Central District of California
Press releases recorded for this federal judicial district.
Santa Barbara County Man Named in Federal Case Alleging Production of Child Pornography by Enticing Minors over InternetRead the Press Release
LOS ANGELES – A man who resided in Carpinteria has pleaded not guilty after being named in a federal grand jury indictment that charges him with producing, receiving, distributing and possessing child pornography in 2015 – crimes he allegedly committed soon after completing a state prison term as a result of other child pornography offenses.
Christopher Robin Coates, 41, was taken into federal custody Wednesday afternoon by federal authorities after the grand jury charged him on Tuesday. Coates was turned over by local authorities in Santa Barbara County, where an extensive investigation occurred resulting in him being charged by Santa Barbara County District Attorney Joyce E. Dudley with multiple child exploitation crimes. The District Attorney’s Office dismissed the state charges after the federal indictment was filed – an indictment that brings the possibility of a life sentence for Coates.
Coates was arraigned Thursday afternoon in United States District Court in Los Angeles. At the arraignment, Coates pleaded not guilty to nine felony offenses in the indictment, and he was ordered to stand trial on May 24 before United States District Judge George W. Wu.
Coates is specifically charged with two counts of producing child pornography by using Kik Messenger to entice two minor boys to engage in sexually explicit conduct last year. Coates also is charged with two counts of receiving child pornography after enticing the victims to engage in the illicit conduct.
The indictment further charges Coates with three counts of using Kik Messenger to distribute child pornography (one count involves one of the victims allegedly enticed by Coates to send images), and one count of possessing child pornography involving a victim under the age of 12.
The indictment alleges that Coates was convicted in Santa Barbara Superior Court in 2011 and in 2013 of possessing child pornography, as well as sexual battery of a disabled adult in 2010. Count nine of the indictment charges Coates with producing child pornography while being required to register as a sex offender as a result of his prior convictions.
“This defendant, if he is convicted, faces a lengthy period of incarceration in federal prison – which would be warranted by his history of crimes against children,” said United States Attorney Eileen M. Decker. “As this case unfortunately illustrates, child pornography is not a victimless crime; on the contrary, it victimizes the most vulnerable among us.”
On July 15, 2015, law enforcement officers conducted a parole search of Coates’ residence. During the search, authorities recovered a Samsung tablet under a mattress that contained hundreds of images and videos of child pornography.
“Protecting children from crimes of sexual abuse and exploitation is a priority for the U.S. Postal Inspection Service,” stated Robert Wemyss, Inspector in Charge for the Los Angeles Division. “I'm proud of the work of the Postal Inspection Service and our investigative partners to bring child predators to justice. U.S. Postal Inspectors have investigated these crimes for more than a century. While the predators' use of sophisticated technology has evolved, the core harm has not changed: a child's lost innocence. We will not lose sight of this, and remain steadfast in our efforts to investigate, apprehend, and assist in the prosecution of those who seek to exploit children via the U.S. Mail.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If he is convicted in this case, Coates faces a potential sentence of life without parole in federal prison. Because of his prior convictions, Coates also faces enhanced mandatory minimum sentences, including a minimum sentence of 35 years for the production counts, a minimum sentence of 15 years for the distribution and receipt counts, and a minimum sentence of 10 years for the possession count. The charge of committing child exploitation offenses while being require to register as a sex offender carries a mandatory consecutive sentence of 10 years in federal prison.
“Protecting the most vulnerable members of society from predators is paramount, and the potential sentence in this case reflects the seriousness of the charges and the repeated harm he caused through the exploitation of children,” said James L. Struyk, Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Unfortunately the actions of this previously convicted child predator will never truly be erased from the Internet or from the minds of his young victims. This investigation is an excellent example of federal agencies working closing with the Santa Barbara District Attorney’s Office and taking swift action to protect our children.”
The investigation into Coates was conducted by the United States Postal Inspection Service and the Federal Bureau of Investigation. The Santa Barbara Sheriff’s Department and the California Department of Corrections and Rehabilitation provided substantial assistance. The investigation is the result of a tip to the Postal Inspection Service by the National Center for Missing & Exploited Children.
Canyon Country Man Sentenced to 10 Years in Federal Prison for Possession of Child Pornography on His Mobile PhoneRead the Press Release
SANTA ANA, California – A registered sex offender from Canyon Country has been sentenced to a decade in federal prison and ordered to serve 40 years of supervised release for his conviction pleading guilty to one count of possession of child pornography.
Paul Frederick Kampmeyer Jr., 45, was sentenced on April 8 by United States District Judge Josephine L. Stanton after he pleaded guilty last May and admitted possessing over a hundred images of minors engaging in sexually explicit conduct.
Kampmeyer, who was previously convicted in state court of possessing child pornography, used his cell phone in 2011 to send a text message that contained a sexually explicit image of a man and a young child. During the execution of a federal search warrant in 2012, agents seized two mobile phones with approximately 124 images of child pornography that had been transmitted over the Internet. One image found on Kampmeyer’s phone included a sexually explicit photo involving a young toddler engaging in sexual acts with an adult male.
Kampmeyer will be ordered to pay restitution to the victims.
“Possessing child pornography is not a victimless crime,” said United States Attorney Eileen M. Decker. “Real children were raped when these images were produced, and every time the images are distributed or possessed the child is re-victimized. The demand for these disturbing images leads to victimization, so my Office is committed to shutting down the illicit market for these images.”
This case was the result of an investigation by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
11th Defendant in $17 Million Case Stemming from Indy Movie Financing Scam Sentenced to over 11 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Palm Springs man who helped fraudulently raise millions of dollars for independent movie productions – money that primarily went to the fundraisers – has been sentenced to 135 months in federal prison.
Paul Baker was sentenced yesterday by United States District Judge John F. Walter, who also ordered the defendant to pay $2,688,433 in restitution.
Baker is the eleventh defendant to be sentenced after each was convicted of participating in a scheme to raise money for two films with false promises of huge returns and misrepresentations as to how investor funds would be used. While some of the movies were actually produced, the defendants lied, gave half-truths and concealed material facts from investors around the nation, according to court documents. (Baker was previously sentenced to more than 16 years, but that sentence was overturned by the U.S. 9th Circuit Court of Appeals, which found an error in how his previous convictions were factored into the sentence.)
Baker’s conviction by a jury in June 2012 on charges of conspiracy, mail fraud, wire fraud and the sale of unregistered securities was related to the activities of Cinamour Entertainment LLC, which bilked investors who put money into independent motion pictures called “From Mexico with Love” and “Red Water: 2012.” The defendants in the case raised money for the films through boiler room telemarketing operations, which made fraudulent pitches to investors. As part of the scheme, telemarketers made “cold calls” and solicited investments with false claims, such as that 93 percent of investor money would be used to produce and promote the films, and that investors would receive returns up to 1,000 percent. In fact, little more than one third of investor funds were used to actually produce and promote “From Mexico with Love,” and the second film was never made.
The scheme raised more than $17 million.
“Investors must beware when presented with extravagant promises of profits,” said United States Attorney Eileen M. Decker. “These defendants used the glamour of the film industry to make their false promises more attractive, which enabled them to steal millions of dollars from these victims. The sentences imposed in this case are a testament to the dedication and persistence of the law enforcement agencies which dismantled this fraudulent scheme, preventing further harm to victims.”
A total of 11 defendants have been convicted in the Cinamour case, including:
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Daniel Toll, of Encino, the president of Cinamour, who pleaded guilty to conspiracy and selling unregistered securities and was sentenced to eight years in federal prison;
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James Lloyd, of Lake Arrowhead, a “closer” for Cinamour and later operated his own boiler room, pleaded guilty to wire fraud and was sentenced to 13 years in prison; and
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Bart Douglas Slanaker, of Panorama City, another closer who helped raise funds for Cinamour in several capacities, pleaded guilty to wire fraud and tax evasion and was sentenced to 145 months in prison.
The investigation into fraudulent boiler rooms raising money for independent movies was conducted by special agents with the Federal Bureau of Investigation and IRS Criminal Investigation.
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Two Leaders of El Monte Street Gang Plead Guilty to Federal Racketeering Offenses, including Narcotics TraffickingRead the Press Release
LOS ANGELES – A Mexican Mafia member who is also a member of the El Monte Flores street gang, and another man who was a “shotcaller” of the gang, have pleaded guilty to federal racketeering offenses.
The two gang leaders pleaded guilty Thursday in United States District Court after they were indicted in 2014 in a racketeering indictment that focused on the El Monte Flores gang, an organization that takes direction from the Mexican Mafia prison gang and controls criminal activity in the cities of El Monte and South El Monte.
James “Chemo” Gutierrez, 53, of El Monte, who is the Mexican Mafia member and the lead defendant in the indictment, and Kenneth Cofer, 36, also of El Monte, each pleaded guilty to conspiring to violate the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. They also each pleaded guilty to conspiring to distribute controlled substances, including methamphetamine and heroin, and conspiring to launder money. Additionally, Cofer pleaded guilty to possession of a firearm in furtherance of a drug trafficking crime.
Gutierrez and Cofer pleaded guilty before United States District Judge John A. Kronstadt, who is scheduled to sentence Gutierrez on July 28 and Cofer on September 8. If Judge Kronstadt accepts the plea agreements in the case, Gutierrez and Cofer will each be sentenced to 15 years in federal prison.
The indictment in the case alleged that members of the El Monte Flores gang members committed crimes that included acts of violence (ranging from battery to murder), drug trafficking, robbery, burglary, carjacking, witness intimidation, kidnapping, weapons trafficking, credit card fraud, identity theft, and money laundering. The indictment outlined a dispute between Gutierrez and other members of the Mexican Mafia who were vying for control over the gang.
“We have effectively targeted criminal enterprises that operate as street gangs for two decades, using the federal racketeering statute to dismantle the leadership structure and incarcerate street-level operatives,” said United States Attorney Eileen M. Decker. “Street gangs present one of the most dangerous criminal elements in Southern California, and we will use every tool at our disposal to restore order to neighborhoods affected by their violence and other criminal activity.”
In his plea agreement, Gutierrez admitted that he “regularly received extortionate ‘tax’ payments from individuals trafficking narcotics in the neighborhoods controlled by the El Monte Flores gang.” Gutierrez “knew that the narcotics traffickers would be subject to violent attacks if they failed to pay the extortionate taxes to the El Monte Flores gang.” Gutierrez acknowledged in his plea agreement that he authorized an attack on a rival gang member.
Cofer admitted in his plea agreement that he “managed and supervised the extortion and drug trafficking activities…[and] directed the use of violence on behalf” of the criminal enterprise. Cofer specifically admitted that he authorized the shooting of a person who had a dispute with another member of the gang.
Gutierrez and Cofer admitted their roles in threats to use violence to extort “taxes” from drug dealers and fraudulent document vendors at “Crawford’s Plaza” (at Valley Boulevard and Garvey Avenue).
In addition to Gutierrez and Cofer, 19 other defendants named in the RICO indictment have pleaded guilty to date.
The investigation into the El Monte Flores gang was conducted by a task force that included the Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms and Explosives; IRS Criminal Investigation; and the El Monte Police Department.
Glendale Tax Return Preparer Arrested on Federal Fraud ChargesRead the Press Release
LOS ANGELES – The operator of a Glendale tax preparation business was arrested this morning on charges that he defrauded customers of his tax preparation business by diverting their tax refunds into his own bank accounts.
Michael Joseph Calalang Cabuhat, 40, a resident of the Hollywood Hills West neighborhood of Los Angeles, who refers to himself in online postings as “celebritytaxguy,” was arrested by special agents with IRS Criminal Investigation and the United States Treasury Inspector General for Tax Administration (TIGTA).
This morning’s arrest was made pursuant to a criminal complaint that charges Cabuhat with wire fraud, aggravated identity theft and structuring financial transactions to evade reporting requirements.
“Corrupt tax return preparers harm their clients, other taxpayers, and the United States government,” said United States Attorney Eileen M. Decker. “Mr. Cabuhat’s clients entrusted him with an important duty that we all have at this time of year, and he abused that fundamental trust.”
Cabuhat is half-owner of VisionQwest Resource Group, Inc., which operates VisionQwest Accountancy Group and Icon Tax Group, Inc., in Glendale. According to a 36-page affidavit filed in the case, Cabuhat defrauded his clients in at least two ways.
In some instances, the taxpayer-client was given a copy of a tax return that showed a much smaller refund amount than on the tax return that Cabuhat actually filed with the IRS on behalf of the taxpayer, according to the affidavit. Sometimes, Cabuhat would simply increase the amount of tax owed on the taxpayer’s copy of the return, thereby decreasing the refund; and sometimes he would manipulate the expenses reported on the filed returns to increase the refund. Without the taxpayer’s knowledge, Cabuhat directed the IRS to deposit the small amount reflected on the taxpayer’s copy of the tax return into the taxpayer’s bank account, and to deposit the remainder into a bank account that Cabuhat controlled.
In other instances, according to the complaint, Cabuhat gave the taxpayer-client a copy of a tax return that falsely showed a tax due, but Cabuhat would file with the IRS a tax return that sought a refund. In these instances, Cabuhat would tell the taxpayer to make the “tax payment” directly to him so he could remit the payment to the IRS. In fact, Cabuhat allegedly kept the “tax payment” and directed the IRS to deposit the refund that the client should have received into a bank account that he controlled.
From 2010 through 2015, Cabuhat allegedly used this scheme to steal more than $1.2 million in refunds that should have gone to 144 clients,
In addition to the tax refund scheme, in September of 2014, Cabuhat structured cash deposits to avoid federal bank reporting requirements. Specifically, Cabuhat structured a $29,700 cash deposit into three separate transactions of $9,900 over seven days, allegedly to evade the reporting requirement triggered by cash transactions of more than $10,000. On the day after these structured transactions were completed, Cabuhat wrote a $24,500 check to purchase a Ferrari 360 Spider. That vehicle was seized today by federal agents.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
Cabuhat is expected to make his initial appearance this afternoon in United States District Court.
If convicted of the charges in the complaint, Cabuhat would face a statutory maximum sentence of 27 years in federal prison.
Return preparer fraud is one of the Internal Revenue Service’s Dirty Dozen Tax Scams for 2016. The IRS has some tips on their website for choosing a tax preparer, and has launched a free directory of federal tax preparers. Additional information about and enforcement efforts by the United States Department of Justice may be found on the Tax Division’s website.
Corona Man Arrested on Federal Charges Related to Scheme to Steal, ‘Wash’ and Cash Checks Stolen from the U.S. MailRead the Press Release
RIVERSIDE, California – A Corona man who had a stolen, blue mail-collection box in his living room was arrested today on federal charges that allege he stole mail, “washed” checks that he found and cashed the checks using a stolen identity.
Paul Wagner, 28, was arrested this morning without incident and is expected to be arraigned in United States District Court this afternoon on a three-count indictment.
Wagner is charged with bank fraud, aggravated identity theft and possession of stolen mail.
Wagner allegedly participated in a scheme that stole mail to find checks. Once Wagner obtained the checks, he would “wash” the checks – meaning that he would remove the payee’s name by physically scraping off the ink or using chemicals to erase the ink. After the check had been washed, Wagner altered the payee to make the check payable to the name of the identity theft victim, according to the indictment.
The indictment specifically alleges that Wagner cashed a check at a Bank of America branch on November 15, 2015 using a driver’s license with the name of an identity theft victim.
During a search of residence on March 1, authorities recovered hundreds of stolen checks, check-washing materials, and a large mail collection box that had been stolen from a street in Riverside.
“The frequency of mail theft is rising at a concerning rate across Southern California,” said United States Attorney Eileen M. Decker. “This criminal activity harms both individuals and businesses in large numbers, and we appreciate the efforts of the Postal Inspection Service in combating this trend.”
Robert Wemyss, Inspector in Charge of the Postal Inspection Service’s Los Angeles Division, noted, “Anyone who attempts to remove mail from a U.S. mail receptacle should be aware that Postal Inspectors, with the full cooperation of their law enforcement partners, will vigorously pursue, arrest, and bring to justice anyone who commits a crime against the U.S. Postal Service or its customers.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If he convicted of the charges in the indictment, Wagner would face a statutory maximum sentence of 37 years in federal prison.
This case was investigated by the United States Postal Inspection Service and the Riverside County Sheriff’s Department.
Gang Member Convicted in Meth Case Sentensed to 14 YearsRead the Press Release
LOS ANGELES – A street gang member has been sentenced to 14 years in federal prison after being found guilty of two narcotics trafficking charges in relation to the sale of about two ounces of methamphetamine during an undercover investigation.
Aaron “Droopy” Ramos, 31, a resident of the Florence-Graham district of Los Angeles, was Monday yesterday afternoon to 168 months in federal prison by United States District Judge Christina A. Snyder.
Following a jury trial in December, Ramos was found guilty of conspiracy to distribute methamphetamine and distribution of methamphetamine. (Ramos was also convicted at trial in 2014, but that conviction was reversed by Judge Snyder because of comments made by a juror.)
“Drug trafficking continues to be a core activity of street gangs,” said United States Attorney Eileen M. Decker. “Taking this violent drug trafficker off of our streets both protects the community and cuts off a source of funding for the gang.”
A second defendant in the case – Sharon “Hyper” Paiz, 35, of Lancaster – who obtained the narcotics involved in the transaction, pleaded guilty and faces a mandatory minimum sentence of 10 years in federal prison when she is sentenced by Judge Snyder on June 20.
In court papers, prosecutors argued that Ramos was a high-ranking member of the 18th Street gang and that he was the driver in a fatal drive-by shooting. Ramos “was involved in a drive-by shooting simply for sport,” according to a sentencing memo filed in the case. “The shooting was a gang initiation that resulted in the death of a non-gang member that [Ramos] was supervising in his leadership role.” Ramos was convicted in relation to this shooting in state court and has nearly completed an 8-year prison sentence.
The investigation into Ramos and other 18th Street gang members was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Former No. 2 of Los Angeles Sheriff’s Department Found Guilty of 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 found guilty today of two obstruction of justice charges for overseeing efforts to derail a federal investigation into corruption and civil rights violations by sheriff’s deputies at two downtown jail complexes.
After only a few hours of deliberations, a federal jury convicted Tanaka of being the leader of a broad conspiracy to obstruct the federal investigation, a scheme that started when the Sheriff’s Department learned that an inmate at the Men’s Central Jail (MCJ) was an FBI informant. Tanaka directed a conspiracy that has previously resulted in the conviction of eight other former LASD deputies.
In addition to the conspiracy count, Tanaka was found guilty of one substantive count of obstructing justice.
Tanaka, 57, faces a statutory maximum sentence of 15 years in federal prison when he is sentenced by United States District Judge Percy Anderson on June 20.
“Another jury has spoken and sent a clear message that the former leaders of the Sheriff’s Department who abused their positions by encouraging, and then concealing, a corrupt culture, must be held accountable,” said United States Attorney Eileen M. Decker. “Mr. Tanaka joins eight of his former subordinates who have been found guilty of actively working to undermine a federal investigation into illegal conduct at the jails. Law enforcement agencies that house inmates, even dangerous ones, must remain steadfast in upholding the law and protecting the civil rights of all of the individuals in their custody. This is required by both the higher standard to which law enforcement is held and their sworn oath to uphold the law.”
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 “problem deputies” at the jails, allegations of rampant abuse of inmates and insufficient internal investigations into deputy misconduct. Nevertheless, Tanaka encouraged jail deputies to work in a “gray area,” and he transferred a jail supervisor who sought to implement reforms at the jails, according to the testimony presented during a 10-day trial.
The scheme to disrupt the federal investigation started in August 2011 when unknown 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.
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 the 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 secure locations. 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 telling fellow deputies that the FBI would lie, threaten, manipulate and blackmail them to obtain information about the Sheriff’s Department.
“Mr. Tanaka created a culture of corruption seen only in the movies, and certainly nothing that anyone would expect from the nation’s largest Sheriff’s department,” said David Bowdich, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “My hope is that this conviction is the last chapter in this case so that the dedicated, law-abiding deputies at the L.A. Sheriff's Department, as well as the citizens they're sworn to serve and protect, can move on without distraction.”
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. Now that Tanaka has been convicted, 10 members of the department – including former Sheriff Leroy Baca – have been convicted in relation to the scheme to obstruct justice.
As a result of the federal investigation into the LASD, another nine deputies who held various ranks have been convicted on charges related to the illegal use of force, illegal firearms and bribery. Two additional deputies are scheduled to go on trial May 3 in a case alleging an illegal use of force at the Twin Towers jail.
San Gabriel Valley Man Sentenced to Federal Prison in Stolen Identity Tax Refund Scheme which Fraudulently Sought $2.6 MillionRead the Press Release
LOS ANGELES – A Hacienda Heights man already serving a 27-month prison term for fraudulently seeking tax refunds has been sentenced in a second case to an additional two years in federal prison for his role in another scheme that used stolen identities to seek more than $2.6 million in false tax returns from the Internal Revenue Service.
Adel Cotton, 63, was sentenced to 51 months in federal prison by United States District Court Judge Michael W. Fitzgerald, who ordered that 27 months be served concurrently with the prior case.
In addition to the prison term, Judge Fitzgerald ordered Adel Cotton to pay $725,294 in restitution to the IRS.
Adel Cotton pleaded guilty in January to one count of conspiracy to defraud the United States by obtaining the payment of false claims, namely tax refunds.
Adel Cotton’s son and co-defendant – Heber Cotton, 39, of Los Angeles – pleaded guilty in November to one count of conspiracy to defraud the United States. Heber Cotton is scheduled to be sentenced by Judge Fitzgerald on June 6, at which time he will face a statutory maximum sentence of 10 years in federal prison.
According to Adel Cotton’s plea agreement, 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.
As part of the scheme, Adel Cotton obtained 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.
“This case is the latest involving stolen identity refund fraud, which victimizes both the United States and the individuals who have had their identities stolen,” said United States Attorney Eileen M. Decker. “Individual victims of this type of fraud typically have to devote significant time and resources recovering their tax refund and protecting their identities from future fraud.”
In his plea agreement, Adel Cotton admitted that he and his son directed the IRS to mail the fraudulent refunds to addresses they controlled. The defendants then worked with two unidentified co-conspirators to deposit the refund checks using bank accounts opened in the names of the identity theft victims.
In the prior case, Adel Cotton was one of 53 people convicted in relation to the “Old Quest” tax refund scheme that fraudulently sought more than $250 million in tax refunds (see: http://go.usa.gov/ceGNJ).
The investigation into Adel and Heber Cotton was conducted by IRS Criminal Investigation and the Federal Bureau of Investigation.
Former Baggage Handlers at LAX Arrested on Federal Drug Charges for Allegedly Using Credentials to Bring Cocaine Past SecurityRead the Press Release
LOS ANGELES – Two former baggage handlers who worked at Los Angeles International Airport were arrested today by law enforcement authorities investigating the use of employee credentials to breach airport security.
Adrian Ponce, 27, and Alberto Preciado Gutierrez, 26, both of South Gate, were arrested this morning without incident by law enforcement officers with the Drug Enforcement Administration, the Federal Bureau of Investigation, the Los Angeles World Airports Police Department, and the Los Angeles Police Department. Both defendants are scheduled to make their initial appearances this afternoon at 2:00.
The two defendants are charged in a federal criminal complaint with conspiracy to possess with intent to distribute and to distribute cocaine. Both men are expected to make their initial court appearances this afternoon in United States District Court in Los Angeles.
According to an affidavit by a detective with the Los Angeles Airport Police, who is working with an anti-narcotics trafficking task force at LAX, Ponce and Preciado “were engaged in a nationwide conspiracy to possess with intent to distribute and to distribute cocaine.” As part of this conspiracy, Ponce and Preciado facilitated the ability of third-party couriers to use commercial airlines to smuggle kilogram “samples” of cocaine from Los Angeles to drug customers on the East Coast. At the time of the conspiracy, Preciado was a supervisory baggage handler employed by Swissport International at LAX.
“These defendants are charged with abusing their privileged access on behalf of drug dealers,” said United States Attorney Eileen M. Decker. “This case is yet another example of employees associated with airports assisting drug traffickers.”
Less than two weeks ago, authorities arrested a JetBlue flight attendant who allegedly attempted to bring nearly 70 pounds of cocaine through security at LAX (see: http://go.usa.gov/cM6aW). Marsha Gay Reynolds, who was arrested in New York, has arrived in Los Angeles, and is expected to make her initial appearance in United States District Court this afternoon at 2:00.
As part of the investigation into the former baggage handlers, law enforcement seized a kilogram of cocaine in Preciado’s possession on December 16, 2015. According to the affidavit, the seizure was made in a restroom in Terminal 3 at LAX, where Preciado was delivering the cocaine to a courier, a man identified as “J.C.,” who was holding a boarding pass to travel on a JetBlue flight to New York only an hour later. After this incident, Preciado was terminated by Swissport.
The following day, law enforcement interviewed Ponce, who had been taken into custody while waiting for Preciado in a vehicle outside Terminal 3. According to the affidavit, Ponce gave a written statement in which he admitted that “on multiple occasions,” he and Preciado had used Preciado’s supervisory status as an LAX employee to smuggle drugs to out-of-state drug customers by using third-party couriers, such as J.C., who had booked flights from LAX to the East Coast, and were willing to take the drugs on a commercial flight in exchange for payment.
In another statement given to law enforcement officials in January, Ponce allegedly admitted working with a large-scale drug supplier, and he explained how couriers with travel documents would pass through normal airport security, and would be provided with kilogram quantities of cocaine by Preciado, who had used his employee credentials to bypass security screening. According to the affidavit, Ponce told law enforcement that if East Coast customers liked the cocaine “sample,” then large shipments – more than 100 kilograms – would be delivered by driving the drugs across the country, and Ponce allegedly admitted actually driving trucks laden with drugs, also in exchange for payment.
Ponce previously worked at LAX for a baggage handling service that was recently acquired by Swissport.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If they are convicted of the narcotics trafficking offense, Ponce and Preciado would face a mandatory minimum sentence of 10 years in federal prison, and a statutory maximum sentence of life.
This investigation was conducted by the DEA Los Angeles International Airport Narcotics Task Force, an inter-agency task force based at LAX. In addition to the Drug Enforcement Administration, the Task Force is made up of representatives from the Federal Bureau of Investigation, the Los Angeles World Airports Police Department, the Los Angeles Police Department, and the Los Angeles County Sheriff’s Department. The Task Force also works closely with the United States Customs and Border Protection and the Transportation Security Administration.
The DEA Los Angeles International Airport Narcotics Task Force is providing a coordinated law enforcement effort to target airport/airline internal criminal enterprises that use the aviation system to transport large amounts of illicit drugs throughout the United States, and throughout the world.
Swissport International cooperated in the investigation.
Orange County man convicted of smuggling Asian songbirds into the U.S.Read the Press Release
LOS ANGELES – A Los Angeles federal jury has convicted a Garden Grove man of smuggling Asian songbirds into the United States concealed in his suitcase at Los Angeles International Airport (LAX).
Can Thanh Nguyen, 63, was found guilty Thursday of importing and bringing Asian songbirds into the United States in violation of federal law.
Nguyen, who had a long history of international travel, landed at LAX April 20 of last year. At a U.S. Customs and Border Protection (CBP) kiosk, Nguyen stated he was not carrying any animals or animal/wildlife products. However, he was subsequently referred by a CBP officer to a secondary agricultural inspection point. While Nguyen was in that inspection area, CBP personnel discovered 27 Asian songbirds that had been carefully concealed in his suitcase. The birds were hidden in cages wrapped in foil or newspaper underneath a layer of foil and clothing to avoid detection. Special agents from the U.S. Fish and Wildlife Service and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) responded to investigate.
“This case demonstrates my office’s commitment to prosecute those who criminally exploit wildlife that is threatened with potential extinction,” said United States Attorney Eileen M. Decker. “The Environmental and Community Safety Crimes Section in my Office is dedicated to protecting endangered species and our eco-system.”
Eleven of the Asian songbirds birds found in Nguyen’s suitcase were identified as Chinese Hwamei, Garrulax canorus, a type of Asian songbird which is protected under the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES). Two of the birds found in the suitcase were already dead, and several others died shortly after.
“This verdict should serve as a warning for individuals who are cashing in by trafficking and selling exotic wildlife that they will be held accountable for their crimes,” said Joseph Macias, special agent in charge for Los Angeles HSI. “Their greed and reckless disregard causes incalculable harm to our environment.”
“One of the highest priorities of the U.S. Fish and Wildlife Service Office of Law Enforcement is to investigate individuals and companies that are involved in the unlawful commercial trafficking and smuggling of protected animals and plants here and around the world,” Said Jill Birchell, special agent in charge of the regional office of the U.S. Fish and Wildlife Service. “This investigation demonstrates our commitment to pursue those who violate fish and wildlife laws for commercial gain as well as those that drive the illegal bird trade nationally and internationally.”
Nguyen’s sentencing is set for June 27. He faces a statutory maximum sentence of 20 years in federal prison.
In addition to HSI and the U.S. Fish and Wildlife Service, CBP, and the U.S. Department of Agriculture provided substantial assistance with the case.
Orange County Man Pleads Guilty to Shooting Laser Pointer at Orange County Sheriff’s Department HelicopterRead the Press Release
SANTA ANA, California – A Santa Ana man pled guilty today to intentionally aiming a laser pointer at a law enforcement helicopter.
Mario Deleon Lopez, 35, pled guilty before United States District Judge Andrew J. Guilford. Lopez’s sentencing was set for July 18 at which time he will face a statutory maximum sentence of five years in prison.
On the evening of November 14, 2015, tactical flight deputies with the Orange County Sheriff’s Department were patrolling over Santa Ana when their helicopter was struck with the beam of a laser, according to investigators. The pilots reported that their aircraft was struck multiple times with a green laser that illuminated the helicopter’s cockpit.
Following the alleged laser attacks, the deputies, along with the Santa Ana Police Department, successfully tracked the source of the laser to a suspect located in the backyard of a residence in Santa Ana. Police on the ground responded to the residence and took Lopez into custody on state charges of pointing a laser at an aircraft. Lopez subsequently posted bail and was released from local custody while the federal investigation continued and culminated with the filing of the indictment.
“This defendant created a dangerous situation for the pilot of the helicopter as well as other innocent bystanders on the ground,” said United States Attorney Eileen M. Decker. “This crime was senseless, but the prosecution highlights the excellent skills and training of the helicopter pilot and the law enforcement team that was able to identify and arrest this defendant.”
This investigation into Lopez was conducted by the Orange County Sheriff’s Department, the Santa Ana Police Department and the FBI.
Reports of laser attacks have increased dramatically in recent years as laser devices have become more affordable and widely available to the public. In addition, technology has improved the effectiveness of laser devices, with a resulting increase in the potential safety hazards for pilots operating aircraft, as well as their passengers and crew. Such safety hazards include temporary distraction and impaired vision, which is particularly dangerous during the critical takeoff or landing phase of flight. California consistently leads the nation in reports of laser attacks. According to the Federal Aviation Administration, which compiles statistics on the number of laser strikes in the United States, 3,960 laser attacks were reported nationwide in 2013.
Northern California Man Who Choked Woman on an Airplane Convicted of AssaultRead the Press Release
LOS ANGELES – A Northern California man has been convicted of a federal assault charge for choking and hitting a fellow passenger on a flight from Los Angeles to San Francisco.
Lawrence Wells, Jr., 54, of Richmond, California, was convicted by a jury yesterday afternoon in United States District Court of federal misdemeanor assault.
According to the evidence at trial, Wells and the victim were passengers on board Southwest Airlines flight 2010 from Los Angeles to San Francisco on October 18 last year. Wells was seated directly behind the victim. The flight was scheduled to take off from Los Angeles International Airport at 7:10 p.m. but was delayed both in boarding and on the tarmac. While the flight was on the tarmac, the victim reclined her seat. Wells summoned a flight attendant and angrily pointed at the victim’s reclined seat. The flight attended instructed the victim to return her seat to the upright position.
The flight did not actually take off until 10:30 p.m. A few minutes after the flight left Los Angeles, the victim reclined her seat again. At that time, Wells reached around the victim’s chair and choked her for five to ten seconds. He also punched her in the head with a closed fist. The pilot returned the flight to LAX.
“Defendant’s violent reaction to the frustrations of air travel was beyond the bounds of civilized behavior,” said United States Attorney Eileen M. Decker. “The victim was fortunate that she did not suffer greater injuries, because she had no way to defend herself from this defendant’s attack.”
The victim testified that, as a result of the assault, she suffered a concussion and experienced persistent nausea, dizziness, headaches, neck pain, loss of appetite, significant anxiety, and ringing in her ear, among other symptoms. The jury, however, acquitted the defendant of the felony count of assault causing serious bodily injury.
After Wells’ conviction yesterday, United States District Judge R. Gary Klausner set sentencing for June 27, 2016. At that time, defendant will face a statutory maximum sentence of six months in federal prison.
This case was investigated by the Federal Bureau of Investigation.
Man Arrested Responding to Ad to Have Sex with 13-Year-Old Girl Faces More Than 15 Years in PrisonRead the Press Release
LOS ANGELES - A man who responded to an Internet advertisement to have sex with a young girl has been arrested and now faces more than 15 years in prison.
Joshua Paul Crouch, 28, of San Pedro, was arrested Wednesday in San Pedro and charged Thursday with attempted sex-trafficking of a minor. This is one of the first prosecutions in Los Angeles under a recent change to the federal sex-trafficking statute.
According to the affidavit filed in support of the criminal complaint in the case, special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and other law enforcement agencies, posted an online advertisement on the Internet using coded language in a ruse offering sex with young girls. The advertisement used catch words such as “daddy,” “petite,” and “young.” Crouch responded to the advertisement and was told by an undercover law enforcement agent that one of the girls advertised was “Cassie,” a 13-year-old girl. Crouch sought to have oral sex with “Cassie” in exchange for $60. Crouch chose "Cassie" instead of a 15-year-old girl who was also offered by the undercover agent. Crouch followed the directions provided by the undercover agent and was arrested when he arrived at “Cassie’s” hotel room. No actual minors were at risk or involved in the operation.
“Human trafficking is modern-day slavery and victimizes large numbers of women and children,” said United States Attorney Eileen M. Decker. “This case demonstrates that law enforcement has changed its approach in combatting human trafficking, by now focusing on customers and commercial sex traffickers and by treating the women and children as crime victims. This defendant is one of the first individuals charged in Los Angeles under this federal statute, but he will not be the last.”
If convicted of the charge contained in the criminal complaint, Crouch would face a mandatory minimum sentence of 15 years of imprisonment and a statutory maximum sentence of life.
“Individuals who pay for sex with minors are contributing in no small way to the current epidemic of teen and child sex-trafficking,” said Joseph Macias, special agent in charge for HSI Los Angeles. “The coercion of minors into prostitution is unconscionable under any circumstances. We intend to hold the perpetrators accountable for their actions, which rob the underage victims in these cases of their youth and their innocence.”
Crouch made an initial appearance Thursday in U.S. District Court in Los Angeles and was ordered released on bond.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
This case was investigated by HSI’s Human Trafficking Group, the Los Angeles Police Department, the Los Angeles Sheriff's Department, and the U.S. Department of State.
San Gabriel Valley Wholesale Executive Pleads Guilty for Role in $9 Million Bank Fraud SchemeRead the Press Release
LOS ANGELES – A San Dimas man who was a vice president of an Ontario-based wholesale equipment company pleaded guilty today to federal charges in connection with a bank fraud scheme that resulted in more than $9 million in losses to a California bank.
Chung Yu Yeung (also known as Louis Yeung), 39, pleaded guilty before United States District Judge Christina A. Snyder to one count of conspiracy to commit bank fraud and four counts of bank fraud. Sentencing was set for June 20 before Judge Snyder.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker, Acting Special Agent in Charge Anthony Orlando of IRS Criminal Investigation’s Los Angeles Field Office, Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Goldsmith Romero and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Field Office made the announcement.
According to admissions made in connection with his guilty plea, from 2007 to 2012, Yeung was the vice president of Eastern Tools and Equipment Inc. (Eastern Tools), a wholesale equipment company based in Ontario, California, that sold portable generators to retailers across the country. Yeung admitted that beginning in 2007, he and his co-conspirators defrauded the Pasadena-based East West Bank in connection with a line of credit for Eastern Tools by making and causing to be made material misrepresentations to the bank about Eastern Tools’ accounts receivable and its financial statements. The conspirators created numerous shell corporations to act as purported suppliers and retailers doing business with Eastern Tools, when, in reality, these shell corporations were entirely under the control of Yeung and existed for the sole purpose of creating the illusion of such business, he admitted. Yeung admitted that the fictitious companies allowed him and other conspirators to falsely inflate Eastern Tools’ accounts receivable and financial statements in representations to East West Bank.
To further the scheme, Yeung and other conspirators opened and caused to be opened post office boxes, phone accounts and email accounts purportedly associated with the shell retail companies, and provided information about these items to East West Bank auditors to promote the illusion that these shell customers were independent entities, according to admissions made in connection with the plea agreement.
Eastern Tools defaulted on the promissory note after East West Bank discovered the fraud, causing more than $9 million in losses to the bank, according to Yeung’s admissions.
“This defendant went to great lengths to create the illusion of business that defrauded the victim bank out of millions, but law enforcement was able to penetrate the illusion,” said United States Attorney Eileen M. Decker. “Crimes like these can threaten the stability of our financial institutions and therefore our national economy.”
SIGTARP, IRS Criminal Investigation and the FBI investigated the case. Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section is prosecuting the case.
California Wholesale Executive Pleads Guilty for Role in $9 Million Bank Fraud SchemeRead the Press Release
A California man who was a vice president of a wholesale equipment company pleaded to fraud charges today in connection with a bank fraud scheme that resulted in more than $9 million in losses to a California bank.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Acting Special Agent in Charge Anthony Orlando of the Internal Revenue Service-Criminal Investigation (IRS-CI) Los Angeles Field Office and Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Goldsmith Romero made the announcement.
Chung Yu Yeung, aka Louis Yeung, 39, of San Dimas, California, pleaded guilty before U.S. District Judge Christina A. Snyder of the Central District of California to one count of conspiracy to commit bank fraud and four counts of bank fraud. Sentencing was set for June 20, 2016, before Judge Snyder.
According to admissions made in connection with his guilty plea, from 2007 to 2012, Yeung was the vice president of Eastern Tools and Equipment Inc. (Eastern Tools), a wholesale equipment company based in Ontario, California, that sold portable generators to retailers across the country. Yeung admitted that beginning in 2007, he and his co-conspirators defrauded East West Bank, based in Pasadena, California, in connection with a line of credit for Eastern Tools by making and causing to be made material misrepresentations to the bank about Eastern Tools’ accounts receivable and its financial statements. The conspirators created numerous shell corporations to act as purported suppliers and retailers doing business with Eastern Tools, when, in reality, these shell corporations were entirely under the control of Yeung and existed for the sole purpose of creating the illusion of such business, he admitted. Yeung admitted that the fictitious companies allowed him and other conspirators to falsely inflate Eastern Tools’ accounts receivable and financial statements in representations to East West Bank.
To further the scheme, Yeung and other conspirators opened and caused to be opened post office boxes, phone accounts and email accounts purportedly associated with the shell retail companies, and provided information about these items to East West Bank auditors to promote the illusion that these shell customers were independent entities, according to admissions made in connection with Yeung’s plea.
Eastern Tools defaulted on the promissory note after East West Bank discovered the fraud, causing more than $9 million in losses to the bank, Yeung admitted.
SIGTARP, IRS-CI and the FBI investigated the case. Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section is prosecuting the case.
Statement of United States Attorney Eileen M. Decker on Government Request to Vacate Order Directing Apple to Help Access iPhoneRead the Press Release
The government has asked a United States Magistrate Judge in Riverside, California to vacate her order compelling Apple to assist the FBI in unlocking the iPhone that was used by one of the terrorists who murdered 14 innocent Americans in San Bernardino on December 2nd of last year. Our decision to conclude the litigation was based solely on the fact that, with the recent assistance of a third party, we are now able to unlock that iPhone without compromising any information on the phone.
We sought an order compelling Apple to help unlock the phone to fulfill a solemn commitment to the victims of the San Bernardino shooting – that we will not rest until we have fully pursued every investigative lead related to the vicious attack. Although this step in the investigation is now complete, we will continue to explore every lead, and seek any appropriate legal process, to ensure our investigation collects all of the evidence related to this terrorist attack. The San Bernardino victims deserve nothing less.
SoCal Doctor Agrees to Plead Guilty to Distributing Addictive Painkiller and Laundering Proceeds of His Drug TraffickingRead the Press Release
LOS ANGELES – In a plea agreement filed this morning, a San Gabriel Valley doctor has agreed to plead guilty to a federal drug trafficking charge for illegally distributing the powerful painkiller best known by the brand name OxyContin.
Dr. Daniel Cham, 48, of Covina, has agreed to plead guilty to one count of distribution of oxycodone and one count of money laundering.
In the plea agreement, Cham admits to unlawfully prescribing oxycodone to an undercover agent posing as a patient in March 2014 in exchange for $300 in money orders, which Cham then deposited into a bank account held in the name of another business. Cham made the deposit “knowing that the transaction was designed to conceal and disguise the nature and source of the money orders,” according to the plea agreement.
“Painkillers like oxycodone can be life-threatening to those who abuse them,” said United States Attorney Eileen M. Decker. “Many of the prescription drugs that find their way to the street come from doctors who prescribe them without medical justification. This defendant put lives at risk for money, making him no different than street-level drug dealer.”
Cham was initially charged in this case in October 2014 when a federal grand jury returned an indictment alleging narcotics trafficking, money laundering, fraud and making false statement to authorities. The indictment focused on prescriptions Cham wrote at various locations, including his medical offices in La Puente and Artesia.
As part of the investigation investigators in May 2014 executed federal search warrants at 13 locations, including Cham’s residence and medical offices. According to the affidavit in support of the search warrants, the doctor often saw patients between 8 p.m. and 2 a.m. on Fridays, Saturdays and Sundays, and he post-dated prescriptions to make them appear to have been written on weekdays. Over the course of a year that ended in March 2014, Cham issued more than 5,500 prescriptions for controlled substances – primarily for oxycodone, hydrocodone, alprazolam and carisoprodol – and he issued more than 42,000 such prescriptions since July 2010, according to the affidavit.
The affidavit also discussed how an undercover officer made three visits to Cham’s La Puente office in 2014, and how Cham wrote prescriptions for controlled substances in exchange for $200 or $300 in cash or money orders. As discussed in the affidavit, Cham issued a prescription for oxycodone even though the undercover operative said he “had been high and drunk while receiving controlled substance prescriptions” previously from Cham. On another occasion, Cham prescribed oxycodone even though the undercover law enforcement officer presented, in lieu of photo identification, a written notice that his license had been suspended for driving under the influence.
Cham’s case is pending before United States District Judge Dean D. Pregerson, who has scheduled an April 4 hearing for Cham to enter his guilty plea.
The drug trafficking and money laundering charges that Cham has agreed to plead guilty to each count carry a statutory maximum penalty of 20 years in federal prison.
In his plea agreement, Cham also agrees to forfeit to the government more than $60,000 in cash that he admits are “proceeds of [his] illegal activity.”
The investigation into Cham was conducted by the Drug Enforcement Administration, IRS Criminal Investigation, the Los Angeles County Sheriff’s Department’s Health Authority Law Enforcement Task Force, the Federal Bureau of Investigation, the California Medical Board, and the Los Angeles Police Department.
Flight Attendant Who Allegedly Tried to Bring nearly 70 Pounds of Cocaine through Security at LAX Arrested on Federal Drug ChargesRead the Press Release
LOS ANGELES – A JetBlue flight attendant who allegedly attempted to use her credentials to bring nearly 70 pounds of cocaine through a security checkpoint at Los Angeles International Airport on Friday was charged today with a federal narcotics trafficking offense.
Marsha Reynolds, 31, of Jamaica, New York, was taken into custody this afternoon after she surrendered herself to the Drug Enforcement Administration at John F. Kennedy International Airport in New York.
Reynolds was charged in United States District Court this afternoon with possession with the intent to distribute cocaine after she allegedly abandoned 68.49 pounds of cocaine after being directed to a secondary screening area at LAX on Friday.
The affidavit in support of the criminal complaint alleges that Reynolds approached the Known Crew Member security checkpoint in Terminal 4 at LAX Friday evening. After showing her official badge and identification to the Transport Security Administration officer on duty, Reynolds was randomly selected for additional screening. Reynolds was then escorted to a secondary screening area. Upon arriving at this checkpoint, Reynolds dropped her luggage, removed her shoes, and fled the area, running down an upward-traveling escalator and away from TSA officers.
According to the affidavit by an FBI agent, law enforcement officials followed protocol to determine that Reynolds’ luggage did not contain explosives or any dangerous devices. An LAX police officer then conducted an inspection of the bag and discovered a total of 11 individually wrapped packages which were later determined to contain cocaine.
“Our nation’s security depends on every individual with security clearances to honor the trust placed in them,” said United States Attorney Eileen M. Decker. “The defendant’s conduct violated that trust and, in the process, exposed the public to a major narcotics transaction and the dangers inherent to such a transaction. The intervention of the Transportation Security Administration and law enforcement ensured the safety of the passengers and staff at LAX.”
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Reynolds is expected to make her initial court appearance tomorrow in United States District Court in Brooklyn.
If she is convicted of the narcotics trafficking offense, Reynolds would face a statutory maximum penalty of life in federal prison, and a mandatory minimum sentence of 10 years.
This investigation was conducted by the Los Angeles International Airport Criminal Enterprise Task Force (LAACETF), an inter-agency task force based at LAX. The Task Force, which includes representatives of the FBI, the DEA, United States Customs and Border Protection, the Transportation Security Administration, the Los Angeles International Airport Police Department, the Los Angeles Police Department, and the Los Angeles Sheriff’s Department. The LAACETF provides a coordinated law enforcement effort to target airport/airline internal criminal enterprises that use the aviation system to transport large amounts of illicit drugs throughout the United States and various international destinations. The LAACETF focuses on LAX and other Southland airports, including John Wayne International Airport, the Los Angeles/Ontario International Airport, the Long Beach Airport, Bob Hope Airport, the Van Nuys Airport, and the Santa Monica Airport.
Federal Grand Jury Indicts Arizona Truck Driver for Manslaughter in Bus Crash that Left One Man Dead on Fort Irwin Army BaseRead the Press Release
RIVERSIDE, California – An Arizona man was indicted today on federal charges of involuntary manslaughter for his role in a fatal bus crash that allegedly occurred because he parked his truck on a highway on the Fort Irwin Army Base in the Mojave Desert.
Steven Kilty, 49, of Apache Junction, Arizona, was named in a single-count indictment that charges him with involuntary manslaughter, a felony offense that carries a penalty of up to eight years in federal prison.
On the evening of June 2, 2014, Steven Kilty was delivering equipment to the Army’s National Training Center at Fort Irwin. Kilty arrived at the base the night before his scheduled delivery, and he parked his tractor-trailer in the right lane of the road on Fort Irwin property, according to investigators, who determined that Kilty turned off the lights on the truck and failed to place any warning devices or reflectors near his truck.
At approximately 5:00 a.m. on June 3, prior to sunrise, a commuter bus bringing people to Fort Irwin collided with the parked truck. As a result of the collision, one man was killed and seven people suffered major injuries.
The indictment alleges that Kilty was illegally blocking traffic on the roadway and that he failed to place any warning reflectors, both of which are violations of the California Vehicle Code. This “grossly negligent” operation of the truck “imperiled the lives of others,” according to the indictment.
“Commercial truck drivers are professionals who have a heightened obligation to operate their vehicles in a safe and responsible manner,” said United States Attorney Eileen M. Decker. “The tragedy that resulted of Mr. Kilty’s negligent conduct was entirely avoidable.”
Kilty will be summoned to appear for an arraignment in the United States District Court in Riverside in the coming weeks.
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 California Highway Patrol, the U.S. Army Criminal Investigation Command, and the Fort Irwin Police Department.
Chinese National Pleads Guilty to Conspiring to Hack into U.S. Defense Contractors’ Systems to Steal Sensitive Military InformationRead the Press Release
LOS ANGELES – A Chinese national pleaded guilty today to participating in a years-long conspiracy to hack into the computer networks of major United States defense contractors, steal sensitive military and export-controlled data, and send the stolen information to China.
Su Bin, who is also known as Stephen Su and Stephen Subin, 50, a citizen and resident of the People’s Republic of China, pleaded guilty before United States District Judge Christina A. Snyder.
The guilty plea was announced by United States Attorney Eileen M. Decker Assistant Attorney General for National Security John P. Carlin, Assistant Director Jim Trainor of the FBI’s Cyber Division and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division.
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.
In a plea agreement filed yesterday in United States District Court, Su admitted to conspiring 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.
“Protecting our national security is the highest priority of the U.S. Attorney’s Office, and cybercrime represents one of the most serious threats to our national security,” said United States Attorney Decker. “The innovative and tireless work of the prosecutors and investigators in this case is a testament to our collective commitment to protecting our nation’s security from all threats. Today’s guilty plea and conviction demonstrate that these criminals can be held accountable no matter where they are located in the world and that we are deeply committed to protecting our sensitive data in order to keep our nation safe.”
“Su Bin admitted to playing an important role in a conspiracy, originating in China, to illegally access sensitive military data, including data relating to military aircraft that are indispensable in keeping our military personnel safe,” said Assistant Attorney General Carlin. “This plea sends a strong message that stealing from the United States and our companies has a significant cost; we can and will find these criminals and bring them to justice. The National Security Division remains sharply focused on disrupting cyber threats to the national security, and we will continue to be relentless in our pursuit of those who seek to undermine our security.”
As part of the conspiracy, Su would e-mail the co-conspirators with guidance regarding what persons, companies and technologies to target during their computer intrusions. One of Su’s co-conspirators would then gain access to information residing on computers of U.S. companies and email 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, including by using techniques to avoid detection when hacking the victim computers, Su translated the contents of certain stolen data from English into Chinese. In addition, Su and his co-conspirators each wrote, revised and emailed reports about the information and technology they had acquired by their hacking activities, including its value, to the final beneficiaries of their hacking activities.
“Cyber security is a top priority not only for the FBI but the entire U.S. government,” said Assistant Director Trainor. “Our greatest strength is when we harness our capabilities to work together, and today’s guilty plea demonstrates this. Our adversaries’ capabilities are constantly evolving, and we will remain vigilant in combating the cyber threat.”
“This investigation demonstrates the FBI’s resolve in holding foreign cyber actors accountable regardless of where they reside,” said Assistant Director in Charge Bowdich. “Cybercrime investigators in Los Angeles are among the finest and their efforts toward preserving America's national security in this case should be commended.”
Su’s plea agreement makes clear that the information he and his co-conspirators intentionally stole included data listed on the United States Munitions List contained in the International Traffic in Arms Regulations. 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.
As a result of today’s guilty plea, Su faces a maximum possible sentence of five years’ in federal prison and a fine of $250,000 (or twice the gross gain or gross loss resulting from the offense, whichever is greatest).
Judge Snyder is scheduled to sentence Su on July 13.
This case is being prosecuted by Assistant United States Attorney Anthony J. Lewis of the 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.
The case is being investigated by the Cyber Division of the FBI Los Angeles Field Office’s Cyber Division with assistance from the United States Air Force’s Office of Special Investigations.
Chinese National Pleads Guilty to Conspiring to Hack into U.S. Defense Contractors’ Systems to Steal Sensitive Military InformationRead the Press Release
A Chinese national pleaded guilty today to participating in a years-long conspiracy to hack into the computer networks of major U.S. defense contractors, steal sensitive military and export-controlled data and send the stolen data to China.
Su Bin, also known as Stephen Su and Stephen Subin, 50, a citizen and resident of the People’s Republic of China, pleaded guilty before U.S. District Judge Christina A. Snyder of the Central District of California.
The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Eileen M. Decker of the Central District of California, Assistant Director Jim Trainor of the FBI’s Cyber Division and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division.
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 Bin admitted to playing an important role in a conspiracy, originating in China, to illegally access sensitive military data, including data relating to military aircraft that are indispensable in keeping our military personnel safe,” said Assistant Attorney General Carlin. “This plea sends a strong message that stealing from the United States and our companies has a significant cost; we can and will find these criminals and bring them to justice. The National Security Division remains sharply focused on disrupting cyber threats to the national security, and we will continue to be relentless in our pursuit of those who seek to undermine our security.”
“Protecting our national security is the highest priority of the U.S. Attorney’s Office, and cybercrime represents one of the most serious threats to our national security,” said U.S. Attorney Decker. “The innovative and tireless work of the prosecutors and investigators in this case is a testament to our collective commitment to protecting our nation’s security from all threats. Today’s guilty plea and conviction demonstrate that these criminals can be held accountable no matter where they are located in the world and that we are deeply committed to protecting our sensitive data in order to keep our nation safe.”
“Cyber security is a top priority not only for the FBI but the entire U.S. government,” said Assistant Director Trainor. “Our greatest strength is when we harness our capabilities to work together, and today’s guilty plea demonstrates this. Our adversaries’ capabilities are constantly evolving, and we will remain vigilant in combating the cyber threat.”
“This investigation demonstrates the FBI’s resolve in holding foreign cyber actors accountable regardless of where they reside,” said Assistant Director in Charge Bowdich. “Cybercrime investigators in Los Angeles are among the finest and their efforts toward preserving America's national security in this case should be commended.”
In the plea agreement filed yesterday in the U.S. District Court of the Central District of California, Su admitted to conspiring 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.
As part of the conspiracy, Su would e-mail the co-conspirators with guidance regarding what persons, companies and technologies to target during their computer intrusions. One of Su’s co-conspirators would then gain access to information residing on computers of U.S. companies and email 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, including by using techniques to avoid detection when hacking the victim computers, Su translated the contents of certain stolen data from English into Chinese. In addition, Su and his co-conspirators each wrote, revised and emailed reports about the information and technology they had acquired by their hacking activities, including its value, to the final beneficiaries of their hacking activities.
Su’s plea agreement makes clear that the information he and his co-conspirators intentionally stole included data listed on the U.S. Munitions List contained in the International Traffic in Arms Regulations. 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 co-conspirators illegally acquired.
Su faces a maximum sentence of five years in prison and a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest. Judge Snyder is scheduled to sentence Su on July 13, 2016.
The case is being investigated by the FBI Los Angeles Field Office’s Cyber Division with assistance from the U.S. Air Force’s Office of Special Investigations.
This case is being prosecuted by Assistant U.S. Attorney Anthony J. Lewis of the Central District of California 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 Lisa Roberts of the Justice Department’s Office of International Affairs.
Su Bin Plea Agreement
California Man Indicted for Traveling to Thailand and Sexually Abusing Minor BoysRead the Press Release
LOS ANGELES – A resident of Montrose was indicted today in a superseding indictment by a federal grand jury in Los Angeles on charges of engaging in illicit sexual conduct in foreign places and sex trafficking of a minor, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and United States Attorney Eileen M. Decker announced today.
Paul Alan Shapiro, 69, was originally indicted on April 22, 2015, on charges relating to his travel to Thailand and illicit sexual conduct with minor boys.
According to the indictment, in February 2010, Shapiro traveled from Los Angeles to Thailand, where Shapiro paid minors as young as 14 years old small amounts of local currency in order to engage in various sex acts with them. Shapiro also allegedly took photographs of himself engaging in sexually explicit conduct with the boys.
“Child predators cannot flee the United States in the hope of having a safe haven for their criminal conduct,” said United States Attorney Eileen M. Decker. “To protect the most vulnerable among us, my office will pursue Americans who seek to exploit children in other countries.”
U.S. Immigration and Customs Enforcement’s Homeland Security Investigations is investigating the case. Trial Attorneys Austin M. Berry and Amy E. Larson of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) are prosecuting the case.
“This indictment should serve as a warning to sexual predators who mistakenly believe they can escape justice by exploiting children overseas,” said Joseph Macias, special agent in charge for HSI Los Angeles. “There is no tolerance for the sexual abuse of foreign children by our citizens, and HSI will work closely with our law enforcement counterparts throughout the world to ensure these criminals face justice.”
The charges and allegations contained in an indictment are merely accusations. The defendant is presumed innocent until and unless proven guilty.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Earlier this month, a Northern California man was found guilty in United States District Court in Los Angeles of traveling to Cambodia to have illicit sexual conduct with young girls (see: http://go.usa.gov/cAgP9).
California Man Indicted for Traveling to Thailand and Sexually Abusing Minor BoysRead the Press Release
A resident of Montrose, California, was indicted today in a superseding indictment by a federal grand jury in Los Angeles on charges of engaging in illicit sexual conduct in foreign places and sex trafficking of a minor, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Eileen M. Decker of the Central District of California announced today.
Paul Alan Shapiro, 69, was originally indicted on April 22, 2015, on charges relating to his travel to Thailand and illicit sexual conduct with minor boys.
According to the indictment, in February 2010, Shapiro traveled from Los Angeles to Thailand, where Shapiro paid minors as young as 14 years old small amounts of local currency in order to engage in various sex acts with them. Shapiro also allegedly took photographs of himself engaging in sexually explicit conduct with the boys.
U.S. Immigration and Customs Enforcement’s Homeland Security Investigations is investigating the case. Trial Attorneys Austin M. Berry and Amy E. Larson of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) are prosecuting the case.
The charges and allegations contained in an indictment are merely accusations. The defendant is presumed innocent until and unless proven guilty.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Central Coast Man Pleads Guilty to Federal Copyright Infringement Offense Related to Online Sales of Pirated Adobe Software PackagesRead the Press Release
LOS ANGELES – A Lompoc man has pleaded guilty to a federal charge of trafficking in counterfeit goods for using two websites to market and sell counterfeit versions of Adobe software
Jeffrey Scott Patterson, 52, pleaded guilty yesterday in United States District Court.
In his plea agreement and in court yesterday, Patterson admitted that, over the course of approximately eight years, he used two websites to advertise and sell counterfeit Adobe software at prices below retail. The software sold by Patterson – sometimes under the assumed name of “Bruce Allen” – included Adobe Acrobat, Adobe Photoshop and Adobe Creative Suite.
“Protecting the business community’s intellectual property from being stolen is an important aspect of protecting our nation’s economy,” said United States Attorney Eileen M. Decker. “Counterfeiting is not a victimless crime, and all consumers end up paying the costs associated with the theft of intellectual property.”
Patterson offered victims either a digital download or a CD version of the pirated Adobe software. To bypass Adobe’s security protocols, Patterson altered the software and used a “key generator” to give his customers a counterfeit “key code” that must be entered by a user when the software is installed on a computer. Many of the counterfeit key codes failed to work, which prompted numerous complaints to Abode and Patterson.
As part of the investigation, special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) made two undercover purchases at about half of the full retail price – one for Adobe Acrobat 9 Professional and one for Adobe Creative Suite 3 Design Premium.
Records obtained by HSI agents showed that Patterson generated well over $500,000 in sales over the course of his scheme.
“As this case makes clear, law enforcement is using every tool available to keep intellectual property thieves from profiting from others’ products, creativity, and ideas,” said Mark Selby, Deputy Special Agent in Charge for HSI Los Angeles. “Simply put, product counterfeiting amounts to economic sabotage and HSI will move aggressively to target those who get rich at the expense of those businesses that play by the rules.”
The charge of trafficking in counterfeit goods carries a statutory maximum sentence of 10 years in federal prison.
Patterson is scheduled to be sentenced by United States District Judge Philip S. Gutierrez on June 27.
Leader of Scheme that Embezzled $8 Million from Commercial Laundry associated with Luxury Jeans Pleads GuiltyRead the Press Release
LOS ANGELES – An East Los Angeles man who oversaw a scheme that embezzled more than $8 million from an industrial launderer that provided finishing services for Citizens of Humanity, a manufacturer of high-end designer jeans, pleaded guilty this morning to federal charges.
Luis Mariano Rodriguez, 48, of East Los Angeles, who was the president of the Gardena-based CM Laundry, LLC, pleaded guilty today to one count of mail fraud.
Rodriguez admitted in court today that he and three other businessmen participated in a scheme that submitted fraudulent invoices to CM Laundry, which paid the bogus bills, with the proceeds being shared by the four men.
According to court documents, the invoices sent to CM Laundry were fraudulent in at least two ways. First, the invoices included fictitious and inflated charges. Second, the invoices were issued by companies operated by Rodriguez’s associates, which served to conceal Rodriguez’s role in the scheme.
Rodriguez admitted that he sent e-mails to two of his co-schemers that gave them detailed instruction on what information to include on each of the fraudulent invoices that were submitted to CM Laundry. At Rodriguez’s behest, the third associate established a fictitious business name (dba) for K&R Industrial Supplies, and Rodriguez used this dba to submit other fictitious and inflated invoices to CM Laundry.
“This defendant victimized the very business that had entrusted him to lead it,” said United States Attorney Eileen M. Decker. “His fraud scheme, motivated by insatiable greed, threatened the viability of the victim company and the livelihood of its employees. Today’s guilty plea demonstrates the Department of Justice’s continued commitment to protecting American businesses from internal and external threats.”
Rodriguez admitted that an industrial supply company in Riverside, FI Products, billed CM Laundry for over $3.6 million and transferred approximately $2.3 million of the proceeds to Rodriguez and a company he owned, Genesis Electronics, Inc.
The Rancho Palos Verdes-based H&T Industrial Products, which was owned by another co-schemer, billed CM Laundry for over $5.5 million and transferred approximately $3.6 million to Rodriguez and Genesis, according to court documents.
Fraudulent bills from K&R industrial supplies amounted to approximately $639,939, of which approximately $493,617 was transferred to Rodriguez. As he admitted in court, Rodriguez generally kept approximately 75 percent of the proceeds generated by the false invoice scheme.
Rodriguez pleaded guilty before United States District Judge Beverly Reid O’Connell, who is scheduled to sentence the defendant on June 20. As a result of today’s guilty plea, Rodriguez faces a statutory maximum sentence of 20 years in federal prison.
In related proceedings, Terry Jay Mink, 62, of Rancho Palos Verdes, the owner of H&T Industrial Products, pleaded guilty to conspiracy to commit mail fraud on February 22. Mink faces a statutory maximum sentence of five years in prison when he is sentenced by Judge O’Connell on May 16.
Rene Exequiel Bautista, 43, of Sylmar, the owner of the company used in the scheme under the dba “K&R Industrial Supplies,” has agreed to plead guilty to one count of conspiracy to commit mail fraud. Bautista was arraigned in the case last week and is expected to enter his guilty plea in the coming weeks.
The fourth man allegedly involved in the scheme – Antonio Anguiano, 48, of Riverside, who was the owner of FI Products, which sold personal protective equipment – was indicted by a federal grand jury on March 4. The indictment charges Anguiano with five counts of mail fraud and two counts of aggravated identity theft. Anguiano has pleaded not guilty and a trial in his case is set for April 26. If convicted, Anguiano faces a statutory maximum sentence of 20 years on each of the mail fraud counts and a consecutive mandatory two years on each of the aggravated identity theft charges.
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.
As a result of civil litigation brought by CM Laundry and Citizens of Humanity, a Los Angeles Superior Court judge in November 2015 ordered Rodriguez and several other defendants to pay a total of $9,563,786, according to court documents.
The investigation into the embezzlement scheme was conducted by the Federal Bureau of Investigation and the Los Angeles Police Department, Major Crimes Division, Criminal Investigations Section.
L.A.-Area Man Sentenced to over 8 Years in Federal Prison for Two Fraud Schemes, including One that Cost Verizon Wireless $17 MillionRead the Press Release
SAN DIEGO – The owner of a Glendale-based ride-sharing business was sentenced in federal court today to more than eight years in prison in two separate fraud cases, including one involving the sale of more than 30,000 Apple iPhones fraudulently obtained from Verizon Wireless at substantially discounted prices.
Karen “Kevin” Galstian, 38, of Chatsworth, California, was sentenced by U.S. District Judge Barry Ted Moskowitz to 100 months in the scheme against Verizon Wireless that generated illegal profits of more than $13 million, and 87 months for defrauding Bank of America out of almost $700,000. The sentences are to run concurrently.
Judge Moskowitz also ordered Galstain to pay $17 million in restitution to Verizon and more than $200,000 in restitution to Bank of America.
Galstian pleaded guilty in November in San Diego to one count of wire fraud, admitting that he committed the offense while on pre-trial release in the case involving Bank of America. In that case, Galstian pleaded guilty in January 2014 to bank fraud.
“This defendant persisted in a multi-million dollar fraud scheme even while preparing to go to prison,” said United States Attorney Eileen M. Decker. “Today’s significant sentence and forfeiting the proceeds of his scheme may be the only meaningful deterrents to this defendant’s criminal conduct.”
As part of the scheme involving the iPhones, Galstian admitted that he used his company, Toro Ride, Inc., to induce Verizon Wireless to provide the business with more than 30,000 iPhones at a substantial discount. He purchased most of the mobile phones – which usually sell for more than $500 – for only 99 cents each in connection with a two-year contract.
Galstian claimed that the phones would be used by drivers for Toro Ride’s ride-sharing service and that Toro Ride, which had only been operating in the Los Angeles area, was poised to expand nationwide. Galstian falsely told Verizon that Toro Ride had received $20 million from investors. When he brokered the deal with Verizon last year, Galstian failed to disclose the he was awaiting sentencing in the bank fraud case and thus would be incarcerated and unavailable to lead the company in the expansion.
As Verizon provided the iPhones that supposedly would be used by Toro Ride’s drivers, Galstian sold the vast majority of the devices to companies engaged in the international re-sale of consumer electronics. Thousands of the iPhones that Verizon shipped to Toro Ride were never used on its network and instead were activated in countries such as Vietnam, Iraq, China and Saudi Arabia.
Galstian fraudulently convinced Verizon to provide him with iPhones worth more than $19.4 million. In less than six months, Galstian generated illegal proceeds of more than $13 million by re-selling the iPhones.
Toro Ride used some of the illicit proceeds derived from iPhone sales to make required monthly payments to Verizon, which enabled Galstian to continue to order thousands of additional iPhones.
In the bank fraud scheme, Galstian orchestrated a conspiracy to defraud Bank of America out of approximately $689,000. As part of the scheme, members of the conspiracy opened over 90 accounts at Bank of America and engaged in a series of transactions that allowed them withdraw funds before Bank of America learned that there were not sufficient funds in the target accounts to cover the withdrawals.
In yet another scheme, Galstain admitted to cashing checks drawn on accounts in which fraudulently-obtained tax returns had been deposited.
Galstian used approximately $2.5 million of the proceeds from the Verizon fraud to purchase several properties, including a penthouse condominium in the Palms Casino in Las Vegas, and a Mercedes S550. The court ordered the forfeiture of various assets obtained by Galstian through the fraud scheme, including real properties in Northridge, Sherman Oaks, Tujunga and Las Vegas, as well as more than $200,000 seized from bank accounts and a number of vehicles.
The investigation into Galstian’s wire fraud scheme against Verizon was conducted by the Federal Bureau of Investigation.
Organizer of Bank Fraud Scheme that Used Information Stolen by Wells Fargo Employees to Access Customer Accounts Pleads GuiltyRead the Press Release
LOS ANGELES – The lead defendant in a bank fraud case who oversaw a scheme in which Wells Fargo Bank employees stole customer account data – information that was used to impersonate customers and steal money from their accounts – has pleaded guilty to federal fraud charges.
Ronald Charles Reed, 69, of Inglewood, pleaded guilty late yesterday to felony counts of bank fraud and aggravated identity theft.
Reed was among eight defendants who were charged in two indictments returned by a federal grand jury last year (see: http://go.usa.gov/c7ZDY). Three of the defendants charged in the case have not yet been identified, and authorities are seeking the public’s help in identifying and apprehending the currently unknown individuals.
Reed, who is also known as “Disco Ronnie,” pleaded guilty before United States District Judge Fernando M. Olguin, who is scheduled to sentence the defendant on July 15. As a result of the guilty pleas, Reed faces a statutory maximum sentence of 32 years in federal prison.
“Schemes involving bank insiders are particularly difficult to investigate,” said United States Attorney Eileen M. Decker. “But in this case, the FBI and Secret Service diligently worked to uncover the mechanics of the scheme and those responsible for the losses suffered by the bank. I want to compliment the special agents involved in this matter, as well as Wells Fargo for cooperating in the investigation.”
When he pleaded guilty, Reed admitted that he worked with former Wells Fargo employees and the three unknown individuals in a scheme that caused Wells Fargo to suffer hundreds of thousands of dollars in losses. In his plea agreement, Reed has agreed to pay nearly $600,000 in restitution.
Reed recruited four Wells Fargo employees in 2013 and 2014, asked them to access the bank’s computer records, and then purchased personal identifying information (PII) belonging to bank customers, including dates of birth, account numbers, driver’s license numbers and social security numbers. With this information, the currently unidentified “runners” used fake IDs to impersonate bank customers and made substantial cash withdrawals from the customers’ accounts. In some cases, the runners also used the customer’s account to deposit worthless checks and receive cash back. The fraudulent transactions were made at Wells Fargo branches across Southern California and in other states, including Minnesota and Nevada.
Reed also admitted that in 2014 he purchased PII for accounts at U.S. Bank – but the information was for an undercover account and was supplied by a confidential informant who was working with law enforcement.
Three former Wells Fargo employees involved in the scheme previously also pleaded guilty and are pending sentencing. A case against one former Wells Fargo employee is still pending.
“The FBI is seeking the public's help in identifying three individuals who participated in the scheme by going into bank branches with fake IDs to illegally access customer accounts,” said FBI Assistant Director in Charge David Bowdich. “Anyone with information is urged to call the FBI’s Los Angeles Field Office at 1-888-226-8443.”
This matter was jointly investigated by the Federal Bureau of Investigation and the United States Secret Service. Wells Fargo Bank fully cooperated during the investigation.
Coachella Valley Doctor Pleads Guilty in Multi-Million Dollar Scheme that Duped Insurance Companies into Paying for Cosmetic SurgeriesRead the Press Release
SANTA ANA, California – A Rancho Mirage cosmetic surgeon pleaded guilty this morning in a scheme to defraud health insurance companies by submitting bills for more than $3.4 million for procedures that he claimed were “medically necessary” – but in fact were cosmetic procedures such as “tummy tucks,” “nose jobs” and breast augmentations.
Dr. David M. Morrow, 71, of Rancho Mirage, a cosmetic surgeon and dermatologist who was the owner of the Morrow Institute (TMI) in Rancho Mirage, pleaded guilty today to one count of conspiracy to commit mail fraud.
In a plea agreement filed in United States District Court, Morrow admitted that he participated in a scheme to obtain money from insurance companies by false or fraudulent pretenses, which included submitting altered documents to the insurance companies. Morrow admitted that cosmetic surgeries were billed to insurance companies under the pretense that the procedures were “medically necessary” so that insurers would pay for them.
“Insurance companies provide a valuable service by providing financial support in a time of medical need – they are not designed to dispense cash to unscrupulous medical providers,” said United States Attorney Eileen M. Decker. “Medical professionals who defraud an insurance provider hurt every person who is forced to pay higher premiums.”
Morrow also pleaded guilty today to one count of filing a false tax return for 2008. Today, Morrow admitted that he failed to report to more than $100,000 of income on his 2008 tax return and more than $1.5 million on his 2009 tax return.
“Today’s guilty plea by Dr. Morrow is an important victory for America’s taxpayers who play by the rules and have no tolerance for those who make up their own rules,” stated Anthony J. Orlando, the Acting Special Agent in Charge of IRS Criminal Investigation in Los Angeles. “This investigation and subsequent conviction serve to remind the public that there is no such thing as free money and there are no awards or incentives for creativity when it comes to medical billing and tax fraud.”
Morrow, his wife, and TMI were charged in this case last fall when a federal grand jury returned a 27-count indictment that outlined a scheme in which patients were lured to the Coachella Valley surgery center with promises that cosmetic procedures would be paid for by their union or PPO health insurance plans. The victim health insurance companies included Anthem Blue Cross, Blue Cross/Blue Shield of California, Blue Cross/Blue Shield of Massachusetts, Regional Employer/Employee Partnership for Benefits, formerly known as Riverside Employer/Employee Partnership (REEP), and Cigna.
Morrow pleaded guilty today to a conspiracy count in the indictment that outlined how insured patients were lured to TMI with promises that they could receive free or discounted cosmetic surgeries that would be paid largely or completely by their insurance plans. Morrow and his wife told patients that they could receive the free or discounted cosmetic procedures if they first underwent multiple procedures that could be billed to insurance, according to the indictment.
To trick insurance companies into paying for the cosmetic procedures, Morrow and others at TMI completely fabricated diagnoses – such as a “hernia” – in the patients’ official medical records. According to the indictment, they also fabricated test results and symptoms on medical records to cover up the actual medical procedures being performed – tummy tucks were fraudulently billed as hernia repair or abdominal reconstruction surgeries, rhinoplasties (“nose jobs”) were fraudulently billed as deviated septum repair surgeries, and breast lifts and augmentations were fraudulently billed as “tuberous breast deformity.” A document filed as part of Morrow’s plea agreement shows that TMI billed insurance as much as $150,750 for a single cosmetic procedure.
Morrow altered existing medical records after the fact to conceal that cosmetic surgery had actually been performed. Morrow admitted in the plea agreement and in court today that on one patient’s medical record sent to an insurance company, he covered up the original text of “Abdominoplasty” (tummy tuck) written in the procedure section and handwrote “umbilical & ventral hernias” on top of it.
“Dr. Morrow enriched himself by cheating policy holders and victim companies whose employees and ability to continue operating were placed in jeopardy as a result of this fraud,” said David Bowdich, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The FBI devotes many resources to combating health care fraud and seeking justice for victims who can suffer a variety of consequences beyond financial loss.”
As a result of today’s guilty pleas, Morrow faces a statutory maximum sentence of 20 years of in federal prison for the conspiracy count and three years of imprisonment for filing the false tax return. Morrow is scheduled to be sentenced by United States District Judge Josephine L. Staton on September 23.
Morrow has also agreed to pay full restitution to the victims.
Charges against Morrow’s wife, Linda Morrow, 63, are currently pending.
This investigation into Morrow and TMI was conducted by the Federal Bureau of Investigation, IRS Criminal Investigation, and the California Department of Insurance.
Justice Department Files Antitrust Lawsuit to Stop L.A. Times Publisher from Acquiring Competing NewspapersRead the Press Release
WASHINGTON – The Department of Justice filed a civil antitrust lawsuit today seeking to block the acquisition by Tribune Publishing Company, publisher of the Los Angeles Times, of Freedom Communications Inc., publisher of the Register in Orange County, California, and the Press-Enterprise in Riverside County, California. Tribune was selected as purchaser of Freedom’s newspapers following a bankruptcy auction and will seek bankruptcy court approval of its acquisition on March 21. The department is seeking a temporary restraining order to prevent the sale to Tribune from proceeding.
According to the department’s complaint, filed in federal district court in Los Angeles, the Los Angeles Times and the Register together account for 98 percent of newspaper sales in Orange County and the Los Angeles Times and Freedom’s newspapers together account for 81 percent of English-language newspaper sales in Riverside County. Tribune’s acquisition of its most significant competitor would give it a monopoly over newspaper sales in each county and allow it to increase subscription prices, raise advertising rates and invest less to maintain the quality of its newspapers.
“If this acquisition is allowed to proceed, newspaper competition will be eliminated and readers and advertisers in Orange and Riverside Counties will suffer,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Newspapers continue to play an important role in the dissemination of news and information to readers and remain an important vehicle for advertisers. The Antitrust Division is committed to ensuring that competition in this important industry is protected.”
Tribune Publishing Company is a Delaware corporation headquartered in Chicago. It publishes 11 major daily newspapers across California, Illinois, Florida, Maryland, Connecticut, Virginia and Pennsylvania.
DEA Agents Arrest Four Men on Federal Charges of Distributing Narcotics, including Pills Manufactured with a Fentanyl AnalogueRead the Press Release
LOS ANGELES – Capping a year-long investigation, special agents with the Drug Enforcement Administration have arrested four Southland men on federal narcotics and money laundering charges related to an operation in which they allegedly imported a powerful synthetic opiate from China and produced their own pills that were then distributed in bulk.
In addition to the arrests yesterday, DEA agents uncovered a working laboratory in Baldwin Park, where they found large quantities of pill presses and variously colored powders that will be tested to determine their chemical compositions.
A criminal complaint unsealed yesterday afternoon charges the four defendants with participating in a ring that imported acetyl-fentanyl, an analogue (meaning it is very similar) to the powerful painkiller fentanyl. Acetyl-fentanyl – which is sometimes called “fake heroin,” even though it is significantly more potent that heroin – is not approved for any use in the United States.
“So-called ‘designer drugs’ may seem to have a similar effect as traditional narcotics, but these back-alley laboratory concoctions are very dangerous,” said United States Attorney Eileen M. Decker. “They have caused many deaths in the United States, and this abuse led the DEA to put it on a list of the most dangerous and easily abused drugs in our country.”
As part of the investigation discussed in the affidavit in support of the criminal complaint, authorities in January seized narcotics – including acetyl-fentanyl pills, methamphetamine, Xanax, hydrocodone pills and “ecstasy” – from a man who has just purchased the drugs from members of the drug trafficking organization.
“Fentanyl and its analogues pose a serious public health risk. Even small doses absorbed through the skin or accidently inhaled can be fatal,” said DEA Acting Special Agent in Charge David Downing. “The DEA will continue to aggressively target individuals and organizations involved in the illicit manufacture and distribution of these toxic substances.”
During the execution of a search warrant last June, agents seized pill presses and 13 kilograms of acetyl-fentanyl from a manufacturing facility allegedly operated by the group.
The four men arrested today are:
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Gary Resnik, 31, of Long Beach;
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Joseph Stanley, 30, of Huntington Beach;
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Christopher Bowen, 30, of downtown Los Angeles; and
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Dylan Simpson, 25, of Fountain Valley
All four defendants made their initial court appearances yesterday afternoon in United States District Court in Los Angeles. All four were ordered detained pending detention hearings scheduled for tomorrow. The defendants are scheduled to be arraigned in this case on April 4.
The criminal complaint charges the four defendants with conspiracy to distribute narcotics, possession of fentanyl and methamphetamine with the intent to distribute, conspiracy to launder money, and money laundering. Were they to be convicted of these charges, each defendant would face a statutory maximum sentence of life in federal prison.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
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Pennsylvania Man Charged with Hacking Apple and Google E-Mail Accounts Belonging to More Than 100 People, Mostly CelebritiesRead the Press Release
LOS ANGELES – A Pennsylvania man was charged today with felony computer hacking related to a phishing scheme that gave him illegal access to over 100 Apple and Google e-mail accounts, including those belonging to members of the entertainment industry in Los Angeles.
Ryan Collins, 36, of Lancaster, Pennsylvania, has signed a plea agreement and agreed to plead guilty to a felony violation of the Computer Fraud and Abuse Act. In the plea agreement also filed today, Collins agreed to plead guilty to one count of unauthorized access to a protected computer to obtain information.
Although Collins has been charged in Los Angeles, the parties have agreed to transfer the case to Harrisburg in the Middle District of Pennsylvania, near Collins’ home, for the entry of his guilty plea and sentencing. Once he enters the guilty plea, Collins will face a statutory maximum sentence of five years in federal prison. The parties have agreed to recommend a prison term of 18 months, but that recommendation will not be binding on the sentencing judge.
“Today, people store important private information in their online accounts and in their digital devices,” said United States Attorney Eileen M. Decker. “Lawless unauthorized access to such private information is a criminal offense. My Office remains committed to protecting sensitive and personal information from the malicious actions of sophisticated hackers and cyber criminals.”
According to factual basis in the plea agreement, from November 2012 until the beginning of September 2014, Collins engaged in a phishing scheme to obtain usernames and passwords for his victims. He sent e-mails to victims that appeared to be from Apple or Google and asked victims to provider their usernames and passwords. When the victims responded, Collins then had access to the victims’ e-mail accounts. After illegally accessing the e-mail accounts, Collins obtained personal information including nude photographs and videos, according to his plea agreement. In some instances, Collins would use a software program to download the entire contents of the victims’ Apple iCloud backups.
The charge against Collins 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 Collins to the actual leaks or that Collins shared or uploaded the information he obtained.
Many of Collins’ victims were members of the entertainment industry in Los Angeles. By illegally accessing the e-mail accounts, Collins accessed at least 50 iCloud accounts and 72 Gmail accounts, most of which belonged to female celebrities.
“By illegally accessing intimate details of his victims' personal lives, Mr. Collins violated their privacy and left many to contend with lasting emotional distress, embarrassment and feelings of insecurity,” said David Bowdich, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “We continue to see both celebrities and victims from all walks of life suffer the consequences of this crime and strongly encourage users of Internet-connected devices to strengthen passwords and to be skeptical when replying to emails asking for personal information.”
The case against Collins is the product of an ongoing investigation by the Federal Bureau of Investigation.
Federal Jury Convicts Studio City Man of Credit Card Fraud for Possessing Card Numbers Stolen from Gas Station ‘Skimmers’Read the Press Release
LOS ANGELES – A federal jury has convicted a Studio City man of possessing more than 1,400 credit card profiles that had been stolen from consumers who used gas pumps with “skimmers” that illegally collected their credit card information.
Koren Robert Kechedzian, 24, of Studio City, was convicted on March 11 in United States District Court of two counts of credit card fraud (specifically, two counts of possession of 15 or more counterfeit access devices) and two counts of aggravated identity theft.
At the conclusion of a one-week trial, the jury found that Kechedzian possessed two USB flash drives – which are commonly called “thumb drives” – that contained stolen credit card information. The portable drives were found at Kechedzian’s residence when federal authorities executed a search warrant in June 2013. At that time, investigators also recovered an illegal skimming device designed to be installed in gas station pumps to steal credit card data.
“As credit card thieves use increasingly sophisticated technology to access consumer data, consumers must be more vigilant in protecting their financial information and keeping a close eye on their transactions,” said United States Attorney Eileen M. Decker. “Law enforcement is responding to the increasing use of skimmers by working with businesses to help them secure their equipment and by more aggressively targeting those engaging in identity theft. This case demonstrates our commitment to protect consumers and to punish those who seek to defraud consumers and financial institutions.”
The investigation in this case was conducted by special agents with IRS Criminal Investigation, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the United States Secret Service.
Special agents testifying at trial said that credit card fraud rings install skimming devices in gas station pumps and obtain credit card numbers from the devices using Bluetooth technology. Customers who use these compromised gas pumps are the unwitting victims of the credit card fraud.
“The incidence of skimming, both here in Los Angeles and nationwide, has reached epidemic proportions and consumers need to very vigilant about any suspicious or unauthorized activity on their accounts,” said Joseph Macias, special agent in charge for HSI Los Angeles. “These types of crimes not only result in major losses for financial institutions and merchants, but can cause a major disruption in consumers’ personal finances. HSI will continue to work closely with its federal and local law enforcement partners to target skimming schemes and the criminal syndicates that typically are behind them.”
Bank records examined by investigators established that the stolen credit cards numbers on the USB flash drives came from Chevron gas stations in Palmdale and Moorpark, and testimony at trial showed that the data on portable drives was consistent with the output from a credit card skimming device.
“As credit card fraud becomes more prevalent, we are increasing our efforts to protect consumers from fraud artists committed to taking the identities of innocent victims,” stated IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “Law enforcement officers respond to credit card fraud with every legal resource available. Let this conviction serve as a warning to those who are considering similar conduct.”
United States District Judge Philip S. Guttierez, who presided over the trial, is scheduled to sentence Kechedzian on June 27, at which time the defendant faces a statutory maximum sentence of 10 years in prison on each of the credit card fraud counts. The charge of aggravated identity theft carries a mandatory consecutive two-year prison term.
Santa Monica Man Faces Five Years in Federal Prison after Pleading Guilty to Conspiring to Engage in Synthetic Identity FraudRead the Press Release
LOS ANGELES – A Santa Monica man pleaded guilty this morning to a federal conspiracy charge stemming from a “synthetic identity” fraud ring that created bogus identities for the purpose of obtaining credit cards.
Yair Shoshani, 38, pleaded guilty to one count of conspiracy to commit bank fraud.
In a plea agreement filed in court, Shoshani, who also used the names “Ben Yahuda” and “Ben Cohen,” agreed to forfeit five properties and nearly $4.5 million in cash, including more than $3.2 million from a Swiss bank account.
Shoshani admitted that he conspired with others to conduct a “bust-out” scheme using synthetic identities and fictitious merchants to defraud banks that issue credit cards. Shoshani and the others created entirely fictitious synthetic identities, applied for credit with those bogus identities and manipulated the credit ratings for the synthetic identities by adding them as authorized users to credit card accounts belonging to real people who had high credit scores. With credit ratings established for the synthetic identities, Shoshani and the others set up fake business to process credit card transactions by the synthetic identities – transactions that were never paid for.
Victim banks in this “bust-out” scheme included JPMorgan Chase Bank, Bank of America, Citibank and Wells Fargo Bank.
Proceeds of the fraud scheme were used to purchase five properties in Los Angeles, West Hollywood and Santa Monica.
Shoshani pleaded guilty before United States District Judge George H. King, who is scheduled to sentence the defendant on June 13. As a result of today’s guilty plea, Shoshani, who has been in custody since June 2014, faces a statutory maximum sentence of five years in federal prison.
“Synthetic identity fraud causes significant loss to our nation’s financial institutions, as this case illustrates,” said United States Attorney Eileen M. Decker. “This guilty plea is a testament to law enforcement’s ability to look behind numerous false identities and fictitious businesses to hold the perpetrators accountable for their fraud. My office will continue to prosecute those that engage in identity fraud to the fullest extent of the law.”
The investigation into Shoshani was conducted by the Los Angeles Field Office of the Federal Bureau of Investigation, the Los Angeles Police Department, and the Los Angeles Sheriff’s Department.
Shoshani’s conviction is the most recent in a line of identity crime prosecutions brought by the U.S. Attorney’s Office. Recent cases include:
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Jeffrey Pineda, 33 of Stevenson Ranch, who pleaded guilty last month to a bank fraud charge after stealing the identities of his personal banking clients to withdraw money from their accounts;
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Robert Lett, 48, and Latanya Lett, 44, of Los Angeles, who pleaded guilty in January to conspiracy to commit mail fraud after defrauding the Employment Development Department out of nearly $1 million through identity theft and disability fraud;
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Vagan Dobazhyan, 53 of Northridge, who was sentenced in January to six years in prison for using counterfeit credit cards;
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Jorge Sanchez, 28 of Moreno Valley, who was sentenced in January to four years in federal prison for using counterfeit debit cards to make ATM withdrawals; and
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Elgrid Adamian, 39 of Sunland, who pleaded guilty in January to bank fraud in a case involving a different “bust-out” scheme resulting in losses of more than $500,000 and the forfeiture of two cars and more than $160,000.
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Federal Court Permanently Enjoins Los Angeles County Pizza Parlor and its Owner from Accruing Payroll Tax LiabilitiesRead the Press Release
LOS ANGELES – A federal judge has ordered that Evnol, Inc., which operates Palisades Pizza, and the company’s owner, Christopher H. Bandt, timely file payroll tax returns and pay payroll taxes.
In an order filed on Monday, United States District Judge Manuel L. Real entered a permanent injunction requiring Evnol and Bandt to timely file payroll tax returns and pay any payroll taxes that accrue.
According to the civil lawsuit filed by the United States, Evnol has repeatedly failed to timely file payroll tax returns or pay payroll taxes.
“Since the third quarter of 2007, Evnol has repeatedly failed to comply with its employment tax obligations despite repeated efforts by the IRS to bring it into compliance,” according to the government’s lawsuit. “Specifically, Evnol consistently failed to meet its obligations to make complete federal employment tax deposits and routinely failed to file timely employment and unemployment tax returns.”
The permanent injunction entered by the Court requires the defendants to stay current on their federal employment tax obligations.
Judge Real issued a default judgment against Evnol and Bandt, in part, because of “their refusal to participate in this litigation,” Judge Real wrote in his order.
United States Attorney Eileen M. Decker complimented the revenue officer of IRS Field Collection for investigating and preparing the civil case. “Without the hard work of the IRS and the continued flow of tax revenue, government could not function,” said United States Attorney Decker. “Now that tax season is upon us, this case is an important reminder that everyone meet their obligations and file accurate tax returns in a timely manner.”
North Hollywood Man Sentenced to Four Years in Federal Prison in Tax Scheme that Fraudulently Sought over $1.2 Million in RefundsRead the Press Release
LOS ANGELES – A North Hollywood man has been sentenced to 48 months in federal prison for his role in a tax fraud conspiracy scheme that fraudulently claimed more than $1.2 million in fraudulent tax refunds.
Antonio Jerome Cook, 37, received the prison sentence yesterday from United States District Judge George H. King. In addition to the prison term, Judge King ordered Cook to pay $537,309 in restitution to the Internal Revenue Service.
Cook pleaded guilty in October 2015 to one count of conspiracy to commit tax fraud.
According to documents filed with the court, starting in late 2008 or early 2009, Cook, along with two co-conspirators, developed a tax fraud scheme in which the defendants prepared and filed fraudulent tax returns for individuals. The fraudulent returns were filed on behalf of individuals who agreed to have the defendants prepare their tax returns (apparently without knowledge of the fraud scheme), as well as individuals whose identities were stolen.
The fraudulent tax returns indicated that the taxpayers were employed by Picaso Fashions, a business established by Cook in name only. In fact, Picaso Fashions did not have any employees and the taxpayers were never actually employed by Picaso. The tax returns indicated that Picaso Fashions had excessively withheld income tax for each taxpayer, and each fraudulently filed tax return sought a tax refund the taxpayers were not entitled to receive.
The scheme related to Picaso Fashions resulted in the filing of 69 false individual federal tax returns during 2009 that claimed tax refunds totaling $621,589.
In addition to Picaso Fashions, Cook and a co-conspirator independently established other companies to serve as fraudulent employers in tax schemes, according to court documents. Specifically, Cook established at least five other companies to perpetrate similar tax fraud schemes. For example, Cook filed an additional 72 tax returns listing a fictitious employer, Arkitek Entertainment Group, which fraudulently claimed $486,659 in refunds.
In total, Cook filed 182 fraudulent returns between 2009 and 2010 seeking tax refunds totaling $1,225,901. The IRS paid full or partial tax refunds on 81 of these returns and suffered actual losses of $537,309.
“As we enter the 2016 tax season, it is important that we continue to work with IRS criminal investigators to ensure the honesty and integrity of the tax system,” said United States Attorney Eileen M. Decker. “Identifying fraudulent claims against the government and prosecuting those responsible for illegally filing false tax returns protects all taxpayers and helps ensure the fairness of the entire system.”
Co-conspirator Rebecca Magruder, 37, of Dallas, Texas was sentenced in January to 18 months in prison and ordered to pay restitution of $119,671 for her role in the scheme.
The investigation into Cook and Magruder was conducted by IRS Criminal Investigation.
Registered Sex Offender from Bay Area Found Guilty of Traveling to Cambodia to have Illicit Sexual Conduct with Young GirlsRead the Press Release
LOS ANGELES – A Bay Area man was found guilty this afternoon of travelling to Cambodia to have illicit sexual conduct with young girls.
Ronald Gerard Boyajian, 55, who resided in Menlo Park and previously spent time on the Palos Verdes peninsula, was found guilty of three child exploitation crimes.
Concluding a six-week trial, a federal court jury found Boyajian guilty of travel with intent to engage in illicit sexual conduct, engaging in illicit sexual conduct with a minor in foreign places, and committing these offenses while being required to register as a sex offender.
United States District Judge Christina A. Snyder is scheduled to sentence Boyajian on June 13, at which time he will face a statutory maximum sentence of 30 years in federal prison for each of the two travel offenses and a mandatory consecutive 10-year term for committing these offenses while being required by California law to register as a sex offender. Because two of his convictions carry potential sentence-doubling provisions, Boyajian’s total sentencing exposure is 130 years in federal custody.
Boyajian was arrested by the Cambodian National Police (CNP) in February 2009, while he was on his 35th trip to Asia over a nine-year period. Boyajian began traveling to Cambodia shortly after completing his parole following convictions for illegal sex with a minor and oral sex with a minor in 1994.
“The evidence presented at trial showed that Boyajian thought that he could molest and intimidate his young victims with impunity because he was in a foreign country, but he could not have been more mistaken,” said United States Attorney Eileen M. Decker. “Protecting children from sexual exploitation is one of our top priorities, and we will pursue pedophiles across the globe if necessary. I also salute the courage of his victims who were willing to come to the United States to be witnesses at the trial and testify against him.”
Federal prosecutors presented evidence that Boyajian sexually assaulted four victims, girls who were between 8 and 11 years old when Boyajian attacked them. One victim, who was approximately 8 when she was molested, testified at trial that “he was abusive, he was cruel, he treated me like I wasn’t even human.”
Boyajian paid pimps and sometimes relatives from impoverished families to have access to his victims, which he preferred to weigh less than 70 pounds. While the attacks took place in the village of Svay Pak – which is known as Kilo 11 because it is located 11 kilometers outside of Phnom Penh – the victims were Vietnamese immigrants who lived in the poor community. A CNP anti-human trafficking officer testified at trial that Svay Pak was well known as a place where foreigners went to have sexual contact with females, often young girls. Boyajian went to Svay Pak to have “unlimited access to young girls for sex,” prosecutors said in court.
“For the young victims robbed of their childhood and innocence by this defendant, justice has been a long time coming, but they can take consolation knowing he will now be made to pay for his crimes,” said Joseph Macias, special agent in charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Los Angeles. “I applaud the efforts by the HSI special agents here and overseas, who, along with the federal prosecutors, have fought tirelessly to vindicate the rights of these child victims. Today’s verdict should send a clear and resounding message that traveling overseas to exploit children will not go unnoticed or unpunished.”
Boyajian’s conviction follows convictions and lengthy sentences imposed on other sex tourists who were prosecuted in Los Angeles, including Michael Joseph Pepe, who was sentenced to 210 years in federal prison after being convicted of abusing seven victims in Cambodia (see: http://go.usa.gov/cfqmh), and Stanley Dan Reczko, who received a mandatory life-without-parole sentence for producing child pornography with a minor victim in the Philippines (see: http://go.usa.gov/cfqyG).
The case against Boyajian is the result of an investigation by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Los Angeles and HSI’s Attaché Offices in Bangkok, Phnom Penh and Ho Chi Minh, with the assistance of the United States Embassy in Phnom Penh.
Orange County Man Arrested on Federal Charges of Shooting Laser Pointer at Orange County Sheriff’s Department HelicopterRead the Press Release
SANTA ANA, California – A Santa Ana man was arrested this morning on federal charges of intentionally aiming a laser pointer at a law enforcement helicopter.
Mario Deleon Lopez, 35, was taken into custody without incident by special agents with the FBI, and he is expected to be arraigned this afternoon in United States District Court in Santa Ana.
Lopez was named in an indictment returned on February 24 by a federal grand jury. The indictment alleges one count of aiming a laser pointer at an aircraft, a felony offense that carries a penalty of up to five years in federal prison.
On the evening of November 14, 2015, tactical flight deputies with the Orange County Sheriff’s Department were patrolling over Santa Ana when their helicopter was struck with the beam of a laser, according to investigators. The pilots reported that their aircraft was struck multiple times with a green laser that illuminated the helicopter’s cockpit.
Following the alleged laser attacks, the deputies, along with the Santa Ana Police Department, successfully tracked the source of the laser to a suspect located in the backyard of a residence in Santa Ana. Police on the ground responded to the residence and took Lopez into custody on state charges of pointing a laser at an aircraft. Lopez subsequently posted bail and was released from local custody while the federal investigation continued and culminated with the filing of the indictment.
“The conduct charged in this indictment placed both the Sheriff’s Deputies and innocent bystanders on the ground in danger,” said United States Attorney Eileen M. Decker. “Had the pilot lost control of the helicopter, lives could have been lost. Consequently, we take these cases very seriously and will continue to prosecute those who commit this crime.”
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 investigation into Lopez was conducted by the Orange County Sheriff’s Department, the Santa Ana Police Department and the FBI.
Reports of laser attacks have increased dramatically in recent years as laser devices have become more affordable and widely available to the public. In addition, technology has improved the effectiveness of laser devices, with a resulting increase in the potential safety hazards for pilots operating aircraft, as well as their passengers and crew. Such safety hazards include temporary distraction and impaired vision, which is particularly dangerous during the critical takeoff and landing phases of flight. California consistently leads the nation in reports of laser attacks.
Oceanside Man Pleads Guilty to Staging Online Attacks against Computer System Operated by His Former EmployerRead the Press Release
LOS ANGELES – An Oceanside man has pleaded guilty to launching repeated online attacks against a computer system operated by his former employer, a Rancho Dominguez-based manufacturer of precision laser and mechanical drilling equipment.
Conrad Pearson, 64, pleaded guilty yesterday to one count of unauthorized damage to a protected computer.
When he pleaded guilty on Wednesday, Pearson admitted that soon after he stopped working for Excellon Automation, he began transmitting “attack scripts” to Excellon’s website. “The ‘attack scripts’ constituted automated actions against Excellon's website, and included automatically downloading information from the Excellon website and automatically sending commands to the Partlink application of the website,” according to a factual statement filed this morning. The Partlink application allowed customers to check inventory of Excellon products.
The attacks on Excellon’s computer system, which were committed on a regular basis over the course of 10 months in 2009 and 2010, “caused the Excellon server to either cease functioning or to become inordinately slow,” according to the court document.
“Computer hacking causes significant economic damage to local businesses and therefore threatens the economic vitality of our entire region,” said United States Attorney Eileen M. Decker. “This defendant used his computer expertise and his knowledge of his former employer’s business to severely disrupt the company’s operations. The victim in this case suffered harm and wasted months fighting the defendant’s attacks on its website. This case illustrates why the prosecution of those who violate cyber security laws remains a top priority for my office.”
Pearson also admitted in court today that, in an attempt to hide his Internet address, he used The Onion Router (TOR) network, which helps conceal the identity of a user by routing them through a distributed network of relays all around the world.
Pearson admitted that his actions caused more than $15,000 in losses to Excellon.
“As evidenced in Mr. Pearson's plea agreement, individuals who attempt to hide criminal activity by using TOR are not beyond detection by law enforcement,” said David Bowdich, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “This case demonstrates the heightened threat posed by insiders whose attacks can be more effective when they're armed with an understanding of the network operated by a targeted company.”
Pearson pleaded guilty before United States District Judge Beverly Reid O’Connell, who is scheduled to sentence the defendant on May 23. As a result of today’s guilty plea, Pearson faces a statutory maximum sentence of 10 years in federal prison,
The investigation in this matter was conducted by the Los Angeles office of the Federal Bureau of Investigation.
Former Customs and Border Protection Officer Sentenced to Nearly 4 Years in Federal Prison in Bribery and Smuggling SchemeRead the Press Release
LOS ANGELES – A former supervisor with U.S. Customs and Border Protection (CBP) who conspired with his ex-wife to smuggle goods into the United States in exchange for bribes has been sentenced to serve 45 months in prison.
Sam Herbert Allen Jr., 54, of San Juan Capistrano (formerly of Diamond Bar), received the prison sentence late yesterday from United States District Judge Dean D. Pregerson, who also ordered the defendant to pay $781,632 in restitution to compensate the United States for duties that were not paid on the smuggled goods.
At yesterday’s sentencing hearing, Judge Pregerson said that society could not tolerate law enforcement “entrusted with border safety” who “sell their jobs.”
Allen pleaded guilty in February 2015 to conspiring to defraud the United States by deceitful and dishonest means.
“This defendant betrayed his sworn duty to uphold the law,” said United States Attorney Eileen M. Decker. “Defendant supervised the inspection of shipping containers entering the United States and thus played an important role in our border security. His greed led him to commit a serious offense that cost the United States hundreds of thousands of dollars and presented an unacceptable security risk to our community and to the nation.”
According to the plea agreement filed in the case, Allen was a supervisor that oversaw the examination and release of international cargo that arrived at “Foreign Trade Zones,” or FTZs, which are privately operated warehouses that perform customs functions under the supervision of CBP. FTZs are considered to be outside the United States, and if goods brought to an FTZ are bound for another country, those goods are not subject to duties and taxes that would be required if the items were entering the United States.
Allen and his ex-wife, Wei “Julia” Lai, agreed to smuggle shipments of clothing into the United States through an FTZ operated by Lai. In exchange for allowing shipments to go through by promising to alter a CBP database to falsely show that the clothing had been exported to Mexico, Lai paid Allen bribes of $2,000 per shipping container. Allen received approximately $100,000 in bribe payments from Lai over the course of several months in 2009 and 2010.
When law enforcement began investigating the shipments, Allen told Lai to lie to federal agents in an attempt to obstruct the investigation.
Lai previously pleaded guilty to conspiracy and money laundering, and she is scheduled to be sentenced by Judge Pregerson on March 31. Several other defendants charged in the case also pleaded guilty and received sentenced that ranged from nine to 15 months in federal prison.
The investigation into Allen was conducted by U.S. Immigration and Customs Enforcement’s (ICE) Office of Professional Responsibility, ICE’s Homeland Security Investigations (HSI), and U.S. Customs and Border Protection’s Office of Professional Responsibility.
Orange County Real Estate CEO Sentenced to 14 Years in Prison for Fraud Scheme that Ended in $169 Million BankruptcyRead the Press Release
SANTA ANA, California – The owner and CEO of a now-defunct Southern California real estate investment firm was sentenced today to 168 months in prison for perpetrating a scheme that ended with the bankruptcy of the company and hundreds of investors collectively losing as much as $169 million.
Michael J. Stewart, 68, of San Clemente, received the 14-year sentence from United States District Judge Cormac J. Carney, who also ordered the defendant to pay $9,234,914 in restitution to 120 victims.
Following a nine-day jury trial before Judge Carney, Stewart was found guilty in August 2015 of 11 counts of mail fraud. Stewart was remanded into custody at that time.
Stewart owned and was the chief executive of Pacific Property Assets (PPA), which had offices in Long Beach and Irvine. Along with co-defendant John Packard, Stewart created PPA in 1999 to purchase, renovate, operate, and resell or refinance apartment complexes in Southern California and Arizona. Typically, PPA financed property acquisitions through mortgages, and it raised money from private investors to pay for renovations to the properties. After several years, PPA would refinance (or sometimes sell) each property.
Although PPA’s apartment rental operations were not profitable, the company was able to raise cash through refinancing and selling properties. As real estate values were generally increasing until approximately 2007, the properties were refinanced at ever-higher values, which enabled PPA to use the extra refinancing proceeds to not only pay off the original mortgages, but also to make payments on other loans, make payments to investors, to pay other business expenses, and to pay Stewart and Packard.
When the real estate market collapse and credit dried up, Stewart and Packard turned to fraud to prop up their failing company and to continuing earning their large salaries. They engaged in what was nothing more than a Ponzi scheme that ultimately collapsed.
“While all investments carry some risks, victims who were lured into this scheme in 2008 and 2009 faced a guaranteed loss of their funds,” said United States Attorney Eileen M. Decker. “Investors are entitled to know how their money is being spent and the true financial state of a company, but Mr. Stewart did everything in his power to conceal the truth. His fraudulent conduct has earned him the lengthy prison sentence handed down today.”
In its 10 years of operation, PPA acquired more than 100 real estate properties and raised hundreds of millions of dollars from hundreds of investors. As Stewart told prospective investors, from 2004 to 2007, PPA was named three times to Inc. magazine’s list of the fastest growing privately held companies in the United States, was a regional finalist in Ernst & Young’s Entrepreneur of the Year Program, and was listed by the Orange County Business Journal as one of fastest growing businesses in Orange County.
But as the government argued at trial, by the end of 2007, when the real estate market began to decline and credit became scarce, PPA’s business model was no longer feasible. As the value of PPA’s properties was falling, PPA could no longer raise money by refinancing its properties with larger mortgages or selling properties at a profit. Furthermore, PPA faced large debt payments to its mortgage lenders and private investors, while it was continuing to lose money in its business operations. In May 2008, PPA’s controller warned Stewart and Packard that without a new source of funds, PPA faced losing as much as $2 million dollars per month, and emails between the owners revealed that they projected that trend to continue.
To keep PPA afloat, from early 2008 through April 2009, Stewart and Packard raised more than $34 million dollars from new investors, many of them elderly and retired persons who were investing their retirement funds in the company. For example, one 74-year-old investor testified at trial that in early 2009, shortly after her husband passed away, Stewart’s staff persuaded her to invest virtually all her retirement savings in PPA.
The defendants used those new funds to pay earlier investors, mortgage lenders, other company expenses, and Stewart and Packard themselves – including annual salaries for the two co-owners of $750,000 and hundreds of thousands of dollars in additional compensation. Packard testified at trial that in 2008, he and Stewart knew that PPA was dependent on these investor loans to make its monthly debt payments and continue operating, and was unable to raise money through other means. PPA’s former Director of Investor Relations further testified that during that period, Stewart began to pressure her and others to raise more money from investors.
Evidence introduced at trial also showed that Stewart misrepresented PPA’s financial condition by claiming that its business model was still working, and that PPA was still financially stable and able to raise money through refinancing. In particular, Stewart created and provided to investors fraudulent financial statements, claiming that PPA had made millions of dollars in income in the first half of 2008 when the company had actually lost millions. Stewart also arranged with Packard to temporarily deposit $2 million dollars into a company bank account to make the company’s cash position look stronger for investors – money that was quickly withdrawn from the account without reflecting the withdrawal in the balance sheet given to investors. Stewart and Packard also concealed from investors the fact that the business had effectively become a Ponzi scheme, using funds from new investors to pay back earlier investors.
In the last investor offering in early 2009, known as the Opportunity Fund, Stewart told investors that their funds would be used to purchase new real estate properties. In fact, none of the more than $9 million raised was used for that purpose. Instead, the money was used to pay earlier investors and banks, to pay Stewart and Packard, and to pay PPA’s bankruptcy attorney. Stewart continued to raise money from investors until late April 2009, when he abruptly informed investors that PPA was suspending their monthly interest payments. Several investors testified at trial that even in mid-April 2009, after PPA had begun to default on some of its bank and investor loans, Stewart personally solicited investments from them in the Opportunity Fund, claiming that PPA was financially sound and their funds would be used for new real estate projects.
PPA and a group of related companies filed for bankruptcy in June 2009. When the bankruptcy was filed, PPA stated that it owed 647 private investors more than $91 million, and it owed banks approximately $100 million. The Chapter 11 trustee appointed in the bankruptcy case later estimated the total investor losses at $169 million, and predicted that investors would receive, at best, “pennies on the dollar” through the bankruptcy process.
As the government stated in a sentencing brief filed with the court, Stewart “acted deliberately and repeatedly in misleading hundreds of people into entrusting their retirement savings to him, and the outcome for many was nothing less than devastating.”
PPA co-owner John Packard pleaded guilty to one count of mail fraud in November 2014 and cooperated with the government. He is scheduled to be sentenced by Judge Carney on March 28.
This investigation was conducted by the Federal Bureau of Investigation, which received assistance from the United States Trustee’s Office and the United States Securities and Exchange Commission.
Orange County Attorney Who Pleaded Guilty to Federal Charges in $8 Million Fraud Scheme Sentenced to over Five Years in PrisonRead the Press Release
LOS ANGELES – An attorney who pleaded guilty to wire fraud and tax evasion charges – and who prosecutors say defrauded a dozen clients out of at least $8 million in an investment fraud scheme – was sentenced today to 63 months in federal prison.
Stephen Young Kang, 46, of Newport Beach, was sentenced by United States District Judge George H. Wu, who rejected the defendant’s request for a three-year sentence.
During today’s sentencing hearing, several of Kang’s victims described in detail the devastating financial and emotional impact of the fraud scheme. Two of the victims commented that Kang’s fraud led to the “darkest years” of their lives.
Kang pleaded guilty in November to two counts of wire fraud and one count of tax evasion. When he pleaded guilty, Kang admitted to orchestrating a three-year-long scheme that defrauded clients who had engaged the attorney to provide legal or investment services. Prosecutors said that Kang used his position as an attorney to gain the trust of his clients, and then Kang bilked them in a Ponzi-like scheme in which none of the money designated for investments was actually invested.
Kang specifically admitted that he defrauded a food distribution company, Ottogi America, Inc., which had hired him to help the company purchase properties near its distribution center in Gardena. Ottogi wire transferred funds to a trust account in Houston, Texas, to be used for the purchase of the properties. But Kang admitted that he did not use the money to invest in properties. Rather, Kang admitted that he caused the funds to be transferred to other bank accounts that he controlled. Prosecutors argued in court that Kang used a substantial portion of Ottogi’s funds to pay for personal expenses and business ventures, as well as to make partial payment to other victims.
Kang also admitted that he defrauded a Texas victim out of $500,000 in 2013 by falsely representing that he would invest the $500,000 in a company called Pegasus Capital Ltd., LLC. When the victim demanded repayment, Kang agreed in September 2015 – which was after he was initially indicted in this fraud case – to provide the victim with a “first priority security interest” in a term life insurance policy. Kang, however, failed to disclose to the victim that the life insurance was worth only $250,000, that Kang’s wife was the sole beneficiary of the policy, that the policy was first applied for and approved on August 28, 2015, and that defendant had not yet made any payments on that policy. Prosecutors said that Kang offered to sign over the exact same life insurance policy to three other victims.
“Attorneys must be held to a higher standard of conduct, because their clients heavily rely on their advice,” said United States Attorney Eileen M. Decker. “This defendant chose his own personal gain over the interests of his clients, and they suffered greatly as a result. This crime and the resulting harm warranted the significant sentence imposed by the Court today.”
“The defendant conned his victims, in part, by using the veneer of his legal practice to lend legitimacy to his scheme,” said David Bowdich, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “Multiple agencies worked collaboratively to successfully investigate this case, including IRS agents and detectives with LAPD, whose contribution was significant."
In relation to the tax evasion count, Kang admitted that he received more than $1.5 million in income in 2013, but he willfully attempted to evade the assessment of income tax by failing to file a federal income tax return for calendar year 2013 and using corporate accounts to conceal the income he received.
“Professionals, including attorneys, who use their position of trust to create elaborate schemes that have no purpose other than to mislead others and defraud the IRS will be prosecuted to the full extent of the law,” stated Acting Special Agent in Charge Anthony Orlando of IRS Criminal Investigation. “Today’s sentence reinforces our commitment to every American taxpayer to identify and prosecute those who devise illegal investment schemes designed to promote their own wealth and evade their tax obligations.”
Kang was ordered to return to court on March 28 for a hearing to determine the amount of restitution he will be ordered to pay to his victims.
The case against Kang is the product of an investigation by the Federal Bureau of Investigation and IRS Criminal Investigation. This case was prosecuted by Assistant United States Attorneys Julian L. André, Anil J. Antony and Poonam G. Kumar.
Two Glendale Men Found Guilty of Laundering Illegal Proceeds of Multi-Million Dollar Health Care Fraud Scheme that Bilked MedicareRead the Press Release
LOS ANGELES – Two Glendale residents have been found guilty of laundering millions of dollars illegally generated by a health care fraud scheme that billed Medicare for equipment and tests that were not medically necessary and sometimes were never provided.
Edgar Pogosian, also known as “Edgar Hakobyan,” 32, was found guilty today of conspiring to commit money laundering and one count of money laundering.
Karen “Gary” Sarkissian, 44, was convicted Thursday of conspiring to commit money laundering, six counts of money laundering, and five counts of health care fraud.
Pogosian and Sarkissian were found guilty by a federal jury following a three-week trial before United States District Judge Philip S. Gutierrez. The jury returned verdicts against Sarkissian on Thursday afternoon and continued to deliberate on the charges against Pogosian until today.
Judge Gutierrez is scheduled to sentence Sarkissian on June 6, and Pogosian on June 27. At sentencing, Pogosian will face a statutory maximum sentence of 40 years in federal prison, and Sarkissian could be sentenced to as much as 190 years in prison.
“As we continue to target organizations that scheme to defraud the Medicare system, criminals develop more elaborate methods to avoid detection, as seen in the money laundering activities of these defendants,” said United States Attorney Eileen M. Decker. “This case shows, however, that federal investigators have the knowledge, skills and tenacity to investigate and prosecute complex fraud schemes, and my office will continue such prosecutions to protect critical government programs like Medicare.”
With today’s guilty verdicts, a total of five defendants have now been convicted in relation to a health care fraud scheme related to several medical clinics, durable medical equipment suppliers and independent diagnostic testing facilities. Sarkissian operated a clinic on Sunset Boulevard in Echo Park and worked there with a physician’s assistant, L’Tanya Smith, who pleaded guilty in this case on the eve of trial. Between July 2009 and March 2010, Smith prescribed or ordered medically unnecessary tests and services at the Sunset clinic, some of which were never provided to the patients. Those prescriptions and orders led to more than $1.2 million in fraudulent claims to Medicare.
“Smith also prescribed medically unnecessary [durable medical equipment] (mainly orthotics) and other medically unnecessary diagnostic tests that were referred to other Medicare providers, some of which were also depositors into the money laundering conspiracy…,” according to court documents. “These providers, in turn, submitted and caused to be submitted over $10 million in false and fraudulent claims to Medicare.”
Smith, 58, of Ladera Park, pleaded guilty to five counts of health care fraud and is scheduled to be sentenced by Judge Gutierrez on May 2, at which time she will face a statutory maximum sentence of 50 years in federal prison.
Sarkissian participated in a scheme that laundered the fraudulent proceeds generated through the Sunset Clinic through five bogus corporations set up by two other men who have also been convicted in this case. The two co-conspirators deposited millions of dollars in fraudulent proceeds into bank accounts for the companies and then wrote checks from these corporations to themselves and their relatives, including Pogosian, who was found guilty based on evidence that he received checks from the sham corporations that he either cashed or deposited in his own bank accounts.
“Some of the checks written to the five corporations falsely indicated that they were payments for services such as advertising, investment, consulting, management, equipment, or professional or technical services,” according to court documents. “The five corporations in fact had no connection to the medical industry, did not provide any legitimate business services to the Medicare providers that wrote the checks, and existed primarily to launder money.”
Pogosian’s uncle, Khachatour Hakobyan, 47, of Glendale, who prosecutors argued was the overall leader of the scheme, was sentenced last month to 57 months in prison and was ordered to pay $606,681 in restitution after he pleaded guilty to conspiring to launder health care fraud proceeds through the five sham corporations and underreporting his income from the conspiracy on his federal income tax returns.
Aram Aramyan, 60, of Glendale, was sentenced in November to 51 months in prison and was ordered to pay $353,669 in restitution.
“The defendants laundered over $1 million in fraudulently obtained Medicare funds through their sham businesses, often using it for their own personal gain,” said Erick Martinez, Special Agent in Charge of IRS Criminal Investigation's Los Angeles Field Office. “As today’s verdict shows, IRS Criminal Investigation will not stand still while criminals line their pockets with illicit proceeds obtained from publically funded health care programs. The defendants have overstepped their bounds feeling entitled to this benefit program.”
The jury that convicted Pogosian also acquitted him of two counts of money laundering.
This case is the product of an investigation by the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS Criminal Investigation.
Lancaster Man Admits Illegally Uploading Screeners of ‘The Revenant’ and ‘The Peanuts Movie’ to BitTorrent WebsiteRead the Press Release
LOS ANGELES – A Lancaster man has agreed to plead guilty to copyright infringement for illegally posting screener versions of two movies – “The Revenant” and “The Peanuts Movie” – to a publicly accessible website. As a result of the illegal upload, more than 1 million people were able to download “The Revenant,” which caused Twentieth Century Fox Film Corporation to suffer losses of well over $1 million
William Kyle Morarity, who used the screen name “clutchit,” 31, admitted the criminal conduct in a plea agreement filed today in United States District Court.
Morarity obtained the screeners without authorization while at work on a studio lot. He copied the screeners onto a portable drive and uploaded the movies from his home computer on December 17 and 19, 2015 to a BitTorrent website called “Pass the Popcorn,” which allowed downloading via a peer-to-peer network.
“The Revenant” was uploaded six days prior to its limited release in theaters.
“As the Academy Awards ceremony this weekend highlights, the entertainment industry is the economic cornerstone of the Central District of California. Therefore, my office is committed to protecting its intellectual property,” said United States Attorney Eileen M. Decker. “The defendant’s conduct harmed the very industry that was providing his livelihood as well as the livelihood of others in Southern California.”
“Stealing movies is not a victimless crime,” said David Bowdich, the Assistant Director of the FBI’s Los Angeles Field Office. “The FBI will continue to pursue those who steal intellectual property, a crime that negatively impacts the U.S. economy, and in the case of a movie leak, victimizes everyday workers in the entertainment industry.”
Morarity agreed to plead guilty to uploading copyrighted work being prepared for commercial distribution, a felony offense that carries a statutory maximum penalty of three years in federal prison.
Morarity will be arraigned on the charge next month in United States District Court.
The case against Morarity is the product of an investigation by the Federal Bureau of Investigation.
Former Officer with Federal Immigration Agency Found Guilty of Accepting Bribes in Large-Scale Immigration Fraud SchemeRead the Press Release
SANTA ANA, California – A former Senior Immigration Services Officer with the United States Citizenship and Immigration Services (USCIS) has been found guilty of accepting bribes in a long-running immigration fraud scheme.
Jesus Figueroa, 69, of Tujunga, was found guilty yesterday afternoon of one count of conspiracy to commit bribery and to impede the lawful function of government immigration agencies. Figueroa was also convicted of four counts of accepting bribes and three counts of fraudulently misusing his official USCIS seal.
United States District Judge Andrew Guilford, who presided over a six-day trial, is scheduled to sentence Figueroa on June 6, at which time the defendant will face a statutory maximum penalty of 80 years in federal prison.
The evidence at trial showed that Figueroa accepted bribes from a Los Angeles attorney in exchange for approving immigration applications regardless of whether the immigrants applying were entitled to immigration benefits, including lawful permanent residence status.
The attorney who paid the bribes – Kwang Man “John” Lee, 50, of Rancho Cucamonga – pleaded guilty in January 2015 to three counts of bribing a public official and is scheduled to be sentenced in September.
Figueroa and Lee had known each other for years, and both worked together at the agency then known as the Immigration and Naturalization Service (INS), where they oversaw the issuance of immigration benefits, including “Green Cards” and citizenship. In 1999, Lee left the INS and became a lawyer in private practice. Figueroa stayed with the INS, part of which became USCIS with the creation of the Department of Homeland Security. Figueroa continued to review applications for immigration benefits.
“Lee’s law practice became primarily immigration related and he began engaging in fraud and bribery in order to obtain immigration benefits for his clients,” according to court documents. “The public officials Lee would bribe in order to obtain immigration benefits for his clients were primarily the individuals he knew while working for INS,” including Figueroa.
Lee and recruiters working for him would tell foreign national clients that Lee could obtain immigration benefits, such as legal permanent resident status, in exchange for fees that ran as high as $50,000. In some cases, Lee and his recruiters arranged sham marriages for aliens to make it appear that they were entitled to immigration benefits. Figueroa, when reviewing petitions from aliens in sham marriages, knew the marriages were bogus and, because he had taken bribes from Lee, approved the applications for legal permanent residence.
“Defendant betrayed his oath to the United States by selling his services and allowing aliens to improperly reside in the United States,” said United States Attorney Eileen M. Decker. “As this case demonstrates, public officials who are more concerned with illicit profit than upholding the law will lose their positions and face prosecution.”
Figueroa was found guilty of conspiracy, which carries a statutory maximum penalty of five years in federal prison; four counts of bribery, each one of which carries a statutory maximum penalty of 15 years in prison; and three counts of fraudulently misusing his official USCIS seal, each one of which carries a maximum statutory sentence of five years.
The investigation was conducted by U.S. Immigration and Customs Enforcement’s Office of Professional Responsibility and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, which received substantial assistance from U.S. Customs and Border Protection, Office of Internal Affairs; the Department of Homeland Security, Office of Inspector General; U.S. Citizenship and Immigration Services, Office of Security and Integrity; and the Los Angeles County Sheriff’s Department.
Co-Owner of Huntington Park Towing Company Indicted on Charges of Bribing City Council Member to Secure Tow Fee IncreaseRead the Press Release
LOS ANGELES – The co-owner of a towing business was named in a federal grand jury indictment returned today that charges him with paying a bribe to a member of the Huntington Park City Council in an attempt to obtain support for a proposed fee increase for towing and vehicle storage.
Sukhbir Singh, 39, and his company, H.P. Automotive & Tow, Inc., were charged today in a two-count indictment that accuses Singh and his company of paying a bribe “to influence and reward” the city councilmember in relation to official action related to a proposed contract to increase rates to tow and store vehicles in Huntington Park.
The indictment states that the city councilperson was a “cooperating witness,” meaning s/he was working with the FBI when Singh allegedly paid the bribe.
Singh is also charged with making false statements to the FBI in October when he falsely stated that he had never discussed the proposed tow fee increase with the city councilmember and when he falsely stated that he had not discussed how payments could made so as to disguise the source of the money.
According to a criminal complaint previously filed in this case, Singh gave a total of $2,650 in checks to the city councilmember between August 2013 and March 2015, although the affidavit in support of the complaint notes that two checks totaling $800 were rejected for insufficient funds and because a signature was illegible.
“By seeking to influence a city council vote through bribes, this defendant perverted the democratic process,” said United States Attorney Eileen M. Decker. “The public deserves to be confident that its elected officials are making decisions in the best interests of the people they serve.”
“City residents deserve honest government and should not tolerate it when bribe payments dictate how their town is run,” said David Bowdich, the Assistant Director in Charge of the FBI's Field Office. “We encourage anyone with knowledge of bribes being paid or being proffered to contact the FBI to report the allegations confidentially.”
The bribery scheme followed an August 19, 2013 meeting in which the City Council voted 3-2 to deny a request by H.P. Tow to increase towing and vehicle storage fees. Ten days later, Singh met with the FBI cooperating witness in the first of a series of meetings that included discussions of Singh and H.P. Tow making campaign contributions to the city councilmember, according to the affidavit, which alleges that Singh offered to make the bribe payments through third-party checks to a campaign account.
The Huntington Park City Council approved the fee increases for H.P. Tow in January in a vote in which the cooperating witness did not participate.
Singh and H.P Tow will be summoned to appear for an arraigned on the indictment next month.
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 bribery count in the indictment carries a statutory maximum penalty of 10 years in federal prison for Singh. If convicted, the company could be ordered to pay a fine as high as $250,000. The false statement charge in the indictment carries a statutory maximum penalty of five years in federal prison.
This case is the product of an investigation by the Federal Bureau of Investigation.
Woman Who Obtained Mortgages, Lying about Homes Being Her Primary Residences, Convicted of Making False Statements to BanksRead the Press Release
LOS ANGELES – A Lakewood woman has been found guilty of five felony charges for lying to banks that funded mortgages for three properties that later went into default, causing about $660,000 in losses to the lenders.
Felicia Muhammad, 45, who at the time of the criminal conduct was a licensed real estate broker living in Long Beach, was convicted Friday afternoon of five counts of making false statements to federally-insured financial institutions, specifically U.S. Bank, Countrywide Bank, and First Horizon Home Loans (a subsidiary of First Tennessee Bank).
United States Michael W. Fitzgerald, who presided over a four-day trial, is scheduled to sentence Muhammad on June 6, at which time she will face a statutory maximum sentence of 10 years in federal prison.
“This defendant lied to three different financial institutions, causing significant losses to all of them,” said United States Attorney Eileen M. Decker. “The Department of Justice will continue to hold accountable those who would commit mortgage fraud and place U.S. financial institutions at risk.”
According to the evidence at trial, in the summer of 2008, Muhammad applied for three loans so she could purchase condominium units in North Hollywood and Canoga Park. The total value of the loans was more than $1.1 million.
In each loan application and in two occupancy certifications, Muhammad falsely stated that each condo would be her primary residence, even though she never intended to live in any of the condos.
Once the loans were funded and the purchased were completed, the titles to the properties were transferred to a trust administered by Muhammad’s former landlord, who had asked her to purchase the properties with her good credit. In exchange for purchasing the properties, Muhammad received $18,000.
After the properties were transferred to the trust, all three loans defaulted, all three condos went into foreclosure, and the three lenders lost a total of $662,000.
The case against Muhammad is the result of an investigation by the United States Department of Housing and Urban Development – Office of the Inspector General and the Federal Bureau of Investigation.
Recruiter in Multi-Million Dollar Mortgage Fraud Sentenced to PrisonRead the Press Release
LOS ANGELES – A Los Angeles man who recruited churches into a $4.2 million mortgage scheme that defrauded Broadway Federal Bank has been sentenced to serve one year and one day in federal prison.
Chester Peggese, 59, received the prison sentence yesterday from United States District Judge Manuel L. Real, who also ordered the defendant to pay $4.2 million to Broadway Federal Bank and $38,609 to the Internal Revenue Service.
Peggese pleaded guilty in 2015 to one count of bank fraud and one count of subscribing to a false tax return.
“It is beyond dispute that mortgage fraud does significant harm to the country,” said United States Attorney Eileen M. Decker. “Crimes like these in the aggregate place financial institutions in jeopardy, which in turn places the entire economy in jeopardy.”
According to the plea agreement filed in the case, Peggese acted as a “consultant” who targeted Los Angeles-area churches with promises of new mortgages to purchase property or refinanced mortgages from Broadway Federal Bank. Between 2007 and 2009, Peggese met with representatives of churches and obtained financial information required for the loan applications. Others involved in the scheme altered the financial information to make it appear the churches were more financially sound than they actually were, and Peggese caused these false loan applications to be submitted to Broadway Federal Bank.
A bank insider, Paul Ryan, provided a template for presenting financial information for the churches that ensured the loan applications would be approved. Based on the false information concerning the financial status of the churches, Broadway Federal Bank issued loans to the churches. Peggese received his payment from the escrow accounts and paid kickbacks to Ryan.
Ryan, 48, also of Los Angeles, pleaded guilty in 2014 to one count of receiving bribes and rewards as a bank employee. Ryan is scheduled to be sentenced by United States District Judge S. James Otero on May 9, at which time he will face a statutory maximum sentence of 30 years in federal prison. Ryan has agreed to pay restitution of $353,925 to Broadway Federal Bank.
When Peggese pleaded guilty, he admitted submitting false financial information for an unidentified church to Broadway Federal Bank in 2007. As a result of this false information, Broadway Federal Bank issued a $1.33 million loan. When the church defaulted on the loan, Broadway Federal Bank suffered a $403,010 loss.
In relation to the tax count, Peggese admitted he failed to report $106,325 of business income that he received in 2008, at least a portion of which was derived from the scheme to defraud Broadway Federal Bank. In addition, for calendar years 2007 and 2009, Peggese had additional gross business receipts not reported on his tax returns of $39,900 and $13,536, respectively. As a result of this unreported income, the total taxes owed by Peggese for the years 2007 through 2009 is $38,609.
The investigation into Peggese and Ryan was conducted by the Federal Bureau of Investigation, IRS Criminal Investigation, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Federal Deposit Insurance Corporation’s Office of Inspector General.
Former Employee of Sporting Goods Distributor Convicted of Embezzling over $300,000 from Orange County CompanyRead the Press Release
SANTA ANA, California – A former office manager for an independent sporting goods distributor was found guilty this afternoon of three counts of wire fraud for using company checks and credit cards to embezzle more than $300,000 from her Los Alamitos-based employer.
Juliana James England, 60, of Cedar Rapids, Iowa, was found guilty of the three felony counts for embezzling money from her former employer, Callan Western Sales Company (CWS).
The evidence at trial showed that England charged company credit cards and wrote company checks to herself to obtain the company’s funds. As part of her scheme, she altered company records and created false bank stubs to give to the company’s accountant.
England was hired by CWS in 2000 to be a part-time secretary and office manager in charge of office administration, which including preparing checks for the signature of Michael Callan, the founder of the company. England was also in charge of maintaining the company’s check ledger, coding the payments, and providing monthly bank statements to the company’s accountant.
From March 2003 to July 2007, England wrote at least 55 checks payable to either herself or her creditors totaling more than $33,000. To cover her tracks, England wrote false notations on the check stubs to indicate payment to a legitimate company vendor. After using these checks for her personal use, she altered the company’s bank statements and provided these altered statements to the CPA.
England also used company credit cards for unauthorized expenses which totaled nearly $280,000. She used CWS Visa and American Express credit cards for personal expenses and made unauthorized online payments from the CWS bank account to these credits cards in an attempt to conceal the unauthorized purchases.
“Workers who steal from their employers can face consequences far beyond mere termination,” said United States Attorney Eileen M. Decker. “Embezzlement is a serious criminal offense. The defendant’s conduct in this case was egregious in that she sought to conceal her crimes by altering business documents and bank records. In the end, those efforts became compelling evidence of the embezzlement.”
England was ordered to surrender herself to the United States Marshals Service on March 1. England is scheduled to be sentenced by United States District Judge James V. Selna on June 20, at which time she will face a statutory maximum penalty of 60 years in federal prison.
England is also facing charges in the Eastern District of Arkansas for making false statements to the Social Security Administration to obtain disability benefits.
This case was the product of an investigation by Federal Bureau of Investigation and the Los Alamitos Police Department.
British Man Named in Federal Grand Jury Indictment that Charges Him with Coming to U.S. to Have Sex with Pre-Teen BoysRead the Press Release
LOS ANGELES – A federal grand jury today indicted a British man on federal charges alleging that he 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.
Paul Charles Wilkins, 70, of Littleport in East Cambridgeshire, England, who had dual United States-United Kingdom citizenship, was charged today with one count of traveling with the intent to engage in illicit sexual conduct and one count of attempted sex trafficking of children.
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.
“My office is committed to protecting children from predators – whether the predators are foreign or domestic,” said United States Attorney Eileen M. Decker. “When this defendant’s original plan was thwarted, he made other arrangements to sexually abuse a child. He must be held accountable for these crimes.”
Wilkins was arrested on February 11 at his rented apartment after paying the money to an undercover operative. He was charged in a criminal complaint that remains under seal and was ordered held without bond. Wilkins is scheduled to be arraigned in United States District Court on March 4.
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 investigation into Wilkins was conducted by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI)
“This case serves as a strong reminder that the abuse of children in the U.S. by citizens of any country is an unconscionable crime that will not be tolerated,” said Joseph Macias, special agent in charge for HSI Los Angeles. “Pedophiles who mistakenly believe they can escape detection by traveling to countries other than their own to commit child sex crimes should be on notice that HSI will use all the resources at its disposal to combat this reprehensible behavior and seek justice for the victims.”