Central District of California

          LOS ANGELES – An electrical engineer from Glendale who was found guilty of violating the Economic Espionage Act for stealing and distributing trade secrets belonging to his former employer was sentenced today to federal prison.

          Derek Wai Hung Tam Sing, 45, was sentenced by United States District Judge Christina A. Snyder to serve one year and one day in prison.

          Judge Snyder presided over a bench trial in September and found Sing guilty in a written ruling issued in January. In her 28-page ruling, Judge Snyder convicted Sing of 32 counts of violating the Economic Espionage Act by transmitting and possessing numerous trade secrets.

          Sing worked at the Pasadena-based Rogerson Kratos (RK) in 2012. Until he was fired by the aircraft avionics company, Sing had access to RK trade secrets, and he signed a confidentiality agreement that prohibited him from disclosing any confidential information and trade secrets that belonged to the company.

          According to a sentencing memorandum filed by prosecutors, Sing’s short tenure at RK was “tumultuous…he was late on assignments, showed up late to work, and had a bad attitude. He created disparaging paraphernalia, such as mugs and bottle openers referring to RK employees as imbeciles, and distributed them to his colleagues. Eventually, he was fired, but not before he took home with him a trove of documents related to RK’s confidential trade secrets, including at least 27 schematics.”

          After being terminated, Sing retained materials that he had collected while working at RK, despite being specifically asked to return all trade secrets. Instead, Sing “packaged the trade secrets with sufficient supporting documentation and instructions so that other competitor companies would be able to use the trade secrets and reverse engineer RK’s products,” according to Judge Snyder’s written verdict, which noted that Sing testified at trial that he “wanted to get back at Rogerson Kratos” for not appreciating his work as an employee.

          Sing prepared packages that included schematics of RK products and a “readme” document that explained the importance of the proprietary information and instructed competitors to reverse engineer the products. In early 2013, Sing sent the stolen trade secrets to other companies that produced avionics, including a company outside of the United States. Sing also sent flash drives with the trade secrets to companies. Judge Snyder found that Sing illegally sent seven schematics to three different companies, and that he illegally possessed four of those schematics.

          In its recommendation to the court, the United States Probation Office

concluded that “Sing acted out of anger, and intended to cause harm to his former employer. He has shown no remorse,” according to the government’s sentencing memo.

          “Mr. Sing tried to conceal his illegal theft and transmission of trade secrets by using fictitious email accounts,” said United States Attorney Eileen M. Decker. “If not for one of the competitors that received the proprietary secrets alerting authorities, Mr. Sing might have caused a devastating blow to his former employer. Intellectual property is the lifeblood of the American economy and provides critical value to businesses and employees.”

          “In addition to violating the law by stealing proprietary information, Mr. Sing further victimized his former employer by advertising his theft of trade secrets to the company’s competitors,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI takes theft of intellectual property very seriously as the compromise of such data affects the American economy and can weaken our national security.”

          The case against Sing was investigated by the Federal Bureau of Investigation.

            Santa Ana, California – As two criminal cases became public this week, the Justice Department today announced three cases in which additional defendants have pleaded guilty to federal charges for participating in a long-running health care fraud scheme that illegally referred thousands of patients for spinal surgeries and generated nearly $600 million in fraudulent billings over an eight-year period.

            The three new defendants join six others who were previously charged in relation to the government’s ongoing investigation into kickbacks for patient referrals and fraudulent bills for spinal surgeries performed at Pacific Hospital in Long Beach. The scheme involved tens of millions of dollars in illegal kickbacks to dozens of doctors, chiropractors and others. As a result of the illegal payments, thousands of patients were referred to Pacific Hospital, where they underwent spinal surgeries that led to more than $580 million in fraudulent bills being submitted during the last eight years of the scheme alone. Many of the fraudulent claims were paid by the California worker’s compensation system and the federal government through the Federal Workers’ Compensation System.

            Two of the three new cases were recently ordered unsealed by United States District Judge Josephine L. Staton. The documents in the two unsealed cases became publicly available this week. In the now-unsealed cases and another case recently filed:

• Michael R. Drobot, 44, of Newport Beach, the son of Pacific Hospital owner Michael D. Drobot (Drobot Senior), pleaded guilty on March 4 to conspiracy and illegal kickback charges. Drobot Junior is scheduled to be sentenced on November 18.

• Chiropractor Michael E. Barri, 48, of San Clemente, who owned and operated the Santa Ana companies Tri-Star Medical Group and Jojaso Management Company, pleaded guilty on March 11 to a conspiracy count and admitted that he received illegal kickbacks for referrals to Pacific Hospital from 2009 through October 2013. During a nine-month period that ended in 2013, Barri admitted receiving $158,555 in illegal kickbacks after referring a dozen patients to Pacific Hospital, where they had back surgeries. As a result of his referrals, Pacific Hospital billed insurance carriers approximately $3.9 million for spinal surgeries. Barri is scheduled to be sentenced by Judge Staton on January 13, 2017.

• Linda Martin, 66, of Clovis, California, who was a marketer for Pacific Hospital who recruited medical professionals and others to refer patients with promises of kickbacks, pleaded guilty to a conspiracy charge on May 27. She is scheduled to be sentenced on August 19.

            These three defendants join six others – including Drobot Senior – who have also pleaded guilty. All nine defendants have agreed to cooperate with the government’s ongoing investigation – dubbed “Operation Spinal Cap” – into the kickback scheme, which involved dozens of surgeons, orthopedic specialists, chiropractors, marketers and other medical professionals.

            “Federal law prohibits kickbacks to health care professionals because these payments impose additional costs on all patients and corrupt the relationship between the doctor and patient,” said United States Attorney Eileen M. Decker. “This scheme resulted in what can only be called a massive amount of fraudulent billing. The continuing investigation into the scheme demonstrates our commitment to protecting patients and prosecuting those in the health care industry who care more about money than those in their care.”

            “The guilty pleas announced today are the latest step in holding accountable the individuals who co-opted doctors and other specialized healthcare workers to carry out multiple kickback conspiracies that abused the state and federal healthcare systems for more than a decade,” said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The continuing results of Operation Spinal Cap are based on a tremendous effort by investigators and prosecutors handling this case, which is among the largest healthcare fraud schemes to be perpetrated in the state of California.”

            As described in court documents, Drobot Senior – who was the owner and/or CEO of Pacific Hospital of Long Beach until late 2013 and who pleaded guilty in April 2014 – ran a 15-year-long scheme in which he and others submitted hundreds of millions of dollars in bills to workers’ compensation insurers and the U.S. Department of Labor for spinal surgeries and other procedures performed on patients who had been referred by dozens of doctors, chiropractors and others who were paid illegal kickbacks.

            As part of the scheme, members of the conspiracy typically paid a kickback of $15,000 for each lumbar fusion surgery and $10,000 for each cervical fusion surgery. Some of the patients lived hundreds of miles away from Pacific Hospital, and closer to other qualified medical facilities. The patients were not informed that medical professionals had been offered kickbacks to induce them to refer the surgeries to Pacific Hospital. From 2005 through 2013 (which is only part of the overall scheme), Pacific Hospital billed insurers more than $580 million for spinal surgeries related to over 4,400 patients. Insurers paid the hospital more than $226 million for the surgeries performed as a result of illegal kickbacks.

            Those involved in the scheme concealed the kickback payments by entering into bogus contracts to provide a “cover story” for the doctors, chiropractors and others who received illegal payments. For example, a number of doctors entered into agreements with a company owned by Drobot Senior, Pacific Specialty Physician Management (PSPM), under which the doctors received as much as $100,000 per month from PSPM in return for the right to purchase their medical practices – an option that was never exercised. In other cases, Pacific Hospital entered into contracts with doctors under which the doctors were to help the hospital collect on its surgery bills to insurance companies, but the hospital’s own collection staff, rather than the doctors, actually performed the collections work. Several doctors entered into lease agreements under which PSPM or Pacific Hospital paid rent for the use of office space, but rarely used the space. And other doctors had agreements to provide consulting services to Drobot’s companies, but did not actually provide the services. Still others, including marketers who introduced doctors to Pacific Hospital, had additional agreements with Drobot’s companies.

            Two other Drobot companies – California Pharmacy Management (CPM) and its successor, Industrial Pharmacy Management (IPM) – were also important players in the scheme. Both companies set up and managed what were essentially mini-pharmacies within doctors’ offices. CPM and IPM bought and dispensed medication that the doctors prescribed to their patients, and these businesses received a portion of the money reimbursed by insurance companies for the medications. Drobot Senior, along with others at CPM and IPM, often agreed to increase the doctors’ shares of the insurance claims in return for those doctors’ referral of patients to Pacific Hospital. In many cases, for doctors who made such referrals, the conspirators “advanced” payments from CPM and IPM before the companies had collected any money for the medications or even prescribed them, and often simply wrote off these payments as losses when collections fell short. Drobot Junior was involved in these companies for over a decade, first as the manager of CPM, and then as co-owner and manager of IPM.

            In his plea agreement, Drobot Junior admitted participating in the kickback scheme, primarily through his operation of CPM and IPM. As far back as 2005, Drobot Junior began personally soliciting doctors and chiropractors to enter into contracts with CPM and specifically discussed kickback arrangements, which were finalized by his father. Drobot Junior later acted a liaison when disputes arose concerning the payment of kickbacks to medical professionals or when those kickback recipients did not refer as many patients as expected.

            Drobot Junior also admitted that he induced doctors who had contracted with CPM or IPM to also use products and services by companies he was affiliated with, including Medi-Lab Corporation. In return for referrals to Medi-Lab, Drobot Junior received monthly payments, some of which he used to make kickback payments to the doctors.

            “These unscrupulous defendants thought they had figured out a clever scheme to line their pockets in their bilking of the insurance system. Federal and state worker’s compensation programs were not designed as a slush fund for the greedy,” stated IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. “Law enforcement is serious about investigating these crimes and holding accountable those who defraud government health care programs and deprive patients of their right to honest services.”

            “Kickback schemes such as these threaten the financial integrity of public healthcare programs,” said Special Agent in Charge Scott Pierce, USPS Office of Inspector General, Contract Fraud Investigations Division. “The workers’ compensation program benefits thousands of postal employees who have received legitimate on-the-job injuries. This case should send a clear message to all health care providers that workers’ compensation fraud is a federal crime that carries serious consequences and will not be tolerated.”

            When he is sentenced, Drobot Junior will face a statutory maximum penalty of 10 years in federal prison.

            Barri and Martin each face potential prison sentences of five years as a result of their guilty pleas.

            Last year, the United States Attorney’s Office announced charges against five other defendants, including two doctors involved in the Pacific Hospital kickback scheme, and a similar scheme involving Tri-City Regional Medical Center in Hawaiian Gardens.

            The ongoing investigation into abuses involving kickbacks paid for spinal surgery patients is being conducted by the Federal Bureau of Investigation; the United States Postal Service, Office of Inspector General; IRS Criminal Investigation; and the California Department of Insurance.

            LOS ANGELES – The chief executive officer and owner of a Westwood-based mortgage brokerage company that falsely promised to help distressed homeowners avoid foreclosure – but instead stole the equity in the homes and served as the homeowners’ impostor landlord – was sentenced this afternoon to 94 months in federal prison.

            David Singui, 52, of Inglewood, the former CEO of Direct Money Source (DMS), was sentenced after pleading guilty to conspiracy, loan fraud, aggravated identity theft and tax evasion charges.

            United States District Judge Christina A. Snyder sentenced Singui and ordered him to pay just over $4 million in restitution.

            The scheme related to DMS caused distressed homeowners to lose more than $4 million and lending institutions to suffer losses of more than $11 million. Homeowners suffered losses when they were induced to sell their homes to straw borrowers sponsored by DMS, which was supposedly going to hold these properties for one year while the distressed homeowners repaired their credit and would then be in a position to repurchase these properties from the straw borrowers. In fact, DMS and Singui took permanent title to these properties and misappropriated the distressed homeowners’ equity, while DMS and Singui ended up serving as the landlord of these distressed properties and collected rent from the homeowners for over five years.

            Previously in this case, Aziz Meghji, 37, of Los Angeles, who was the second-in-charge at DMS, was sentenced to four years in federal prison.

            “Mortgage rescue schemes cause significant harm to distressed homeowners, as well as to financial institutions that are often defrauded in the scams,” said United States Attorney Eileen M. Decker. “These schemes target vulnerable victims who are already in financial jeopardy and make their plights even worse. Some of the victims in this case were left homeless by the financial predators who targeted them, including Singui.”

            DMS offered a “Fresh Start Program” that purportedly could assist distressed homeowners avoid foreclosure by arranging to have their homes purchased by so called “credit investors,” who would hold the properties for a year and then sell them back to the original homeowners after they restored their credit ratings. In reality, DMS was an equity-skimming operation that took possession of distressed homeowner’s equity under fraudulent pretenses.

            As part of the scheme, DMS told distressed homeowners that it would provide “credit investors” who would provisionally purchase the properties for one year, thereby allowing the homeowners to avoid foreclosure. During the one-year period, the distressed homeowners could remain in their homes and repair their credit. At the end of the 12-month period, the homeowners were promised that they could repurchase their homes at a lower interest rate.

            The distressed homeowners were told that DMS would draw down on the equity in their homes and use the revenues to make monthly mortgage payments during the one-year period.

            DMS took title to about 50 distressed properties and misappropriated the existing equity in the homes. The “credit investors” were nothing more than “straw borrowers” whose names were used to access the equity in the homes. DMS and its principals falsified the employment, bank account and income information of the straw borrowers on the loan applications.

            At the conclusion of these transactions, DMS usually ended up with approximately $100,000 equity per transaction, plus around $35,000 in fees and commissions associated with each loan. In the meantime, each of the straw borrowers ended up owing approximately $300,000 or more on loans that went into default because DMS did not make the mortgage payments as promised. This led to banks suffering more than $11 million in losses and the homeowners suffering losses of over $4 million as a result of the theft of the equity in their homes.

            “The defendant preyed on struggling and trusting homeowners, literally stealing the American Dream out from under them, with no remorse,” said IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. “Today’s sentencing exemplifies the continued effort by federal law enforcement to investigate and prosecute those who commit mortgage fraud. IRS-CI is committed to pursuing those who line their pockets with profits from these schemes.”

            This case was the result of a joint investigation by the Federal Bureau of Investigation, the United States Postal Service and IRS Criminal Investigation.

LOS ANGELES – Federal prosecutors today filed a civil asset forfeiture lawsuit and an application that, if approved, would allow the seizure of the proceeds of two life insurance policies worth a total of $275,000 held by San Bernardino shooter Syed Rizwan Farook, announced U.S. Attorney Eileen M. Decker and Assistant Attorney General for National Security John P. Carlin.

Before the December 2, 2015, terrorist attack at the Inland Regional Center, Farook obtained two insurance policies through his employment with San Bernardino County – one for $25,000 in 2012, and another for $250,000 in 2013. This afternoon, the United States Attorney’s Office filed the asset forfeiture lawsuit against the proceeds of the life insurance policies, as well as a request to seize the policies. The “application for arrest in rem” must be approved by a federal judge before the money can be seized by the government.

Under federal law, any assets derived from a crime of terrorism against the United States, its citizens or residents, or their property, are subject to forfeiture by the government.

“Terrorists must not be permitted to provide for their designated beneficiaries through their crimes,” said United States Attorney Eileen M. Decker. “My office intends to explore every legal option available to us to ensure these funds are made available to the victims of this horrific crime. We will continue to use every tool available to seek justice on behalf of the victims of the San Bernardino terrorist attacks.”

            The continuing investigation into the San Bernardino terrorist attacks is being conducted by the Federal Bureau of Investigation’s Joint Terrorism Task Force, which includes partners with the San Bernardino Police Department, the San Bernardino County Sheriff’s Department, the Riverside County Sheriff’s Department, the Ontario Police Department, the Riverside Police Department, the Corona Police Department and other law enforcement agencies.

SANTA ANA, California – An associate of the Orange County Mexican Mafia criminal enterprise, who pleaded guilty to federal racketeering charges related to his role in the Orange County Mexican Mafia, has been sentenced to serve over five years in federal prison.

Danny “Big Shotgun” Rodriguez, 41, of Orange, was sentenced on Monday to 64 months in prison by United States District Judge Andrew J. Guilford. Rodriguez pleaded guilty last year to conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act.

According to a plea agreement filed in federal court, Rodriguez’s role in the RICO conspiracy included extortion – or collecting “taxes” – from criminal street gang members and others, which enabled the Orange County Mexican Mafia to continue trafficking narcotics and to exert influence over neighborhoods. Rodriguez also distributed messages on behalf of the gang, including messages that ordered “green lights” – assaults – on gang members. The plea agreement notes that Rodriguez wrote a message ordering an assault, which led associates of the Orange County Mexican Mafia to attack an individual in custody.

The Mexican Mafia is a powerful and violent prison gang that controls drug distribution and other illegal activities within the California penal system and on the streets of Southern California by organizing Latino street gang members for the purpose of establishing a larger network for the Mexican Mafia’s illegal activities. If a street gang does not comply with the demands of the Mexican Mafia, the prison gang will order the assault or murder of the offending gang’s members, whether they are in custody or on the streets.

“Defendant Rodriguez helped the Mexican Mafia by collecting ‘taxes’ and passing directives,” said United States Attorney Eileen M. Decker. “Rodriguez, and others like him, enabled the Mexican Mafia to carry out its criminal activities, which involved narcotics trafficking and the use of violence, and this sentence appropriately recognizes that fact.”

Rodriguez was one of 25 defendants named in a RICO indictment brought as part of Operation “Smokin’ Aces,” which was a multi-agency operation that targeted the Orange County wing of the Mexican Mafia and led to charges against more than 80 defendants in federal court and about four dozen people in state court. In addition to Rodriguez, 16 other defendants named in the RICO indictment have been sentenced, with one defendant receiving a prison term of nearly 10 years.

            The investigation was jointly conducted by special agents of the Santa Ana Gang Task Force, which consists of agents and officers with the Federal Bureau of Investigation; the Santa Ana Police Department; the Orange County Sheriff’s Department; the Bureau of Alcohol, Tobacco and Firearms and Explosives; and the California Department of Corrections and Rehabilitation-Special Service Unit.

            LOS ANGELES – Actor Mark Wayne Salling was charged today in a federal indictment with receiving and possessing child pornography on his laptop computer and a flash memory drive.

            Salling, 33, of Shadow Hills, who is best known for his role as Noah Puckerman on the television show “Glee,” was named in a two-count indictment returned this afternoon by a federal grand jury.

            “Those who download and possess child pornography create a market that causes more children to be harmed,” said United States Attorney Eileen M. Decker. “Young victims are harmed every time an image is generated, every time it is distributed, and every time it is viewed.”

            The indictment specifically alleges that Salling used the Internet to receive a still image and a video depicting child pornography on December 26, 2015. These images depict young girls.

            The second count in the indictment charges Salling with possessing two videos depicting child pornography on December 29, 2015. The image and video also depict young girls.

            “The traditional stereotype about the kinds of people who commit child sexual exploitation crimes simply doesn’t dovetail with reality. As our investigators can attest, the defendants in child pornography cases come in all ages and from all walks of life,” said Joseph Macias, Special Agent in Charge for U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Los Angeles. “While people are often surprised when high-profile individuals come under scrutiny in such investigations, we hope cases like this will raise awareness about law enforcement’s vigilance to combat the online sexual exploitation of children and hold those involved, regardless of their position, accountable for their actions.”

            The laptop, a hard drive, and a USB flash drive seized from Salling’s residence at the end of 2015 contained thousands of images and videos depicting child pornography, according to investigators, who are continuing to review the material. Salling was initially arrested by the Los Angeles Police Department and HSI on state charges, and he was released on bond. Once investigators realized the scope of the collection of child pornography, the matter was referred to federal authorities for further action, which resulted in today’s indictment.

“It doesn’t matter who you are or what you do, if you hurt a child you will be held accountable,” said Lt. Andrea Grossman, Commander of the LAPD Internet Crimes Against Children Task Force. “These images are more than photographs, they are child abuse.”

            An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

            The charge of receiving child pornography carries a mandatory minimum sentence of five years in federal prison and a statutory maximum sentence of 20 years. The charge of possessing child pornography also carries a statutory maximum sentence of 20 years in federal prison.

            Salling, through his attorney, has agreed to surrender to federal authorities on June 3 to face the charges in the indictment. He is expected to be arraigned on the indictment on that date.

            The case against Salling is the product of an investigation by the Los Angeles Police Department and HSI as part of the Child Exploitation Investigations Group, a multi-agency task force that combats all forms of child exploitation. The Beverly Hills Police Department provided substantial assistance.

            LOS ANGELES – A Los Angeles-area doctor was arrested this morning after being indicted on federal “structuring” charges that allege he made hundreds of thousands of dollars in cash deposits designed to circumvent federal reporting requirement.

            Dr. Washington Bryan II, 47, was arrested this morning at his residence in Westwood. Bryan is expected to be arraigned this afternoon at the United States Courthouse in downtown Los Angeles.

            The 29-count indictment charges Bryan with structuring more than $400,000 in cash deposits between October 2011 and January 2013. Bryan allegedly made deposits of less than $10,000 each into four separate accounts for the purpose of preventing banks from reporting the deposits to the federal government, which is required for every cash transaction of more than $10,000.

            In conjunction with Bryan’s arrest, investigators executed federal search warrants at Bryan’s residence and his Brentwood medical office. The affidavit in support of the search warrants discusses a total of $3.8 million in structured cash deposits allegedly made by Bryan as far back as December 2007. The affidavit also discusses evidence that Bryan structured the cash for the purpose of concealing income he receive from thousands of fraudulent prescriptions that he issued for narcotic painkillers and HIV medications. 

            According to data maintained by the State of California, Bryan issued nearly 10,000 controlled drug prescriptions over a three-year period that ended in March. According to the affidavit, 86 percent of those prescriptions were for the same two narcotic drugs, namely, oxycodone (commonly known by the brand name OxyContin) and oxymorphone (also known by the brand name Opana). Since 2006, Medicare has paid more money to pharmacies to cover Bryan’s narcotic drug prescriptions – $7.8 million – than for any other prescribing doctor in California, and he outpaced the next-highest prescriber by more than $1.6 million.

            “The federal structuring statute was designed to prevent criminals from hiding their illicit proceeds from scrutiny,” said United States Attorney Eileen M. Decker. “In this case the defendant will now be held accountable for his attempt to hide millions of dollars made from excessive and highly-suspicious narcotic drug prescriptions.”

“Federal laws that regulate the reporting of certain financial transactions are in place to detect and stop illegal activities, such as narcotics trafficking and prescription drug diversion schemes,” stated IRS Criminal Investigation’s acting Special Agent in Charge Anthony J. Orlando. “IRS Criminal Investigation is committed to enforcing these laws and following the money, particularly when doctors profit from issuing medically unnecessary prescriptions.”

            An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

            If convicted of the 29 counts in the indictment, Bryan would face a statutory maximum sentence of 145 years in federal prison.

            The investigation into Bryan was conducted by IRS Criminal Investigation, the Drug Enforcement Administration, the Department of Health and Human Services – Office of Inspector General, the Department of Defense – Defense Criminal Investigative Service, the California Department of Justice and the Los Angeles Police Department.

            LOS ANGELES – The United States has intervened in a lawsuit against Prime Healthcare Services Inc.; the company’s founder and chief executive officer, Dr. Prem Reddy; and 14 Prime hospitals in California that alleges Emergency Departments at Prime facilities improperly admitted patients to the hospitals and submitted false claims to Medicare, the Justice Department announced today.

            The lawsuit alleges that Reddy directed the corporate practice of pressuring Prime’s Emergency Department physicians and hospital administrators to raise inpatient admission rates, regardless of whether it was medically necessary to admit the patients.  The lawsuit alleges that Prime’s corporate officers, at Reddy’s direction, exerted immense pressure on doctors in the Emergency Departments to admit patients who could have been placed in observation, treated as outpatients or discharged. As a result of these medically unnecessary admissions from the Emergency Departments, Prime hospitals allegedly submitted false claims to federal health care programs, such as Medicare.

            “Fraudulent billing practices, such as those alleged in this civil lawsuit, harm taxpayers who fund health care programs, such as Medicare,” said U.S. Attorney Eileen M. Decker for the Central District of California. “The Justice Department works collaboratively with law enforcement agencies, regulators and, in some cases, private citizens to ensure the integrity of a system that provides healthcare to millions of Americans.”

            “The Department of Justice is committed to ensuring that health care providers do not inappropriately seek to profit at the expense of federal health care programs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Schemes such as this one can contribute significantly to the rising cost of health care delivery and create needless patient risk.”

            The lawsuit, United States ex rel. Berntsen v. Prime Healthcare Services, et al., CV11-8214-PJW, was filed in United States District Court in Los Angeles by relator Karin Berntsen, who worked at one of the Prime hospitals where the allegedly improper inpatient admissions allegedly took place. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery. The False Claims Act permits the government to intervene in such a lawsuit, as it has done in a portion of this case.

            “Charging for medically unnecessary services, as alleged in this case, raises costs in government health programs and remorselessly passes that bill along to taxpayers,” said Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Our investigation into the allegations in this case, along with our law enforcement partners, led to the government’s decision to intervene.”

            The government’s intervention in this matter illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $29 billion through False Claims Act cases, with more than $17.5 billion of that amount recovered in cases involving fraud against federal health care programs.

            This matter was investigated by the DOJ Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office in Los Angeles, HHS-OIG and the Federal Bureau of Investigation.

            The claims asserted against Prime and Reddy are allegations only, and there has been no determination of liability.

Update:

        A Pennsylvania man charged in relation to the ongoing “Celebgate” investigation pleaded guilty this morning in United States District Court in Harrisburg, Penn. The case against Ryan Collins was investigated by FBI agents based in Los Angeles, and the plea agreement was negotiated by prosecutors in the United States Attorney’s Office in Los Angeles. The case was transferred to the Middle District of Pennsylvania for the entry of the guilty plea because the defendant lives in that area.

        Collins pleaded guilty before Senior U.S. District Court Judge William W. Caldwell, who has not yet scheduled a date for sentencing. As indicated in the original press release (included below), Collins faces a statutory maximum penalty of five years in federal prison.

Original Release, which was issued on March 15:

Pennsylvania Man Charged with Hacking Apple and Google E-Mail Accounts Belonging to More Than 100 People, Mostly Celebrities

        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.

            LOS ANGELES – An Australian man was arrested over the weekend when he arrived at a Los Angeles-area hotel allegedly to buy a 6-year-old boy for sex. 

            Michael Quinn, 33, of Melbourne, was charged in a criminal complaint filed in federal court on Monday with traveling to the United States for the purpose of engaging in illicit sexual conduct with a minor. The complaint also charges Quinn with attempted sex trafficking of a minor.

            Quinn was arrested Saturday by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). After the complaint was filed on Monday afternoon, Quinn made his initial appearance in United States District, where he was ordered held in jail pending a detention hearing on Friday.

 “Predators who travel overseas to sexually exploit children do not just victimize children in faraway lands,” said United States Attorney Eileen M. Decker. “As this case shows, children everywhere are vulnerable to such predators, including children right here in Los Angeles. The Internet has helped to enable the child sex tourism industry by making the world a smaller place, but this case, and others like it by my office, show that such international predators can and will be brought to justice.”

According to the affidavit filed in support of the criminal complaint, the investigation began earlier this month after undercover HSI special agents met Quinn on a social networking site that caters to individuals with a sexual interest in children. Quinn told undercover agents he was traveling to Los Angeles and wanted to “meet up with a dad who shares his young ones.” Quinn explained to the undercover agent he was hoping to meet “other pervs” in the U.S. and ultimately agreed to pay a human trafficker $250 to provide him with a young boy with whom he could engage in illicit sex. 

            On Saturday afternoon, Quinn went to a Los Angeles-area hotel expecting to meet with three fellow child predators for a party, during which the men would engage in sex with boys provided by the sex trafficker. Quinn went to the hotel room not realizing the men inside were actually undercover HSI special agents. A short time later, another undercover agent, posing as the sex trafficker, arrived to collect payment for the children. After Quinn handed the sex trafficker his money, law enforcement authorities came into the hotel room and took him into custody.

            “Millions of tourists flock to Los Angeles every year for all this city has to offer, but if you’re coming here to sexually exploit children, expect to be met by law enforcement, not a welcome mat,” said Joseph Macias, special agent in charge for HSI Los Angeles. “As this case vividly illustrates, the advent of the Internet means youth are now vulnerable to exploitation by sexual predators not just around the corner, but around the globe. Pedophiles should be on notice, HSI and its law enforcement partners are using all of the resources at our disposal to combat this reprehensible behavior and hold the perpetrators responsible for their crimes.”

            The ongoing investigation is being conducted by HIS, with assistance from the FBI and the Los Angeles Police Department’s Internet Crimes Against Children Task Force.

            A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

            The child sex trafficking charge is punishable by a mandatory minimum sentence of 15 years in federal prison and a maximum term of life without parole. Traveling with the intent of engaging in illicit sexual conduct with a minor carries a maximum penalty of 30 years in prison.

            This case is a product of Project Safe Childhood, a Department of Justice initiative launched in 2006 to combat the growing epidemic of child sexual exploitation and abuse, and HSI’s Operation Predator, an international initiative to protect children from sexual predators.

            Led by the U.S. Attorneys’ Offices and the DOJ Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals state and local resources to locate, apprehend and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

            Since the launch of Operation Predator in 2003, HSI has arrested more than 12,000 individuals for crimes against children, including the production and distribution of online child pornography, traveling overseas for sex with minors, and sex trafficking of children. In fiscal year 2014, more than 2,000 individuals were arrested by HSI special agents under this initiative.

            HSI encourages the public to report suspected child predators and any suspicious activity through its toll-free Tip Line at 1-866-DHS-2-ICE or by completing its online tip form. Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.

LOS ANGELES – An El Monte man who pled guilty to four separate crimes related to gang activity has been sentenced to serve 210 months in federal prison.

Christian “Bossy” Lafargo, 30, was sentenced Thursday by United States District Judge John A. Kronstadt after pleading guilty to multiple charges, including Racketeer Influenced and Corrupt Organizations (“RICO”) Conspiracy, Violent Crime in Aid of Racketeering -– Attempted Murder, Violent Crime in Aid of Racketeering – Conspiracy to Commit Murder, and Discharging a Firearm During and in Relation to a Crime of Violence.

The case was based on Lafargo’s activities in the El Monte Flores (“EMF”) gang, one of the oldest street gangs in Los Angeles County. According to the government’s sentencing papers, EMF has hundreds of Mexican Mafia affiliated gang members, spanning several generations. The Mexican Mafia is a powerful and violent prison gang that controls drug distribution and other illegal activities within the California penal system and on the streets of Southern California by organizing Latino street gang members for the purpose of establishing a larger network for the Mexican Mafia’s illegal activities. If a street gang does not comply with the demands of the Mexican Mafia, the prison gang will order the assault or murder the offending gang’s members, whether they are in custody or on the streets.

According to the indictment, the EMF gang seeks to control parts of the San Gabriel Valley through violence and intimidation, while deriving profits from its drug-trafficking operations and the scheme of “taxing” persons within the community. The crimes of EMF include drug-trafficking, extortion, theft, robbery, assault, hate crimes against African-Americans, and murder.

Lafargo, a long-time EMF member, participated in drug distribution, extortion, and crimes of violence on behalf of the enterprise and the most aggravating aspect of defendant’s offense conduct was his violent activity on behalf of the gang. In 2009, Lafargo beat and kicked a victim in the head and assaulted this victim while Lafargo possessed marijuana for distribution along with a 9mm firearm. In 2010, Lafargo attempted to kill a co-defendant, Jose Salas, because Salas had instructed an unidentified co-conspirator to sell drugs in the same area where Lafargo was selling drugs on behalf of Mexican Mafia members.

Even during his periods of incarceration, LaFargo continued to participate in criminal activity on behalf of the gang and Mexican Mafia within the walls of the State Prison. 

“Gang violence like that employed by the EMF gang terrorizes the community and often victimizes the innocent,” said United States Attorney Eileen M. Decker. “Lafargo was an integral part of that violence and was unwilling to stop committing crimes, even when in State Prison. The sentence imposed in this case will protect the El Monte community for over 17 years.”

Lafargo was the latest defendant sentenced by Judge Kronstadt in the case against the EMF gang:

•     Rafael Lomeli, 38, of El Monte, was sentenced to 130 months in custody on May 5, 2016;

•     Mark Salazar, 25, of El Monte, was sentenced to five years in prison on April 21, 2016;

•     Enrique Lopez, 50, of El Monte, was sentenced to 65 months in custody on March 24, 2016;

•     Marie Gutierrez, 56, of El Monte, was sentenced to 27 months in custody on February 4, 2016; and

•     Hiram Ramirez, 48, of El Monte, was sentenced to 32 months in custody on December 17, 2015.

Jose Salas, 38, of El Monte, has pled guilty and admitted to attempting to murder Lafargo and another gang member after Lafargo failed in his attempt to murder Salas.  Salas has agreed to a sentence of 15 years in prison and will be sentenced later this year.  James Gutierrez, 53, of El Monte, a Mexican Mafia member who was a “shotcaller” of the gang has pled guilty to conspiring to violate the RICO Act, conspiring to distribute controlled substances, including methamphetamine and heroin, and conspiring to launder money.  Gutierrez has also agreed to a sentence of 15 years in prison and will be sentenced later this year.

The investigation into the EMF 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.

            SANTA ANA, California – A former Orange County resident who oversaw a company that claimed to be developing oil and gas wells and bilked investors by, among other things, falsely claiming they would see 50 percent annual returns has been sentenced to 10 years in federal prison.

            Jerry L. Aubrey, 51, who at the time of the fraud lived in Santa Ana, was sentenced Monday for his in role in the scheme that caused investors in the Costa Mesa-based Progressive Energy Partners (PEP) to suffer over $9 million in losses.

            United States District Judge James V. Selna imposed the decade-long sentence and ordered Jerry Aubrey to pay $9,408,184 in restitution to nearly 200 victims.

            Jerry Aubrey was sentenced after pleading guilty in January to one count of mail fraud. As prosecutors noted in sentencing papers filed with the court, Jerry Aubrey orchestrated the PEP scheme from October 2005 until April 2010 – and after that he served a five-year prison term in Florida for another fraud scheme that he was involved in prior to PEP.

            “This defendant orchestrated a classic investment fraud that promised extravagant returns while investors’ money was simply being used to line the pockets of the scammers,” said United States Attorney Eileen M. Decker. “This is a serial offender who was deserving of a lengthy sentence.”

            PEP raised more than $11 million in five unregistered securities offerings for the purported purpose of developing and supporting oil and gas wells. According to court documents, most of the money went to pay the personal expenses of PEP principals, huge commissions to salespersons, and Ponzi-like payments to early investors. As part of the scheme, PEP salespersons used purchased “lead lists” to make cold calls to potential investors, who were told about the alleged profits they could earn from investing in PEP. The victims were not told that, in reality, less than 10 percent of their investments would be used to develop oil and gas wells, according to Jerry Aubrey’s plea agreement.

            Along with Jerry Aubrey, two other people were named in a federal grand jury indictment returned in September 2013. They are:

• Jerry Aubrey’s brother, Timothy J. Aubrey, 56, of Moreno Valley, a manager and salesperson at PEP, who is scheduled to go on trial before Judge Selna on mail fraud and wire fraud charges on October 25; and

• Aaron M. Glasser, 33, a former Mission Viejo resident who now lives in San Jacinto, was a PEP salesman who pleaded guilty in February to one count of mail fraud and is scheduled to be sentenced by Judge Selna on December 19, at which time he will face a statutory maximum sentence of 20 years in federal prison.

            In 2012, the Securities and Exchange Commission obtained permanent injunctions against the three defendants in a lawsuit filed in relation to the PEP investment scheme.

            The criminal investigation was conducted by the FBI.

Update:

            Today, a federal grand jury returned an indictment charging Arnold Gerald Leto III with two counts of piloting a plane without a license. Leto was charged for flying a Cessna Citation turbojet aircraft from Santa Monica, California, to Phoenix, Arizona, on or about January 30, 2015, and a Falcon 10 turbojet aircraft from Van Nuys Airport to Las Vegas, Nevada, on or about April 8, 2016.

            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.

Each charge alleged in the indictment carries a statutory maximum penalty of three years federal prison.

Original Release:

Orange County Pilot Charged with Flying Private Jet

without Having Proper License Issued by FAA

            LOS ANGELES – An Irvine man was arrested this morning on federal charges of illegally flying a twin-engine Falcon 10 turbojet airplane with passengers onboard without having a valid pilot’s license.

            Arnold Gerald Leto III, 36, was charged in a criminal complaint filed yesterday in United States District court with operating an aircraft in air transportation without a valid airman’s certificate.

            The affidavit in support of the criminal complaint alleges that Leto’s pilot’s license was revoked earlier this year, he operated the Falcon without having the required co-pilot, and he was never certified to fly this type of aircraft.

            Leto is scheduled to be arraigned on the felony offense this afternoon in United States District Court.

            Leto is charged will illegally flying the Falcon 10 from Van Nuys Airport to Las Vegas, Nevada, on April 8. Leto allegedly operated the aircraft with approximately eight passengers on board.

            “Federal regulations governing the operation of aircraft and other common carriers are designed to protect the traveling public,” said United States Attorney Eileen M. Decker. “The investigation into Mr. Leto shows that he flagrantly violated these rules – and continued to do so after the FAA took action to take him out of the air. A swift and thorough investigation by the Department of Transportation has now improved the safety of all air travelers.”

            According to the complaint, the aircraft that Leo piloted alone is a complex aircraft that requires two pilots to operate. Furthermore, Leto’s defendant’s pilot certificate – which he failed to surrender after it was revoked by the Federal Aviation Administration in January – did not have a turbojet-type rating that would authorize him to fly that airplane.

            A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The charge alleged in the complaint carries a statutory maximum penalty of three years federal prison.

            This case was investigated by the Department of Transportation – Office of Inspector General, with assistance by the Federal Aviation Administration.

            LOS ANGELES – A West Los Angeles man who masterminded a bank account ‘bustout’ scheme that defrauded financial institutions such as Bank of America and Chase Bank and cumulatively caused more than $15 million in losses has been sentenced to serve 63 months in federal prison.

            Jae Ho Chung, 46, who resides in Westwood, received the prison sentence on May 12 from United States District Judge John A. Kronstadt, who also ordered the defendant to pay nearly $2.1 million in restitution to a variety of banks.

            The overall scheme involved approximately $15 million in losses, but Chung was directly involved in criminal conduct that netted him approximately $2 million – money that prosecutors said Chung used to support his lifestyle, which included a home in Bel Air and gambling at casinos.

            Chung pleaded guilty in October 2015 to two counts of bank fraud, admitting that he “conspired over a period of more than five years with 14 others to defraud banks by depositing fraudulent checks to inflate account balances so that, in the brief period that credited and reflected those deposits, defendant and others could withdraw provisionally-granted funds for their benefit,” according to a sentencing memorandum recently filed in federal court. “This scheme was defendant’s brain child.”

            According to documents filed in the case, beginning in July 2008 and continuing until October 2013, Chung conspired with Michael Yeon Cho and 13 other co-defendants to defraud banks through the bustout scheme that used counterfeit checks to inflate account balances so that withdrawals could promptly be made before the banks learned that the deposited checks were worthless. Chung created and directed others to create counterfeit checks, directed others to arrange the establishment of “shell” corporations make it appear that bank accounts were legitimate; and withdrew funds from bustout accounts and transferred the fraudulent proceeds to himself and others.

            “While members of the public may be familiar with high-tech scam such as so-called phishing schemes, they may not have heard of bustout schemes that have plagued financial institutions for years,” said United States Attorney Eileen M. Decker. “This type of fraud is very common and the threat is growing. Whether it is one person with a stolen credit or a sophisticated operation with numerous participants, the losses from one bustout scheme can be huge. We are continuing to work with the financial industry to address the problem and to prosecute those responsible for exploiting the goodwill banks extend to their customers.”

            “This case shows that the appearance of success can be a mask for a tangled financial web of lies,” stated acting Special Agent in Charge Anthony J. Orlando for IRS Criminal Investigation’s Los Angeles Field Office. “Bustout schemes can thrive for a while until the source of funds is scrutinized and the perpetrators are identified.  Now that time is gone, and as this sentence shows, it’s time for Mr. Chung to be held accountable.”

            Cho, who was Chung’s primary co-conspirator, a 32-year-old Pacific Palisades resident, previously pleaded guilty and is scheduled to be sentenced by Judge Kronstadt on December 1.

            Out of the remaining 13 defendants, the charges against 12 of them have been resolved either through pre-trial diversion or through guilty pleas. Several of those defendants have been sentenced to prison terms as long as 33 months. One remaining defendant is scheduled to go on trial in September.

            The case against Chung, Cho and the 13 other defendants is the result of Operation “Check Kkang,” a multi-agency investigation into the bustout scheme that victimized financial institutions such as Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo Bank. Check Kkang refers to a Korean term that describes check kiting.

            The investigation was jointly conducted by special agents with the Federal Bureau of Investigation and IRS Criminal Investigation.

            LOS ANGELES – Two former deputies with the Los Angeles Sheriff’s Department were found guilty today of violating the civil rights of a mentally ill jail inmate by beating, kicking and pepper spraying the victim after he showed disrespect to a jail employee.

            Bryan Brunsting, 31, and Jason Branum (also known as Jason Johnson), 35, were each found guilty of three felony counts related to the unprovoked attack on March 22, 2010.

            The evidence presented during a one-week trial in United States District Court showed that Brunsting and Branum assaulted the victim, who was an inmate at the Twin Towers Correctional Facility in downtown Los Angeles. The assault occurred after the inmate mouthed-off to a civilian Sheriff’s Department employee. Brunsting, who was a training officer assigned to a rookie deputy who had just started working at the jail, told his trainee that they were going to “teach [the inmate] him a lesson.”

            Brunsting, Branum and the rookie deputy brought the victim out of the visiting area and directed him to a locked hallway without any surveillance cameras. Once in the hallway, the inmate realized he was going to be assaulted and began to run. The victim was tackled. Brunsting and Branum then beat the victim with fists, kicked him in the genitals and sprayed him in the eyes with pepper spray. Once other deputies arrived, they instructed the rookie deputy to handcuff the victim before he was led away for medical treatment.

            After the beating, Brunsting, Branum and the rookie deputy met to coordinate and falsify their stories. The rookie deputy testified that he was told what to say and how to write his report. As prosecutors argued at trial, the reports submitted by Brunsting and the rookie were strikingly similar, and were written to justify the use of force by falsely claiming that the victim had attempted to punch the rookie.

            “The civil rights in the Constitution are guaranteed to everyone in the United States, even those who are being held in jail,” said United States Attorney Eileen M. Decker. “A violation of any civil right is a crime against the United States and affects the nation’s entire citizenry, which is why we will tirelessly work to prosecute civil rights violations, especially when they are committed by people who have sworn to uphold the Constitution.”
            After approximately one hour of deliberations, the jury convicted Brunsting and Branum of conspiracy to violate civil rights, deprivation of civil rights with bodily injury, and falsification of records for preparing reports that tried to justify their use of force against the victim.

            United States District Judge George W. Wu is scheduled to sentence the two defendants on August 22, at which time they each will face a statutory maximum penalty of 40 years in federal prison.

            Brunsting still faces civil rights charges in relation to another alleged use-of-force incident on August 20, 2009 at Twin Towers, and he is scheduled to go on trial later this year. It is important to note that Brunsting is only charged in relation to the 2009 incident and is considered to be innocent of these charges until he is proven guilty in court.

            The case against Brunsting and Branum is the result of an investigation by the FBI, and is one in a series of cases resulting from an investigation into corruption and civil rights abuses at county jail facilities in downtown Los Angeles. As a result of today’s guilty verdicts, 21 current or former members of the Los Angeles Sheriff’s Department have now been convicted of federal charges.

            LOS ANGELES – An Inland Empire man who operated a fraudulent foreign currency exchange investment house and who arranged for an unauthorized wire transfer from a Pennsylvania car dealership was sentenced today to 108 months in federal prison, and to pay $1,303,307 in restitution.

            Malachai Levy – who was born Ralph Maurice Metters, but recently legally changed his name – 38, of Corona, was sentenced today by United States District Judge John F. Walter.

            While imposing the nine-year prison term, Judge Walter said that Levy was “the definition of a classic con man,” and noted that the defendant conspired to commit credit card fraud over jail telephones that he knew were being monitored while he was awaiting sentencing in the wire fraud case.

            Levy pleaded guilty in January 2015 to conspiring to commit wire fraud and admitted both the fraudulent wire transfer and defrauding investors who thought their money would be used in connection with foreign currency investments with various companies, including Omni Finance and Mo Betta Advisors.

            In relation to the fraudulent wire transfer, an unknown person hijacked the online banking profile of an account belonging to a Lexus dealership in Haverford, Pennsylvania, according to documents filed in this case. An online request was made in 2013 that resulted in a fraudulent wire transfer of $556,375 to Levy’s Omni Finance account in California.

            In relation to the fraudulent investment scheme, in 2013 the owner of a Tennessee bakery business invested $500,000 with Levy, who promised that the money would be used to make foreign currency trades. Even though the investment was supposed to remain in an escrow account, the money was soon disbursed after Levy submitted notarized paperwork with the victim’s forged signature.

            “This defendant’s criminal conduct was widespread and demonstrates an aversion to leading a law-abiding life,” said United States Attorney Eileen M. Decker. “This lengthy prison sentence is the result of various schemes and hopefully will allow Mr. Levy time to consider the benefits of following the law.”

            The case against Levy is the product of an investigation by the Federal Bureau of Investigation, the United States Secret Service and the Hawthorne Police Department.

            SANTA ANA, California – A federal grand jury has issued a superseding indictment that charges an Irvine engineer with stealing and possessing trade secrets belonging to two former employers, both of which develop and manufacture medical devices used to treat cardiac and vascular ailments.

            Wenfeng Lu, 43, of Irvine, was named in a 12-count superseding indictment returned by a grand jury on Wednesday.

            The indictment alleges that Lu stole the confidential and proprietary trade secrets from two different medical device companies with research facilities in Irvine, where Lu worked from January 2009 until he was arrested in 2012.

            During this time, Lu travelled to the People’s Republic of China (PRC) multiple times – sometimes soon after allegedly downloading trade secrets from an employer’s computer and emailing information to his personal email account. Lu was arrested as he prepared to board a plane to the PRC in November 2012, according to court documents.  Lu appeared “to be in the process of setting up a company with other individuals in the PRC to manufacture medical devices,” an FBI agent wrote in an affidavit previously filed in this case.

            “Intellectual property theft poses a grave threat to businesses and the employees who depend on those businesses for their livelihoods,” said United States Attorney Eileen M. Decker. “Moreover, when the stolen material is destined for foreign entities seeking to compete with American businesses, as it was in this case, IP theft also threatens the security of our nation. This is one of the reasons that my Office now prosecutes IP crimes out of a National Security Division.”

            Lu was initially indicted in this case in December 2012. That indictment included allegations related only to one of the companies’ trade secrets.  The new indictment incorporates the allegations related to four trade secrets owned by the other.

            An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

            The case against Lu has been assigned to United States District Judge, who previously had scheduled a trial for June 21. Lu is scheduled to be arraigned on the superseding indictment on June 13.

            Each of the 12 felony counts alleging the theft and possession of trade secrets carries a statutory maximum sentence of 10 years in federal prison and a fine of up to $5 million.

            This case was investigated by the Federal Bureau of Investigation.

          RIVERSIDE, California – An Upland man who pleaded guilty to federal bank fraud and tax charges for submitting fraudulent loan applications in a scheme that caused nearly $6 million in losses has been sentenced to one year and one day in federal prison.

          Derek Richard Brewart, 53, a former licensed insurance agent and owner of Hamilton Brewart Insurance Agency (HBIA) in Upland, was sentenced Wednesday afternoon by United States District Judge Jesus G. Bernal. In addition to the prison term, Judge Bernal ordered Brewart to pay $5,926,430 in restitution to the victim, Universal Bank of West Covina.  As part of the sentence, Brewart is also required to work with the Internal Revenue Service to determine the amount owed in unpaid taxes.

          Brewart pleaded guilty in February 2015 to two charges – bank fraud and filing a false tax return. As part of the scheme, Brewart secured loans from Universal Bank in his clients’ names without their knowledge or authorization. HBIA brokered the sale of insurance from various carriers who wrote general liability, earthquake, malpractice, worker’s compensation and other policies. Because of the significant cost of these policies, HBIA clients sometimes sought loans so they could pay the premiums associated with the policies over a period of time.

          Over the course of about four years, Brewart submitted fraudulent loan applications to Universal Bank to secure premium financing loans. The loans were submitted on behalf of HBIA clients, who did not know that Brewart was submitting the applications. The proceeds of the loans were used to pay HBIA’s expenses.

          In some cases, Brewart took premium payments from clients and never obtained insurance for them.

          “This defendant used his insurance expertise to engage in a scheme that violated the trust given to him as a licensed agent and cost a local bank nearly $6 million,” said United States Attorney Eileen M. Decker. “His clients trusted him to protect their assets, but he repaid them by placing their assets at risk for his own financial gain.”

          When he pleaded guilty, Brewart also admitted that he filed false tax returns for tax years 2010 and 2011. As part of his guilty plea, Brewart admitted that he failed to report to the Internal Revenue Service approximately $785,922 of the income he received for the two years.

          The investigation into Brewart’s fraudulent scheme and tax fraud violations was jointly conducted by the Federal Bureau of Investigation, the California Department of Insurance and IRS Criminal Investigation.

          LOS ANGELES – A former official with U.S. Customs and Border Protection (CBP), who went on to operate an immigration consulting service, has been sentenced to 37 months in federal prison for participating in a scheme to pay bribes to other government employees to obtain “Green Cards” and citizenship for immigrants.

          George Wu, 63, of Pico Rivera, who worked as a CBP officer until early 2012, and then operated Great Eastern Immigration Services, was sentenced late yesterday by United States District Judge Michael W. Fitzgerald.

          Wu was found guilty in August 2015 of paying bribes in an effort to obtain citizenship and legal permanent resident status for several immigrants. A federal jury convicted Wu of conspiracy and five counts of bribery of a public official.

          Wu, another immigration consultant named Michael Bui, and others solicited money from immigrants in exchange for help in obtaining benefits from U.S. Citizenship and Immigration Services (USCIS) that included lawful permanent residence and citizenship. Some of the money paid by the immigrants was used to pay bribes to public officials in exchange for granting immigration benefits.

          “This defendant attempted to corrupt our nation’s immigration system by offering bribes in exchange for benefits,” said United States Attorney Eileen M. Decker. “It is critical to our national security that our nation’s immigration system functions properly and free from corruption such as this defendant’s.”

          During the trial, prosecutors presented evidence that Wu received and paid bribe money on behalf of immigrants. The overall conspiracy involved at least seven immigrants, one of whom was allowed to pass an English proficiency exam even though she could not speak English.

          In the first case, an attorney who also works as an immigration consultant paid Wu $15,000, and Wu subsequently paid Bui $10,000, a portion of which was intended for bribery payments, to secure assistance with a citizenship application. In the second case, Wu paid the attorney a total of $15,000, again a portion of which was intended for bribes, for assistance in securing legal permanent resident status – commonly called a Green Card – for an immigrant. And in the third case, Wu paid a total of $3,000 to an official with USCIS – an official who was acting in an undercover capacity as part of the investigation – for help in obtaining a Green Card for an immigrant.

          Bui pleaded guilty in May 2015 to conspiracy and bribery, and he was sentenced yesterday afternoon by Judge Fitzgerald to serve one year and one day in prison.

          The case against Wu and Bui was part of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations Office of Professional Responsibility and the Federal Bureau of Investigation. The investigation into corruption involving government officials and immigration consultants has resulted in charges against 11 defendants. Seven of those defendants – including Wu and Bui – have now been convicted, including:

•         Attorney Kwang Man “John” Lee, who pleaded guilty in March to three counts of bribery and admitted, among other things, paying tens of thousands of bribes to a Senior Immigrations Services Officer with USCIS and arranging sham marriages to secure Green Cards for clients;

•         James Dominguez, a former special agent with U.S. Immigration and Customs Enforcement (ICE), who pleaded guilty to making false statements to ICE investigators when he lied about accessing immigration files and providing information to an immigration lawyer; and

•         Paul Lovingood, a former official with USCIS, who pleaded guilty to accepting an illegal gratuity from an immigration lawyer after adjudicating a petition for lawful permanent residence filed on behalf of one of the attorney’s clients.

          LOS ANGELES – In a plea agreement filed this morning, a Glendale doctor has agreed to plead guilty to a federal drug trafficking charge for illegally distributing hydrocodone, a powerful painkiller best known by the brand names Vicodin and Norco.

          Dr. Manasseh Nwaigwe, 72, who resides in Glendale and operated a medical office in Boyle Heights, agreed to plead guilty to one count of illegal distribution of hydrocodone. As part of the agreement with the government, Nwaigwe will forfeit to the government more than $97,000 in cash that Nwaigwe admits were proceeds derived from his illegal prescriptions.

          In the plea agreement, Nwaigwe admits that, on five occasions in May and July 2015, he wrote prescriptions for drugs to undercover law enforcement officers in exchange for cash.

          Nwaigwe prescribed the drugs hydrocodone, clonazepam (commonly known by the brand name Klonopin), and promethazine with codeine (a narcotic cough syrup known on the streets as “purple drank” or “sizzurp”) to undercover agents who “did not in fact have a medical need for those prescriptions.” In exchange, Nwaigwe received $90 cash for each prescription.

          “The issuance of prescriptions without a legitimate medical purpose fuels the prescription drug abuse epidemic and the related problem of heroin use across the United States,” said United States Attorney Eileen M. Decker. “Doctors who choose illegal profits instead of dispensing sound medical care are no better than street corner drug dealers.”

          “Prescription drug abuse continues to plague our communities – it’s a nationwide epidemic and the effects have taken a horrific toll on public health and safety across the U.S.,” said John S. Comer, Special Agent in Charge of DEA’s Los Angeles Field Division. “The DEA remains committed to identifying and investigating doctors prescribing potentially lethal substances outside the scope of legitimate medical practice.”

          Under the terms plea agreement, Nwagiwe will cooperate with the Medical Board of California by surrendering his medical license, which will effectively resolve a pending action filed by the Medical Board against Nwaigwe earlier this year. On March 8, the Medical Board filed an accusation against Nwaigwe that alleged sexual misconduct, prescribing without an appropriate exam and gross negligence.

          Under the plea agreement, Nwaigwe also will surrender his DEA registration, which is the federal license that all physicians must have to prescribe controlled substances.

          Nwaigwe is expected to appear in United States District Court in Los Angeles on June 7 for an arraignment, at which point a hearing to enter his guilty plea will be scheduled.

          The drug distribution charge against Nwagiwe carries a statutory maximum penalty of 20 years in federal prison.

          The investigation into Nwaigwe was conducted by the Drug Enforcement Administration, the Medical Board of California, the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the Torrance Police Department, and the Redondo Beach Police Department.

            LOS ANGELES – The former chief executive officer of Absolute Capital Holdings Ltd., which had its primary office in Palma on the Spanish island of Majorca, has entered into an agreement with federal prosecutors in which he will forfeit $8 million that federal prosecutors contend was derived from a fraud scheme conducted by fugitive hedge fund manager Florian Homm, who is accused of overseeing a stock manipulation scheme that caused investors to lose approximately $200 million.

            Sean Ewing, 51, a resident of Dubai in the United Arab Emirates, has agreed to forfeit $8 million in a civil settlement, and he has agreed to appear in United States District Court on a criminal case that charges him with books and records violations under the Investment Advisers Act of 1940.

            Prosecutors filed a criminal information and a Deferred Prosecution Agreement against Ewing on May 5, and those documents became publicly available today. Prosecutors entered into the agreement, in part, because Ewing, who resides in the United Arab Emirates, has agreed to voluntarily travel to the United States to resolve this matter, and he is taking responsibility for the actions alleged in the criminal case.

            According to government filings, Ewing, who along with Homm was a co-founder of Absolute Capital, was the company’s chief executive officer and chairman. Ewing was also a substantial shareholder of Absolute Capital, which traded on the Alternative Investment Market in the London Stock Exchange. From January 30, 2006 through September 10, 2007, Absolute Capital was a registered investment adviser with the United States Securities and Exchange Commission, and Ewing was listed on SEC filings as chief compliance officer. Absolute Capital managed eight hedge funds (the Absolute Funds) involved in an alleged stock manipulation scheme that was designed to artificially prop up the value of the Absolute Funds and Absolute Capital’s stock price.

            The Deferred Prosecution Agreement, which resolves the government’s investigation as to Ewing, provides that the government will not pursue Ewing in the stock manipulation scheme. The criminal information filed last week charges Ewing with causing Absolute Capital to fail to keep certain records required by the SEC, namely certain annual securities holdings reports and quarterly transaction reports from persons within the company who had access to confidential information, as well as records of pre-approval of securities trades by such access persons. These records were meant to identify material conflicts of interest between Absolute Capital access persons and Absolute Capital clients, which including the Absolute Funds operated by the company.

            In the Deferred Prosecution Agreement, Ewing admits that he was named as the Absolute Capital’s chief compliance officer in SEC filings, but he failed to adequately discharge responsibilities of that position. Among other things, Ewing failed to require Homm and other senior executives at Absolute Capital who had access to confidential information to provide annual holdings reports and quarterly transaction reports, and he did not ensure that they secured pre-approval of securities trades in order to identify any material conflicts of interest with the Absolute Funds raised by such securities trading.

            “The United States is continuing to pursue justice and restitution for investors who suffered from the collapse of Absolute Capital,” said United States Attorney Eileen M. Decker. “Mr. Ewing has admitted that he failed to fulfill duties prescribed by U.S. securities laws that are designed to protect investors, and he has agreed to forfeit the monies we believe he obtained as a result.”

            Homm was arrested in Italy in 2013 at the request of the United States, and he was subsequently named in an indictment that accused him of orchestrating a stock manipulation scheme designed to “pump up” the reported returns of his hedge funds, while self-dealing for his own benefit and to the detriment of the funds. The United States sought Homm’s extradition to the United States. Homm was ordered extradited by the Italian Ministry of Justice, but he was released from custody and is believed to have fled to Germany, where he remains a fugitive.

            In December 2015, a federal grand jury returned a superseding indictment against Homm and three additional defendants. The superseding indictment outlines a penny stock manipulation scheme designed to pump up the reported returns of the eight Absolute Funds and alleges that the fraud caused investors to lose approximately $200 million. The superseding indictment also charges Homm and the other defendants with money laundering.

            As part of a Deferred Prosecution Agreement, Ewing will pay the settlement, but will not admit any criminal liability or concede knowledge of any allegedly illegal acts by Homm and others at Absolute Capital.

            The Deferred Prosecution Agreement requires Ewing to appear in federal court in Los Angeles soon after he pays the $8 million settlement. In return, the government will dismiss certain seizure warrants filed to restrain Ewing-related assets in the Bailiwick of Guernsey and – if Ewing abides by all of the terms of the agreement, which includes cooperating truthfully with the FBI’s ongoing investigation – will dismiss the criminal case within one year.

            The case against Ewing is the product of an investigation by the Federal Bureau of Investigation. The Bailiwick of Guernsey Law Enforcement and the United Kingdom Financial Conduct Authority provided assistance to the FBI’s investigation.

          SANTA ANA, California – An Orange County man has pleaded guilty to embezzling approximately $1.4 million from his employer, a crime he committed when he was pending sentencing in another embezzlement case involving another former employer.

          Peter Suk Lee, 49, a resident of the City of Orange, pleaded guilty yesterday afternoon to a federal bank fraud charge and admitted that he embezzled company funds from Contempo Inc. USA, a family-owned, Los Angeles-based business that imports and distributes fashion accessories.

          As a result of this week’s guilty plea and the earlier federal charges, Lee faces a statutory maximum sentence of 90 years in federal prison when he is sentenced by United States District Judge David O. Carter on August 15.

From August 2014 through September 2015, Lee was the controller at Contempo. During this time, Lee embezzled money by forging the signatures of the company officers on 92 unauthorized checks that were made out to him and several associates. The total value of these checks was $1.38 million. Lee admitted that he deposited $393,400 embezzled from Contempo into his personal TD Ameritrade account, and caused other embezzled funds to be wired to casinos for his use.

At the time, Lee was free on bond and awaiting sentencing after pleading guilty to wire fraud for embezzling money from another business. In that prior case, Lee admitted that he embezzled approximately $2.65 million from Glovis America, Inc., an Irvine-based automotive logistics company where Lee had been employed as the accounting manager.

In court on Monday, Lee also admitted that, between his stints at Glovis and Contempo, he embezzled from a third company. Lee specifically admitted that he stole approximately $70,000 from the Placentia-based Orion Technology, Inc.

“This defendant’s brazen theft of millions of dollars from three different employers in only a few years was extremely harmful to those companies,” said United States Attorney Eileen M. Decker. “That Mr. Lee continued to victimize employers while pending sentencing on fraud charges makes his actions all the more outrageous.”

          This case was investigated by the Federal Bureau of Investigation.

          LOS ANGELES – Two Los Angeles Sheriff’s deputies who were found guilty after a two-week trial earlier this year of falsifying reports with the intent to obstruct justice related to their assault of a waist-chained  inmate were sentenced to prison terms today.

          Former deputies Joey Aguiar, 28, and Mariano Ramirez, 40 were sentenced respectively to 18 months and 13 months in prison by the Honorable Beverly Reid-O’Connell. When imposing sentence Judge O‘Connell found that, in addition to falsifying their reports, Aguiar and Ramirez had engaged in excessive force against the shackled inmate, who was struck, kicked, repeatedly hit by a flashlight, and pepper-sprayed, while he was on the ground.

          Aguiar was convicted of one count of falsification of records for submitting a report that falsely stated the inmate, Bret Phillips, who is now 44, was beaten after he had attempted to headbutt deputy Aguiar’s face and that Phillips violently kicked at Aguiar. Mr. Phillips did neither, according to testimony presented at the trial.

          It was undisputed that Mr. Phillips was waist-chained with handcuffs binding his hands to a chain around his stomach throughout the entire beating.

          During the trial, Chaplin Paulino Juarez, who was an eyewitness to the event, testified that he repeatedly raised concerns about what he had seen with senior LASD officials, but was rebuffed. Chaplin Juarez ultimately relayed his concerns to the ACLU.  The information provided to the ACLU by the chaplain later came to the attention of the FBI.  By this time the FBI had begun a wide-ranging investigation into civil rights abuses by the LASD in custodial settings, particularly excessive uses of force by deputies on the 3000 Floor of the Men’s Central Jail. Another witness, who was an inmate when Mr. Phillips was beaten, testified that he hid in the shower to avoid being seen by LASD personnel as he watched the deputies beat a defenseless and unmoving inmate.  During the sentencing, Judge O’Connell stated that she believed the testimony of Chaplain Juarez and Mr. Maestaz.

          “These defendants attempted to cover up an unwarranted attack upon an inmate who was restrained with waist chains,” said United States Attorney Eileen M. Decker. “The reprehensible conduct of these defendants in this case undermines the work of law enforcement everywhere, tarnishing the outstanding performance of the vast majority of officers.”

The jury in the case had been unable to reach a unanimous decision on a civil rights offense that alleges the deputies unlawfully beat the victim during the incident on February 11, 2009. The jury reported in open court that it was split 10-2 in favor of guilt. The jury acquitted Aguiar and Ramirez of conspiring to violate the inmate’s civil rights.

          The case against Aguiar and Ramirez is the result of an investigation by the FBI, and is one in a series of cases resulting from an investigation into corruption and civil rights abuses at county jail facilities in downtown Los Angeles. As a result of the investigation, 18 current or former members of the Los Angeles Sheriff’s Department have now been convicted of federal charges.

          LOS ANGELES – A man who ran a trucking company pleaded guilty today to dumping 11,000 gallons of waste water and soap into a tributary of the San Gabriel River in Santa Fe Springs.

          David Lee Flury, the 61-year-old owner and operator of Flury Industries, Inc., a Santa Fe Springs-based waste-hauling company, pleaded guilty to a felony charge of water pollution. United States District Judge Stephen V. Wilson set Flury’s sentencing hearing for August 15.

          The San Gabriel River, one of the three most important waterways in Southern California, flows into the Pacific Ocean at Alamitos Bay between the cities of Long Beach and Seal Beach. Flury admitted that the City of Santa Fe Springs spent nearly $750,000 cleaning up the soapy waste that he illegally dumped into Los Coyotes Creek.

          “Water is a resource that we cannot afford to waste or pollute in drought-stricken Southern California,” said United States Attorney Eileen M. Decker. “This defendant’s crime caused significant harm to the public, taxpayers and the environment.”

          Flury had previously been indicted with multiple felony counts, including water pollution, mail and wire fraud, witness tampering, destruction of evidence and identity theft. The federal grand jury indictment alleged that Flury used interstate wire communications and the mail system to defraud approximately 17 customers out of more than $350,000. The indictment alleges that Flury told his customers that he would pick-up their various waste products and transport the waste for disposal at a facility licensed to receive and dispose of such waste products. Instead, Flury illegally dumped tens of thousands of gallons of waste products into the San Gabriel River and desert areas in Riverside County, according to the indictment.

          As a result of today’s conviction, Flury faces a statutory maximum sentence of three years in prison and a $250,000 fine.

          This case was investigated by the City of Santa Fe Springs Fire Department, the City of Santa Fe Springs Police Department, the Los Angeles Department of Public Works, the California Department of Toxic Substances Control, and the United States Environmental Protection Agency – Criminal Investigations Division.

          SANTA ANA, California – A longtime member of the Mexican Mafia prison gang who controlled Latino street gangs in Orange County for at least three decades was sentenced today to 15 years in federal prison after being found guilty earlier this year of federal racketeering offenses.

          Peter Ojeda, 74, was sentenced this morning by United States District Judge James V. Selna, who said the defendant, notwithstanding his age, still represented a “danger to the community.”

          A federal jury in January found Ojeda guilty of two offenses: conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) and conspiracy to commit violent crimes in aid of racketeering.  The jury found that Ojeda ordered murders and assaults while incarcerated in federal prison for a prior racketeering conviction.

          Ojeda, who is also known as “Sana” and “The Big Homie,” has been in federal custody since he was indicted in the prior racketeering case in 2005.

          “Ojeda is a career criminal and a Mexican Mafia leader, which means he is intimately familiar with the violence, drug trafficking, and extortion that fuels this criminal organization,” said United States Attorney Eileen M. Decker. “Prior criminal cases against Mr. Ojeda have not had any deterrent effect, but today’s sentence makes it unlikely that Mr. Ojeda will ever be able to walk freely on the streets where his criminal organization has caused so much harm.”

          Ojeda was convicted by a jury that heard evidence during a two and half month trial before the United States District Court in Santa Ana.  The jury found that both conspiracies involved plots to murder other gangsters as part of a turf war with a rival Mexican Mafia member who attempted to assert control over local street gangs after Ojeda was imprisoned in his prior case.

          In relation to the RICO conspiracy, the jury found that Ojeda was involved in the operation and management of the Mexican Mafia’s activities in Orange County, which included conspiring to commit murder, extortion, and narcotics trafficking.  Ojeda ordered Latino street gangs in Orange County to pay “taxes” that consisted of a portion of the proceeds the gangs earned from various criminal activities, including drug trafficking.  In return, gang members were permitted to exert influence over their neighborhoods and territories and seek protection or assistance from the Mexican Mafia.

          Ojeda’s girlfriend, Suzie Rodriguez, 53, was also found guilty in the RICO and VICAR conspiracies for acting as a messenger between Ojeda and local gang leaders while Ojeda was housed in a federal prison in Pennsylvania.  During the trial, prosecutors argued that Rodriguez acted as Ojeda’s eyes, ears, and voice on the streets of Orange County.  Judge Selna is scheduled to sentence Rodriguez on June 6, 2016.

          The Mexican Mafia is a powerful and violent prison gang that controls drug distribution and other illegal activities within the California penal system and on the streets of Southern California by organizing Latino street gang members for the purpose of establishing a larger network for the Mexican Mafia’s illegal activities.  If a street gang does not comply with the demands of the Mexican Mafia, the prison gang will order the assault or murder the offending gang’s members, whether they are in custody or on the streets.

          In the prior federal case, Ojeda pleaded guilty to conspiring to violate RICO and conspiring to distribute narcotics.  In late 2006, he was sentenced to 14 years in federal prison.  It was while in federal prison that he participated in the subsequent conspiracy that led to his indictment, conviction, and today’s sentencing.

          Ojeda’s conviction was the result of Operation “Black Flag,” an investigation conducted by the Santa Ana Gang Task Force.  As a result of the investigation, 59 defendants were convicted on federal charges, and another 40 defendants were prosecuted by the Orange County District Attorney’s Office.

          The Santa Ana Gang Task Force is made up of agents and officers with the Federal Bureau of Investigation; the Santa Ana Police Department; the Orange County Sheriff’s Department; the Bureau of Alcohol, Tobacco and Firearms and Explosives; and the California Department of Corrections and Rehabilitation.  The Anaheim Police Department, the Los Angeles Sheriff’s Department and the United States Bureau of Prisons provided substantial assistance.

          LOS ANGELES – A Downey man who falsely certified that contaminated beef was free of E. coli O157:H7 bacterium has been sentenced to a year of home detention and required to pay $307,695.90 in restitution.

          Jim Johnson, 67, had pleaded guilty to falsifying a Certificate of Analysis in United States District Court last November.

          Johnson worked as a consultant for Huntington Meat Packing Company, a former meat processing and distribution company located in Montebello, California.  The company had a plan that addressed, among other things, how the company would test its beef for E. coli.  Among Huntington’s customers were El Primo Foods and Foster Farms.

Several years ago, Johnson knowingly and willfully provided the U.S. Department of Agriculture Food Safety Inspection Service (“USDA-FSIS”) with a fake Certificate of Analysis which falsely stated that a beef sample from the company had tested negative for E. coli.  In fact, when Johnson made the false document, he knew that preliminary laboratory results indicated that the beef tested positive for E. coli.  Further laboratory testing confirmed that the beef was, indeed, contaminated with the pathogen.

          “The defendant’s crime endangered consumers throughout the country,” said United States Attorney Eileen M. Decker. “The public is dependent upon inspections and testing for food safety, and this case illustrates the immense ramifications that one failure can have on consumers.”

          In its sentencing papers, the government stated that the USDA identified a total of approximately 111 Certificates of Analysis falsified by Johnson between March 30, 2009, and January 12, 2010. Other than the meat that tested positive for E. coli, none of the other meat related to those Certificates of Analysis was ever sent to the laboratory for testing.

Upon learning of the false Certificate of Analysis, USDA-FSIS initially recalled approximately 864,000 pounds of beef products. The recall was expanded less than a month later to include approximately 4.9 million pounds of additional beef and veal products from Huntington due to the falsified Certificates of Analysis and other violations.

          The case against Johnson is the product of an investigation by the U.S. Department of Agriculture, Office of Inspector General, with assistance by the U.S. Department of Agriculture Food Safety and Inspection Service.

          LOS ANGELES – A longtime member of the Mexican Mafia-affiliated Southside Montebello street gang was found guilty this afternoon of federal racketeering charges that included providing a firearm used by another gang member to kill a rival.

          George Vera Sr., 48, was convicted by a federal jury that determined he conspired to violate the Racketeer-Influenced and Corrupt Organizations Act (RICO). The jury also found Vera Sr. guilty of possession of a firearm in furtherance of a crime of violence.

          As a result of today’s convictions, Vera Sr. faces a statutory maximum penalty of life in federal prison, and a mandatory minimum prison term of five years. United States District Judge Dolly M. Gee, who presided over a three-week trial, will schedule a sentencing hearing for later this year.

          Vera Sr., who was also known as “Rascal” and “Big Rascal,” was a senior “OG” member of Southside Montebello. At trial, prosecutors argued that he led a double life, working as an electrician for Los Angeles County during the day, and acting a gang leader and gang shot-caller during his off hours.

          According to court document filed in court, Vera Sr. “engaged in hiding a firearm with a fellow gang member, provided a firearm to a younger gang member that was used in a murder, stored firearms and ammunition at his home for gang members to use, hosted gang meetings, was involved in the payment of ‘taxes’ to the Mexican Mafia on the gang’s behalf, directed younger members of the gang to protect his home from disrespect from rival gangs, and agreed to lie to his son’s probation officer to shield him from prosecution for drug dealing.”

          United States Attorney Eileen M. Decker stated: “George Vera Sr. was a senior member of a gang that undertook great efforts to quash its rivals. This gang also maintained an arsenal of weapons, regularly engaged in acts of violence, and was involved in significant narcotics trafficking.”

          Two of Vera Sr.’s sons were charged and pleaded guilty in this case. Marcus Matthew Vera pleaded guilty to drug, conspiracy and firearm charges, and will be sentenced later this year. George Vera pleaded guilty to conspiracy to commit robbery and possession of a firearm, and he previously was sentenced to 54 months in federal prison.

          Vera Sr. and his two sons are among 16 defendants who have been convicted in federal court on charges related to Operation “Sudden Impact,” which was a task force investigation into gang activities in the City of Montebello.

          As a result of Sudden Impact, six defendants were charged by the Los Angeles County District Attorney’s Office in relation to six murder “cold cases” solved during this investigation. Four of those charged in relation to the previously unsolved murder cases have been convicted in state court, and another two defendants are pending trial. Additionally, five other defendants were charged by the District Attorney on crimes ranging from drug sales to attempted murder.

          “Montebello Police personnel, working with our federal law enforcement counterparts, have successfully prosecuted some of the top leaders and most dangerous members of a street gang that has terrorized the community for decades,” said Montebello Police Chief Kevin L. McClure. “As a result of this collaborative effort, the City of Montebello is now a safer and more peaceful place.”

          Operation Sudden Impact was a multi-agency effort of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); the Montebello Police Department; the Los Angeles County Sheriff’s Department; and the California Department of Corrections and Rehabilitation, Special Services Unit.

          As part of the investigation, undercover law enforcement officers and confidential informants infiltrated the Southside Montebello gang and obtained evidence of the gang’s crimes, including murders and methamphetamine distribution.

ATF Special Agent in Charge Eric Harden stated: “I applaud the agents and prosecutors who pursue investigative leads derived from crime guns. Linking trace and ballistic intelligence can also link the worst of the criminal element on our streets, providing some closure to families and communities.”

          SANTA ANA, California – A former Garden Grove resident pleaded not guilty this afternoon to federal charges of hacking into the computer system of Blue Stone Strategy Group – an Irvine-based company and the man’s former employer – and deleting files.

          Nikishna Polequaptewa, 34, who currently resides in Polacca, Arizona, was arrested this morning after surrendering to federal authorities. At his arraignment this afternoon, he entered a not guilty plea, was ordered released on a $25,000 bond and was ordered to stand trial on June 28.

          Polequaptewa was indicted by a federal grand jury in March on one count of unauthorized impairment of a protected computer.

          “IT administrators often hold the ‘keys to the kingdom’ for companies,” said United States Attorney Eileen M. Decker. “Disgruntled IT administrators can therefore pose a grave threat to businesses, which must take measures to protect themselves when letting such an employee go.”

          According to the indictment, Blue Stone provided consulting services to Native American tribal governments throughout the United States. Polequaptewa was responsible for information technology at Blue Stone until November 2014, when he was relieved of his duties, which led to his resignation. Immediately following his resignation, Polequaptewa repeatedly accessed the Blue Stone internal server, a desktop computer, and remote accounts held by Blue Stone, and allegedly deleted various files belonging to the company. 

          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 computer hacking charge in the indictment carries a statutory maximum penalty of 20 years in federal prison.

          The investigation into Polequaptewa was conducted by the Federal Bureau of Investigation.

            LOS ANGELES – Two doctors were found guilty today of federal health care fraud charges for falsely certifying that Medicare patients were terminally ill, and therefore qualified for hospice care, when the vast majority of them were not actually dying.

            Following a two-week trial, the doctors were found guilty of participating in a scheme related to the Covina-based California Hospice Care (CHC). Between March 2009 and June 2013, CHC submitted approximately $8.8 million in fraudulent bills to Medicare and Medi-Cal for hospice-related services, and the public health programs paid nearly $7.4 million to CHC.

            The two doctors convicted today by a federal jury are:

• Sri Wijegoonaratna, known as Dr. J., 61, of Anaheim, who was found guilty of seven counts of health care fraud; and

• Boyao Huang, 43, of Pasadena, who was found guilty of four counts of health care fraud.

              United States District Judge S. James Otero, who presided over the trial, is scheduled to sentence the two defendants on August 15, at which time each will face a statutory maximum sentence of 10 years in federal prison for each count of health care fraud.

              “A number of patients admitted to California Hospice Care testified at trial, showing that they did not require end-of-life care,” said United States Attorney Eileen M. Decker. “In fact, only a small percentage of patients later died – notwithstanding the two doctors declaring that they needed hospice care. This scheme is one of many that has victimized public health care programs and, in the end, the taxpayers who fund these important programs. We will continue to investigate these fraudulent schemes, shut down the operations and incarcerate those responsible for stealing from the system.”

            Four other defendants who were named in a federal grand jury indictment in September 2014 have pleaded guilty to health care fraud charges and are pending sentencing (except for one defendant who has been accepted into a diversion program). Those other defendants include a Placentia woman who purchased CHC in 2007 and operated the facility after being charged and incarcerated in another health care fraud scheme. Priscilla Villabroza, 70, previously pleaded guilty in December to one count of health care fraud and is scheduled to be sentenced by Judge Otero on June 20.

            As part of the CHC fraud scheme, Villabroza and her daughter – who was the nominal owner while Villabroza was in custody – paid patient recruiters known as “marketers” or “cappers” to bring in Medicare and Medi-Cal beneficiaries. CHC nurses performed “assessments” to determine whether the beneficiaries were terminally ill and, regardless of the outcome, Wijegoonaratna and Huang certified that the beneficiaries were terminally ill – even though the vast majority of them were not dying. CHC personnel altered medical records in response to Medicare audits to make the beneficiaries appear sicker.

            The evidence at trial showed that Wijegoonaratna also recruited patients into the scheme and received tens of thousands of dollars in kickbacks. “Not only did defendant Wijegoonaratna refer beneficiaries to CHC in exchange for illegal kickbacks, but he also created fraudulent diagnoses and falsely certified that the referred beneficiaries were terminally ill, even though the overwhelming majority of CHC beneficiaries were not terminally ill, so that CHC could qualify for reimbursement from Medicare,” prosecutors wrote in court documents filed in relation to the trial. The California Medical Board has revoked Wijegoonaratna’s medical license.

            By the time the scheme was shut down in June 2013, Medicare and Medi-Cal paid millions of dollars for medically unnecessary hospice-related services.

            The investigation into California Hospice was conducted by the United States Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the California Bureau of Medi-Cal Fraud & Elder Abuse; and IRS Criminal Investigation.

            LOS ANGELES – The operator of a Brea-based investment company that prosecutors allege was a Ponzi scheme that brought in about $7 million with promises of breakthrough products made with graphene was arrested this morning on federal fraud charges.

            Wenxing Huang, who is also known as “Di Peng” and “Fatty,” 33, of San Gabriel, was taken into custody by special agents with the Federal Bureau of Investigation.

            A criminal complaint unsealed after this morning’s arrest charges Huang with wire fraud and money laundering, charges that together carry a statutory maximum penalty of 30 years in federal prison.

            Huang operated Ju Ding, Inc., which solicited funds from investors with false promises that their money would be used to invest in and develop technology based on graphene, which is a layer of pure carbon that is only one atom thick. But, according to the complaint, Ju Ding does not appear to have engaged in any business or to have sold any goods.

            An FBI agent who reviewed Ju Ding financial accounts determined that approximately 400 victims invested more than $6.9 million in traceable funds (which does not include cash deposits that may have been made with the company). Huang used approximately half of the funds deposited with Ju Ding to purchase a $1.3 million home in Diamond Bar, luxury automobiles and jewelry.

            Promotional materials for Ju Ding promised “Quick profit, wealth creation by helping you make shortcut to your riches,” according to the affidavit. Huang allegedly orchestrated a Ju Ding holiday party at the end of 2013 at the Long Beach Convention and Entertainment Center in which luxury items, including a Mercedes-Benz automobile were raffled off. Records from the facility show that the event for 2,000 people cost more than $180,000.

            “Mr. Huang misled hundreds of investors with get-rich-quick promises decorated with fancy cars and parties,” said United States Attorney Eileen M. Decker. “Extravagant promises of instant wealth are almost assuredly frauds, and potential investors should be especially wary of lavish pitches such as those employed by Mr. Huang.”

            As part of the scheme, Huang allegedly offered compensation to investors who recruited others, according to the complaint, which alleges that many investors received little, if any, return on their investments. However, approximately $2.2 million appears to have been returned to clients in what were essentially Ponzi payments.

            Huang is charged with money laundering for allegedly using approximately $1.2 million in investor funds to purchase the Diamond Bar home, which has since been sold.

            Huang is expected to make his initial appearance this afternoon in United States District Court in Los Angeles.

            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.

            SANTA ANA, California – A Mexican national who allegedly led an organization that assisted international narcotics traffickers launder more than $60 million in illicit drug proceeds has been taken into custody, as have three of his associates.

            Gustavo Barba, 59, of Guadalajara, was arrested Tuesday evening as he attempted to enter the United States through the Otay Mesa Port of Entry in San Diego. Barba made an initial court appearance in San Diego federal court yesterday and will remain in custody there until a detention hearing scheduled for May 10.

            Following Barba’s arrest, special agents with IRS Criminal Investigation and the Drug Enforcement Administration began arresting other defendants named in a 32-count money laundering indictment. A federal grand jury in Santa Ana returned the indictment under seal on July 22, 2015, and the indictment was unsealed today after three other defendants were taken into custody. Federal authorities are continuing to search for three fugitives.

            Barba, who is also known as “Gus” and “Gustavo Barba Casillas,” is the lead defendant in the indictment that alleges a series of money laundering crimes, including conspiring to launder narcotics proceeds. Barba operates Barba International, Inc., which has offices in Guadalajara and the Los Angeles Jewelry District and is also charged as a defendant. The indictment describes how Barba’s organization allegedly used a “Black Market Peso Exchange” (BMPE) scheme to convert millions of dollars generated by drug sales in the United States into pesos that are delivered to drug trafficking organizations in Mexico.

            The BMPE is one of the primary methods used by drug cartels to launder proceeds generated by drug sales in the United States and return the proceeds to where the cartels are located. The BMPE involves both illegal drug trafficking and legitimate businesses operating throughout the Americas, and the scheme solves problems faced by both groups. Drug cartels have massive amounts of U.S. currency – often in small denominations – that is difficult to transport in bulk or to deposit into financial institutions. At the same time, some legitimate businesses in Mexico want U.S. dollars in the United States to pay domestic suppliers and manufacturers so they can avoid incurring fees and taxes that would result if they wired the money to the United States through legitimate channels.

            In a BMPE scheme, a “peso broker” or professional money launderer unites these entities to solve their problems. The peso broker receives narcotics proceeds in the United States and uses this money to pay United States businesses for goods ordered by Mexico-based businesses, which, in turn, pay the peso broker for the goods that will be shipped to Mexico. The peso broker then delivers the money, minus the service charge, to the narcotics traffickers in Mexico. Through a BMPE scheme, narcotics proceeds generated in the United States are moved to Mexico without having to physically cross the border or be sent through the banking system.

            “Cutting off the flow of illicit profits to drug cartels is a key component in the battle against international drug traffickers,” said United States Attorney Eileen M. Decker. “As banks implement controls to shut down money laundering and as regulations make it more difficult for drug cartels to move money, these organizations seek out new ways to collect money from illegal drug sales. We are responding accordingly and will continue to target new methods of laundering drug proceeds.”

            In addition to Barba, three other defendants have been taken into custody since yesterday. They are:

• Isaias Navarro, 37, of Fullerton, who operated Barba International’s office in Los Angeles, was arrested last night;

• Vidal Gutierrez Vargas, 58, of Whittier, who allegedly facilitated the money laundering operation, was arrested this morning; and

• Gervork Hagopian, 61, of the Windsor Square District of Los Angeles, the owner of a business in the jewelry district, who allegedly received money being laundering by the organization and facilitated the money laundering operation, was arrested this morning.

              The three defendants arrested in the Los Angeles area are scheduled to be arraigned this afternoon in United States District Court in Santa Ana.

              “This week’s arrests should send a clear message to the Mexican drug cartels that IRS Criminal Investigation and our partners will not tolerate the exploitation of U.S. financial institutions and businesses for the purpose of illicit financial transactions that fund the distribution of narcotics,” stated IRS Criminal Investigation’s acting Special Agent in Charge Aimee Schabilion. “In addition, this week’s actions should send a warning to American businesses that turn a blind eye to the crime they facilitate in an attempt to avoid bank currency reporting requirements, taxes and law enforcement scrutiny.”

            Three other individual defendants named in the indictment are fugitives:

• Roberto Castaneda, also known as “the Engineer,” 77, of Guadalajara, who is Barba’s father in law and allegedly coordinated the delivery of narcotics proceeds and tracked the money being laundered by the organization;

• Jose Luis Guizar, 43, of East Palo Alto, a courier for the organization; and

• Leo Alfonso Alvarez, 35, of Edinburg, Texas, who also was a courier.

            “This organization was laundering narcotics proceeds for multiple cartels under the guise of legitimate business,” said DEA Assistant Special Agent in Charge Anthony Chrysanthis. “Along with targeting the narcotics trafficking activities of criminal organizations polluting our society with deadly drugs, we will continue efforts with our law enforcement partners to attack the trade-based money laundering schemes these organizations engage in.”

            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.

            Each defendant is named in various counts in the indictment. The money laundering charges alleged in the indictment each carry statutory maximum sentences of either 20 years or 10 years in federal prison.

            This case is the result of an ongoing investigation being conducted by IRS Criminal Investigation and the Drug Enforcement Administration.

            The following agencies provided assistance during the investigation: the Torrance Police Department, the Santa Ana Police Department, the Placentia Police Department, the Irvine Police Department, the Orange Police Department, the Seal Beach Police Department, the Cypress Police Department, the Orange County District Attorney’s Office, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

          LOS ANGELES – Postal Inspectors this morning arrested a Monrovia woman on federal charges of assaulting a mail carrier, who allegedly was subjected to racial epithets and then pepper sprayed in the face.

          Ruby Guerrero Valenzuela, 64, was arrested on charges of assaulting the United States Postal Service employee in an incident on April 20 in Pasadena.

          Valenzuela is expected to make her initial appearance this afternoon in United States District Court.

          According to the affidavit in support of the criminal complaint, Valenzuela apparently believed that the mail carrier’s vehicle had cut her off at an intersection in Pasadena. Valenzuela shouted obscenities and followed the victim to her next stop, where Valenzuela ran up the victim, who had walked to the entrance of a building on Lake Avenue. According to witnesses, Valenzuela screamed additional obscenities and racial epithets at the victim before spraying the victim in the face with pepper spray, which caused the victim to suffer severe pain and blurred vision.

          “The evidence in this case indicates that a postal carrier carrying out her duties was the victim of an unwarranted attack,” said United States Attorney Eileen M. Decker. “All federal employees should be able to carry out their duties without fear of attacks based on the performance of those duties.”

          A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

          The charge of assaulting a federal employee in a manner that inflicts bodily injury carries a statutory maximum penalty of 20 years in federal prison.

          This case was investigated by the United States Postal Inspection Service, which received assistance from the Pasadena Police Department and the Monrovia Police Department.

            LOS ANGELES – A Riverside man has been sentenced to 10 years in federal prison for possessing about 100 images depicting child pornography, including sexually explicit pictures of pre-pubescent girls under the age of 12.

            James Gregory O’Neill, 58, was sentenced Monday afternoon by United States District Judge R. Gary Klausner.

            O’Neill pleaded guilty in January to possessing child pornography on his mobile phone in the spring of 2015. When authorities discovered the pictures of O’Neill’s phone, he was on parole after being convicted in Riverside Superior Court of possessing matter depicting a minor in a sexual act, a crime that led to a two-year sentence. O’Neill had also been convicted in federal court in 2003 of distributing child pornography, a conviction that brought a 40-month prison sentence.

            “Mr. O’Neill has now been convicted three separate times of serious felony offenses related to child pornography,” said United States Attorney Eileen M. Decker. “Even after his prior convictions, he was not deterred from continuing to engage in crimes that victimize children. Because of his repeated failure to behave lawfully, Mr. O’Neill earned the decade-long sentence imposed by the Court.”

            The case against O’Neill was investigated by the Riverside Police Department and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).

“Every time a sexually explicit image or video of a minor is downloaded and viewed, the child who’s shown is victimized again,” said Joseph Macias, special agent in charge of HSI Los Angeles. “That’s why HSI, in close collaboration with its law enforcement partners and prosecutors, is using every resource and tool at its disposal not only to target those involved in online child sexual exploitation, but also to identify and rescue the children who’ve fallen prey to these predators.”

            O’Neill is one of a half-dozen men from the Inland Empire who currently face federal charges related to child pornography.

• Jeremy Matthew Meyerett, 41, of San Bernardino, has agreed to plead guilty to production of child pornography in a case that carries a 15-year mandatory minimum prison term. During an undercover investigation by the Queensland (Australia) Police Service, Meyerett discussed sexually molesting a 5-year-old girl, and a subsequent search of an online account by federal law enforcement yielded child pornography depicting the young victim. Meyerett is scheduled to enter his guilty plea on June 13, 2016 before United States District Judge Virginia A. Phillips. This investigation was conducted by HSI and the Riverside County Sheriff’s Department.

• Andrew Harrison Fowler, 26, of Perris, a convicted sex offender who was convicted of having sex with minors in San Diego Superior Court, pleaded guilty on April 18 to possession of child pornography, with some of the images depicting victims younger than 10. Fowler came to the attention of law enforcement after his employer discovered that he was distributing and possessing child pornography while using a computer at his job in Corona. Fowler is scheduled to be sentenced by Judge Phillips on June 27, at which time he will face a mandatory minimum sentence of 10 years in federal prison and maximum possible sentence of 20 years. Fowler was on parole in the San Diego case when he committed the offense in the federal case. This case was investigated by the Riverside County District Attorney’s Office Sexual Assault and Felony Enforcement/Internet Crimes Against Children Unit, which includes special agents with HSI.

• Anthony Michael Scotti, 22, of Murrieta, pleaded guilty on April 4 to possession of child pornography. Scotti, who was previously convicted in Riverside Superior court of distributing lewd material to a minor, admitted that he had images on an iPod that was seized by law enforcement last August, and that he used the KIK messaging app to distribute images of children engaged in sex acts with adults. In a plea agreement, Scotti also admitted that he used text messages to convince a 15-year-old girl in another state to take sexually explicit pictures and send them to him. United States District Judge Philip S. Gutierrez is scheduled to sentence Scotti on September 12, at which time the defendant faces a mandatory minimum sentence of 10 years in federal prison, and prosecutors have said they will recommend a sentence of 14 years. This case was investigated by HSI.

• Angelo Harper Jr., 21, of Moreno Valley, is scheduled to go on trial on July 19 on charges of advertising, distributing and possessing child pornography. A grand jury indictment in this case accused Harper of distributing child pornography that includes a six-minute video depicting a man with a pre-pubescent boy. If he is convicted, Harper would face a statutory maximum sentence of 70 years in federal prison. This case was investigated by HSI and the Riverside Sexual Assault Felony Enforcement Task Force.

• Nathan Charles Longino Barba, 21, of Rancho Cucamonga, was indicted on April 13 on charges of receiving and possessing child pornography. Barba has pleaded not guilty and is scheduled to go on trial on June 14. The indictment alleges that Barba received video files depicting child pornography over the Internet and that he possessed images that depicted a child under the age of 12. If he is convicted, Barba would face a statutory maximum sentence of 40 years in federal prison. This case was investigated by FBI.

            “Child pornography offenses must be punished,” said United States Attorney Decker. “These crimes create further demand in child pornography market, which by its nature is based on the exploitation and abuse of children. By deterring demand, we are protecting against future abuse.”

            An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

          LOS ANGELES – A Sacramento man was sentenced today to 15 years in federal prison today for producing child pornography that was used to advertise the victim as a prostitute.

          Antonio Dickerson, 26, was found guilty in February by a federal jury of one count of sexual exploitation of a minor for production of child pornography.

          Previously in this case, Dickerson’s co-defendant – D’Antoine Thomas, 26, also of Sacramento – pleaded guilty to sex trafficking of a minor. Thomas was sentenced by Judge Wilson in March to seven years in federal prison.

          The victim in the case was 16 when she met Thomas in Sacramento in 2010.  She soon started working for Thomas as a prostitute in Northern California. In April 2011, Dickerson transported Thomas, the victim and another prostitute to Orange County. During this trip, Dickerson directed the 16-year-old victim and another prostitute to simulate sex acts, which he photographed and posted on a website to advertise prostitution services involving the girls.

Dickerson also directed the victim and another 16-year old girl to engage in commercial sex acts, according to the sentencing papers filed by prosecutors, which noted that Dickerson was well aware of the victim’s age, but he “didn’t care” how old she was.

“No child should be subjected to this type of exploitation,” said United States Attorney Eileen M. Decker. “This defendant’s criminal conduct demeaned his child victim, caused the victim harm each time one of the images appeared on the Internet, and was used to further promote illegal sex trafficking.”

          This case is the result of an investigation by the Federal Bureau of Investigation and the Sacramento Sheriff’s Department. 

          SANTA ANA, California – A Garden Grove man was taken into federal custody this morning after being charged with receiving sexual videos from a 13-year-old girl he met on the Internet and traveling to Canada to have sex with the girl. 

          Paul Binh Do, 29, was arrested after he surrendered himself to federal authorities this morning.

          Do was charged last month with one count of traveling with the intent to engage in illicit sexual conduct and one count of receipt of child pornography.  In a plea agreement also filed last month, Do agreed to plead guilty to the charges that could send him to federal prison for as long as 50 years.

          “All forms of child exploitation are deeply troubling, and this case demonstrates how quickly online child exploitation can lead to physical exploitation,” said United States Attorney Eileen M. Decker. “Mr. Do coerced a girl that he knew was only 13 to perform sex acts on camera and then travelled to another country in the hopes of further exploiting her. If not for the timely intervention of law enforcement here and in Canada, a greater tragedy would almost certainly have occurred.”

          According to the documents filed in United States District court, Do began an online relationship with a 13-year-old girl and soon thereafter they began exchanging naked videos of themselves engaging in sexual conduct.  Two years ago today, Do traveled to Canada from Orange County to celebrate the victim’s 14th birthday and have sex with her, but he was stopped by Canadian law enforcement as he attempted to enter into the country.

          When he was stopped by Canadian authorities, Do possessed digital devices that contained naked videos of the victims. Following his arrest in Canada, Do obstructed justice when he contacted the victim and asked her to tell law enforcement that she had lied to Do about her age when, in fact, she had been completely truthful about being 13.

          The investigation into Do was conducted by the Orange County Child Exploitation Task Force, which includes special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). The Task Force received substantial assistance from HSI’s attaché office in Vancouver, the Calgary Police Service, Canada Border Services Agency, and the Royal Canadian Mounted Police’s Southern Alberta Internet Child Exploitation Unit.

          “As this case illustrates, the burgeoning use of the Internet means youth are now vulnerable to exploitation by sexual predators not just around the corner, but around the globe,” said Joseph Macias, special agent in charge for HSI Los Angeles. “That said, child sexual predators who mistakenly believe they can escape detection by boarding an airplane to victimize minors beyond our borders should be on notice – HSI is using all the resources at its disposal to combat this reprehensible behavior and hold the perpetrators responsible for their crimes.”

          Do is expected to be arraigned on the charges this afternoon in United States District Court in Santa Ana.

          The charge of receiving child pornography carries a mandatory minimum sentence of five years in federal prison and statutory maximum penalty of 20 years.

          The charge of traveling with the intent to engage in illicit sexual conduct carries a statutory maximum sentence of 30 years.

          WASHINGTON – A former FBI special agent pleaded guilty today for stealing over $136,000 of drug proceeds seized during the execution of search warrants in 2014 and falsifying reports and tampering with a witness.

          Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Angel D. Gunn of the Department of Justice Office of the Inspector General Los Angeles Field Office made the announcement.

          Scott M. Bowman, 45, of Moreno Valley, California, pleaded guilty to one count of conversion of property by a federal employee, one count of obstruction of justice, one count of falsification of records and one count of witness tampering before U.S. District Judge Jesus G. Bernal of the Central District of California.  Sentencing is set for Aug. 15.

          In connection with his plea, Bowman admitted that he misappropriated drug proceeds seized during the execution of three search warrants in June and August 2014, after they were transferred to his custody in his official capacity as a federal law enforcement officer.  Bowman then spent the stolen money for his own personal use, including by spending $43,850 to purchase a 2012 Dodge Challenger coupe, $27,500 to purchase a 2013 Toyota Scion FR-S coupe and $26,612 to outfit these vehicles with new speakers, rims, tires and other equipment.  Bowman also admitted that he used $15,000 of the misappropriated cash to pay for cosmetic surgery for his spouse and opened a new checking account into which he deposited $10,665 of the stolen funds.

          In order to conceal his embezzlement, Bowman falsified official FBI reports, submitted a receipt with a forged signature and asked a local police detective to provide false information to law enforcement officers if asked about Bowman’s activities with respect to the drug proceeds.  Specifically, Bowman sent emails to the local police detective in October 2014 containing a detailed cover story that the detective was instructed to provide and a copy of the receipt with the forged signature, so that the detective could falsely claim the forged signature as his own.

          “When the FBI became aware of allegations of misconduct by defendant Bowman, FBI management took immediate action by contacting the Justice Department’s Office of Inspector General,” said Acting Assistant Director in Charge James Struyk of the FBI’s Los Angeles Field Office.  “As Mr. Bowman takes responsibility for his actions by pleading guilty, the public should be reminded that FBI personnel are held to the highest standards and misconduct of any kind is taken very seriously.”

          This case was investigated by the Department of Justice Office of the Inspector General and is being prosecuted by Trial Attorneys Lauren Bell and Robert J. Heberle of the Criminal Division’s Public Integrity Section. 

          RIVERSIDE, California – Two Corona residents were arrested this morning by Postal Inspectors on federal conspiracy and mail theft-related offenses for a scheme that resulted in them using a counterfeit Postal Service key to access 300 mailboxes at a Corona apartment complex and steal mail. A third defendant is currently a fugitive being sought by federal authorities.

          Today’s arrests are the result of federal grand jury indictment filed on Wednesday. The two taken into custody today are Bernie Martinez, 23, and Kammi Leigh Vestesen, 24. These defendants are expected to be arraigned on the three-count indictment this afternoon in United States District Court in Riverside.

          The third defendant named in the indictment – Hector Mendez, 29, of Corona – is being sought by authorities.

          According to the indictment, Martinez and Vestesen entered the mail room of the Sierra Del Oro apartment complex on April 10 and used a counterfeit Postal Service key to open resident mailboxes. All three defendants allegedly went to the same mailroom on April 12, used the counterfeit key to open mailboxes and left the premises with a trash bag full of mail.

          The indictment specifically charges all three defendants will conspiracy, mail theft and possession of a counterfeit United States Postal Service key.

          “Mail theft is becoming an increasing problem in our community,” said United States Attorney Eileen M. Decker. “This crime is frequently a precursor to identity theft, fraud, and drug crimes. Protecting the integrity of the postal system from this type of theft is therefore important to preventing an escalation of criminal activity.”

          Postal Inspector in Charge Robert Wemyss said, “The United States Postal Inspection Service will continue to bring violators to justice to secure the integrity of the U.S. Mail. Protecting the ability to use the mail in a safe and secure manner is at the core of the Postal Inspection Service's mission.”

           “Mail theft and other property crimes are a rising problem and trend in this region,” said Corona Police Department Chief of Police Michael Abel. “We take these matters seriously and truly appreciate the joint cooperation in this prosecution.  It’s important that we hold suspects such as these accountable for their actions.”

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

          The charges of conspiracy and mail theft each carry a statutory maximum sentence of five years in federal prison. The charge of unlawful possession of counterfeit postal key carries a statutory maximum sentence of 10 years in prison.

          This case was investigated by the United States Postal Inspection Service and the Corona Police Department.

          LOS ANGELES – A Lancaster couple has been sentenced, with each receiving several years in federal prison, for conspiring to defraud the California Employment Development Department (EDD) by filing fraudulent applications for disability benefits and obtaining more than $900,000 from the agency.

          Robert Lee Lett, 48, who during the time of scheme lived in Lancaster and now claims a South Los Angeles residence, was sentenced on Monday to 57 months in federal prison by United States District Judge Andre Birotte Jr. His wife, LaTanya Annette Lett, 44, was also sentenced on Monday by Judge Birotte to 46 months in prison.

          In addition to the prison terms, Judge Birotte ordered the couple to pay restitution in the total amount of $900,711.

          The Letts each pleaded guilty to one count of conspiracy to commit mail fraud on January 25. According to court documents, including the plea agreements filed in this case, from 2011 to 2015, the Letts defrauded the EDD by filing 127 fraudulent disability applications. These applications were filed in the names of identity theft victims and included bogus certifications of disability with forged doctors’ signatures.

          The Letts arranged to have mail received in the victims’ names at a dozen different addresses and repeatedly used the disability benefits cards they received in the mail to withdraw over $900,000 in cash from ATM’s during the four year period.

          “This was a serious offense in which the defendants intended to steal at least $1.5 million, and actually obtained more than $900,000 over the course of several years,” said United States Attorney Eileen M. Decker. “Their fraudulent conduct continued even after law enforcement authorities executed a search warrant at their home seeking evidence related to their scheme. The crime was well-planned, repetitious and long-term, which has earned them terms in federal prison.”

          This case is the result of an investigation by the Postal Inspection Service, California Employment Development Department, Investigation Division, and the United States Secret Service.

            RIVERSIDE, California – Three people with family connections to Syed Rizwan Farook, one of the perpetrators of the December 2, 2015 terrorist attack at the San Bernardino Inland Regional Center (IRC), were arrested this morning on federal conspiracy, marriage fraud and false statement charges.

            A five-count indictment returned yesterday by a federal grand jury charges three defendants in a marriage fraud conspiracy that involved making false statements under oath for the purpose of obtaining immigration benefits for one of the defendants.

            The three defendants arrested this morning are:

• Mariya Chernykh, 26, of Ontario, who, according to official records, is married to Enrique Marquez, Jr., who is awaiting trial on charges of conspiring with Syed Rizwan Farook in 2011 and 2012 to provide material support to terrorists;

• Tatiana Farook, 31, of Corona, who is Chernykh’s sister; and

• Syed Raheel Farook, 31, of Corona, who Tatiana Farook’s husband and Syed Rizwan Farook’s brother.

            The indictment charges all three defendants in a conspiracy to knowingly make under oath a false statement with respect to a material fact in an application, affidavit, and other document required by the immigration laws and regulations of the United States. This charge carries a statutory maximum sentence of five years in federal prison.

            The indictment also charges Chernykh with fraud and misuse of visas, permits, and other documents; perjury; and two counts of making material false statements to federal agents. These four charges carry a combined statutory maximum sentence of 25 years in federal prison.

            When Marquez was indicted by a federal grand jury at the end of 2015 with conspiring with Syed Rizwan Farook to provide material support to terrorists, he was also charged with entering into a sham marriage with Chernykh in November 2014 and illegally signing an immigration form that falsely declared he was living with her (see: http://go.usa.gov/cuKEm).

            “This is the latest step in the comprehensive investigation into the horrific attacks in San Bernardino last year that took the lives of 14 innocent Americans and deeply affected so many more,” said United States Attorney Eileen M. Decker. “As I have said previously, we owe the victims, and the entire community of San Bernardino, a thorough investigation that uncovers all criminal activity surrounding these events.  Today's arrests open a new phase in the process of bringing to justice all individuals who allegedly committed crimes that were uncovered during our exhaustive investigation.  The charges also reflect the importance we place on statements made to law enforcement officials during a terrorism investigation.  Those who lie to or conceal material information from law enforcement officers investigating terrorist acts will be prosecuted to the fullest extent of the law.”

            Acting Assistant Director of the FBI’s Los Angeles Field Office, James Struyk, said, “Members of the FBI's Joint Terrorism Task Force worked around the clock in an attempt to find immediate answers in the days and weeks following the December murders in San Bernardino to ensure no additional threats to the community were present. As proof of our enduring commitment to the victims and their families, the FBI and our partners will continue to pursue all leads developed in this matter to build cases when evidence of a crime is revealed.”

            Joseph Macias, Special Agent in Charge U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Los Angeles, stated: “Last year’s tragedy in San Bernardino showed yet again how our nation’s legal immigration system can be subverted and exploited by those intent on doing this country harm. As the second largest presence on the nation’s Joint Terrorism Task Forces, HSI special agents, in collaboration with their JTTF partners, are using their unique skills and authorities, including their immigration expertise, to pursue individuals and organizations that pose a threat to domestic security. As this case underscores, that vigilance extends to those whose actions directly or indirectly put our communities and our country at risk.”

            The case against Chernykh and the Farooks stems from the overall investigation into the IRC terrorist attack. While investigating the terrorist attack, federal agents obtained official records showing that Marquez, a former neighbor of Syed Rizwan Farook’s, is married to Chernykh. The investigation determined that Marquez agreed to marry Chernykh so she could obtain immigration benefits that were not available to her because she is a Russian citizen and did not have legal status in the United States. The indictment alleges that Marquez received money from Chernykh to enter into the sham marriage.

            In furtherance of this conspiracy, both Marquez and Chernykh signed immigration documents, under penalty of perjury, that included information that they lived at the same address, when they did not.

            Syed Raheel Farook and Tatiana Farook participated in the conspiracy by, among other things, witnessing Marquez and Chernykh’s wedding, taking staged family pictures of Marquez and Chernykh, establishing a joint checking account for Marquez and Chernykh, and creating a back-dated lease for Marquez and Chernykh to create the illusion that they shared a marital residence with Syed Raheel Farook and Tatiana Farook.

            FBI agents interviewed Chernykh as part of the investigation into the IRC terrorist attacks, and she allegedly made false statements that she lived with Marquez at Syed Raheel Farook and Tatiana Farook’s residence in Corona.

            All three defendants are expected to be arraigned on the indictment this afternoon in United States District Court in Riverside.

            An indictment contains allegations that a defendant has committed a crime.  Every defendant is presumed to be innocent until proven guilty in court.

            Today's operation is the result of an ongoing investigation by the FBI's Joint Terrorism Task Force, which includes partners with HSI, the San Bernardino Police Department, the San Bernardino County Sheriff’s Department, the Riverside County Sheriff’s Department, the Ontario Police Department, the Riverside Police Department, the Corona Police Department and the Chino Police Department.

            LOS ANGELES – A Gardena man has been found guilty of 14 felony counts for trafficking seven girls who worked as prostitutes, several of whom worked under threats of force, fraud or coercion.

            Laron Carter, also known as “Birdd” and variations of that moniker, 39, was found guilty yesterday afternoon by a federal jury in Los Angeles.

            Following a five-day trial, the jury convicted Carter of seven counts of sex trafficking of a minor by force, fraud or coercion, and seven counts of transporting a child to engage in prostitution.

            The evidence at trial showed that Carter trafficked girls as young as 13 and subjected some of them to beatings, which included victims being punched in the face and whipped with a belt.

            The case was tried before United States District Judge Virginia Phillips, who is scheduled to sentence Carter on July 18. At sentencing, Carter will face a mandatory minimum sentence of 15 years in federal prison and a statutory maximum sentence of life without parole.

            “The evidence at trial showed that Mr. Carter bragged about being a ‘pimp,’ and that he forced girls through violence and coercion to sell their bodies for his profit,” said United States Attorney Eileen M. Decker. “No child should ever be subjected to this type of exploitation, which will forever haunt them and immeasurably alter their lives. This prosecution demonstrates law enforcement’s commitment to combating human trafficking on multiple fronts, including both traffickers like Carter and customers, while supporting the victims of exploitation.”

            The case against Carter stemmed from the rescue of a 16-year-old girl in 2013. The victim told investigators from the Los Angeles County Sheriff's Department and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) that she had been recruited by Carter to travel from Minneapolis to Los Angeles. When she arrived in Southern California, Carter forced her into prostitution. As part of his activities, Carter took this victim to a hotel in El Segundo and advertised her services on backpage.com. The victim “ran away at one point, but she found herself lost with no money and returned,” according to a trial memorandum filed in this case. “When she returned, defendant beat her and whipped her with a belt for leaving.”

            After this victim was rescued, investigators located six other girls – one of whom was only 13 – who had been coerced or physically forced into prostitution by Carter between 2003 and 2010.

            During the trial, the jury saw Facebook postings in which Carter described himself as a “cross country pimp” who worked for “Pimpin International.” The jury also saw photos of tattoos with the “Birdd” moniker that victims were forced to get.

            “This verdict and the possible life prison sentence it carries should give solemn pause to anyone considering selling minors for sex,” said Joseph Macias, special agent in charge for HSI Los Angeles. “Those who sexually exploit young people for financial gain show that greed has no bounds. HSI will continue to work closely with its law enforcement partners and prosecutors to protect those who cannot protect themselves.” 

A Valencia, California, doctor pleaded guilty today to submitting more than $2.4 million in fraudulent claims to Medicare.

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, Special Agent in Charge Christian Schrank of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) Los Angeles Region and Special Agent in Charge Joseph Fendrick of the California Department of  Justice’s Orange County and San Diego Office made the announcement.

Gary J. Ordog, M.D., 61, pleaded guilty before U.S. District Court Judge Fernando M. Olguin of the Central District of California to one count of health care fraud.  Sentencing has been scheduled for Aug. 18, 2016.

According to admissions made as part of his plea agreement, Ordog purported to be a physician, specializing in toxicology.  Ordog admitted that he submitted false claims to Medicare for purported visits with Medicare beneficiaries, when in fact those visits never actually occurred, including on dates when Ordog was out of the country.  He also admitted to billing for services provided to beneficiaries who were deceased on the dates Ordog purportedly treated them and for services totaling more than 24 hours in one day.  Ordog fabricated patient records to support false claims, he admitted.

Between January 2009 and February 2015, Ordog submitted approximately $2,435,089 in false and fraudulent claims to Medicare, he admitted.  Medicare paid approximately $1,295,699 of those claims, according to the plea agreement.

The HHS-OIG and the California Department of Justice investigated the case, which was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  Fraud Section Trial Attorneys Ritesh Srivastava and Niall O’Donnell are prosecuting the case.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.

Ordog Plea Agreement

            LOS ANGELES – A Valencia doctor pleaded guilty today to federal charges for submitting more than $2.4 million in fraudulent claims to Medicare.

            Dr. Gary J. Ordog, 61, pleaded guilty before United States District Judge Fernando M. Olguin to one count of health care fraud. Judge Olguin is scheduled to sentence Ordog on August 18.

            According to admissions made as part of his plea agreement, Ordog, a physician specializing in toxicology, submitted false claims to Medicare for purported visits with Medicare beneficiaries, when in fact those visits never actually occurred. Ordog admitted the he submitted bills for services purportedly performed on deceased Medicare beneficiaries, supposedly performed when he was out of the country, and that totaled more than 24 hours for one day. Ordog fabricated patient records to support false claims, he admitted.

            Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Eileen M. Decker, Special Agent in Charge Christian Schrank of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) Los Angeles Region and Special Agent in Charge Joseph Fendrick of the California Department of  Justice’s Orange County and San Diego Office made the announcement.

            “Medical professionals who defraud Medicare drive up the costs associated with healthcare for everyone,” said United States Attorney Eileen M. Decker. “This crime harms both taxpayers and patients.”

            Between January 2009 and February 2015, Ordog submitted approximately $2,435,089 in false and fraudulent claims to Medicare, he admitted.Medicare paid approximately $1,295,699 of those claims, according to the plea agreement.

            The HHS-OIG and the California Department of Justice investigated the case, which was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  Fraud Section Trial Attorneys Ritesh Srivastava and Niall O’Donnell are prosecuting the case. 

            Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

            To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to Health Care Fraud Unit.

          LOS ANGELES – A police officer employed by the Los Angeles Unified School District was taken into federal custody this morning after being named in an indictment that charges him with the attempted sex trafficking of a child.

          Mauricio Edgardo Estrada, 28, who has been placed on administrative leave by LAUSD, surrendered himself to federal authorities after he was indicted yesterday by a federal grand jury.

          The two-count indictment charges Estrada with attempted sex trafficking of a child and use of the Internet to induce a minor to engage in criminal sexual activity.

          The case against Estrada is the result of an undercover operation by the Los Angeles Regional Human Trafficking Task Force, which includes representatives of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI), the Los Angeles County Sheriff’s Department and the Department of State’s Diplomatic Security Service. The Task Force was conducting an anti-sex trafficking operation in Artesia and posted an advertisement on the Craigslist website that was designed to attract individuals interested in engaging in commercial sex acts with minors.

          “Protecting children from sexual exploitation means focusing our resources on all aspects of the industry that preys upon young people,” said United States Attorney Eileen M. Decker. “Prosecutors in my office who deal with sex crimes against children have a long history of targeting those who produce, distribute and possess child pornography. We also aggressively prosecuted pimps who prostitute minors and use physical violence to establish and maintain control over their victims. Now we are turning our attention to customers who seek out young prostitutes, because their demand fuels an industry that causes so much harm to so many young people.”

          On April 20, Estrada responded to the advertisement via e-mail and subsequently engaged in a series of text messages with an undercover agent he thought was a 15-year-old girl, according to the indictment. Estrada agreed to pay $150 to engage in sex with the “girl.” In preparation for the encounter, Estrada purchased condoms. When he arrived at a gas station in Artesia for the encounter with the girl, Estrada had approximately $150 in his possession. He was taken into custody by the Los Angeles County Sheriff’s Department and subsequently released from county jail after posting bond.

          “It’s deeply troubling when those sworn to protect our kids, are accused of an act that violates every tenet of the oath they pledged to uphold,” said Joseph Macias, special agent in charge for HSI Los Angeles. “The reality is that the defendants in child exploitation cases come from all walks of life and access to children is all too often the common denominator. The predators who’re brazenly stalking our children online need to know that HSI, together with its law enforcement partners, is working tirelessly to track you down and hold you accountable for your crimes.” 

          Estrada is expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.

          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.

          Both of the charges in the indictment carry a mandatory minimum sentence of 10 years in federal prison and statutory maximum sentence of life.

          Last week, a San Pedro man was indicted on charges of attempted sex trafficking of a child and use of the Internet to induce a minor to engage in criminal sexual activity. Joshua Paul Crouch allegedly sought to have sex with a 13-year-old girl after responding to an advertisement on backpage.com (see: http://go.usa.gov/cuZnP). Crouch is scheduled to be arraigned on the indictment this afternoon in United States District Court.

          President Barack Obama has declared April 2016 as National Child Abuse Prevention Month, during which “we recommit to giving every child a chance to succeed and to ensuring that every child grows up in a safe, stable, and nurturing environment that is free from abuse and neglect.”

          Last month, Attorney General Loretta E. Lynch released the 2016 National Strategy for Child Exploitation Prevention and Interdiction (http://go.usa.gov/cuWMR). The strategy provides a comprehensive threat assessment of the nature and scope of the current dangers facing our nation’s children, including child pornography offenses, sextortion and live-streaming of child sexual abuse, child sex trafficking, child sex tourism and sex offense registry violations.

          LOS ANGELES – An Irvine man was arrested this morning on federal charges of illegally flying a twin-engine Falcon 10 turbojet airplane with passengers onboard without having a valid pilot’s license.

          Arnold Gerald Leto III, 36, was charged in a criminal complaint filed yesterday in United States District court with operating an aircraft in air transportation without a valid airman’s certificate.

          The affidavit in support of the criminal complaint alleges that Leto’s pilot’s license was revoked earlier this year, he operated the Falcon without having the required co-pilot, and he was never certified to fly this type of aircraft.

          Leto is scheduled to be arraigned on the felony offense this afternoon in United States District Court.

          Leto is charged will illegally flying the Falcon 10 from Van Nuys Airport to Las Vegas, Nevada, on April 8. Leto allegedly operated the aircraft with approximately eight passengers on board.

          “Federal regulations governing the operation of aircraft and other common carriers are designed to protect the traveling public,” said United States Attorney Eileen M. Decker. “The investigation into Mr. Leto shows that he flagrantly violated these rules – and continued to do so after the FAA took action to take him out of the air. A swift and thorough investigation by the Department of Transportation has now improved the safety of all air travelers.”

          According to the complaint, the aircraft that Leo piloted alone is a complex aircraft that requires two pilots to operate. Furthermore, Leto’s defendant’s pilot certificate – which he failed to surrender after it was revoked by the Federal Aviation Administration in January – did not have a turbojet-type rating that would authorize him to fly that airplane.

          A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The charge alleged in the complaint carries a statutory maximum penalty of three years federal prison.

          This case was investigated by the Department of Transportation – Office of Inspector General, with assistance by the Federal Aviation Administration.

          “This case that alleges operating an aircraft without a valid airman’s certificate is a clear signal that those who would seek to circumvent or disregard transportation-related laws and regulations will face serious repercussions,” said William Swallow, regional Special Agent-In-Charge, U.S. Department of Transportation, Office of Inspector General. “Our agents will continue to work with federal, state, and local authorities to ensure safety for the traveling public.”

          LOS ANGELES – The general manager of a La Puente garment factory has been found guilty of federal charges of offering to pay bribes to an investigator with the United States Department of Labor in exchange for the investigator closing an investigation into wage violations.

          Howard Quoc Trinh, 42, of Arcadia, the manager of Seven-Bros. Enterprises, was convicted late Tuesday by a federal jury. The jury returned guilty verdicts on two counts of bribery after prosecutors presented evidence that Trinh offered to pay $10,000 in bribe, and actually paid $3,000 to a Department of Labor Wage and Hour investigator. As part of the bribery scheme, Trinh promised to pay the balance when the investigation was closed.

          “Companies and their managers victimizing their own employees through wage violations cannot perpetuate their conduct through bribes,” said United States Attorney Eileen M. Decker. “This jury verdict strikes a blow against both corruption and the exploitation of workers.”

          The Labor Department investigator was investigating Seven-Bros. for violating the Fair Labor Standards Act (FLSA), which sets standards for minimum wage and overtime pay. The Wage and Hour investigator led a team that conducted an unannounced visit to Seven-Bros on March 10, 2015. The investigation into wage violations covered a period from May 2012 through March 10, 2015, and found that Seven-Bros owed approximately $100,000 to compensate employees for FLSA violations over that period. As part of the investigation, the Labor Department issued a “hot goods” Notice to Restrain the Shipment of Goods, which prevented the company from shipping certain inventory until the back wages were paid to employees.

          The investigator returned to Seven-Bros on March 18, at which time Trinh said he did not owe his employees any back wages and that he wanted to “take care” of the investigator. In response to Trinh’s statements, the Labor Department’s Office of Investigator General (OIG) initiated an investigation and outfitted the investigator with recording equipment. On the evening of March 18, during a recorded meeting, Trinh offered the investigator $10,000 to close out the investigation without finding any violations and to lift the Hot Goods objection.

          The next day, during another recorded meeting, Trinh gave the investigator an initial payment of $3,000 in an unmarked manila envelope. On March 20, Trinh was arrested.

          Trinh was convicted late yesterday after the jury deliberated for less than one hour. As a result of today’s convictions, Trinh faces a statutory maximum sentence of 30 years in federal prison. United States District Judge Christina A. Snyder, who presided over the trial, has yet to schedule a sentencing date.

          The investigation in this case was conducted by the United States Department of Labor, Office of Investigator General, Office of Labor Racketeering and Fraud Investigations.

          “Today’s jury verdict sends a strong message that those who attempt to bribe public officials will be held responsible for their serious crimes,” stated Abel Salinas, Special Agent in Charge of the Los Angeles Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations. “The Office of Inspector General will continue to vigorously pursue those who endeavor to obstruct the Labor Department’s enforcement of worker protection laws by illegal means.”

          Ruben Rosales, the Regional Administrator for the Labor Department’s Wage and Hour Division in San Francisco, said: “We will not tolerate this type of behavior from anyone. We are very pleased that the collaboration between the Office of the Inspector General and the Division has resulted in a criminal conviction. Any employer who attempts to bribe any of our labor investigators will face consequences.”

            LOS ANGELES – A couple from Walnut, California and two of their import and distribution companies have been sentenced after previously pleading guilty to a wide variety of criminal activity, including smuggling Harp Seal oil into the United States from China, falsely classifying goods to avoid import duties, and importing mislabeled food into the United States from China. 

            Lynn Leung, 61, the former president and co-owner of the UBF Group, Inc., doing business as the Nu-Health Products Company, was ordered yesterday to serve five years of probation, which will include one year of home detention. Leung was also ordered by United States District Judge Dale S. Fischer to pay a $20,000 fine. Additionally, Leung was banned from working as a manager, officer or director of any business entity – including her own family companies – for a period of five years.

            Daniel Fu, 65, Leung’s husband and the former vice-president of UBF Group, Inc., was also sentenced Monday to five years of probation, ordered to spend six months under home detention and fined $20,000. During the period of probation, Fu is also banned from working as a manager, officer or director of any business entity – including his own family companies.

            Leung and Fu jointly owned and operated a number of local dietary supplement import and distribution companies doing business as the Nu-Health Products Company, including UBF Group, Inc. and ASN Group, Inc.

            Judge Fischer also sentenced UBF Group, Inc. yesterday, ordering it to pay a total monetary penalty of $1.29 million. The company was ordered to pay a $230,000 fine, to forfeit $941,000 in proceeds derived from criminal activity, and to pay $119,000 in restitution to the United States Customs and Border Protection agency for import duties it avoided as a result of the criminal scheme.

            ASN Group, Inc., also on Monday was sentenced to pay a $30,000 criminal fine and ordered to implement a compliance program designed to insure compliance with all relevant United States Food and Drug Act requirements and regulations.

            Leung and Fu previously pleaded guilty to introducing misbranded food into interstate commerce with the intent to defraud or mislead. The “food” at issue consisted of millions of capsules of honey bee royal jelly – dietary supplements that were falsely and misleadingly described in import records as “aloe vera.” The mislabeled dietary supplements were purchased from UBF Group, Inc.’s supplier in China, the Sirio Pharma Company, Ltd. Both Leung and Fu admitted that the royal jelly was falsely described in import and export documents because Sirio Pharma lacked regulatory certificates required for export of the honey bee products from China.

            “Laws protecting wildlife are also designed to protect consumers, who deserve to know that products are legally obtained and do not pose a threat to their health,” said United States Attorney Eileen M. Decker. “Prosecutions like this one demonstrate the commitment of my office and our partner regulatory agencies to stop crimes motivated by greed that threaten our environment."

            UBF Group, Inc. previously pleaded guilty to two felonies, specifically smuggling 4 million capsules of Harp Seal oil into the United States (the shipments were falsely labeled as fish oil) and smuggling falsely classified Chinese goods into the United State to avoid payment of import duties. Harp Seals are protected by the federal Marine Mammal Protection Act, which forbids importation of any seals or seal parts, except for scientific or educational purposes. By falsely classifying the value of its imported products on customs documents, UBF Group, Inc. avoided payment of at least $119,000 in import duties legally owed on its Chinese merchandise.

            ASN Group, Inc. previously pleaded guilty to a misdemeanor offense of introducing mislabeled food into interstate and foreign commerce.

            The Chinese supplier, Sirio Pharma Company, previously pleaded guilty in this case to wildlife trafficking and was ordered to pay $500,000 in monetary fines and penalties. Sirio Pharma admitted that employees of the Nu-Health Products Company asked Sirro Pharma to falsely label certain products, including Harp Seal oil and honey bee products, and invoice its shipments of various dietary products in a manner that helped the Nu-Health Products Company to disguise the true cost of the products and their true description. 

            “This case is victory for protected species everywhere,” said Eileen Sobeck, assistant administrator for NOAA Fisheries. “Taking enforcement actions against those who violate the laws protecting marine species will always be a top enforcement priority.”

            This case was investigated by the National Oceanic and Atmospheric Administration – Office of Law Enforcement, the United States Food and Drug Administration – Office of Criminal Investigations, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigation.

            LOS ANGELES – A convicted felon and member of the 92nd Street Hoover Crips gang has been sentenced to 41 months in federal prison for being a felon in possession of a firearm – a .22-caliber revolver that he sold.

            James “Walter” Hayward, 33, of South Los Angeles, was sentenced by United States District Judge Michael W. Fitzgerald Monday afternoon after pleading guilty to the offense in February.

            Hayward had been convicted of five felony charges in state court prior to being charged in the federal case.

            When he pleaded guilty, Hayward admitted that he sold the revolver in exchange for at least $175.

            “Illicit firearms trafficking poses a great danger to the community,” said United States Attorney Eileen M. Decker. “This defendant’s conduct could have put innocent lives at risk.”

            After he concludes his prison sentence, Hayward will serve three years of supervised release.

            This case was part of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives.

            ATF Special Agent in Charge Eric Harden said, “ATF works proactively to keep firearms out of the hands of convicted felons in an effort to make our communities a safer place to live.”

          LOS ANGELES – Concluding a three-year investigation, authorities today arrested 11 defendants who are accused of using peer-to-peer file-sharing programs to receive and possess – and, in some cases, distribute – child pornography.

          The arrests are the results of eight indictments filed in United States District Court and three cases filed by local prosecutors.

          Today’s arrests are part of Operation “Wide Net,” an investigation conducted by the Los Angeles Internet Crimes Against Children (ICAC) Task Force. ICAC includes special agents with the Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the United States Postal Inspection Service, who work in conjunction with local law enforcement partners, including the Los Angeles Police Department and the Los Angeles Sheriff's Department. The Long Beach Police Department and the California Highway Patrol assisted in today’s operation.

          Over the past three years, Operation Wide Net has resulted in a total of more than 80 defendants being prosecuted for child pornography offenses and the execution of over 100 federal and state search warrants in the Los Angeles area.

          Those arrested today include Luis Gutierrez, 49, of Chino, who was previously indicted by a federal grand jury on two counts of receiving child pornography and one count of possessing child pornography obtained through the use of the Ares file-sharing program. Gutierrez was an engineer with the Los Angeles City Fire Department in 2013 at the time of the alleged offenses, and investigators believe that he used Internet connections at three different fire stations to download the child pornography found on his computer.

          Gerald Patrick Beaver, 53, of Cerritos, was also arrested today based on law enforcement operations in New Zealand and Oklahoma in which undercover officers allegedly observed him offering to distribute child pornography over the Internet using the Gigatribe file-sharing program. A federal grand jury previously indicted Beaver and charged him with one count of advertising child pornography, two counts of distributing child pornography and one count of possessing child pornography. When a search was executed at Beaver’s home, authorities allegedly found more than 6,000 images and more than 400 videos of child pornography on his computer.

          “Those who trade in child pornography inflict great harm on the most vulnerable in our society by re-victimizing the children in the existing pornography as well as by fueling a market that requires new child victims,” said United States Attorney Eileen M. Decker. “Operation Wide Net and the scores of other child exploitation cases brought every year by my office demonstrate the Department of Justice’s dual commitments to prosecuting these offenders and to preventing the further abuse of children.”

          “The children depicted in these images that were illegally shared are victimized time and time again,” said Jim Struyk, the Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Today’s announcement illustrates the prevalence of this crime and law enforcement actions should send a message that peer-to-peer networks do not shield criminals from prosecution.”

          Six other defendants were arrested this morning as a result of federal indictments obtained as part of Operation Wide Net. They are:

• Jace Jeanes, 39, of Torrance, is charged with receipt of child pornography and possession of child pornography that he allegedly obtained using the BitTorrent file-sharing program. Jeanes allegedly possessed more than 20,000 images and videos of child pornography on computer equipment found during a search of his residence.

• Steven David Lavinsky, 58, of Long Beach, is charged in a three-count indictment with advertising, distributing and possessing child pornography in a case involving the Gigatribe file-sharing program.

• Kenneth Martin Medellin, 55, of Carson, is charged with receipt of child pornography and possession of child pornography using the Limewire file-sharing program.

• Antonio Joseph Garcia II, 41, of Upland, is charged with four counts of distributing child pornography, one count of receiving child pornography, and two counts of possessing child pornography. In addition to peer to peer file sharing, Garcia also allegedly sent and received child pornography by e-mail.

• Michael Brian Perry, 37, of Pasadena, is charged in a three-count indictment that accuses him of advertising, distributing and possessing child pornography.

• Curtis Audun Larssen, 33, of Los Angeles, is charged with receipt and possession of child pornography using the Ares file-sharing program.

          The eight federal defendants arrested today are expected to be arraigned this afternoon in United States District Court in downtown Los Angeles.

          “File-sharing software has become increasingly popular with collectors and producers of child pornography because they mistakenly believe the technology shields them and their reprehensible criminal acts from detection,” said Mark Selby, acting special agent in charge for HSI Los Angeles. “But as today’s arrests make clear, cyberspace affords these predators no refuge from justice. HSI, together with its law enforcement partners, will continue to use every tool and resource at our disposal to pursue those who prey on and wantonly exploit the most vulnerable among us.”

          As part of Operation Wide Net, the Los Angeles County District Attorney’s Office has charged three defendants in Los Angeles Superior Court with possession of child pornography. The three state court defendants – Michael Becerra, 30, of Long Beach; Cristian Carrasco, 23, of Compton; and Andre Desire Loustau, 71, of Van Nuys – were also taken into custody this morning.

          Recently, as part of Operation Wide Net, prosecutors in the United States Attorney’s Office charged two other defendants, who are:

• James Breton Butler, 51, of Sherman Oaks, who has agreed to plead guilty to possession of child pornography, admitting that “he possessed several hundred thousand images of child pornography, as well as more than 20,000 videos of child pornography” obtained through the Ares file-sharing program. In a plea agreement filed yesterday, Butler agreed to plead guilty prior to being indicted. Butler will make his initial appearance in federal court next month.

• David John Gastelum, 53, of Palmdale, was arrested on March 10 after being named in an indictment that charges him with two counts of receiving child pornography and one count of possessing child pornography using the Ares file-sharing program. Gastelum has pleaded not guilty and is scheduled to go on trial on August 9.

          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 advertising child pornography carries a mandatory minimum sentence of 15 years in federal prison and a statutory maximum sentence of 30 years. Distribution of child pornography and receipt of child pornography each carries a mandatory minimum sentence of five years in federal prison and a statutory maximum sentence of 20 years. The charge of possession of child pornography carries a statutory maximum sentence of 10 or 20 years in federal prison, depending on the nature of the images the defendant possessed.

          President Barack Obama has declared April 2016 as National Child Abuse Prevention Month, during which “we recommit to giving every child a chance to succeed and to ensuring that every child grows up in a safe, stable, and nurturing environment that is free from abuse and neglect.”

          Last month, Attorney General Loretta E. Lynch released the 2016 National Strategy for Child Exploitation Prevention and Interdiction (http://go.usa.gov/cuWMR). The strategy provides a comprehensive threat assessment of the nature and scope of the current dangers facing our nation’s children, including child pornography offenses, sextortion and live-streaming of child sexual abuse, child sex trafficking, child sex tourism and sex offense registry violations.

          LOS ANGELES – A Hacienda Heights couple pleaded guilty today to federal fraud charges related to their participating in a scheme that generated millions of dollars by soliciting investments in a company that purportedly offered children’s educational courses – but in reality was a pyramid scheme designed to generate revenue by adding new investors.

          Cheong Wha “Heywood” Chang, 48, and Chang’s wife, Toni Chen, 47, each pleaded guilty to one count of wire fraud and admitted that they made materially false representations and omissions in order to induce people to invest in a series of Hong Kong-based companies collectively known as CKB. With other names that included WIN168 Biz Solutions, Ltd.; CKB168 Ltd.; and Cyber Kids Best Education Limited, these companies claimed to generate substantial profits from the sale of web-based children’s educational courses. The scheme operated from at least September 2012 through at least the beginning of 2014.

          Chang and Chen each admitted that made false statements to investors, including: CKB was a successful and profitable business; with each investment of $1,380, an investor would receive “Profit Reward Points” (PRPTs) that were worth $750 and could be exchanged for money; PRPTs would increase in value as a passive investment, even if investors did not actively recruit new investors to CKB or sell CKB courses; and PRPTs were analogous to, or could be converted into, pre-IPO or future shares of CKB that would increase greatly in value when CKB went public. These statements to investors were false.

          Authorities have yet to accurately determine the amount of losses suffered by victims in this CKB scheme, but in their plea agreements Chang and Chen admit they received approximately $2 million as a result of the fraud scheme.

          “These defendants defrauded investors out of millions of dollars, and then they attempted to obstruct justice when the Securities and Exchange Commission filed a lawsuit,” said United States Attorney Eileen M. Decker. “The fraudulent conduct in this case has harmed many people, both in the United States and abroad.”

          Chang and Cheng will face up to 20 years in federal prison when they are sentenced by United States District Judge Dale S. Fischer on February 6, 2017.

          Three other defendants who are charged in an indictment that was filed last summer – Wen Chen “Wendy” Lee, Daliang “David” Guo, and Chih Hsuan “Kiki” Lin – are scheduled to go on trial before Judge Fischer in November. These three defendants are each charged with one count of conspiracy and 13 counts of wire fraud. The indictment alleges that the defendants collected approximately $30 million from CKB investors.

          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 is the result of an investigation by the Federal Bureau of Investigation.

          LOS ANGELES – As part of the Obama Administration’s commitment to strengthening the criminal justice system, the Department of Justice has designated the week of April 24-30 as National Reentry Week. Attorney General Loretta E. Lynch is holding events this week in several cities to announce new efforts to improve outcomes for justice-involved individuals (see: https://www.justice.gov/reentry). The 94 United States Attorney’s Offices are hosting over 200 events, and Bureau of Prison facilities are holding more than 370 events across the country.

          “Too often, justice-involved individuals who have paid their debt to society confront daunting obstacles to good jobs, decent housing, adequate health care, quality education, and even the right to vote,” said Attorney General Lynch. “National Reentry Week highlights the many ways that the Department of Justice – and the entire Obama Administration – is working to tear down the barriers that stand between returning citizens and a meaningful second chance – leading to brighter futures, stronger communities, and a more just and equal nation for all.”

          In Los Angeles, there are a series of Reentry Week events, two of which will be open to the media. The public events will include remarks by United States Attorney Eileen M. Decker and Lisa Foster, the Director of the Justice Department’s Office of Access to Justice.

          “When people are released from prisons, we need to take steps to ensure they are prepared to reenter society as productive citizens,” said United States Attorney Decker. “For several years, my office has worked with the Court, Pre-Trial Services and the Federal Public Defenders on a sentencing alternative program and a re-entry program. Our work has made a difference in the lives of numerous individuals and the communities in which they now live.”

          The Obama Administration has taken major steps to make our criminal justice system fairer, more efficient and more effective at reducing recidivism and helping formerly incarcerated individuals contribute to their communities. Removing barriers to successful reentry helps formerly incarcerated individuals compete for jobs, attain stable housing, and support their families. An important part of that commitment is preparing those who have paid their debt to society for substantive opportunities beyond the prison gates, and addressing collateral consequences to successful reentry that too many returning citizens encounter.  

          The two public events in Los Angeles took place today:

• This morning, United States Attorney Decker and the Director of the Office of Access to Justice attended a news conference where the U.S. Department of Housing and Urban Development (HUD) and the Justice Department announced a $100,000 award for the Housing Authority of the City of Los Angeles and Public Counsel to address the challenges justice-involved individuals face when trying to find work and a place to call home. Under the Juvenile Reentry Assistance Program (JRAP), funded through DOJ’s Second Chance Act funds, HUD and DOJ are teaming up to help young Americans who’ve paid their debt to society rehabilitate and reintegrate back into their communities (see: http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2016/HUDNo_16-056).

• This afternoon, United States Attorney Decker, Federal Public Defender Hilary Potashner and federal judges spoke at the Conviction and Sentence Alternatives (CASA) Program Graduation Ceremony. CASA is a four-year-old program in the United States District Court in which certain individuals participate in a program of Post-Guilty Plea Diversion as an alternative to conviction or imprisonment. CASA provides those individuals a creative blend of treatment, alternative sanctions and incentives to effectively address offender behavior, rehabilitation and the safety of the community. Eight individuals graduated today.