June of 2015 and seized additional identity theft related evidence, including an additional 33 re-encoded credit/debit cards.
“Task force members investigating this case worked from the bottom up to determine the extent of the criminal organization and to uncover how and with whom it functioned as it victimized dozens of institutions,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “I hope this lengthy sentence for Mr. Monge, a repeat offender, serves as a warning to those conducting similar criminal activity.”
When imposing sentence the judge considered Monge’s criminal history, which included prior federal convictions for fraud involving cloned cellphone devices and possession of firearm silencers without serial numbers. Judge Anderson also said that Monge’s applying for passports in false names while on bond showed a lack of respect for the law.
The investigation into Monge was conducted by the Southern California Identity Theft Task Force which includes the Federal Bureau of Investigation, the Los Angeles County Sheriff’s Department, and the U.S. Department of State.
Former Postal Employee Makes Appearance in Federal Court After Agreeing to Plead Guilty to Stealing from the Mail and Selling at Least 6,240 Credit CardsRead the Press Release
SANTA ANA, California – A Garden Grove man who worked for the United States Postal Service for more than two decades appeared in federal court this morning after agreeing to plead guilty to stealing from the mail and selling at least 6,240 credit cards.
Chinh Vuong, 48, was summonsed into federal court this morning.
Vuong was charged last week with one count of conspiracy to commit bank fraud and one count of aggravated identity theft for stealing mail while on the job for a year and using the information in the mail for identity theft.
“Postal employees have a duty to conduct postal business in a professional manner, to ensure the proper delivery of the public's mail," said United States Attorney Eileen M. Decker. “This defendant, who was entrusted with providing this important public service, victimized thousands of postal customers to finance a life of luxury. Such conduct is contrary to the long-established tradition of the postal service and its employees, whose honest delivery of mail contributes every day to the economic vitality of our country.”
According to the documents filed in the case, Vuong had worked at the United States Postal Service Santa Ana Processing and Distribution Center (“Santa Ana P. & D.C.”) as a mail processing clerk since 1989. Between October 6, 2014, and October 6, 2015, while working at the Santa Ana P. & D.C., Vuong stole at least 6,240 credit cards from undelivered mail for the profit of him and others. Vuong made at least $6,000 per month selling stolen credit cards.
Vuong used the funds from the sale of stolen credit cards to pay for personal expenses, including designer handbags and boots, two BMWs, alcohol, and drugs. On October 6, 2015, federal authorities searched Vuong’s Garden Grove residence and seized approximately 199 stolen credit cards and luxury items bought using the proceeds from selling stolen credit cards, including two BMWs and over 20 handbags made by brands like Prada, Louis Vuitton, and Gucci.
Special Agent in Charge Brian Washington added, “The USPS OIG conducts internal investigations to include mail theft and misconduct by postal employees. The overwhelming majority of postal employees are honest, hardworking and trustworthy individuals who would never consider engaging in any form of criminal behavior. However, when a postal employee betrays that trust, our special agents vigorously investigate those matters as has been done in this case.”
Robert Wemyss, Postal Inspector in Charge of the Los Angeles Division, stated “The overwhelming majority of Postal Service employees work conscientiously to move the nation’s mail to its proper destination. When that trust is compromised the United States Postal Inspection Service takes proper investigative steps to have them and their co-conspirators prosecuted.”
“Citizens need to rely on the security of the U.S. mail and the integrity of the postal carriers with whom their correspondence and their privacy is entrusted," said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. "By lining his pockets through identity theft, Mr. Vuong breached the trust placed in him by citizens who paid his salary and the companies which sustained a financial loss.”
Vuong entered not guilty pleas this morning and his matter was assigned to United States District Judge Cormac J. Carney. Although a trial date of August 30 was set, it is expected that Judge Carney will set a change of plea hearing in the near future where Vuong will plead guilty to both counts.
The charge of aggravated identity theft carries a mandatory minimum sentence of two years in federal prison—which must run consecutively with the sentence imposed for the bank fraud conspiracy charge. The bank fraud charge conspiracy carries a statutory maximum sentence of 30 years.
The investigation into Vuong was conducted by United States Postal Inspection Service, United States Postal Service Office of the Inspector General, and the Federal Bureau of Investigation. Westminster Police Department also provided assistance in the investigation.
Former Member of Westminster Planning Commission to Face Federal Charge of Soliciting Bribe to Help Obtain a Liquor LicenseRead the Press Release
SANTA ANA, California – A former member of the Planning Commission for the City of Westminster is scheduled to be arraigned today on charges of soliciting and receiving a $15,000 bribe to help a person obtain a liquor license.
Dave Phuong Dinh Vo, 42, of Westminster, is expected to surrender and be arraigned this morning on one count of bribery in a program receiving federal funds.
Vo has agreed to plead guilty to the federal bribery charge.
“Public officials like Mr. Vo must serve the interests of the public at all times, and not succumb to the temptation of accepting bribes from those seeking to influence the process," said United States Attorney Eileen M. Decker. “The people of Westminster deserve to have confidence that their government is granting permits based on merit rather than those willing to pay bribes.”
Vo served as a Planning Commissioner in the Orange County city from early 2009 through August 25, 2011. As a Planning Commissioner, Vo had influence over the issuance of conditional use permits.
In June 2011, Vo solicited a $15,000 bribe from a confidential informant working with the FBI, he admitted in a plea agreement. During August 2011, over the course of four meetings, Vo received payments that totaled $15,000 in exchange for pushing the liquor license through the city’s approval process.
"Corrupt activity such as the defendant's in this case leads to an erosion of trust in government by citizens whose livelihoods depend on decisions made by elected officials," said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. "Mr. Vo's admission of guilt is a welcome step in restoring that trust."
The charging document, called an information, and the plea agreement were filed June 2 in United States District Court.
The bribery charge carries a statutory maximum penalty of 10 years in federal prison.
The case against Vo was investigated by the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Daniel Ahn of the Santa Ana Branch Office.
Illinois Man Charged with Hacking Apple iCloud and Gmail Accounts Belonging to More Than 300 People, including Many CelebritiesRead the Press Release
LOS ANGELES – An Illinois man was charged today with felony computer hacking related to a phishing scheme that gave him illegal access to over 300 Apple iCloud and Gmail accounts, including those belonging to members of the entertainment industry in Los Angeles.
Edward Majerczyk, 28, who resides in Chicago and Orland Park, Illinois, was named in a criminal information filed today in United States District Court in Los Angeles. Majerczyk has signed a plea agreement in which he agrees to plead guilty to a felony violation of the Computer Fraud and Abuse Act, specifically, one count of unauthorized access to a protected computer to obtain information.
Although Majerczyk has been charged in Los Angeles, the parties have agreed to transfer the case to the Northern District of Illinois for the entry of his guilty plea and sentencing. Once he enters the guilty plea, Majerczyk will face a statutory maximum sentence of five years in federal prison.
“Hacking of online accounts to steal personal information is not merely an intrusion of an individual’s privacy but is a serious violation of federal law,” said United States Attorney Eileen M. Decker. “Defendant’s conduct was a profound intrusion into the privacy of his victims and created vulnerabilities at multiple online service providers.”
Majerczyk’s plea agreement was lodged today in United States District Court for the Central District of California and will be executed upon transfer of the case to the Northern District of Illinois. According to the factual basis in the plea agreement, from November 23, 2013 through August 2014, Majerczyk engaged in a phishing scheme to obtain usernames and passwords for his victims. He sent e-mails to victims that appeared to be from security accounts of internet service providers that directed the victims to a website that would collect the victims’ usernames and passwords. After victims responded by entering information at that website, Majerczyk had access to victims’ usernames and passwords. After illegally accessing the iCloud and Gmail accounts, Majerczyk obtained personal information including sensitive and private photographs and videos, according to his plea agreement.
“This defendant not only hacked into e-mail accounts – he hacked into his victims’ private lives, causing embarrassment and lasting harm,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “As most of us use devices containing private information, cases like this remind us to protect our data. Members of society whose information is in demand can be even more vulnerable, and directly targeted.”
The charge against Majerczyk stems from the investigation into the leaks of photographs of numerous female celebrities in September 2014 known as “Celebgate.” However, investigators have not uncovered any evidence linking Majerczyk to the actual leaks. Many of Majerczyk’s victims were members of the entertainment industry in Los Angeles. By illegally accessing the e-mail accounts, Majerczyk accessed at least 300 accounts, and at least 30 accounts belonging to celebrities.
The case against Majerczyk is the product of an investigation by the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys Ryan White and Vicki Chou of the Cyber and Intellectual Property Crimes Section.
23 People Indicted in Decades-Long, $126 Million Telemarketing Scheme involving Sale of Toner for Copiers and PrintersRead the Press Release
SANTA ANA, California – Federal authorities and Huntington Beach Police officers this morning arrested 20 defendants indicted by a grand jury on charges of participating in a long-running telemarketing scheme that targeted small businesses and charities by selling them toner products for printers and photocopiers at grossly inflated prices.
The indictment unsealed after this morning’s arrests alleges that participants in the scheme fraudulently induced over 50,000 victims to send more than $126 million to telemarketers who posed as the victims’ regular supplier of toner products at prices as much as ten times the normal retail price.
The 30-count indictment, which charges 23 defendants, alleges a conspiracy that started in 1988 and was orchestrated by Gilbert N. Michaels, a West Los Angeles man who had previously been ordered by federal and state court judges to cease fraudulent and deceptive business practices related to toner sales. Michaels owned and operated IDC SERVCO, a Culver City-based business that sold toner to small businesses, charities (such as Easter Seals Disability Services and the United Way), schools, churches, city governments and other entities in the United States and Canada.
In addition to the 20 defendants arrested this morning, two other defendants have agreed to surrender in the coming days. Authorities continue to search for the final defendant. Those taken into custody in this district this morning are expected to be arraigned this afternoon in United States District Court in Santa Ana.
“This toner fraud has been a tremendous burden on small businesses across America for many years,” said United States Attorney Eileen M. Decker. “The fraud had a tremendous impact on some victims, who reported a severe impact on their finances, and the collective losses caused by the fraud were massive.”
“This case originated from the initiative of the Huntington Beach Police Department,” said Special Agent in Charge L. Robert Savage of the U.S. Secret Service’s Los Angeles Field Office. “Their long-term partnership and steadfast collaboration with the Secret Service and other law enforcement agencies led to the dismantling of a large-scale fraud operation, which impacted victims throughout the United States.”
“The teamwork and tenacity of the agencies, investigators and prosecutors involved in this complex investigation is a testament to law enforcement’s united commitment to pursue accountability for criminals and justice for victims,” said Huntington Beach Police Chief Robert Handy.
“I’d like to commend our partners at the Huntington Beach Police Department and the U.S. Secret Service for their initiative and tenacity in following the evidence to what ultimately amounted to an enormous scheme. It is an honor to work with these agencies,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The actions of the defendants, some of whom became millionaires through the scheme, specifically targeted and victimized America’s small businesses and charities.”
The indictment outlines a scheme in which telemarketers at a series of companies called victim organizations and claimed to be their regular supplier of toner or affiliated with those suppliers. The telemarketers typically told employees at the victim companies that the price of toner had increased and they had not been notified, however, the victims now had a chance to purchase toner at the previous, lower price. Believing that they were dealing with their regular supplier of toner supplies, employees at the victim companies signed order confirmation forms, which prompted Michael’s company to ship toner to victims and send invoices that demanded payment at inflated prices.
When the victim companies realized they had been scammed, they called IDC to complain. The victims were told IDC could not cancel the order or refund money because the victims had signed order confirmation forms, according to the indictment, which further alleges that IDC failed to disclose its relationships to the telemarketing companies that had actually brokered the fraudulent deals.
In many cases, the indictment alleges, IDC employees threatened victims with collections or legal action if they did not pay an invoice. In the cases where IDC agreed to take toner back, victims were forced to pay significant “restocking fees.”
The indictment alleges that most victims received toner at no extra cost as part of their printer or copier service agreements. The indictment alleges the telemarketers knew there had not been a price increase for toner, and failed to disclose that the prices they were charged were two to ten times the regular cost of toner.
Another aspect of the fraud was that the telemarketers failed to disclose that they were affiliated with IDC. In a series of court orders dating back to November 1988, Michaels and his companies were prohibited from making false statements – such as that they were a usual supplier of photocopier supplies or that there had been price change – and they were required to provide oversight to “independent sales companies.” Michaels allegedly violated these court orders by working with and providing financing to independent sales companies that were engaged in deceptive and fraudulent practices, despite the fact that IDC received thousands of complaints from victims claiming they had been defrauded.
The defendants named in the indictment are:
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Gilbert “Gil” N. Michaels, 73, of West Los Angeles, the owner of G.N.M. Financial Services Inc., doing business as IDC SERVCO and Mytel International, Inc.;
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Jerry P. Feldman, 61, of Mar Vista, a longtime associate of Michaels who is the vice president of IDC;
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Anjanette S. Lester, 60, of Garden Grove, who owned Supply Processing Center, Inc. and Invoice Processing Center, Inc.;
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Glen K. Katayama, 48, of Fullerton, who owned GK Ventures, Inc., Supply Management Center, and Copier Products Center;
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Tiffany M. Ostrander, 32, of Newport Beach, who owned Epic Distribution, Inc. and Supply Fulfillment Center;
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Ostrander’s husband, Sean S. Moustakas, 35, of Newport Beach, who also owned and/or controlled Epic Distribution, Inc. and Supply Fulfillment Center;
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James R. Milheiser, 49, of Huntington Beach, who owned and/or controlled Material Distribution Center, PDM Marketing, Bird Coop Industries, Inc., and Copier Products Center;
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Thomas A. Sanetti, 49, of Huntington Beach, who also owned and/or controlled Material Distribution Center; Bird Coop Industries, Inc.; and Copier Products Center, as well as West Coast Distribution and Uncaged Industries, Inc., who has agreed to surrender to authorities in the coming days;
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Cynthia A. Weekes, 47, of Pacific Palisades, who owned Coastal Distribution Center, Inc.;
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Cynthia Weekes’ husband, Michael B. Weekes, 44, of Pacific Palisades, who also owned Coastal Distribution Center, Inc., the one defendant who is still being sought by authorities;
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Daniel C.J. Ellis, 59, of Folsom, who owned Turner Supply Company, Inc. and Tech Transfer, Inc. (doing business as Delray Supply Company), who is expected to appear this afternoon in federal court in Sacramento;
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Leah D. Johnson, 52, of Ignacio, Colorado, who owned Capital Supply Center and LJT Distribution, Inc., who is expected to appear this afternoon in federal court in Durango, Colorado;
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John A. Buzzard, 60, of San Diego, who also owned and/or controlled Capital Supply Center and LJT Distribution, Inc.;
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Jonathan M. Brightman, 49, of West Lake Village, who owned Copy Com Distribution, Inc.; Independent Cartridge Supplier; and Corporate Products, who has agreed to surrender to authorities in the coming days;
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Stephen D. Paine, 51, of Hollywood, who owned Case Distribution Services, Inc.;
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Sharon Scandaliato Virag, 51, of West Hills, who owned XL Supply, Inc.;
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Glen M. Diamond III, 38, of Carlsbad, who owned Specialty Business Center; Specialty Office Products, Inc.; and Elite Office Supplies, Inc.;
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Tammi L. Williams, 41, of Chino Hills, who was the office manager at Elite Office Supply, and also worked at Specialty Business Center, Rancho Office Supply and Select Imaging Supplies;
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Christina M. Cadena, 49, of Vista, who owned Warehouse Service Center, Inc. and Resource Processing Center, Inc.;
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Michelle C. Nunez, 53, of Menifee, who also owned and/or controlled Warehouse Service Center, Inc. and Resource Processing Center, Inc.;
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Francis “Frank” S. Scimeca, 51, of Woodland Hills, who owned Supply Central Distribution, Inc. and Priority Office Supply;
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Cynda L. Hill, 43, of Rancho Cucamonga, who owned and/or controlled Distribution Service Center, Inc. and C&H Management; and
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Cynda Hill’s husband, Henry L. Hill II, 44, of Rancho Cucamonga, who also owned and/or controlled Distribution Service Center, Inc., and C&H Management.
All 23 defendants are charged with conspiracy to commit mail fraud. Each of the 23 is charged in at least one of the two dozen mail fraud counts alleged in the indictment. Michaels is additionally charged with five counts of money laundering.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
All of the charges in the indictment carry a statutory maximum penalty of 20 years in federal prison, except for two of the money laundering against Michaels, which carry a 10-year maximum prison term.
The four-year investigation into this toner fraud case was conducted by the Huntington Beach Police Department, the United States Secret Service, the FBI and the Orange County District Attorney’s Office. Several other agencies assisted with today’s arrests and search warrant executions as well as at various points during the investigation. The case is being prosecuted by Assistant United States Attorney Greg Staples.
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Paul Tanaka, Former No. 2 in the Los Angeles Sheriff’s Department, Sentenced to Five Years in Federal Prison for Obstructing Federal Investigation into Misconduct at County JailsRead the Press Release
LOS ANGELES – Paul Tanaka, who was the second in command of the Los Angeles Sheriff’s Department, was sentenced today to 60 months in federal prison for his conviction on obstruction of justice charges stemming from him leading the LASD’s efforts to derail a federal investigation into corruption and civil rights violations by sheriff’s deputies at two downtown jail complexes.
Tanaka, 57, a resident of Gardena who left the LASD in 2013 when he was the undersheriff, was sentenced this morning by United States District Judge Percy Anderson. In addition to the five-year prison term, which Tanaka was ordered to begin serving on August 1, Judge Anderson ordered the defendant to pay a $7,500 fine.
In sentencing Tanaka, Judge Anderson recounted Tanaka’s career at the LASD, his role in the scheme to obstruct justice, and “the incalculable harm you have caused this community.”
While he was the assistant sheriff in charge of the jails, Tanaka “perpetrated an environment of excessive deputy conduct,” according to Judge Anderson, who said Tanaka’s actions led directly to an increased number of use-of-force incidents against inmates at the jails. The obstruction of justice scheme was designed “to derail the federal grand jury investigation” and constituted “a gross abuse of the public trust.”
A federal jury on April 6 found Tanaka guilty of two felony offenses – conspiring to obstruct justice and a substantive count of obstructing justice. After a 10-day trial, a federal jury deliberated for only a few hours before convicting Tanaka of being the head of a broad conspiracy to obstruct the federal investigation, a scheme that started when the LASD learned that an inmate at the Men’s Central Jail (MCJ) was an FBI informant. Tanaka directed a conspiracy that has resulted in the conviction of other former LASD officials who received sentences of up to 41 months in prison.
“Paul Tanaka supervised a scheme to obstruct the FBI’s investigation into corruption and civil rights violations at the jails,” said United States Attorney Eileen M. Decker. “Mr. Tanaka was the ringleader and the driving force behind a plot that concealed an FBI informant, tampered with witnesses and led to the threatened arrest of an FBI agent for doing nothing more than her job. In addition to being a top law enforcement officer who was personally involved in the obstruction of justice, Mr. Tanaka was responsible for a culture that unfortunately led to the widespread abuse of inmates at the jails that he personally oversaw.”
Tanaka was the undersheriff – the number 2 in the LASD – until 2013, and he ran an unsuccessful campaign for sheriff in 2014. As he rose through ranks during a 31-year career with the LASD, Tanaka became well aware of problems with deputies at the jails, allegations of rampant abuse of inmates and insufficient internal investigations into deputy misconduct. “During his time as an executive, defendant threatened to discipline
supervisors who frequently referred deputies to Internal Affairs, transferred captains who tried to reduce deputy abuse and break up cliques, instructed deputies to work in the ‘gray area’ of law enforcement, and expressed his desire to gut Internal Affairs,” prosecutors wrote in a sentencing memorandum filed with the court. Tanaka’s “actions caused deputies to believe that they could act with impunity, which, unfortunately, they did much too frequently.”
“Mr. Tanaka swore to serve the county of Los Angeles, but disappointed the people through his corrupt actions, as well as many in the department under his command and influence,” said Deirdre Fike, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “As this investigation comes to a close, the department's law-abiding deputies who serve honorably can put this behind them under new leadership at the L.A. Sheriff's Department."
The scheme to disrupt the federal investigation started in August 2011 when deputies recovered a mobile phone from an inmate in MCJ, linked the phone to the FBI, and determined that the inmate was an informant in the FBI’s corruption and civil rights investigation. The phone was given to the inmate as part of an undercover investigation by a corrupt deputy, who subsequently pleaded guilty to a federal bribery charge and was recently sentenced to federal prison.
In response to the federal investigation, members of the Tanaka-led conspiracy took steps to hide the cooperator from the FBI and the United States Marshals Service, which was attempting to bring the inmate to testify before a federal grand jury. The evidence presented during Tanaka’s trial showed that the deputies altered records to make it appear that the cooperator had been released from jail, when in fact he had been re-booked into custody under a fake name and moved to an LASD patrol station. Members of the conspiracy prohibited FBI access to the informant, and then told the cooperator that he had been abandoned by the FBI.
Over the course of several weeks, members of the conspiracy sought an order from a Los Angeles Superior Court judge to compel the FBI to turn over information about its investigation to the LASD. After the judge refused to issue the order because he had no jurisdiction over the federal law enforcement agency – and even though it was clear that the FBI was acting legally – two LASD sergeants confronted the lead FBI agent at her residence in an attempt to intimidate her. The sergeants threatened the agent with arrest and later reiterated this threat to her supervisor, stating that the agent’s arrest was imminent.
Tanaka oversaw co-conspirators who told fellow deputies not to cooperate in the federal investigation. Members of the conspiracy engaged in witness tampering by ordering fellow deputies not to speak to the federal government and telling them that the FBI would lie, threaten, manipulate and blackmail them to obtain information about the Sheriff’s Department.
Tanaka was indicted last year along with William Thomas Carey, a former LASD Captain who headed the Internal Criminal Investigations Bureau. Carey pleaded guilty last year and is pending sentencing. A total of 10 members of the department – including former Sheriff Leroy Baca – have been convicted in relation to the scheme to obstruct justice. Baca, who pleaded guilty in February pursuant to a plea agreement, is scheduled to be sentenced by Judge Anderson on July 11.
As a result of the FBI investigation into the LASD, 21 current or former members of the Los Angeles Sheriff’s Department have been convicted of federal charges. These include the following former members of the LASD:
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Former Sergeant Eric Gonzalez, who was sentenced to 8 years in prison for his conviction on civil rights charges related to the beating of a visitor to the Men’s Central Jail;
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Fernando Luviano, who was sentenced to 7 years in prison for beating a jail visitor;
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Sussie Ayala, who was sentenced to 6 years in prison for the beating of a jail visitor;
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Former Lieutenant Gregory Thompson, who was ordered to serve 37 months in prison for obstructing justice;
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Former Lieutenant Stephen Leavins, who received a 41-month prison sentence for obstructing justice;
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Gerard Smith, who was ordered to serve 21 months in prison for obstructing justice;
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Mickey Manzo, who received a two-year prison sentence for obstructing justice;
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Former Sergeant Scott Craig, who was sentenced to 33 months for obstructing justice;
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Former Sergeant Maricela Long, who was sentenced to two years in federal prison for obstructing justice;
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James Sexton, who was sentenced to 18 months in prison for obstructing justice;
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Joey Aguiar, who was sentenced to 18 months in prison for falsifying reports related to a use-of-force incident;
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Mariano Ramirez, who was sentenced to 13 months in prison, who was convicted with Aguiar;
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Gilbert Michel who was sentenced to six months in prison in the bribery case; and
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Richard Piquette, who was sentenced on a firearms charge.
Six other defendants, including former Sheriff Leroy Baca, are scheduled for sentencing later this year.
The cases against Tanaka and Baca are being prosecuted by Assistant United States Attorney Brandon D. Fox, Chief of the Public Corruption and Civil Rights Section; Assistant United States Attorney Lizabeth A. Rhodes, Chief of the General Crimes Section; and Assistant United States Attorney Eddie A. Jauregui of the General Crimes Section.
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Former Attorney Pleads Guilty to Participating in Fraudulent Mortgage Modification Scheme that Cost Victims $6 MillionRead the Press Release
SANTA ANA, California – A former licensed attorney from Irvine pleaded guilty this afternoon to federal charges for his role in a multi-million dollar fraudulent mortgage modification scheme.
Ronald Rodis, 51, of Irvine, pleaded guilty before United States District Judge David O. Carter to one count of conspiracy to commit mail and wire fraud.
Rodis admitted that he participated in a scheme with several co-conspirators – Bryan D’Antonio, Charles Wayne Farris and others – to induce homeowners to pay between $3,500 and $5,500 for the services of the Rodis Law Group (RLG). Between October 2008 and June 2009, Rodis and his co-conspirators made numerous misrepresentations regarding the RLG’s ability to negotiate loan modifications from the homeowners’ mortgage lenders.
Rodis recorded radio advertisements encouraging struggling homeowners to call RLG. In the ads, Rodis falsely claimed that RLG consisted of “a team of experienced attorneys” who were “highly skilled in negotiating lower interest rates and even lowering your principal balance.” In fact, RLG was a telemarketing operation that never had a team of experienced attorneys. During much of the scheme, Rodis was the only attorney at RLG.
“This defendant posed as an accomplished attorney who could provide quality legal services – and hope – to struggling homeowners,” said United States Attorney Eileen M. Decker. “But the promises were bogus. Rodis Law Group made few efforts to assist homeowners, who paid thousands of dollars in last-ditch attempts to keep their homes, many of which entered foreclosure.”
When homeowners called RLG, telemarketers made misrepresentations to convince them to hire RLG. For example, telemarketers stated that RLG had been in business for 11 years, when in fact it had only opened in October 2008. They falsely stated that RLG routinely obtained positive results for homeowners, including lower monthly payments, reductions in principal balance and lower interest rates. In fact, positive results were rarely achieved for any RLG clients. Telemarketers also falsely reiterated that homeowners would have a team of attorneys and real estate professionals assigned to their case.
“It is an unfortunate truth that people often take advantage of a crisis for personal gain,” said Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Field Office. “The Rodis Law Group was among the worst type of scammers, trying to take advantage of homeowners already experiencing profound heartache in the face of potential foreclosure. The FBI will not tolerate this kind of criminal behavior. I truly hope that when the next financial crisis arises, members of the public take a moment to look into claims that sound too good to be true, even if those claims are made by attorneys, before would-be clients become victims.”
In a plea agreement filed in federal court, Rodis admitted that the RLG scheme fraudulently obtained approximately $6 million from more than 1,500 victims.
“At the height of the mortgage crisis, this defendant and his co-conspirators preyed on desperate homeowners with a series of lies and false promises,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will continue to prosecute individuals who target vulnerable victims for profit.”
Judge Carter is scheduled to sentence Rodis on February 27, 2017
The two co-defendants in the case – Bryan D’Antonio and Charles Wayne Farris – are each charged with conspiracy and nine counts of wire fraud. Each of these counts carries a statutory maximum penalty of 20 years in prison. In addition, D’Antonio is charged with 13 counts of criminal contempt for violating a 2001 federal court order which permanently banned D’Antonio from participating in future telemarketing operations. Criminal contempt of court has no statutory maximum penalty.
D’Antonio and Farris are scheduled to go on trial on September 20.
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.
This case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Joseph T. McNally and DOJ Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch.
U.S. Attorney Eileen Decker Announces Formation of Civil Rights Section Focused on Affirmative Civil Enforcement and OutreachRead the Press Release
LOS ANGELES – United States Attorney Eileen M. Decker today announced the formation of a new Civil Rights Section within the Civil Division of the United States Attorney’s Office. This Section will focus exclusively on affirmative enforcement of federal civil rights laws, including federal statutes prohibiting discrimination on the basis of race, color, sex, disability, religion, familial status and national origin.
“My office is committed to protecting the civil rights of every single resident in our district,” U.S. Attorney Decker said. “The formation of the Civil Rights Section will increase our capacity to address civil rights complaints and enhance our community engagement on these issues. Protecting these rights, and especially those of our most vulnerable residents, is one of my top priorities.”
The newly formed Civil Rights Section will focus on enforcing federal laws that:
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prohibit discrimination and harassment on the basis of race, color, sex, disability, religion, familial status and national origin;
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prohibit police misconduct;
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protect the constitutional rights of institutionalized persons;
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protect the employment rights of individuals serving in our armed services; and
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prohibit discrimination in housing and lending.
The Section will also focus on increasing community outreach on these issues.
This week, approximately 40 Assistant United States Attorneys from across the United States who handle affirmative civil rights enforcement matters are in Los Angeles for training. This training, which is sponsored by the Executive Office for United States Attorneys in Washington, will provide AUSAs with in-depth instruction on various civil rights enforcement topics.
The United States Attorney’s Office for the Central District of California serves residents in the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo. The Central District of California, with a population of more than 19 million people, is by far the largest federal district in the nation.
Assistant United States Attorney Joanna Hull has been appointed to serve as the chief of the new Civil Rights Section. AUSA Hull received her undergraduate and law degrees from the University of California at Berkeley, where she was Order of the Coif. She spent seven years with the Department of Labor, both in Washington and in the Los Angeles regional office. Shortly after joining the United States Attorney’s Office in 2010, AUSA Hull joined the newly formed Civil Rights Unit in the Civil Division, which was the predecessor to the Civil Rights Section. AUSA Hull has worked on affirmative civil rights cases in a variety of areas, including disability rights and military service members’ rights. She also participated in the Civil Division’s investigation which resulted in a court-enforceable agreement with Los Angeles County and the Los Angeles County Sheriff’s Department to ensure the constitutional rights of all county jail inmates, specifically to protect them from serious suicide risks and excessive force. AUSA Hull is returning to Los Angeles in mid-July after a one-year detail as the National Civil Rights Coordinator at the Executive Office for U.S. Attorneys. In that role, she served as a subject-matter expert on all civil rights matters and assisted in developing and providing training to federal prosecutors across the nation.
More information on the new Section can be found here. For more information on the Department of Justice’s civil rights efforts, please visit www.justice.gov/crt.
The Public Corruption and Civil Rights Section in the Criminal Division will continue to handle prosecutions related to criminal civil rights violations, including hate crimes and allegations that law enforcement officers used excessive force.
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22 Defendants Named in Health Care Fraud Cases involving over $161 Million in Fraudulent Bills to Government Health Care ProgramsRead the Press Release
LOS ANGELES – Culminating investigations by a host of state and federal law enforcement agencies, federal prosecutors have brought 13 criminal cases that charge a total of 22 defendants in health care fraud schemes. Several medical professionals were charged as part of the sweep, including five physicians, a psychiatrist, one pharmacist and an occupational therapist. The cases announced today allege various schemes that led to more than $161 million in fraudulent bills being submitted to publicly funded health care programs such as Medicare and TRICARE.
The cases filed in federal court in Los Angeles and Santa Ana are part of a nationwide sweep announced today in Washington by Attorney General Loretta Lynch, who said criminal and civil charges have been filed against 301 individuals who allegedly participated in health care fraud schemes involving approximately $900 million in false billings. The local cases were filed by Assistant United States Attorneys and Trial Attorneys with the Justice Department’s Medicare Fraud Strike Force.
“Health care fraud is a serious offense that costs Americans billions of dollars, and the cases announced today here in Los Angeles alone cost taxpayers more than $100 million,” said United States Attorney Eileen M. Decker. “These crimes affect real people and erode the trust that should exist between a patient and their health care provider. The entire Justice Department and our law enforcement partners are committed and determined to doing everything it takes to ensure the health care system works for the American public – and not those, whether health care providers or others, who seek to abuse the system.”
The cases filed in the Southland involve actual losses of more than $125 million, with the bulk of those losses associated with five cases related to schemes involving compounding pharmacies. In schemes orchestrated by marketers (sometimes called “cappers”), compounding pharmacies were provided with large numbers of prescriptions, generally for pain medications, that carried huge reimbursements, often more than $15,000 for each prescription. The prescriptions were written by doctors who received kickbacks from marketers or from “telemedicine” websites that had little or no contact with patients. The prescriptions were written for “patients” who, in many cases, did not want the prescriptions, had never met the prescribing doctors or had no idea why they were receiving the medications. In many cases, the beneficiary information was being used without the knowledge of the “patients” until the prescriptions showed up at their homes.
TRICARE, the military’s managed care program, was the primary victim of schemes involving the compounding pharmacies. Over the course of just a few years, TRICARE paid hundreds of millions of dollars for medications dispensed to “patients” across the nation, typically creams that supposedly would treat minor pain, scars, erectile dysfunction or “general wellness.” Five of the cases announced today relate to compounding pharmacies and allege losses of more than $100 million, most of which was paid by TRICARE over the course of just a few months.
In one case, John Garbino, a marketer who resides in Dana Point, was charged with receiving illegal kickbacks after referring prescriptions to compounding pharmacies that filled the prescriptions and billed TRICARE. One Palmdale pharmacy allegedly received more than $46 million from TRICARE in only six months. Another pharmacy in Corona received nearly $6 million over the same six-month period. Garbino allegedly received illegal kickbacks of as much as 65 percent for referring prescriptions to the compounding pharmacies. The criminal complaint against Garbino alleges that one of the pharmacies dramatically increased its claims to TRICARE “for filling compounded medications prescriptions that had been specially formulated to achieve the highest possible reimbursement rates rather than the greatest medical efficacy.”
In another scheme, the Florida-based operator of a “telemedicine” website was charged with health care fraud for allegedly misusing the identity and medical credentials of a physician to submit prescriptions to a compounding pharmacy. The criminal complaint in this case alleges that two local pharmacies received more than $6.5 million in payments from TRICARE in 2015.
In a third case, the owner of a La Mirada pharmacy, two marketers and a doctor were indicted on charges of paying and receiving illegal kickbacks. Health insurers paid the pharmacy, Valley View Drugs, more than $20 million, and the pharmacy paid nearly half of that to companies associated with the marketers.
“The Defense Criminal Investigative Service, in partnership with our fellow federal investigative agencies, will continue to uncompromisingly investigate and bring to justice the people who perpetrate these criminal acts,” said Special Agent in Charge Chris Hendrickson, DCIS Western Field Office. “Their actions threaten to cripple our vital national health care industry, and place our citizenry at risk. Over $100 million in Department of Defense health care funds that should have been used to treat the military and their families was instead allegedly stolen by swindlers. We will remain vigilant.”
“These arrests demonstrate that the U.S. Government will not tolerate fraud in the compounding pharmacy industry,” said Norbert E. Vint, the Acting Inspector General for the Office of Personnel Management, Office of Inspector General. “We appreciate the efforts of all the investigating agencies and the Department of Justice that have held these individuals accountable for their actions, and thereby protected taxpayer funded health care programs, including the Federal Employees Health Benefits Program.”
“The United States Postal Service, Office of Inspector General, along with our law enforcement partners will aggressively investigate those who engage in fraudulent activities intended to defraud federal benefit programs and the Postal Service,” said Special Agent in Charge Brian Washington, U.S. Postal Service, Office of Inspector General. “This week’s arrests should send a clear message to all health care providers that health care fraud is a federal crime that carries serious consequences and will not be tolerated.”
“Patients were pawns in an alleged pay-for-play fraud scheme,” said California Insurance Commissioner Dave Jones. “Patients should be able to trust that medications prescribed for them are based on their healthcare needs, not on payoffs and kickbacks to physicians and pharmacists.”
In other cases announced today, a doctor who had offices in Temecula and Mira Loma allegedly submitted nearly $12 million in fraudulent bills to Medicare for unnecessary “vein ablation” surgery. Another doctor was charged for helping the owner of a Granada Hills medical clinic, who recruited Medicare patients with promises of free equipment and used their beneficiary information to bill for services that simply were never provided.
“Medical professionals who seek to enrich themselves through Medicare fraud – such as exchanging illegal kickbacks or billing for medically unnecessary procedures – undermine this taxpayer-funded program and drive up health care costs for everyone,” said Special Agent in Charge Chris Schrank, of the U.S. Department of Health and Human Services, Office of Inspector General. “Today’s announcement shows our commitment to working with our state and federal law enforcement partners to swiftly investigate such allegations of fraud.”
Another case announced today charges three defendants in a scheme to defraud the health benefit plans established for members of the International Longshore and Warehouse Union and Federal Express employees. Participants in the scheme allegedly paid beneficiaries of those plans to undergo unnecessary sleep and nerve conduction velocity studies that were then billed to the plans. The defendants operated facilities in Sherman Oaks and San Pedro, where the testing was conducted as part of the fraud scheme that submitted at least $16 million in bills to the union and FedEx health plans. The defendants in this case also face money laundering charges.
“Those who commit fraud targeting health care funding get rich on the backs of American taxpayers who watch their premiums go up,” said Deirdre Fike, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Anyone who identifies suspicious billing practices or unlawful activity by a provider should contact a member of the Strike Force.”
“In the coming years, we will continue to leverage our financial skill set and focus on investigating those whose criminal activity drives up medical costs and jeopardizes a system that our citizens have come to trust,” stated IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “We will continue to work with our federal and state law enforcement partners to bring to justice those individuals who prey on the nation's health care system for their own personal greed.”
Most of the 22 defendants named in the cases were arrested on Monday and Tuesday. Several defendants self-surrendered after learning of the federal charges. A separate announcement details all 13 cases and the defendants charged in those cases.
Indictments and criminal information contain allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The cases announced this week in Los Angeles are the result of investigations conducted by the United States Department of Health and Human Services, Office of Inspector General; the Defense Criminal Investigative Service; the Federal Bureau of Investigation; the Office of Personnel Management, Office of Inspector General; the Veterans Administration, Office of the Inspector General; the Department of Labor, Employee Benefits Security Administration; the California Department of Insurance, Fraud Division; the United States Postal Service, Office of the Inspector General; Amtrak’s Office of the Inspector General; the California Board of Pharmacy; IRS Criminal Investigation; and the California Department of Justice.
Two Orange County Men Convicted of Conspiring to Join ISIL; They also Engaged in Fraud to Finance One’s Trip to SyriaRead the Press Release
SANTA ANA, California – A federal jury today convicted two Orange County men – one of whom attempted to travel to the Middle East to join ISIL – of conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL).
Nader Elhuzayel and Muhanad Badawi, both of whom are 25-year-old Anaheim residents, were convicted today in United States District Court following a two-week trial. Elhuzayel also was found guilty of attempting to provide material support, and Badawi was found guilty of aiding and abetting the attempt to provide support to ISIL.
In addition to the terrorism-related counts, Elhuzayel was found guilty of 26 counts of bank fraud, and Badawi was found guilty of one count of federal financial aid fraud. The jury deliberated for just over an hour before returning its guilty verdicts.
Both men were arrested on May 21, 2015, when Elhuzayel attempted to board a plane at Los Angeles International Airport to travel to Turkey to join ISIL. Badawi had purchased a one-way ticket on Turkish Airlines for Elhuzayel to travel to Israel, with a layover in Istanbul.
Badawi and Elhuzayel used social media to discuss ISIL and terrorist attacks, expressed a desire to die as martyrs, and made arrangements for Elhuzayel to leave the United States to join ISIL. In recorded conversations, Badawi and Elhuzayel “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.”
The evidence at trial also showed that Badawi had a Facebook account, on which he made posts that supported ISIL and violence aimed at non-Muslims, and he said he intended to join the terrorist organization. Elhuzayel also had a Facebook account and used the ISIL flag as his profile picture. “On October 21, 2014, defendant Badawi made a video of defendant Elhuzayel in which defendant Elhuzayel swore allegiance to the leader of ISIS, Abu Bakr al-Baghdadi, and pledged to travel to Syria to be an ISIS fighter,” according to court documents.
Elhuzayel was convicted of obtaining cash through a scheme to defraud three different banks by depositing stolen checks into his personal checking accounts and then withdrawing cash at branch offices and ATMs in Orange County. The money generated from the bank fraud was to finance his travel to Syria to join ISIL.
Badawi was convicted of using his federal financial aid to purchase a plane ticket for Elhuzayel to travel to Turkey. The time of the fraud and the time of the terrorist activity coincide.
“These two defendants betrayed their country and sought to join ISIL, a terrorist organization dedicated to brutally murdering innocent people,” said United States Attorney Eileen M. Decker. “The FBI and the Orange County Joint Terrorism Task Force did outstanding work in investigating and apprehending these men before their plans could be completed. The fine work of law enforcement undoubtedly saved lives, both in the United States and abroad.”
“These convictions are a message to those who aim to travel to take up arms with ISIL and to those who support them – the FBI and our partners are determined to thwart your efforts,” said Deirdre Fike, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The JTTF’s proactive identification of these subjects and disruption of a terrorist conspiracy is a coup in the fight against the scourge of ISIL. At trial, the jury heard evidence that Mr. Badawi also encouraged other associates to support ISIL and participate in violent jihad. This is a reminder that our work is not done and the public must remain steadfast and report suspicious behavior, whether that behavior is carried out in person or online.”
After the jury returned its verdicts, United States District Judge David O. Carter scheduled Elhuzayel’s sentencing hearing for September 19 and Badawi’s sentencing hearing for September 26.
At the time of sentencing, Elhuzayel will face a statutory maximum sentence of 30 years in federal prison on each bank fraud count, Badawi faces a statutory maximum sentence of five years imprisonment on the financial aid fraud count, and both men each face a statutory maximum sentence of 15 years in prison on each count of providing material support to ISIL.
Both men 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 following agencies: 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 and the Orange County Regional Computer Forensics Laboratory. The Department of Education, Office of Inspector General provided substantial assistance in the investigation.
The 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.
Two California Men Convicted of Conspiring to Join ISILRead the Press Release
A federal jury today convicted two Orange County, California, men – one of whom attempted to travel to the Middle East to join the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization – of conspiring to provide material support to ISIL.
The verdict was announced by Assistant Attorney General for National Security John P. Carlin, 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 Field Office.
Nader Elhuzayel, 25, and Muhanad Badawi, 25, both of Anaheim, California, were convicted today in U.S. District Court for the Central District of California following a two-week trial. Elhuzayel was found guilty of attempting to provide material support and Badawi was found guilty of aiding and abetting the attempt to provide material support to ISIL.
“Foreign terrorist fighters have traveled from countries around the world to join ISIL and are responsible for some of the most despicable acts of violence committed by the terrorist organization,” said Assistant Attorney General Carlin. “ISIL depends on these travelers as a significant part of its fighting force. Stopping Americans from engaging in terrorist activity on behalf of ISIL here or abroad will remain one of the highest priorities of the National Security Division.”
“These two defendants betrayed their country and sought to join ISIL, a terrorist organization dedicated to brutally murdering innocent people,” said U.S. Attorney Decker. “The FBI and the Orange County Joint Terrorism Task Force did outstanding work in investigating and apprehending these men before their plans could be completed. The fine work of law enforcement undoubtedly saved lives, both in the United States and abroad.”
“These convictions are a message to those who aim to travel to take up arms with ISIL and to those who support them – the FBI and our partners are determined to thwart your efforts,” said Assistant Director in Charge Fike. “The JTTF’s proactive identification of these subjects and disruption of a terrorist conspiracy is a coup in the fight against the scourge of ISIL. At trial, the jury heard evidence that Mr. Badawi also encouraged other associates to support ISIL and participate in violent jihad. This is a reminder that our work is not done and the public must remain steadfast and report suspicious behavior, whether that behavior is carried out in person or online.”
In addition to the terrorism-related counts, Elhuzayel was found guilty of 26 counts of bank fraud and Badawi was found guilty of one count of federal financial aid fraud.
Both men were arrested on May 21, 2015, when Elhuzayel attempted to board a plane at Los Angeles International Airport to travel to Turkey to join ISIL. Badawi had purchased for Elhuzayel a one-way ticket to Israel with a layover in Istanbul.
Badawi and Elhuzayel used social media to discuss ISIL and terrorist attacks, expressed a desire to die as martyrs and made arrangements for Elhuzayel to leave the United States to join ISIL. In recorded conversations, Badawi and Elhuzayel discussed “how it would be a blessing to fight for the cause of Allah, and to die in the battlefield.”
The evidence at trial also showed that Badawi had a Facebook account, on which he made posts that supported ISIL and violence aimed at non-Muslims, and he said he intended to join the terrorist organization. Elhuzayel also had a Facebook account and used the ISIL flag as his profile picture. According to court documents, on Oct. 21, 2014, Badawi made a video of Elhuzayel in which Elhuzayel swore allegiance to Abu Bakr al-Baghdadi, the leader of ISIL, and pledged to travel to Syria to be an ISIL fighter.
Elhuzayel was convicted of obtaining cash through a scheme to defraud three different banks by depositing stolen checks into his personal checking accounts and then withdrawing cash at branch offices and ATMs in Orange County. The money generated from the bank fraud was to finance his travel to Syria to join ISIL.
Badawi was convicted of using his federal financial aid to purchase a plane ticket for Elhuzayel to travel to Turkey.
U.S. District Judge David O. Carter of the Central District of California scheduled Elhuzayel’s sentencing hearing for Sept. 19, 2016, and Badawi’s sentencing hearing for Sept. 26, 2016.
At the time of sentencing, Elhuzayel will face a statutory maximum sentence of 30 years in prison on each bank fraud count, Badawi faces a statutory maximum sentence of five years in prison on the financial aid fraud count and both men each face a statutory maximum sentence of 15 years in prison on each material support count.
Both men 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 following agencies: 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, California, Police Department; the Irvine, California, Police Department; the Naval Criminal Investigative Service; and the Orange County Regional Computer Forensics Laboratory. The Department of Education’s Office of Inspector General provided substantial assistance in the investigation.
The case was prosecuted by Assistant U.S. Attorneys Judith A. Heinz, Deirdre Z. Eliot and Julius J. Nam of the Central District of California, with assistance from Trial Attorney Michael Dittoe of the National Security Division’s Counterterrorism Section.
Organizer of $9 Million Scam Sentenced to 8 Years in Federal Prison in Scheme to Provide Hospice to Patients who were not Terminally IllRead the Press Release
LOS ANGELES – A Placentia woman was sentenced today to 96 months in federal prison related to her operation of a hospice that submitted more than $9 million in fraudulent bills to Medicare and Medi-Cal for purportedly providing end-of-life care to patients who were not actually dying.
Priscilla Villabroza, 70, was sentenced by United States District Judge S. James Otero, who characterized the defendant’s conduct as “callous” and “despicable.” In addition to the eight-year prison term, Judge Otero ordered the defendant to pay $7,433,329 in restitution.
Villabroza is one of 10 defendants who were charged in relation to a fraud scheme run out of the Covina-based California Hospice Care, which Villabroza purchased in late 2007 while under investigation in a prior health care fraud case.
Between March 2009 and June 2013, California Hospice submitted nearly $9 million in fraudulent bills to Medicare and Medi-Cal for hospice-related services, and the public health programs paid nearly $7.5 million.
“This scheme is one of many that has victimized taxpayers who fund public healthcare programs,” said United States Attorney Eileen M. Decker. “This scheme also victimized patients who were needlessly put into hospice and had changes made to their treatment for non-medical reasons. As this case clearly demonstrates, healthcare fraud is not a victimless crime.”
All 10 defendants charged in relation to the California Hospice scheme have pleaded guilty to healthcare fraud charges or were convicted at trial. One of the defendants was accepted into a diversion program.
Following a two-week trial that ended last month, Sri Wijegoonaratna, known as Dr. J., 61, of Anaheim, and Boyao Huang, 43, of Pasadena were found guilty of federal health care fraud charges for falsely certifying that Medicare patients were terminally ill, and therefore qualified for hospice care, when the vast majority of them were not actually dying. Judge Otero is scheduled to sentence defendants Wijegoonaratna and Huang on August 15.
As part of the California Hospice fraud scheme, Villabroza secretly purchased and managed the company, while representing that her daughter, who was also charged in the case, was the true owner. The scheme involved illegal payments to “marketers” or “cappers” for referrals of Medicare and Medi-Cal beneficiaries, false and fraudulent documentation by nurses and false certifications by doctors that the beneficiaries were terminally ill and therefore entitled to hospice benefits – even though the vast majority of them were not terminally ill. Participants in the scheme also fraudulently altered medical records in response to Medicare audits to make the beneficiaries appear sicker than they were in an attempt to deceive the auditors into believing that the beneficiaries were entitled to benefits.
In the prior case, Villabroza was convicted for her role in a scheme that defrauded the Medi-Cal program by fraudulently billing for in-home care provided to disabled patients. She was sentenced in that case to 4½ years in federal prison.
The investigation into California Hospice was conducted by the United States Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the California Bureau of Medi-Cal Fraud & Elder Abuse; and IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorney Steven Arkow of the Major Frauds Section and Assistant United States Attorney Leon W. Weidman, Special Assistant to the United States Attorney.
British Man Previously Charged with Coming to U.S. to Have Sex with Pre-Teen Boys Now also Faces Child Pornography OffensesRead the Press Release
LOS ANGELES – A British man who was previously charged with travelling to the Coachella Valley to have sex with pre-teen boys was charged today in a superseding indictment that adds child pornography charges.
Paul Charles Wilkins, 70, of Littleport in East Cambridgeshire, England, a dual United States-United Kingdom citizen, was named today in a four-count superseding indictment that now includes charges of transportation of child pornography and possession of child pornography.
The indictment reiterates charges contained in the original indictment that was filed in February – traveling with the intent to engage in illicit sexual conduct and attempted sex trafficking of children.
Wilkins allegedly travelled to the Coachella Valley in late January in order to engage in illicit sexual conduct with boys who were 10 and 12 years old.
While the first count of the indictment relates to Wilkins travel to the United States to allegedly have sex with two pre-teen boys, the attempted sex trafficking charge stems from a deal he allegedly brokered with an undercover investigator in which Wilkins allegedly paid $250 to have sex with a 9-year-old boy at an apartment he had rented in Palm Springs.
The child pornography counts related to images found on a laptop computer and a digital storage device that were seized when Wilkins was arrested on February 11 at his rented apartment after allegedly paying the money to the undercover operative.
“Child predators – whether foreign or domestic – threaten the most vulnerable members of society, which is why we devote considerable resources to stopping them,” said United States Attorney Eileen M. Decker. “The new indictment adds additional charges that more fully reflect the totality of this defendant’s conduct and could subject him to a longer prison term.”
Wilkins, who has been ordered held without bond, is currently scheduled to go on trial before United States District Judge Dolly M. Gee on July 19.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The charge of traveling with the intent to engage in illicit sexual conduct carries a statutory maximum sentence of 30 years.
The charge of attempted sex trafficking of children carries a mandatory minimum sentence of 15 years in federal prison and statutory maximum penalty of life without parole.
The two child pornography charges each carry a statutory maximum sentence of 20 years, and the transportation count carries a mandatory minimum sentence of five years in prison.
The investigation into Wilkins was conducted by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI)
“Pedophiles in the United States, or anywhere in the world, who believe they can escape the detection of law enforcement by traveling to another county to commit heinous crimes against children should take note,” said Robert Goetsch, acting special agent in charge for HSI Los Angeles. “HSI and its law enforcement partners around the globe will pursue those criminals who subject children to this torment and bring them to justice by using every tool at our disposal.”
The case is being prosecuted by Assistant United States Attorney Christina T. Shay.
Six Coachella Valley Men Charged in Federal Court in Task Force Operation Targeting Illegal Firearms and Drugs in Desert Hot SpringsRead the Press Release
LOS ANGELES – Six Coachella Valley residents have been charged by federal prosecutors with drug trafficking offenses, and four of the men face additional counts for illegal possession of a firearm.
Four of the men were arrested this morning as part of a joint operation involving both federal and local authorities. Two of the men are already in state custody on separate charges.
In the first case, 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 in an indictment with engaging in a conspiracy to distribute methamphetamine. In addition, Gomez was 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. Gomez and Carmona were arrested this morning, and Gonzalez is in state prison in Wasco, California.
In the second 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 is currently in jail in Riverside County.
Mario Vincent Lopez, 49, of Desert Hot Springs, was charged in an indictment with possession of an unregistered 12-gauge shotgun and shotgun ammunition after being convicted of multiple state felonies as well as distributing methamphetamine. Lopez was arrested this morning.
Finally, Donnie Darnel Dennis, 38, of Desert Hot Springs, was also arrested this morning pursuant to a criminal complaint charging him with the distributing methamphetamine. The affidavit in support of the criminal complaint describes Dennis handing his daughter a handgun when using her as part of a drug deal.
Five of the men face a statutory minimum penalty of 10 years in federal prison and a statutory maximum of life imprisonment if convicted on the counts with which they have been charged. Figueroa faces a statutory minimum penalty of five years imprisonment and a statutory maximum penalty of 65 years if he were to be convicted on all counts.
“Drug trafficking involving firearms continues to pose a tremendous danger to our communities,” said United States Attorney Eileen M. Decker. “Several of these men were undeterred by prior state convictions, so now they must face federal charges and lengthy prison sentences.”
ATF Special Agent in Charge Eric D. Harden added, “ATF works with our law enforcement partners to keep firearms out of the hands of prohibited persons and pursues federal criminal charges against felons that repeatedly seek to possess firearms."
At their court appearances this afternoon at the United States District Court in Riverside, Gomez, Lopez and Dennis were ordered detained pending trial. Carmona is scheduled for a court appearance tomorrow afternoon.
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.
These cases were investigated by the Coachella Valley Gang Impact Team, which includes members of the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Riverside County District Attorney’s Office.
9 Defendants Named in Federal Indictment that Alleges $6 Million in Losses Resulting from Jewelry Store Robberies across SouthlandRead the Press Release
LOS ANGELES – Law enforcement authorities this morning arrested four defendants who are charged in a federal indictment with participating in a conspiracy that planned and executed a series of brazen smash-and-grab robberies that targeted millions of dollars worth of Rolex and other high-end Swiss watches being sold at retail outlets across Southern California.
The indictment charges a total of nine defendants, six of whom allegedly planned and organized the robberies, and three of whom allegedly participated in one or more of the robberies. In addition to four defendants arrested this morning by special agents with ATF and deputies with the Los Angeles County Sheriff’s Department, three defendants are already in custody. Authorities are continuing to search for two remaining defendants.
Members of conspiracy allegedly selected jewelry stores based on their inventory of expensive watches, including those manufactured by Rolex, Audemar Piguet and TAG Heuer. The organizers of the conspiracy recruited financially desperate young men to perform the smash-and-grab robberies, often by promising large sums of money if they were successful. However, when those involved in the actual robberies were eventually paid, they often received much less than what they had promised, despite stealing watches and other jewelry worth approximately $6 million.
“The organizers of this ring carefully planned and executed a series of daylight robberies that terrified and endangered store employees and bystanders,” said United States Attorney Eileen M. Decker. “The indictment and arrests today demonstrate that ringleaders cannot escape prosecution by sending lower-level participants in to commit the crimes on their behalf.”
The 13-count indictment, which was returned under seal by a federal grand jury in Santa Ana on June 8, charges all nine defendants with violating the Hobbs Act by conspiring to interfere with commerce by robbery. The conspiracy count alleges a string of 10 robberies between early August 2015 and April of this year. One heist at a store in the Century City mall allegedly netted watches worth more than $1.6 million and involved one of the robbers firing a shot from a rifle at a security guard who was trying to secure the store.
“Those who plan, equip or facilitate violent crime do not avoid accountability by never brandishing a firearm,” said ATF Special Agent in Charge Eric D. Harden. “ATF stands ready to combine resources with our state and local partners to pursue federal criminal charges against all that use violence to victimize businesses and endanger the public that patronizes them, regardless of their role.”
“This is a fine example of another successful collaborative effort between the Los Angeles County Sheriff’s Department’s Major Crimes Bureau and the Bureau of Alcohol, Tobacco, Firearms and Explosives,” said Captain Myron Johnson of the LASD’s Major Crimes Bureau. “Investigators from both agencies worked countless hours to bring several individuals who operated a highly sophisticated robbery crew to justice. This crew victimized a number of luxury, high-end watch establishments causing millions of dollars in losses to the victims."
The nine defendants are each charged in at least one of six counts alleging a Hobbs Act robbery. Five of the defendants are charged in at least one of six counts of using a firearm in relation to a crime of violence.
The nine defendants named in the indictment are:
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Darrell Dent, 39, of Inglewood, who was arrested and who is accused of being the leader of the conspiracy;
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Keith Walton, 45, of Los Angeles, another key figure in the conspiracy, who was already in federal custody on an unrelated charge;
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Robert Johnson, 27, of Inglewood, who was arrested and who allegedly recruited robbers and supplied firearms used during several of the robberies;
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Stanley Ford, 47, of Los Angeles, who was arrested and who is accused of being an organizer of the robberies;
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Justin Henning, 28, of Inglewood, who was arrested and who allegedly helped recruit some of the robbers;
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Evan Scott, 27, of Inglewood, currently a fugitive, who allegedly was a gunman in two of the robberies;
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Kenneth Paul, 21, of Los Angeles, currently a fugitive, who allegedly helped recruit robbers;
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Jameson Laforest, 24, of Inglewood, who was already in state custody on an unrelated charge and who allegedly received watches stolen during a robbery in Torrance; and
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Marshawn Marshall, 18, of Inglewood, who was already in federal custody after being arrested in March 2016 on charges of participating in a jewelry store robbery in Mission Viejo.
Those arrested this morning are expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.
According to the indictment, the organizers planned the details of the robberies, including selecting the display cases to be smashed, and providing the firearms, tools, disguises and stolen cars used in the robberies.
The conspiracy count in the indictment alleges that 10 robberies were committed:
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the August 3, 2015 robbery of Edward George Jewelers in Canoga Park, during which approximately $59,105 in watches and engagement rings were stolen;
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the August 24, 2015 armed robbery of Rolex Boutique Geary’s in the Century City Mall, during which 40 Rolex watches with an approximate retail value of $1.63 million were stolen;
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the October 21, 2015 armed robbery of Frederic H. Rubel Jewelers in the Shops at Mission Viejo, during which 40 Rolex watches and David Yurman jewelry with an approximate retail value of $595,000 were stolen;
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the January 22, 2016 armed robbery of Manya Jewelry in Woodland Hills, during which three Rolex watches and other assorted watches and jewelry with an approximately retail value of $192,410 were stolen;
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the February 7, 2016 robbery of Ben Bridge Jewelers in the Oaks Mall in Thousand Oaks, during which 35 Rolex watches with an approximate retail value of $298,000 were stolen;
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the February 17, 2016 armed robbery of Westime in West Hollywood, during which 18 Audemars Piguet watches with an approximately retail value of $576,200 were stolen;
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the February 29, 2016 armed robbery of Ben Bridge Jewelers in the Del Amo Fashion Center in Torrance, during which 30 Rolex watches with an approximate retail value of $456,325 were stolen;
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the March 9, 2016 armed robbery of Ben Bridge Jewelers in Canoga Park, during which 36 Rolex watches with an approximate retail value of $662,650 were stolen;
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the March 22, 2016 robbery of Westime in Malibu, during which 66 Audermar Piguet, Breitling, Franck Muller, Omega and Hublot watches with an approximate retail value of $1.42 million were stolen; and
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the April 24, 2016 robbery of Ben Bridge Jewelers in Santa Monica, during which three Rolex watches and other assorted watches and jewelry with an approximate retail value of $192,000 were stolen.
Along with the nine defendants named in the indictment unsealed today, another nine defendants were previously named in a series of indictments that accuse them of participating in various jewelry store robberies.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The seven counts that allege violations of the Hobbs Act each carry a statutory maximum penalty of 20 years in federal prison. The charges that allege use of a firearm during the robberies carry a consecutive sentence of seven years, or 10 years if the gun is discharged during the underlying offense.
The investigation into the robbery ring is being conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Los Angeles County Sheriff's Department.
The cases resulting from the investigation are being prosecuted by Assistant United States Attorneys Scott D. Tenley of the Santa Ana Branch Office and Jeffrey M. Chemerinsky of the Violent and Organized Crime Section.
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Yorba Linda Chiropractor Sentenced to Four Years in Prison for Defrauding Investors in $2 Million Real Estate Ponzi SchemeRead the Press Release
SANTA ANA, California – A Yorba Linda chiropractor who solicited more than $2 million from investors in a real estate scam has been sentenced to four years in federal prison.
Bobby Hamby, 56, of Yorba Linda, was sentenced Monday afternoon by United States District Judge Cormac J. Carney, who also ordered the defendant to pay $1,257,628 in restitution.
Hamby pleaded guilty in May 2015 to two counts of wire fraud in connection with a real estate investment scheme he operated while doing business as B+E Family Investments LLC.
Hamby told investors that he would use the money invested in B+E to purchase and improve properties, resell the properties at a profit, and then share the profits with investors. Hamby falsely assured victims that their investments would be secure because he would put their names on the property deeds. At least 22 victims – some of whom were elderly – invested nearly $2.5 million with B+E during the scheme that ran from May 2008 through December 2011.
According to a plea agreement filed in this case, Hamby did not invest the victims’ money as promised. Instead, he spent the majority of his victims’ money to pay for personal expenses. Among other things, Hamby used the money to pay his mortgage, dues at the Yorba Linda Country Club, car payments, attorney fees, medical and dental bills, and expenses incurred at restaurants and several retail stores.
“As a result of Mr. Hamby’s scheme, a number of victims will live out their lives under a dark cloud of financial uncertainty,” said United States Attorney Eileen M. Decker. “Mr. Hamby must now trade the comfortable life that he financed with his victims’ money for this federal prison sentence.”
In addition to the real estate scheme, Hamby also fraudulently solicited investors to finance laser equipment for his chiropractic office. In this separate scheme, Hamby collected approximately $150,000 from November 2010 through May 2011, but used only about $5,000 on laser equipment, spending most of the money on personal expenses that including mortgage payments and private school tuition for his children.
After returning some of the investor’s money in Ponzi-style payments, the total loss for both schemes totaled approximately $1.25 million.
This case was investigated by the FBI. The case was prosecuted by Assistant United States Attorney Gregory W. Staples.
Orange County Businessman Sentenced to over 10 Years in Federal Prison for Defrauding Investors out of nearly $50 MillionRead the Press Release
SANTA ANA, California – A former Newport Beach resident has been sentenced to 121 months in federal prison for running a Ponzi scheme through his Orange County-based company that defrauded hundreds of investors out nearly $50 million.
Joseph J. Lampariello, 62, who recently relocated to Huntington Station, New York, was sentenced Monday afternoon by United States District Judge David O. Carter.
In addition to the prison term of just over 10 years, Judge Carter ordered Lampariello to pay $39,961,859 in restitution.
Lampariello previously pleaded guilty to one felony count of wire fraud and one misdemeanor count of willfully failing to file a tax return.
Lampariello was the president and chief operating officer of Medical Capital Holdings, Inc., a medical receivables financing company that operated out of offices in Anaheim and Tustin. Medical Capital administered several entities that raised money from investors who were told their money would be used to purchase account receivables from accredited medical providers, make secured loans and provide money for general operating expenses.
Over 11 months in 2008 and 2009, Lampariello misappropriated funds invested with one of the entities and used the money to make Ponzi payments to prior investors and to pay himself administrative fees. Lampariello, through Medical Capital, defrauded over 700 investors of nearly $49 million.
“Mr. Lampariello’s sentence properly reflects the significant harm he caused to hundreds of victims,” said United States Attorney Eileen M. Decker. “This defendant’s false promises were designed only to provide wealth for himself, and he must now pay for that greed.”
“The massive monetary figures can’t begin to explain the devastation to victims in this case, some of whom were forced out of retirement, some who lost their marriage and many more who lost trust and live with despair as a result,” said Deirdre L. Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Investors must do extensive research before handing over their hard-earned savings, and must never fall for phony online profiles as a way of determining a reputable investment business.”
“When you knowingly mix deceit and trickery into the financial well-being of individuals, you create a recipe for devastation that could last a lifetime,” stated IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “Today’s sentencing demonstrates how federal law enforcement will band together to help put an end to the criminal behavior of those who prey on investors for their own personal financial gain.”
This case was the result of a joint investigation by the Federal Bureau of Investigation and IRS Criminal Investigation. The prosecution was handled by Assistant United States Attorney Jennifer L. Waier.
Federal Racketeering Indictment Targets Santa Fe Spring-Based Street Gang that Operates under Control of Mexican MafiaRead the Press Release
LOS ANGELES – As a result of a racketeering indictment issued last week by a federal grand jury, 31 members and associates of a Santa Fe Springs-based street gang were arrested today on charges related to a wide-ranging criminal enterprise controlled by a member of the Mexican Mafia that allegedly is responsible for the murder of a rival gangster and the attempted murder of a Whittier Police officer.
The 147-page indictment names 51 defendants, including the so-called shotcaller of the Canta Ranas street gang, which operates in Santa Fe Springs and Whittier. The indictment alleges that an incarcerated member of the Mexican Mafia prison gang exerts control over Canta Ranas and other gangs, and that he received compensation in the form of “rent” or “taxes” generated by drug trafficking and other offenses committed in gang territory.
The Mexican Mafia “carnal” identified in the indictment as D.G. (who was not charged as he is currently serving a life-without-parole sentence in Pelican Bay State Prison) allegedly issued instructions from prison that directed and authorized gangsters under his control to attack rivals and others who disobeyed directives, distribute narcotics, collect extortion payments from drug dealers and commit acts of violence. The indictment specifically discusses criminal acts that date back to the spring of 2004, when members of the gang allegedly attempted to rob a group of high school students near a Santa Fe Springs park.
The lead defendant in the 35-count indictment is Jose Loza, who recently became a full-fledged member of the Mexican Mafia and is the “shotcaller” of the Canta Ranas gang. In addition to implementing D.G.’s orders, Loza allegedly executed another member of the Mexican Mafia who wanted to expand his influence and challenge D.G.’s authority over street gangs in the San Gabriel Valley. During the incident two months ago at a restaurant in the San Gabriel Valley community of Basset, the Mexican Mafia member was fatally shot, his bodyguard was severely wounded, and an innocent restaurant patron was shot six times in the abdomen.
The indictment also alleges that two defendants who were part of the Canta Ranas organization overseen by D.G. attempted to murder a detective with the Whittier Police Department when they shot at him in his unmarked vehicle while he was conducting undercover surveillance as part of a narcotics investigation.
Participants in the racketeering conspiracy also threatened to tax and “to shoot up” a private party because the residence was in gang territory, according to the indictment, which also states that gang members used Facebook and text messages to advertise narcotics sales, make threats, plan attacks and negotiate transactions involving firearms and ammunition.
“As this indictment charges, the Canta Ranas gang is a root cause of violence and drugs in multiple communities here in Southern California,” said United States Attorney Eileen M. Decker. “The RICO statutes are designed to target criminal enterprises like Canta Ranas, and RICO prosecutions like this one, which target the top leaders of the gang, help make whole communities safer.”
The indictment also alleges a series of narcotics transactions, including one involving one-half pound of methamphetamine.
During today’s law enforcement operation, approximately 400 agents and officers targeted members and associates of the Canta Ranas gang, which was formed in Santa Fe Springs around 1950. The gang (Spanish for “Singing Frogs”), whose estimated 140 members reside primarily in Santa Fe Springs and Whittier, has established a presence in other California communities, including Riverside, Sacramento and Stockton.
During the course of the three-year investigation, which was called Operation “Frog Legs,” authorities seized 51 firearms and made several narcotics seizures, including nearly one pound of methamphetamine seized during the execution of search warrants after Loza allegedly murdered the other Mexican Mafia member.
“We are grateful for the cooperation that took place throughout this investigation among local, state and federal law enforcement resources,” said Whittier Police Chief Jeff Piper. “This operation was a true example of law enforcement partners working tirelessly to make our communities safer.”
Operation Frog Legs is the result an investigation by the Southern California Drug Task Force, which is led by the Drug Enforcement Administration as part of the High Intensity Drug Trafficking Area (HIDTA) initiative. The Task Force members that participated in Operation Frog Legs were U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigation (HSI), the Whittier Police Department, the Los Angeles County Sheriff’s Department, IRS Criminal Investigation, the California Department of Corrections and Rehabilitation, Office of Correctional Safety, Special Service Unit.
“This coordinated enforcement action illustrates how effective our law enforcement alliances are in attacking the crime afflicting our communities,” said DEA Los Angeles Special Agent in Charge John S. Comer. “These types of criminal organizations are comprised of the worst of the worst offenders who are trafficking drugs and committing acts of violence, putting citizens in serious danger.”
“This criminal organization may be less well-known than many of the Southland street gangs, but if the allegations in this case prove true, its members are no less ruthless or violent,” said Edward Owens, deputy special agent in charge for HSI Los Angeles. “Today’s actions not only took some of the most dangerous members of the Canta Ranas off the streets, but through our joint enforcement efforts we’ve made significant strides toward dismantling a criminal organization that has for too long believed it could operate with impunity in our communities.”
The indictment specifically charges a conspiracy to violate the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and a second conspiracy to distribute narcotics, which includes allegations of smuggling controlled substances, including heroin, into county jails. All 51 defendants are charged in these two conspiracy counts.
The indictment further charges eight counts of violent crimes in aid of racketeering (VICAR). Loza and five other defendants each are charged in at least two of these VICAR charges that involve the hit on the rival Mexican Mafia member, the attack on the Whittier Police officer, and the stabbing of a rival gang member.
Various defendants are additionally charged in 11 drug trafficking charges, 13 firearms offenses and a conspiracy to commit money laundering.
“The alleged ‘tax’ payments made to the Mexican Mafia demonstrate the hierarchy and organizational structure of this criminal enterprise, as the money flowed from the Canta Ranas Organization to Mexican Mafia member D.G. and his designees,” stated IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “The role of IRS Criminal Investigation in narcotics investigations is to follow the money so we can financially disrupt and dismantle these major drug trafficking organizations and protect our communities from the violent behavior of these malicious street gangs.”
Among the 51 defendants charged in the indictment are:
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Jose Loza, also known by a number of monikers, including “Cartune” and “Pumpkin Head,” 37, of Whittier, who was arrested last month on state charges related to the execution of the Mexican Mafia member, but who is expected to be turned over to federal authorities today;
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David Gaitan, 37, of Whittier, who was Loza’s top lieutenant and who, among other things, allegedly sought “flash-bang” grenades to help the gang collect taxes;
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Leonardo Antolin, 21, of Whittier, who was also arrested last month for allegedly participating in the hit on the rival Mexican Mafia member and is expected to be turned over today to federal authorities;
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Sylvia Olivas, 69, of Whittier, a “secretary” to Mexican Mafia member D.G., who allegedly obtained orders during visits to Pelican Bay and relayed instructions to members of his organization;
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Christy Arizmendi, 37, of Whittier, another secretary to D.G., who also allegedly negotiated the purchase of narcotics;
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Frankie Vasquez, 37, of Carson, a member of the Varrio Keystone street gang and a key supplier of narcotics to the Canta Ranas organization, who allegedly fired the shots during the attack on the Whittier Police detective;
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Rene Pantaleon, 37, of Carson, a member of the 38th Street gang who allegedly participated in the attack on the Whittier Police officer while driving a vehicle immediately behind Vasquez; and
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Peter Orozco, 48, of Pico Rivera, the shotcaller of the Brown Brotherhood gang who worked with Gaitan to manage gangs overseen by D.G.
Twenty-eight defendants were taken into custody today in the Los Angeles area, and they are expected to be arraigned on the charges in the indictment this afternoon in United States District Court in downtown Los Angeles. Three other defendants were arrested today in Northern California and Arizona.
A dozen of the 51 RICO defendants – including Loza and Antolin – were already in state custody. They are expected to be turned over to federal authorities in the coming days.
“Through the dedication and hard work of the Sheriff’s Homicide Bureau, detectives were able to arrest Jose Loza and Leonardo Antolin as the suspects responsible for the murder,” said Los Angeles County Sheriff's Homicide Captain Steve Katz. “Working collaboratively with the assistance of HIDTA Task Force investigators, Sheriff's Homicide Bureau detectives determined the murder to be connected with the activities of the Mexican Mafia Prison Gang.”
Authorities continue to search for eight defendants who are named in the RICO indictment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
All of the defendants are charged in the RICO conspiracy, which carries a statutory maximum penalty of 20 years in federal prison. The VICAR charges carry varying penalties, but the two defendants charged with murder could potentially face the death penalty. The narcotics charges all carry mandatory minimum sentences of either five or 10 years in prison.
In addition to the participating members of the Southern California Drug Task Force, the Los Angeles Police Department, the Stockton Police Department, the Riverside County Sheriff’s Department, and the Bureau of Alcohol, Tobacco, Firearms and Explosives provided substantial assistance during the investigation.
The Task Force received assistance during today’s takedown from the United States Marshals Service, the Multi-Agency Response Team, LA IMPACT, the El Monte Police Department, the United States Postal Inspection Service, the United States Secret Service, the Pasadena Police Department, the Simi Valley Police Department and the West Covina Police Department.
The RICO case resulting from Operation Frog Legs is being prosecuted by Assistant United States Attorney Carol Chen of the Organized Crime Drug Enforcement Task Force.
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Orange County Doctor and Two Employees Indicted on Federal Drug Charges that Allege Illegal Prescriptions Written without Medical NeedRead the Press Release
SANTA ANA, California – A federal grand jury has indicted a doctor who operated a medical clinic in Fountain Valley, as well as two physician assistants who worked at the clinic, on federal drug trafficking charges that allege they issued prescriptions for dangerous and addictive narcotics without a medical purpose.
The indictment, which was returned by the grand jury on June 8, was announced today after one of the physician assistants was arrested this morning by federal authorities in the Bay Area. The other defendants have agreed to surrender.
Dr. Victor Boon Huat Siew, 65, a resident of Laguna Beach, is accused of seeing “patients” – some of whom were addicted to drugs, and some of whom were undercover law enforcement officers – and issuing prescriptions outside the usual course of professional practice and without a legitimate medical purpose.
The indictment alleges that Siew wrote prescriptions for at least four people who died from drug overdoses within days of seeing the doctor.
Siew and his employees allegedly wrote prescriptions for narcotics for “patients” who often paid cash for office visits that typically involved only the most cursory examination, if any at all.
The most common drugs prescribed by Siew and his employees were oxycodone (best known under the brand name OxyContin), methadone (a synthetic opioid often used as a treatment for addiction to opioids such as heroin), and alprazolam (sold primarily under the brand name Xanax).
The physician assistant arrested today – Kaitlyn Phuong Nguyen, 31, of San Jose, California – is expected to make a court appearance this afternoon in United States District Court in San Jose.
Siew is expected to surrender to federal authorities tomorrow. He is expected to be arraigned tomorrow afternoon in United States District Court in Santa Ana.
The third defendant in the case – physician assistant Thanh Nha T. Pham, 45, of Fountain Valley – has agreed to surrender to authorities later this week.
“Opioids such as oxycodone and methadone can bring substantial benefits to patients who truly need these drugs,” said United States Attorney Eileen M. Decker. “But narcotics such as these also threaten the lives of people who abuse the drugs or become addicted. Medical professionals who prescribe dangerous drugs without a medical need are harming patients and threaten entire communities when these drugs are diverted to the black market.”
“DEA is committed to ending the nationwide prescription opioid epidemic,” said Special Agent in Charge John S. Comer. “Medical professionals who act with complete disregard for patient health and safety violate their code of ethics and abuse the public’s trust. We will continue to target those engaged in criminally motivated ‘prescription-for-profit’ schemes.”
The indictment alleges one count of conspiracy to distribute controlled substances and 55 counts of illegal distribution of a controlled substance by a practitioner. Each of the three defendants is charged in multiple, but not all, illegal distribution counts.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Each of the 56 counts in the indictment carries a statutory maximum penalty of 20 years in federal prison.
This case is the result of an investigation by the Drug Enforcement Administration, the Fountain Valley Police Department and the California Department of Justice. The case is being prosecuted by Assistant United States Attorney Ann Luotto Wolf.
Former State Senator Ronald Calderon Agrees to Plead Guilty to Federal Corruption Charge; Admits Receiving Tens of Thousands of Dollars in BribesRead the Press Release
LOS ANGELES – Former California State Senator Ronald S. Calderon has agreed to plead guilty to a federal corruption charge and admits in a plea agreement filed today that he accepted tens of thousands of dollars in bribes in exchange for performing official acts as a legislator.
Ron Calderon, 58, of Montebello, agreed to plead guilty to one count of mail fraud through the deprivation of honest services to resolve a case against him that was filed in 2014. The plea agreement comes several weeks before Ron Calderon was scheduled to go on trial on charges contained in a 24-count indictment.
In the plea agreement, Ron Calderon admits 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 millions of dollars in illicit profits from a separate fraud scheme and 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, pleaded guilty last Monday to a federal money laundering charge for allowing bribe money earmarked for his brother to be funneled through his firm.
“Public officials who engage in corrupt behavior threaten the basic fabric of our democracy,” said United States Attorney Eileen M. Decker. “The Calderons have acknowledged their roles in a bribery scheme in which money for them and their families alone was driving legislation that would have benefited only a few individuals.”
“My office will not tolerate pay-to-play corruption by public officials and their associates,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “While in office, Ron Calderon and others profited handsomely when bribe money was accepted and laundered, and I’m gratified that he has chosen to take responsibility for his actions.”
Ron Calderon is expected to plead guilty to the mail fraud charge this week before United States District Judge Christina A. Snyder.
In the plea agreement filed today, Ron Calderon admitted participating in a bribery scheme involving two areas of legislation and the hiring of a staffer at the behest of those paying bribes.
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 is not implicated in the healthcare fraud scheme.) Drobot 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. 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 $3,000 monthly 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.
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.
As part of Ron Calderon’s plea agreement, federal prosecutors have agreed not to seek a sentence of more than 70 months in federal prison, a term that is expected to be within the United States Sentencing Guidelines advisory range for this case. However, Judge Snyder would not be bound by any sentencing recommendation and could sentence Ron Calderon up to statutory maximum sentence of 20 years in federal prison.
Tom Calderon pleaded guilty last week 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.
Tom Calderon “deposited the $30,000 bribe payment from [the undercover agent] into the Calderon Group’s bank account and then wrote a check for $9,000 from
the Calderon Group’s bank account to Ronald S. Calderon’s daughter,” Tom Calderon admitted in his plea agreement.
“Tom Calderon provided a conduit for illicit bribery payments and played a key role in hiding corrupt activities from the voting public,” said United States Attorney Decker.
As part of Tom Calderon’s plea agreement, prosecutors have agreed to recommend a sentence of no more than one year in prison, which is expected to be within the United States Sentencing Guideline advisory range for the offense. However, when Judge Snyder sentencing Tom Calderon of September 12, she could impose a term of up to 20 years in prison, which is the statutory maximum penalty for the money laundering count.
“The Calderon brothers shamelessly defrauded the citizens of California to their right to honest services through an illicit bribery scheme," stated IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “IRS CI tirelessly untangled the web of fraudulent transactions that lead to these corrupt individuals being held accountable for their actions.”
The investigation into the Calderons was conducted by the Federal Bureau of Investigation and IRS Criminal Investigation. The case is being prosecuted by Assistant United States Attorneys Douglas M. Miller and Mack E. Jenkins of the Public Corruption and Civil Rights Section.
Long Beach Lobbyist Agrees to Plead Guilty to Federal Tax Offense for Failing to Report Income Received from Illegal Marijuana StoresRead the Press Release
LOS ANGELES – A Long Beach-based lobbyist, whose clients included illegal marijuana stores in Long Beach, has been charged with filing a false tax return and failing to report more than three-quarters of a million dollars in income over a six-year period.
Carl A. Kemp, 43, of Long Beach, the owner of the public relations firm The Kemp Group, was charged yesterday with subscribing to a false tax return for the year 2012.
“For years, Mr. Kemp failed to accurately report his income to the IRS, going so far as reporting zero taxable income for 2012 when his business brought in more than $200,000,” said United States Attorney Eileen M. Decker. “Everyone, no matter what business they are engaged in, has a responsibility to fully report their income on their income tax returns.”
In a plea agreement also filed yesterday, Kemp agreed to plead guilty to the tax offense. As part of the plea agreement, Kemp admits receiving a total of $754,783 in income that he failed to report on his taxes for the years 2007 through 2012. Kemp admits that he owes the Internal Revenue Service a total of $210,661 to cover the back taxes due for those six years, as well as a civil fraud penalty.
“As admitted by Kemp in documents filed with the court today, all forms of income are taxable, including cash payments received from illegal marijuana dispensaries and fees paid for lobbying services,” stated IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. “Those Americans who file accurate, honest and timely returns can be assured that the government will hold accountable those who don’t.”
The charge of subscribing to a false tax return carries a statutory maximum penalty of three years in federal prison.
Kemp will be directed by the court to appear for an arraignment in this case, likely later this month.
The case against Kemp was investigated by IRS Criminal Investigation and the Federal Bureau of Investigation.
Hacienda Heights Man Sentenced to Federal Prison in Tax Refund Scheme that used Stolen Identities to Fraudulent Seek $2.6 MillionRead the Press Release
LOS ANGELES – A San Gabriel Valley man has been sentenced to 30 months in federal prison for his role in a scheme that used stolen identities to file fraudulent tax returns with the Internal Revenue Service that sought more than $2.6 million in false tax refunds.
Heber Cotton, 40, of Hacienda Heights, received the prison sentenced Monday, and he was further ordered by United States District Judge Michael W. Fitzgerald to pay $725,294 in restitution to the IRS.
Heber Cotton pleaded guilty in November to one count of conspiracy to defraud the United States by obtaining the payment of false claims, namely tax refunds.
Heber Cotton’s father and co-defendant – Adel Cotton, 64, also of Hacienda Heights – is currently serving a prison term of 51 months for his role in the scheme.
According to court documents, beginning in December 2008 and continuing through March 2010, the Cottons caused at least 275 fraudulent income tax returns to be filed with the IRS. Those fraudulent returns sought income tax refunds totaling more than $2.6 million.
“Stolen identity refund fraud continues to be a significant problem that harms both the IRS and taxpayers whose identities are fraudulently used without their knowledge,” said United States Attorney Eileen M. Decker. “This father and son pair prolifically defrauded the government and hundreds of taxpayers, earning them the significant sentences imposed by the court.”
As part of the scheme, Adel Cotton obtained the names and Social Security numbers of individuals without their knowledge and consent. Adel Cotton, with the help of others, prepared false Forms W-2 (IRS Wage and Tax Statements) in the names of the identity theft victims that reported false employment and income information, as well as false tax withholding amounts. Using the falsified information reported on the Forms W-2, Adel Cotton and others prepared fraudulent individual income tax returns claiming false tax refunds. The tax returns were filed without the knowledge or consent of the identity theft victims.
In his plea agreement, Heber Cotton admitted that the fraudulent tax returns filed as part of the scheme directed the IRS to mail the refund checks to addresses the that he and Adel Cotton controlled. Heber Cotton also admitted that he gave personal information associated with the identity theft victims to a co-conspirator who managed a bank, which the co-conspirator used to open bank accounts and cash the fraudulent refunds. Herber Cotton further admitted that, toward the end of the conspiracy, he paid the co-conspirator bank manager approximately 20 percent of each tax refund check that the bank manager cashed.
"These unscrupulous defendants, a father and son team, thought they had figured out a clever scheme to thwart the IRS and steal from American taxpayers," stated IRS Criminal Investigation's Acting Special Agent in Charge Anthony J. Orlando. "IRS CI has made investigating refund fraud and identity theft a top priority and we will vigorously pursue those who undermine the integrity of the U.S. tax system."
The investigation into Heber Cotton and Adel Cotton was conducted by IRS Criminal Investigation and the Federal Bureau of Investigation.
Federal Jury Convicts Man of Smuggling nearly Two Tons of Marijuana from Ensenada to Santa Barbara County on Panga BoatRead the Press Release
LOS ANGELES – A resident of Tecate, Mexico has been found guilty of federal drug trafficking charges for piloting a “panga” boat stuffed with nearly two tons of marijuana from Ensenada to the United States.
Following a three-day trial, the man, 24-year-old Jose Guadalupe Zepeda-Ramirez, was found guilty on June 2 of two felony counts – conspiracy to possess with the intent to distribute marijuana and possession with the intent to distribute marijuana.
Zepeda and another man – Miguel Rodriguez-Doranme, 39, of La Paz, Mexico – were found on March 27 near a panga that had landed on a private beach near Hollister Ranch, which is just west of Gaviota. A panga is an open-bowed fishing vessel that is often used by smugglers bringing marijuana north from Mexico.
According to the evidence presented at Zepeda’s trial, the two men brought the marijuana from Ensenada during a six-day journey. The men had planned to meet a second crew that would off-load the marijuana for further distribution.
The plan was thwarted when Zepeda and Rodriquez were spotted while landing on Alegria Beach. They were detained by a Hollister Ranch security guard until law enforcement arrived.
The investigation revealed that the panga was carrying 1,656 kilograms – or more than 3,650 pounds – or marijuana.
United States District Judge Manuel Real, who presided over Zepeda’s trial, is scheduled to sentence the defendant on September 19. As a result of his conviction on the two charges, Zepeda faces a mandatory minimum sentence of 10 years in federal prison, and he could be sentenced to a maximum term of life.
Rodriguez, who previously pleaded guilty to the conspiracy count, is scheduled to be sentenced on August 1, at which time he will face a maximum sentence of 20 years in prison.
“Law enforcement is working hard at curtailing the smuggling of drugs on panga boats,” said United States Attorney Eileen M. Decker. “We will continue to enforcement efforts by prosecuting those who engage in this dangerous method of smuggling.”
The investigation was conducted by special agents with U.S. Immigration and Custom Enforcement’s Homeland Security Investigations (HSI), the Santa Barbara County Sheriff’s Department, the United States Coast Guard, U.S. Customs and Border Protection - Border Patrol, the California Highway Patrol and the California National Guard.
“This case and the subsequent conviction are a direct result of the ongoing collaborative efforts by HSI, together with its federal and local partners, to detect and deter maritime smuggling,” said Edward Owens, deputy special agent in charge for HSI Los Angeles. “Maritime smuggling poses both a security and a public safety concern and we’re continuing to use all of the resources and tools at our disposal to address this threat.”
Los Angeles Man Arrested on Federal Fraud and Identity Theft Charges Related to Lottery Scam that Targeted Elderly VictimsRead the Press Release
LOS ANGELES - A South Los Angeles man was arrested today on federal fraud charges for participating in a lottery scam that allegedly targeted elderly victims with promises of cash prizes and cars – as long as they paid taxes and fees.
Carl Dean Bullock, 65, was arrested at his residence this morning without incident by inspectors with the United States Postal Inspection Service. Bullock is expected to be arraigned on a 20-count indictment this afternoon in United States District Court.
A federal grand jury on June 3 returned an indictment that charges Bullock with 13 counts of mail fraud, three counts of wire fraud and four counts of aggravated identity theft.
Bullock allegedly participated in a scheme to defraud mostly elderly victims in the United States. Using false promises that the victims had won large lottery or sweepstakes prizes, members of the scheme fraudulently told victims that, in order to obtain their “winnings,” they would need to send money to pay for taxes, fees and other expenses. Hoping to collect the winnings, victims sent money to members of the scheme via wire transfer, money orders and cash. The money was sent through the United States mail, as well as through the Western Union and MoneyGram systems.
Bullock allegedly received some of the fraudulently obtained money, and then sent a portion of it to his co-schemers, most of whom were in Jamaica.
The investigation, so far, has uncovered 25 victims – one of whom was 88 years old – who sent nearly $200,000 to obtain their non-existent prizes.
“Fraud schemes like the one charged in this indictment, which promise large rewards in exchange for ‘fees’ and ‘taxes,’ harm vulnerable members of our communities and potentially jeopardize the victims’ ability to make ends meet in retirement,” said United States Attorney Eileen M. Decker. “This defendant’s conduct was particularly egregious because he assisted criminals outside of the United States target elderly victims here.”
“Foreign lottery and sweepstakes fraud cost Americans millions every year,” stated Los Angeles Postal Inspector in Charge Robert Wemyss. “When one family member is harmed, the impact can be felt by all. Losses can be monumental, and entire fortunes, inheritances and retirement security can be wiped-out. This arrest demonstrates the commitment of Postal Inspectors to protect our seniors from these unscrupulous scam artists.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
The wire fraud and mail fraud charges each carry a statutory maximum penalty of 20 years in federal prison. The aggravated identity theft charges carry a mandatory consecutive sentence of two years in prison.
The investigation in this case is being conducted by the United States Postal Inspection Service, which received substantial assistance from the Glendale Police Department.
Glendale Man Who Stole and Distributed Trade Secrets Belonging to Former Employer Sentenced to One Year in Federal PrisonRead the Press Release
LOS ANGELES – An electrical engineer from Glendale who was found guilty of violating the Economic Espionage Act for stealing and distributing trade secrets belonging to his former employer was sentenced today to federal prison.
Derek Wai Hung Tam Sing, 45, was sentenced by United States District Judge Christina A. Snyder to serve one year and one day in prison.
Judge Snyder presided over a bench trial in September and found Sing guilty in a written ruling issued in January. In her 28-page ruling, Judge Snyder convicted Sing of 32 counts of violating the Economic Espionage Act by transmitting and possessing numerous trade secrets.
Sing worked at the Pasadena-based Rogerson Kratos (RK) in 2012. Until he was fired by the aircraft avionics company, Sing had access to RK trade secrets, and he signed a confidentiality agreement that prohibited him from disclosing any confidential information and trade secrets that belonged to the company.
According to a sentencing memorandum filed by prosecutors, Sing’s short tenure at RK was “tumultuous…he was late on assignments, showed up late to work, and had a bad attitude. He created disparaging paraphernalia, such as mugs and bottle openers referring to RK employees as imbeciles, and distributed them to his colleagues. Eventually, he was fired, but not before he took home with him a trove of documents related to RK’s confidential trade secrets, including at least 27 schematics.”
After being terminated, Sing retained materials that he had collected while working at RK, despite being specifically asked to return all trade secrets. Instead, Sing “packaged the trade secrets with sufficient supporting documentation and instructions so that other competitor companies would be able to use the trade secrets and reverse engineer RK’s products,” according to Judge Snyder’s written verdict, which noted that Sing testified at trial that he “wanted to get back at Rogerson Kratos” for not appreciating his work as an employee.
Sing prepared packages that included schematics of RK products and a “readme” document that explained the importance of the proprietary information and instructed competitors to reverse engineer the products. In early 2013, Sing sent the stolen trade secrets to other companies that produced avionics, including a company outside of the United States. Sing also sent flash drives with the trade secrets to companies. Judge Snyder found that Sing illegally sent seven schematics to three different companies, and that he illegally possessed four of those schematics.
In its recommendation to the court, the United States Probation Office
concluded that “Sing acted out of anger, and intended to cause harm to his former employer. He has shown no remorse,” according to the government’s sentencing memo.
“Mr. Sing tried to conceal his illegal theft and transmission of trade secrets by using fictitious email accounts,” said United States Attorney Eileen M. Decker. “If not for one of the competitors that received the proprietary secrets alerting authorities, Mr. Sing might have caused a devastating blow to his former employer. Intellectual property is the lifeblood of the American economy and provides critical value to businesses and employees.”
“In addition to violating the law by stealing proprietary information, Mr. Sing further victimized his former employer by advertising his theft of trade secrets to the company’s competitors,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI takes theft of intellectual property very seriously as the compromise of such data affects the American economy and can weaken our national security.”
The case against Sing was investigated by the Federal Bureau of Investigation.
3 New Defendants, including Chiropractor, Plead Guilty in Scheme involving nearly $600 Million in Fraudulent Claims by SoCal HospitalsRead the Press Release
Santa Ana, California – As two criminal cases became public this week, the Justice Department today announced three cases in which additional defendants have pleaded guilty to federal charges for participating in a long-running health care fraud scheme that illegally referred thousands of patients for spinal surgeries and generated nearly $600 million in fraudulent billings over an eight-year period.
The three new defendants join six others who were previously charged in relation to the government’s ongoing investigation into kickbacks for patient referrals and fraudulent bills for spinal surgeries performed at Pacific Hospital in Long Beach. The scheme involved tens of millions of dollars in illegal kickbacks to dozens of doctors, chiropractors and others. As a result of the illegal payments, thousands of patients were referred to Pacific Hospital, where they underwent spinal surgeries that led to more than $580 million in fraudulent bills being submitted during the last eight years of the scheme alone. Many of the fraudulent claims were paid by the California worker’s compensation system and the federal government through the Federal Workers’ Compensation System.
Two of the three new cases were recently ordered unsealed by United States District Judge Josephine L. Staton. The documents in the two unsealed cases became publicly available this week. In the now-unsealed cases and another case recently filed:
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Michael R. Drobot, 44, of Newport Beach, the son of Pacific Hospital owner Michael D. Drobot (Drobot Senior), pleaded guilty on March 4 to conspiracy and illegal kickback charges. Drobot Junior is scheduled to be sentenced on November 18.
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Chiropractor Michael E. Barri, 48, of San Clemente, who owned and operated the Santa Ana companies Tri-Star Medical Group and Jojaso Management Company, pleaded guilty on March 11 to a conspiracy count and admitted that he received illegal kickbacks for referrals to Pacific Hospital from 2009 through October 2013. During a nine-month period that ended in 2013, Barri admitted receiving $158,555 in illegal kickbacks after referring a dozen patients to Pacific Hospital, where they had back surgeries. As a result of his referrals, Pacific Hospital billed insurance carriers approximately $3.9 million for spinal surgeries. Barri is scheduled to be sentenced by Judge Staton on January 13, 2017.
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Linda Martin, 66, of Clovis, California, who was a marketer for Pacific Hospital who recruited medical professionals and others to refer patients with promises of kickbacks, pleaded guilty to a conspiracy charge on May 27. She is scheduled to be sentenced on August 19.
These three defendants join six others – including Drobot Senior – who have also pleaded guilty. All nine defendants have agreed to cooperate with the government’s ongoing investigation – dubbed “Operation Spinal Cap” – into the kickback scheme, which involved dozens of surgeons, orthopedic specialists, chiropractors, marketers and other medical professionals.
“Federal law prohibits kickbacks to health care professionals because these payments impose additional costs on all patients and corrupt the relationship between the doctor and patient,” said United States Attorney Eileen M. Decker. “This scheme resulted in what can only be called a massive amount of fraudulent billing. The continuing investigation into the scheme demonstrates our commitment to protecting patients and prosecuting those in the health care industry who care more about money than those in their care.”
“The guilty pleas announced today are the latest step in holding accountable the individuals who co-opted doctors and other specialized healthcare workers to carry out multiple kickback conspiracies that abused the state and federal healthcare systems for more than a decade,” said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The continuing results of Operation Spinal Cap are based on a tremendous effort by investigators and prosecutors handling this case, which is among the largest healthcare fraud schemes to be perpetrated in the state of California.”
As described in court documents, Drobot Senior – who was the owner and/or CEO of Pacific Hospital of Long Beach until late 2013 and who pleaded guilty in April 2014 – ran a 15-year-long scheme in which he and others submitted hundreds of millions of dollars in bills to workers’ compensation insurers and the U.S. Department of Labor for spinal surgeries and other procedures performed on patients who had been referred by dozens of doctors, chiropractors and others who were paid illegal kickbacks.
As part of the scheme, members of the conspiracy typically paid a kickback of $15,000 for each lumbar fusion surgery and $10,000 for each cervical fusion surgery. Some of the patients lived hundreds of miles away from Pacific Hospital, and closer to other qualified medical facilities. The patients were not informed that medical professionals had been offered kickbacks to induce them to refer the surgeries to Pacific Hospital. From 2005 through 2013 (which is only part of the overall scheme), Pacific Hospital billed insurers more than $580 million for spinal surgeries related to over 4,400 patients. Insurers paid the hospital more than $226 million for the surgeries performed as a result of illegal kickbacks.
Those involved in the scheme concealed the kickback payments by entering into bogus contracts to provide a “cover story” for the doctors, chiropractors and others who received illegal payments. For example, a number of doctors entered into agreements with a company owned by Drobot Senior, Pacific Specialty Physician Management (PSPM), under which the doctors received as much as $100,000 per month from PSPM in return for the right to purchase their medical practices – an option that was never exercised. In other cases, Pacific Hospital entered into contracts with doctors under which the doctors were to help the hospital collect on its surgery bills to insurance companies, but the hospital’s own collection staff, rather than the doctors, actually performed the collections work. Several doctors entered into lease agreements under which PSPM or Pacific Hospital paid rent for the use of office space, but rarely used the space. And other doctors had agreements to provide consulting services to Drobot’s companies, but did not actually provide the services. Still others, including marketers who introduced doctors to Pacific Hospital, had additional agreements with Drobot’s companies.
Two other Drobot companies – California Pharmacy Management (CPM) and its successor, Industrial Pharmacy Management (IPM) – were also important players in the scheme. Both companies set up and managed what were essentially mini-pharmacies within doctors’ offices. CPM and IPM bought and dispensed medication that the doctors prescribed to their patients, and these businesses received a portion of the money reimbursed by insurance companies for the medications. Drobot Senior, along with others at CPM and IPM, often agreed to increase the doctors’ shares of the insurance claims in return for those doctors’ referral of patients to Pacific Hospital. In many cases, for doctors who made such referrals, the conspirators “advanced” payments from CPM and IPM before the companies had collected any money for the medications or even prescribed them, and often simply wrote off these payments as losses when collections fell short. Drobot Junior was involved in these companies for over a decade, first as the manager of CPM, and then as co-owner and manager of IPM.
In his plea agreement, Drobot Junior admitted participating in the kickback scheme, primarily through his operation of CPM and IPM. As far back as 2005, Drobot Junior began personally soliciting doctors and chiropractors to enter into contracts with CPM and specifically discussed kickback arrangements, which were finalized by his father. Drobot Junior later acted a liaison when disputes arose concerning the payment of kickbacks to medical professionals or when those kickback recipients did not refer as many patients as expected.
Drobot Junior also admitted that he induced doctors who had contracted with CPM or IPM to also use products and services by companies he was affiliated with, including Medi-Lab Corporation. In return for referrals to Medi-Lab, Drobot Junior received monthly payments, some of which he used to make kickback payments to the doctors.
“These unscrupulous defendants thought they had figured out a clever scheme to line their pockets in their bilking of the insurance system. Federal and state worker’s compensation programs were not designed as a slush fund for the greedy,” stated IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. “Law enforcement is serious about investigating these crimes and holding accountable those who defraud government health care programs and deprive patients of their right to honest services.”
“Kickback schemes such as these threaten the financial integrity of public healthcare programs,” said Special Agent in Charge Scott Pierce, USPS Office of Inspector General, Contract Fraud Investigations Division. “The workers’ compensation program benefits thousands of postal employees who have received legitimate on-the-job injuries. This case should send a clear message to all health care providers that workers’ compensation fraud is a federal crime that carries serious consequences and will not be tolerated.”
When he is sentenced, Drobot Junior will face a statutory maximum penalty of 10 years in federal prison.
Barri and Martin each face potential prison sentences of five years as a result of their guilty pleas.
Last year, the United States Attorney’s Office announced charges against five other defendants, including two doctors involved in the Pacific Hospital kickback scheme, and a similar scheme involving Tri-City Regional Medical Center in Hawaiian Gardens.
The ongoing investigation into abuses involving kickbacks paid for spinal surgery patients is being conducted by the Federal Bureau of Investigation; the United States Postal Service, Office of Inspector General; IRS Criminal Investigation; and the California Department of Insurance.
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CEO of Mortgage Brokerage Engaged in Equity-Skimming Scheme Sentenced to Nearly Eight Years in Federal PrisonRead the Press Release
LOS ANGELES – The chief executive officer and owner of a Westwood-based mortgage brokerage company that falsely promised to help distressed homeowners avoid foreclosure – but instead stole the equity in the homes and served as the homeowners’ impostor landlord – was sentenced this afternoon to 94 months in federal prison.
David Singui, 52, of Inglewood, the former CEO of Direct Money Source (DMS), was sentenced after pleading guilty to conspiracy, loan fraud, aggravated identity theft and tax evasion charges.
United States District Judge Christina A. Snyder sentenced Singui and ordered him to pay just over $4 million in restitution.
The scheme related to DMS caused distressed homeowners to lose more than $4 million and lending institutions to suffer losses of more than $11 million. Homeowners suffered losses when they were induced to sell their homes to straw borrowers sponsored by DMS, which was supposedly going to hold these properties for one year while the distressed homeowners repaired their credit and would then be in a position to repurchase these properties from the straw borrowers. In fact, DMS and Singui took permanent title to these properties and misappropriated the distressed homeowners’ equity, while DMS and Singui ended up serving as the landlord of these distressed properties and collected rent from the homeowners for over five years.
Previously in this case, Aziz Meghji, 37, of Los Angeles, who was the second-in-charge at DMS, was sentenced to four years in federal prison.
“Mortgage rescue schemes cause significant harm to distressed homeowners, as well as to financial institutions that are often defrauded in the scams,” said United States Attorney Eileen M. Decker. “These schemes target vulnerable victims who are already in financial jeopardy and make their plights even worse. Some of the victims in this case were left homeless by the financial predators who targeted them, including Singui.”
DMS offered a “Fresh Start Program” that purportedly could assist distressed homeowners avoid foreclosure by arranging to have their homes purchased by so called “credit investors,” who would hold the properties for a year and then sell them back to the original homeowners after they restored their credit ratings. In reality, DMS was an equity-skimming operation that took possession of distressed homeowner’s equity under fraudulent pretenses.
As part of the scheme, DMS told distressed homeowners that it would provide “credit investors” who would provisionally purchase the properties for one year, thereby allowing the homeowners to avoid foreclosure. During the one-year period, the distressed homeowners could remain in their homes and repair their credit. At the end of the 12-month period, the homeowners were promised that they could repurchase their homes at a lower interest rate.
The distressed homeowners were told that DMS would draw down on the equity in their homes and use the revenues to make monthly mortgage payments during the one-year period.
DMS took title to about 50 distressed properties and misappropriated the existing equity in the homes. The “credit investors” were nothing more than “straw borrowers” whose names were used to access the equity in the homes. DMS and its principals falsified the employment, bank account and income information of the straw borrowers on the loan applications.
At the conclusion of these transactions, DMS usually ended up with approximately $100,000 equity per transaction, plus around $35,000 in fees and commissions associated with each loan. In the meantime, each of the straw borrowers ended up owing approximately $300,000 or more on loans that went into default because DMS did not make the mortgage payments as promised. This led to banks suffering more than $11 million in losses and the homeowners suffering losses of over $4 million as a result of the theft of the equity in their homes.
“The defendant preyed on struggling and trusting homeowners, literally stealing the American Dream out from under them, with no remorse,” said IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. “Today’s sentencing exemplifies the continued effort by federal law enforcement to investigate and prosecute those who commit mortgage fraud. IRS-CI is committed to pursuing those who line their pockets with profits from these schemes.”
This case was the result of a joint investigation by the Federal Bureau of Investigation, the United States Postal Service and IRS Criminal Investigation.
United States Attorney’s Office Files Lawsuit to Seize Life Insurance Payments of San Bernardino ShooterRead the Press Release
LOS ANGELES – Federal prosecutors today filed a civil asset forfeiture lawsuit and an application that, if approved, would allow the seizure of the proceeds of two life insurance policies worth a total of $275,000 held by San Bernardino shooter Syed Rizwan Farook, announced U.S. Attorney Eileen M. Decker and Assistant Attorney General for National Security John P. Carlin.
Before the December 2, 2015, terrorist attack at the Inland Regional Center, Farook obtained two insurance policies through his employment with San Bernardino County – one for $25,000 in 2012, and another for $250,000 in 2013. This afternoon, the United States Attorney’s Office filed the asset forfeiture lawsuit against the proceeds of the life insurance policies, as well as a request to seize the policies. The “application for arrest in rem” must be approved by a federal judge before the money can be seized by the government.
Under federal law, any assets derived from a crime of terrorism against the United States, its citizens or residents, or their property, are subject to forfeiture by the government.
“Terrorists must not be permitted to provide for their designated beneficiaries through their crimes,” said United States Attorney Eileen M. Decker. “My office intends to explore every legal option available to us to ensure these funds are made available to the victims of this horrific crime. We will continue to use every tool available to seek justice on behalf of the victims of the San Bernardino terrorist attacks.”
The continuing investigation into the San Bernardino terrorist attacks is being conducted by the Federal Bureau of Investigation’s Joint Terrorism Task Force, which includes partners with the San Bernardino Police Department, the San Bernardino County Sheriff’s Department, the Riverside County Sheriff’s Department, the Ontario Police Department, the Riverside Police Department, the Corona Police Department and other law enforcement agencies.
Orange County Mexican Mafia Associate Sentenced to 64 Months in Federal Prison on Racketeering ChargeRead the Press Release
SANTA ANA, California – An associate of the Orange County Mexican Mafia criminal enterprise, who pleaded guilty to federal racketeering charges related to his role in the Orange County Mexican Mafia, has been sentenced to serve over five years in federal prison.
Danny “Big Shotgun” Rodriguez, 41, of Orange, was sentenced on Monday to 64 months in prison by United States District Judge Andrew J. Guilford. Rodriguez pleaded guilty last year to conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act.
According to a plea agreement filed in federal court, Rodriguez’s role in the RICO conspiracy included extortion – or collecting “taxes” – from criminal street gang members and others, which enabled the Orange County Mexican Mafia to continue trafficking narcotics and to exert influence over neighborhoods. Rodriguez also distributed messages on behalf of the gang, including messages that ordered “green lights” – assaults – on gang members. The plea agreement notes that Rodriguez wrote a message ordering an assault, which led associates of the Orange County Mexican Mafia to attack an individual in custody.
The Mexican Mafia is a powerful and violent prison gang that controls drug distribution and other illegal activities within the California penal system and on the streets of Southern California by organizing Latino street gang members for the purpose of establishing a larger network for the Mexican Mafia’s illegal activities. If a street gang does not comply with the demands of the Mexican Mafia, the prison gang will order the assault or murder of the offending gang’s members, whether they are in custody or on the streets.
“Defendant Rodriguez helped the Mexican Mafia by collecting ‘taxes’ and passing directives,” said United States Attorney Eileen M. Decker. “Rodriguez, and others like him, enabled the Mexican Mafia to carry out its criminal activities, which involved narcotics trafficking and the use of violence, and this sentence appropriately recognizes that fact.”
Rodriguez was one of 25 defendants named in a RICO indictment brought as part of Operation “Smokin’ Aces,” which was a multi-agency operation that targeted the Orange County wing of the Mexican Mafia and led to charges against more than 80 defendants in federal court and about four dozen people in state court. In addition to Rodriguez, 16 other defendants named in the RICO indictment have been sentenced, with one defendant receiving a prison term of nearly 10 years.
The investigation was jointly conducted by special agents of the Santa Ana Gang Task Force, which consists of agents and officers with the Federal Bureau of Investigation; the Santa Ana Police Department; the Orange County Sheriff’s Department; the Bureau of Alcohol, Tobacco and Firearms and Explosives; and the California Department of Corrections and Rehabilitation-Special Service Unit.
Actor Named in Federal Indictment Alleging Receipt and Possession of Child Pornography on his Computer and Flash DriveRead the Press Release
LOS ANGELES – Actor Mark Wayne Salling was charged today in a federal indictment with receiving and possessing child pornography on his laptop computer and a flash memory drive.
Salling, 33, of Shadow Hills, who is best known for his role as Noah Puckerman on the television show “Glee,” was named in a two-count indictment returned this afternoon by a federal grand jury.
“Those who download and possess child pornography create a market that causes more children to be harmed,” said United States Attorney Eileen M. Decker. “Young victims are harmed every time an image is generated, every time it is distributed, and every time it is viewed.”
The indictment specifically alleges that Salling used the Internet to receive a still image and a video depicting child pornography on December 26, 2015. These images depict young girls.
The second count in the indictment charges Salling with possessing two videos depicting child pornography on December 29, 2015. The image and video also depict young girls.
“The traditional stereotype about the kinds of people who commit child sexual exploitation crimes simply doesn’t dovetail with reality. As our investigators can attest, the defendants in child pornography cases come in all ages and from all walks of life,” said Joseph Macias, Special Agent in Charge for U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Los Angeles. “While people are often surprised when high-profile individuals come under scrutiny in such investigations, we hope cases like this will raise awareness about law enforcement’s vigilance to combat the online sexual exploitation of children and hold those involved, regardless of their position, accountable for their actions.”
The laptop, a hard drive, and a USB flash drive seized from Salling’s residence at the end of 2015 contained thousands of images and videos depicting child pornography, according to investigators, who are continuing to review the material. Salling was initially arrested by the Los Angeles Police Department and HSI on state charges, and he was released on bond. Once investigators realized the scope of the collection of child pornography, the matter was referred to federal authorities for further action, which resulted in today’s indictment.
“It doesn’t matter who you are or what you do, if you hurt a child you will be held accountable,” said Lt. Andrea Grossman, Commander of the LAPD Internet Crimes Against Children Task Force. “These images are more than photographs, they are child abuse.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The charge of receiving child pornography carries a mandatory minimum sentence of five years in federal prison and a statutory maximum sentence of 20 years. The charge of possessing child pornography also carries a statutory maximum sentence of 20 years in federal prison.
Salling, through his attorney, has agreed to surrender to federal authorities on June 3 to face the charges in the indictment. He is expected to be arraigned on the indictment on that date.
The case against Salling is the product of an investigation by the Los Angeles Police Department and HSI as part of the Child Exploitation Investigations Group, a multi-agency task force that combats all forms of child exploitation. The Beverly Hills Police Department provided substantial assistance.
Medical Doctor Arrested on Federal ‘Structuring’ Charges for Making Cash Deposits to Avoid Federal Reporting RequirementsRead the Press Release
LOS ANGELES – A Los Angeles-area doctor was arrested this morning after being indicted on federal “structuring” charges that allege he made hundreds of thousands of dollars in cash deposits designed to circumvent federal reporting requirement.
Dr. Washington Bryan II, 47, was arrested this morning at his residence in Westwood. Bryan is expected to be arraigned this afternoon at the United States Courthouse in downtown Los Angeles.
The 29-count indictment charges Bryan with structuring more than $400,000 in cash deposits between October 2011 and January 2013. Bryan allegedly made deposits of less than $10,000 each 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.
In conjunction with Bryan’s arrest, investigators executed federal search warrants at Bryan’s residence and his Brentwood medical office. The affidavit in support of the search warrants discusses a total of $3.8 million in structured cash deposits allegedly made by Bryan as far back as December 2007. The affidavit also discusses evidence that Bryan structured the cash for the purpose of concealing income he receive from thousands of fraudulent prescriptions that he issued for narcotic painkillers and HIV medications.
According to data maintained by the State of California, Bryan issued nearly 10,000 controlled drug prescriptions over a three-year period that ended in March. According to the affidavit, 86 percent of those prescriptions were for the same two narcotic drugs, namely, oxycodone (commonly known by the brand name OxyContin) and oxymorphone (also known by the brand name Opana). Since 2006, Medicare has paid more money to pharmacies to cover Bryan’s narcotic drug prescriptions – $7.8 million – than for any other prescribing doctor in California, and he outpaced the next-highest prescriber by more than $1.6 million.
“The federal structuring statute was designed to prevent criminals from hiding their illicit proceeds from scrutiny,” said United States Attorney Eileen M. Decker. “In this case the defendant will now be held accountable for his attempt to hide millions of dollars made from excessive and highly-suspicious narcotic drug prescriptions.”
“Federal laws that regulate the reporting of certain financial transactions are in place to detect and stop illegal activities, such as narcotics trafficking and prescription drug diversion schemes,” stated IRS Criminal Investigation’s acting Special Agent in Charge Anthony J. Orlando. “IRS Criminal Investigation is committed to enforcing these laws and following the money, particularly when doctors profit from issuing medically unnecessary prescriptions.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
If convicted of the 29 counts in the indictment, Bryan would face a statutory maximum sentence of 145 years in federal prison.
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.